Columbia Banking System, Inc. · NASDAQ:COLB
Columbia Banking System — Q3 2024 Earnings Presentation
35 slides from Columbia Banking System's earnings presentation, Oct 24, 2024
Slide 1: 3rd Quarter 2024 Earnings Presentation
3rd Quarter 2024 Earnings Presentation October 24, 2024
Slide 2: Disclaimer
2 Disclaimer FORWARD-LOOKING STATEMENTS This presentation includes forward-looking statements within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. These statements are necessarily subject
Slide 3: Columbia Banking System: A Franchise Like No Other
3 Columbia Banking System: A Franchise Like No Other Columbia at a Glance West-Focused Regional Powerhouse Business Bank of Choice Ticker COLB ■ In-market, relationship-based commercial banking Corporate Headquarters Tacoma, Washington ■ Attractive footprint in high-growth markets Offices ~300 in ei
Slide 4: Why Columbia?
4 Why Columbia? ■ Community banking at scale business model drives granular, low-cost core deposit base ■ Opportunity to gain share in California and growing metros in the West while increasing density in the Northwest ■ Solid capital generation supports long-term organic growth and return to shareh
Slide 5: Operating in Large, Attractive Western Markets
5 Operating in Large, Attractive Western Markets Foothold in the West(1) Top Regional Bank in the NW (WA, OR, ID)(1) Established Presence in Attractive Markets(1) (population in millions) Total Northwest Northwest Rank Bank (HQ State) Assets ($B) Deposits ($B) Mkt Shr ■ Our market share in the North
Slide 6: Opportunity to Increase Density and Gain Share throughout Our Footprint
6 Opportunity to Increase Density and Gain Share throughout Our Footprint Improve Density in the Northwest Expand Footprint in California Broaden Presence in Other Western Markets Population Deposits ($mm) COLB Population Deposits ($mm) COLB Population Deposits ($mm) COLB (1) (1) (1) MSA (000s) Mark
Slide 7: Financial Highlights
FINANCIAL HIGHLIGHTS
Slide 8: YTD 2024 Highlights
8 YTD 2024 Highlights Reported Operating(1) ■ Completed an enterprise-wide evaluation of our operations during Q1 2024 that resulted in consolidated positions, simplified reporting $390 million $418 million and organizational structures, and an improved profitability outlook. Net Income Net Income I
Slide 9: Third Quarter 2024 Highlights
9 Third Quarter 2024 Highlights Reported Operating(1) ■ Opened Umpqua Bank’s second retail branch in Arizona and announced a planned third location in the state, as we continue to $146 million $143 million reallocate savings from strategic consolidations into new locations in Net Income Net Income t
Slide 10: Diversified Commercial Bank Business Model Supports Granular Deposit Base
10 Our Diversified Commercial Bank Business Model with a Strong Retail Network Supports our Granular, High-Quality Deposit Base Enterprise-wide Deposit Composition Deposits by Category Customer Deposit Composition(1) Commercial - Small Business, 20% Non-interest, 33% Demand, 20% Non-interest, 36% De
Slide 11: Securities Portfolio Overview
11 Securities Portfolio Overview Available-for-Sale Securities Portfolio as of September 30, 2024 Available-for-Sale Securities Portfolio Percentage at Gain / Loss as of September 30, 2024 % of Total Current Amortized Unrealized Unrealized AFS Effective ($ in millions) Par Cost Gains Losses Fair Val
Slide 12: Loan Roll Forward Activity
12 Loan Roll Forward Activity Three Months Ended September 30, 2024 Nine Months Ended September 30, 2024 $2,557 $875 $37,710 $37,503 $37,442 $— $74 $37,503 ($271) ($103) ($1,343) $ in millions $ in millions ($610) ($311) ($60) ($955) Beginning New Net Prepayments Payoffs or Other¹ Ending Beginning M
Slide 13: Diversified, High Quality Loan and Lease Portfolio
13 Diversified, High Quality Loan and Lease Portfolio Mortgage Portfolio Composition at September 30, 2024 Owner Occupied CRE • Portfolio average loan size of $1.0 million • Portfolio average loan size of $481,000 Multifamily, 15% • 3Q24 average loan size of $1.4 million • 3Q24 average loan size of
Slide 14: C&I and CRE Portfolio Composition
14 C&I and CRE Portfolio Composition C&I Portfolio Composition(1) CRE Portfolio Composition(1) $9.7 Billion at September 30, 2024 $17.4 Billion at September 30, 2024 Other, 12.8% Agriculture, 9.2% Special Purpose, 7.5% Hotel/Motel, 4.2% Other Healthcare, 4.4% Contractors, 7.7% Retail, 11.4% Other, 1
Slide 15: Office Portfolio Details
15 Office Portfolio Details Office Portfolio Metrics at September 30, 2024 Number of Loans by Balance ■ Loans secured by office properties Average loan size $1.36 million represented 8% of our total loan portfolio 1,746 1,719 1,621 as of September 30, 2024. Average LTV 57% DSC (non-owner occupied) 1
Slide 16: Continued Strong Credit Quality
16 Continued Strong Credit Quality Allowance for Credit Losses ("ACL") ■ The remaining credit discount on loans of 1.41% 1.45% 1.35% 1.36% 1.34% $65 million as of September 30, 2024 provides an additional 17 basis points of 1.18% 1.24% 1.16% 1.16% 1.17% loss absorption when added to the ACL of $86 $
Slide 17: ACL Reflects Strong Portfolio Credit Metrics
17 ACL Reflects Strong Portfolio Credit Metrics Allowance for Credit Losses by Loan Segment Total ACL Remaining including Lease & Commercial Residential & Credit Discount Credit Discount ($ in thousands) Commercial Equipment Real Estate Home Equity Consumer Total(1) on Loans on Loans(1) Balance as o
Slide 18: Capital Management
18 Capital Management Regulatory Capital Ratios: Bank and Holding Company as of September 30, 2024 Capital Ratios Continue to Trend Up 14.0% 14.0% 12.5% 12.2% 12.5% 11.6% 11.9% 12.0% 12.2% 12.0% 11.1% 11.1% 12.0% 10.3% 10.3% 9.8% 10.0% 10.3% 9.5% 9.6% 10.0% 8.7% 10.0% 8.1% 8.0% 8.0% 6.0% 6.0% 4.0% 6
Slide 19: Net Interest Income and Net Interest Margin
19 Net Interest Income and Net Interest Margin Net Interest Income and Net Interest Margin Net Interest Margin: Q2 2024 vs Q3 2024 $481 $454 $423 $427 $430 0.04% 3.56% 0.01% 0.01% 3.56% (0.03)% 3.91% (0.03)% 3.78% 3.52% 3.56% 3.56% Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q2 2024 LHFI-ex LHFI-PAA¹ In
Slide 20: Interest Rate Sensitivity
20 Interest Rate Sensitivity Interest Rate Simulation Impact on Net Interest Income at September 30, 2024(1) Floors: Floating and Adjustable Rate Loans at September 30, 2024 Ramp Shock ($ in millions) No Floor(5) At Floor(5) Above Floor(5) Total Year 1 Year 2 Year 1 Year 2 Floating $8,692 $214 $4,35
Slide 21: Longer-Term Balance Sheet Optimization Opportunities as Rates Decline
21 Longer-Term Balance Sheet Optimization Opportunities as Rates Decline Opportunity to Strategically Reposition Balance Sheet Over Time Deposit and Funding Repricing Betas During Current Rate Cycle Effective Fed Cost of: Funds Rate Interest- Bearing Three Months Ended (Daily Avg.) Total Deposits To
Slide 22: Non-Interest Income
22 Non-Interest Income For the Quarter Ended Q3 2024 Highlights (compared to Q2 2024) ($ in millions) Q3 2024 Q2 2024 Q1 2024 Q4 2023 Q3 2023 ■ Our Business Bank of Choice strategy Service charges on deposits $18.5 $18.5 $16.1 $17.3 $17.4 incorporates a collaborative team Card-based fees 14.6 14.7 1
Slide 23: Non-Interest Expense
23 Non-Interest Expense Non-Interest Expense ("NIE") Non-Interest Expense: Q2 2024 vs Q3 2024 $337.2 $304.1 $2.4 $294.3 $7.7 $287.5 $279.2 $ in millions $ in millions $281.2 $276.9 $279.2 $271.4 $268.4 $1.8 $262.5 $271.4 $(6.0) $(13.7) Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q2 2024 Salary & Group 2
Slide 24: A Cost-Conscious Culture Contributes Funding to Franchise Reinvestments
24 A Cost-Conscious Culture Contributes Funding to Franchise Reinvestments Savings Fund Franchise Revinvestments $270 Million Gross Cost Savings Realized Since Merger Closing: ■ We realized $270 million in gross savings Equates to 25% of Combined-Company Pre-Merger Cost Base in the 18-month period f
Slide 25: Appendix
APPENDIX
Slide 26: Liquidity Overview
26 Liquidity Overview Select Balance Sheet Items Total Off-Balance Sheet Liquidity Available at September 30, 2024 Sequential Gross Net Three Months Ended Quarter Change ($ in millions) Availability Utilization Availability ($ in millions) Q3 2024 Q2 2024 Q3 2023 Q3 2024 FHLB lines $11,783 $2,370 $9
Slide 27: Summary Income Statements
27 Summary Income Statements For the Quarter Ended Q3 2024 Highlights (compared to Q2 2024) ($ in millions, except per-share data) Q3 2024 Q2 2024 Q1 2024 Q4 2023 Q3 2023 Net interest income before provision $430.2 $427.4 $423.4 $453.6 $480.9 ■ Net interest income increased by $3 million due to high
Slide 28: Summary Period-End Balance Sheets
28 Summary Period-End Balance Sheets ($ in millions, except per-share data) Q3 2024 Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q3 2024 Highlights (compared to Q2 2024) ASSETS: ■ Loan balances declined by $207 million Total assets $51,908.6 $52,047.5 $52,224.0 $52,173.6 $51,993.8 during Q3 2024 as healthy custo
Slide 29: Purchase Accounting Details
29 Purchase Accounting Details Adjustment at Closing Remaining Balances at Select Purchase Accounting Items(1) February 28, 2023 June 30, 2024 September 30, 2024 Notes ITEMS TO ACCRETE THROUGH INTEREST INCOME: Available for sale securities - rate discount $(1,011) million $(518) million $(497) milli
Slide 30: Non-GAAP Reconciliation: Tangible Capital
30 Non-GAAP Reconciliation: Tangible Capital ($ in thousands, except per-share data) 9/30/2024 6/30/2024 3/31/2024 12/31/2023 9/30/2023 Total shareholders' equity a $5,273,828 $4,976,672 $4,957,245 $4,995,034 $4,632,162 Less: Goodwill 1,029,234 1,029,234 1,029,234 1,029,234 1,029,234 Less: Other int
Slide 31: Non-GAAP Reconciliation: Adjustments and Average Balances
31 Non-GAAP Reconciliation: Adjustments and Average Balances For the Quarter Ended For the Nine Months Ended ($ in thousands) 9/30/2024 6/30/2024 3/31/2024 12/31/2023 9/30/2023 9/30/2024 9/30/2023 Non-Interest Income Adjustments Gain (loss) on sale of debt securities, net $ 3 $ (1) $ 12 $ 9 $ 4 $ 14
Slide 32: Non-GAAP Reconciliation: Income Statements
32 Non-GAAP Reconciliation: Income Statements For the Quarter Ended For the Nine Months Ended ($ in thousands) 9/30/2024 6/30/2024 3/31/2024 12/31/2023 9/30/2023 9/30/2024 9/30/2023 Net interest income c $ 430,218 $ 427,449 $ 423,362 $ 453,623 $ 480,875 $ 1,281,029 $ 1,339,548 Non-interest income (G
Slide 33: Non-GAAP Reconciliation: Earnings Per-Share and Performance Metrics
33 Non-GAAP Reconciliation: Earnings Per-Share and Performance Metrics For the Quarter Ended For the Nine Months Ended ($ in thousands, except per-share data) 9/30/2024 6/30/2024 3/31/2024 12/31/2023 9/30/2023 9/30/2024 9/30/2023 Select Per-Share & Performance Metrics Earnings per share - basic j/r
Slide 34: Non-GAAP Reconciliation: Operating Efficiency Ratio, as Adjusted
34 Non-GAAP Reconciliation: Operating Efficiency Ratio, as Adjusted For the Quarter Ended For the Nine Months Ended ($ in thousands) 9/30/2024 6/30/2024 3/31/2024 12/31/2023 9/30/2023 9/30/2024 9/30/2023 Non-interest expense (GAAP) h $271,358 $279,244 $287,516 $337,176 $304,147 $838,118 $975,524 Les
Slide 35: Non-GAAP Reconciliation: Net Interest Income & Net Interest Margin
35 Non-GAAP Reconciliation: Net Interest Income & Net Interest Margin For the Quarter Ended For the Nine Months Ended ($ in thousands) 9/30/2024 6/30/2024 3/31/2024 12/31/2023 9/30/2023 9/30/2024 9/30/2023 Net interest income(2) a $431,184 $428,434 $424,344 $454,730 $482,031 $1,283,962 $1,342,568 Le
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