Document

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

COLUMBIA BANKING SYSTEM, INC.

(Exact name of registrant as specified in its charter)



Washington	0-20288	91-1422237
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1301 A Street Tacoma, WA		98402
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (253) 305-1900

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:



☒	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)



☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)



☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))



☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐

Items to be Included in this Report

Item 2.02 Results of Operations and Financial Condition

Item 8.01 Other Events

The following information is furnished pursuant to Item 2.02, "Results of Operations and Financial Condition" and Item 8.01 "Other Events."

On July 27, 2017, Columbia Banking System, Inc. issued a press release reporting its financial results for the quarter ended June 30, 2017 and a quarterly cash dividend of $0.22 per share. The dividend will be paid on August 23, 2017 to shareholders of record at the close of business on August 9, 2017. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference in its entirety.

Item 9.01 Financial Statements and Exhibits

(d) The following exhibit is being furnished herewith:

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



		COLUMBIA BANKING SYSTEM, INC.

Date:	July 27, 2017	/s/ HADLEY S. ROBBINS
		Hadley S. Robbins
		President and Chief Executive Officer

FOR IMMEDIATE RELEASE

Columbia Banking System Announces Second Quarter 2017 Results

and Quarterly Cash Dividend

Record second quarter net income of $27.1 million; diluted earnings per share of $0.47

New loan production for the quarter of $316.2 million and loan growth of $194.9 million

Terminated all existing loss share agreements with the FDIC

Nonperforming assets to period end assets ratio remains low at 0.42%

TACOMA, Washington, July 27, 2017 -- 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 second quarter 2017 earnings, “I’m pleased with our record setting earnings for the quarter, especially in light of the impact of the $2.4 million expense we recognized to terminate our FDIC loss sharing agreements, which when combined with the $1.0 million of acquisition-related expense recorded in the quarter, reduced our earnings per share by $0.04.” Mr. Robbins continued, “Our record first half 2017 earnings is a direct reflection on the efforts of our bankers, who remain focused on developing new relationships while deepening existing ones.”

Total assets at June 30, 2017 were $9.69 billion, an increase of $157.8 million from March 31, 2017. Loans grew $194.9 million during the quarter due to strong loan originations of $316.2 million and seasonal increases in line utilization. Securities available for sale were $2.26 billion at June 30, 2017, a decrease of $66.7 million, or 3% from $2.33 billion at March 31, 2017. Total deposits at June 30, 2017 were $8.07 billion, a decrease of $16.4 million from March 31, 2017. Core deposits comprised 96% of total deposits and were $7.72 billion at June 30, 2017, a decrease of $72.8 million from March 31, 2017. The average cost of total deposits for the quarter was 0.05%, an increase of one basis point from the first quarter of 2017.

Net interest income for the second quarter of 2017 was $86.2 million, a decrease of $514 thousand from the linked period and an increase of $4.0 million from the prior year period. The linked quarter decrease was principally from taxable securities income, whose yields during the first quarter of 2017 benefited from a market-driven reduction in premium amortization. Also contributing to the decrease was incremental accretion from purchased loans, which was $956 thousand lower than the linked period. The increase from the prior year period was due to higher loan and securities volumes, partially offset by lower incremental accretion. Incremental accretion income from purchased loans in the current period was $1.3 million lower than the prior year period. For additional information regarding net interest income, see the “Average Balances and Rates” table.

Noninterest income was $24.1 million for the second quarter of 2017, a decrease of $724 thousand compared to $24.9 million for the first quarter of 2017. The linked quarter decrease was principally due to lower bank owned life insurance (“BOLI”) benefits in the current period as well as a $573 thousand benefit from re-measuring our mortgage repurchase liability in the linked period. Both the BOLI and mortgage repurchase benefits were recorded to other noninterest income. Compared to the second quarter of 2016, noninterest income increased by $2.2 million due to lower expenses from the FDIC loss-sharing asset as well as higher other noninterest income, principally from a current quarter BOLI benefit of $430 thousand, with no such BOLI benefit in the prior year period.

Total noninterest expense for the second quarter of 2017 was $68.9 million, a decrease of $119 thousand from the first quarter of 2017. The small improvement resulted from lower compensation costs being offset by the $2.4 million charge from early termination of our FDIC loss-sharing agreements; the early termination charge was recognized in other noninterest expense. The lower compensation costs stemmed from additional stock compensation expense recognized in the linked quarter due to the immediate vesting of certain restricted share awards as well as additional payroll taxes.

Compared to the second quarter of 2016, noninterest expense increased $5.1 million, or 8%, from $63.8 million. The increase was due to the previously noted charge from early termination of loss-sharing agreements as well as $1.0 million of acquisition-related expenses recognized in the current quarter. In addition, legal and professional fees were higher due to costs from both our investment in a customer relationship management application and the search for a permanent Chief Executive Officer.

Columbia’s net interest margin (tax equivalent) for the second quarter of 2017 was 4.12%, a decrease of 8 basis points from the linked quarter and an increase of 2 basis points from the prior year period. The decrease from the linked quarter was due to higher linked quarter interest income from taxable securities, which was driven by reduced amortization of premiums as well as lower incremental accretion in the current quarter. The increase from the prior year quarter was due to higher loan and security volumes, partially offset by lower incremental accretion. Columbia’s operating net interest margin (tax equivalent)⁽¹⁾was 4.09% for the second quarter of 2017, unchanged from the linked quarter and an increase of 9 basis points from the prior year period due to higher loan and security volumes.

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															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2017			2017			2016			2016			2016			2017			2016
	(dollars in thousands)
Incremental accretion income due to:
FDIC purchased credit impaired loans	$	753		$	2,117		$	1,199		$	1,816		$	1,300		$	2,870		$	2,957
Other acquired loans	2,356			1,948			3,087			2,749			3,074			4,304			6,147
Incremental accretion income	$	3,109		$	4,065		$	4,286		$	4,565		$	4,374		$	7,174		$	9,104

Net interest margin (tax equivalent)	4.12		%	4.20		%	4.11		%	4.13		%	4.10		%	4.16		%	4.12		%
Operating net interest margin (tax equivalent) (1)	4.09		%	4.09		%	3.99		%	4.03		%	4.00		%	4.09		%	4.01		%

(1) Operating net interest margin (tax equivalent) is a non-GAAP financial measure. See the section titled “Non-GAAP Financial Measures” on the last page of this earnings release for the reconciliation of operating net interest margin (tax equivalent) to net interest margin.

At June 30, 2017, nonperforming assets to total assets were 0.42% compared to 0.32% at March 31, 2017 and 0.35% at December 31, 2016. Total nonperforming assets increased $10.8 million from the linked quarter due to an $11.3 million increase in nonaccrual loans, partially offset by a decrease in other real estate owned.

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



	June 30, 2017		March 31, 2017		December 31, 2016
	(in thousands)
Nonaccrual loans:
Commercial business	$	24,747	$	10,848	$	11,555
Real estate:
One-to-four family residential	697		450		568
Commercial and multifamily residential	7,267		10,237		11,187
Total real estate	7,964		10,687		11,755
Real estate construction:
One-to-four family residential	241		213		563
Total real estate construction	241		213		563
Consumer	3,872		3,799		3,883
Total nonaccrual loans	36,824		25,547		27,756
Other real estate owned and other personal property owned	4,058		4,519		5,998
Total nonperforming assets	$	40,882	$	30,066	$	33,754

The following table provides an analysis of the Company's allowance for loan and lease losses:



	Three Months Ended									Six Months Ended
	June 30, 2017			March 31, 2017			June 30, 2016			June 30, 2017			June 30, 2016
	(in thousands)
Beginning balance	$	71,021		$	70,043		$	69,264		$	70,043		$	68,172
Charge-offs:
Commercial business	(3,600		)	(1,127		)	(2,941		)	(4,727		)	(6,714		)
One-to-four family residential real estate	(153		)	(307		)	(35		)	(460		)	(35		)
Commercial and multifamily residential real estate	—			—			(26		)	—			(26		)
One-to-four family residential real estate construction	—			(14		)	—			(14		)	—
Consumer	(465		)	(428		)	(334		)	(893		)	(600		)
Purchased credit impaired	(1,800		)	(1,939		)	(2,898		)	(3,739		)	(5,764		)
Total charge-offs	(6,018		)	(3,815		)	(6,234		)	(9,833		)	(13,139		)
Recoveries:
Commercial business	2,944			365			753			3,309			1,415
One-to-four family residential real estate	223			117			20			340			61
Commercial and multifamily residential real estate	127			78			130			205			199
One-to-four family residential real estate construction	58			29			5			87			259
Commercial and multifamily residential real estate construction	—			—			1			—			2
Consumer	248			285			201			533			366
Purchased credit impaired	1,204			1,144			1,524			2,348			3,075
Total recoveries	4,804			2,018			2,634			6,822			5,377
Net charge-offs	(1,214		)	(1,797		)	(3,600		)	(3,011		)	(7,762		)
Provision for loan and lease losses	3,177			2,775			3,640			5,952			8,894
Ending balance	$	72,984		$	71,021		$	69,304		$	72,984		$	69,304

The allowance for loan losses to period end loans was 1.14% at both June 30, 2017 and March 31, 2017. For the second quarter of 2017, Columbia recorded a net provision for loan and lease losses of $3.2 million compared to a net provision of $2.8 million for the linked quarter and $3.6 million for the comparable quarter last year. The net provision for loan and lease losses recorded during the current quarter consisted of $3.9 million of provision for loan losses for loans, excluding PCI loans, partially offset by a provision recovery of $738 thousand for PCI loans.

Andy McDonald, Columbia’s Executive Vice President and Chief Credit Officer, commented, “Our nonperforming assets ratio of 42 basis points reflects the strength of our regional economy and the diversification within our loan portfolio.”

Organizational Update

Mr. Robbins commented, “Our pending acquisition of Pacific Continental Corporation is progressing. As announced last month, we have received the required shareholder approvals to complete the merger. Once the remaining regulatory approvals are obtained, we look forward to joining these two great companies together to the benefit of our customers, shareholders and the communities we serve. In addition, we regularly evaluate the alignment of our products and services with the needs of our clients. Given rapid technology changes in the payments industry, we are shifting our merchant card services business to an industry leading, third-party provider. We believe this transition will better serve our business clients via a broad selection of competitive, best-in-class payment processing solutions. This transaction will result in a one-time $14.0 million gain which will be recognized in the third quarter of 2017.”

Mr. Robbins continued, “I’m pleased to have recently announced some organization changes that are occurring at the Company. Clint Stein’s transition from Chief Financial Officer to Chief Operating Officer provides a great opportunity for leadership continuity as the two of us and our teams, have worked closely on the majority of our recently completed and in process strategic business initiatives. In addition to the national search for our next CFO, we have a search underway for an executive level Chief Risk Officer. This role will oversee the maturation of our existing enterprise risk management program and position us for future growth.”

Cash Dividend Announcement

Columbia will pay a regular cash dividend of $0.22 per common share on August 23, 2017 to shareholders of record as of the close of business on August 9, 2017.

Conference Call Information

Columbia’s management will discuss the second quarter 2017 results on a conference call scheduled for Thursday, July 27, 2017 at 1:00 p.m. Pacific Time (4:00 p.m. ET). Interested parties join the live-streamed event and a replay of the event by using the site:

https://engage.vevent.com/rt/columbiabankingsystemincao~48444274

The conference call can also be accessed on Thursday, July 27, 2017 at 1:00 p.m. Pacific Time (4:00 p.m. ET) by calling 1-888-286-8956; Conference ID code #48444274.

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 eleventh consecutive year, the bank was named in 2017 as one of Puget Sound Business Journal's "Washington's Best Workplaces." Columbia ranked in the top 30 on the 2017 Forbes list of best banks.

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

Note Regarding Forward-Looking Statements

This news release includes forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements include, but are not limited to, descriptions of Columbia’s management’s expectations regarding future events and developments such as future operating results, growth in loans and deposits, continued success of Columbia’s style of banking and the strength of the local economy. The words “will,” “believe,” “expect,” “intend,” “should,” and “anticipate” or the negative of these words or words of similar construction are intended in part to help identify forward looking statements. Future events are difficult to predict, and the expectations described above are necessarily subject to risks and uncertainties, many of which are outside our control, that may cause actual results to differ materially and adversely. In addition to discussions about risks and uncertainties set forth from time to time in Columbia’s filings with the Securities and Exchange Commission, available at the SEC’s website at www.sec.gov and the Company’s website at www.columbiabank.com, including the “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our annual reports on Form 10-K and quarterly reports on Form 10-Q, (as applicable), factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following: (1) local, national and international economic conditions may be less favorable than expected or have a more direct and pronounced effect on Columbia than expected and adversely affect Columbia’s ability to continue its internal growth at historical rates and maintain the quality of its earning assets; (2) changes in interest rates could significantly reduce net interest income and negatively affect funding sources; (3) projected business increases following strategic expansion or opening or acquiring new branches may be lower than expected; (4) costs or difficulties related to the integration of acquisitions may be greater than expected; (5) competitive pressure among financial institutions may increase significantly; (6) legislation or regulatory requirements or changes may adversely affect the businesses in which Columbia is engaged; and (7) the proposed merger with Pacific Continental Corporation (“Pacific Continental”) may not close when expected or at all because required regulatory or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all, which may have an effect on the trading prices of Columbia’s stock. 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.

Additional Information

In connection with the Agreement and Plan of Merger, dated as of January 9, 2017, by and between Columbia Banking System, Inc. and Pacific Continental, Columbia has filed with the SEC a Registration Statement on Form S-4 that includes a Joint Proxy Statement of Columbia and Pacific Continental and a Prospectus of Columbia, as well as other relevant documents concerning the proposed transaction. Shareholders of Columbia and Pacific Continental are urged to carefully read the Registration Statement and the Joint Proxy Statement/Prospectus regarding the transaction in their entirety and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they contain important information. Shareholders of Columbia and Pacific Continental are also urged to carefully review and consider each of Columbia’s and Pacific Continental’s public filings with the SEC, including but not limited to their Annual Reports on Form 10-K, their proxy statements, their Current Reports on Form 8-K and their Quarterly Reports on Form 10-Q. A definitive Joint Proxy Statement/Prospectus has been sent to the shareholders of each institution seeking any required shareholder approvals. The Joint Proxy Statement/Prospectus and other relevant materials filed with the SEC may be obtained free of charge at the SEC’s Website at http://www.sec.gov. PACIFIC CONTINENTAL AND COLUMBIA SHAREHOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND THE OTHER RELEVANT MATERIALS BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE TRANSACTION.

Investors will also be able to obtain these documents, free of charge, from Pacific Continental by accessing Pacific Continental’s website at www.therightbank.com under the link “Investor Relations” or from Columbia at www.columbiabank.com under the tab “About” and then under the heading “Investor Relations.” Copies can also be obtained, free of charge, by directing a written request to Columbia, Attention: Corporate Secretary, 1301 A Street, Suite 800, Tacoma, Washington 98401-2156 or to Pacific Continental, Attention: Corporate Secretary, 111 West Seventh Avenue, P.O. Box 10727, Eugene Oregon 97440-2727.



Contacts:	Hadley S. Robbins,
	President and
	Chief Executive Officer

	Clint E. Stein,
	Executive Vice President and
	Chief Financial Officer

	Investor Relations
	(253) 305-1921



FINANCIAL STATISTICS
Columbia Banking System, Inc.	Three Months Ended												Six Months Ended
Unaudited	June 30,				March 31,				June 30,				June 30,			June 30,
	2017				2017				2016				2017			2016
Earnings	(dollars in thousands except per share amounts)
Net interest income	$	86,161			$	86,675			$	82,140			$	172,836		$	162,310
Provision for loan and lease losses	$	3,177			$	2,775			$	3,640			$	5,952		$	8,894
Noninterest income	$	24,135			$	24,859			$	21,940			$	48,994		$	42,586
Noninterest expense	$	68,867			$	68,986			$	63,790			$	137,853		$	128,864
Acquisition-related expense (included in noninterest expense)	$	1,023			$	1,364			$	—			$	2,387		$	2,436
Net income	$	27,132			$	29,199			$	25,405			$	56,331		$	46,664
Per Common Share
Earnings (basic)	$	0.47			$	0.50			$	0.44			$	0.97		$	0.80
Earnings (diluted)	$	0.47			$	0.50			$	0.44			$	0.97		$	0.80
Book value	$	22.23			$	21.86			$	21.93			$	22.23		$	21.93
Averages
Total assets	$	9,597,274			$	9,473,698			$	9,230,791			$	9,535,827		$	9,090,001
Interest-earning assets	$	8,651,735			$	8,520,291			$	8,285,183			$	8,586,376		$	8,145,564
Loans	$	6,325,462			$	6,198,215			$	5,999,428			$	6,262,190		$	5,913,434
Securities, including Federal Home Loan Bank stock	$	2,316,077			$	2,310,490			$	2,262,012			$	2,313,299		$	2,204,734
Deposits	$	7,965,868			$	7,954,653			$	7,622,266			$	7,960,292		$	7,533,980
Interest-bearing deposits	$	4,123,135			$	4,118,604			$	4,026,384			$	4,120,882		$	4,004,849
Interest-bearing liabilities	$	4,367,216			$	4,263,660			$	4,264,792			$	4,315,724		$	4,194,687
Noninterest-bearing deposits	$	3,842,733			$	3,836,049			$	3,595,882			$	3,839,410		$	3,529,131
Shareholders' equity	$	1,295,564			$	1,261,652			$	1,267,670			$	1,278,702		$	1,263,040
Financial Ratios
Return on average assets	1.13		%		1.23		%		1.10		%		1.18		%	1.03		%
Return on average common equity	8.38		%		9.26		%		8.02		%		8.81		%	7.39		%
Average equity to average assets	13.50		%		13.32		%		13.73		%		13.41		%	13.89		%
Net interest margin (tax equivalent)	4.12		%		4.20		%		4.10		%		4.16		%	4.12		%
Efficiency ratio (tax equivalent) (1)	60.42		%		59.95		%		59.30		%		60.19		%	60.93		%
Operating efficiency ratio (tax equivalent) (2)	57.23		%		59.07		%		58.81		%		58.15		%	59.12		%

	June 30,				March 31,				December 31,
Period end	2017				2017				2016
Total assets	$	9,685,110			$	9,527,272			$	9,509,607
Loans, net of unearned income	$	6,423,074			$	6,228,136			$	6,213,423
Allowance for loan and lease losses	$	72,984			$	71,021			$	70,043
Securities, including Federal Home Loan Bank stock	$	2,280,996			$	2,341,959			$	2,288,817
Deposits	$	8,072,464			$	8,088,827			$	8,059,415
Core deposits	$	7,721,766			$	7,794,590			$	7,749,568
Shareholders' equity	$	1,297,314			$	1,275,343			$	1,251,012
Nonperforming assets
Nonaccrual loans	$	36,824			$	25,547			$	27,756
Other real estate owned ("OREO") and other personal property owned ("OPPO")	4,058				4,519				5,998
Total nonperforming assets	$	40,882			$	30,066			$	33,754
Nonperforming loans to period-end loans	0.57		%		0.41		%		0.45		%
Nonperforming assets to period-end assets	0.42		%		0.32		%		0.35		%
Allowance for loan and lease losses to period-end loans	1.14		%		1.14		%		1.13		%
Net loan charge-offs	$	1,214		(3)	$	1,797		(4)	$	239		(5)

(1) Noninterest expense divided by the sum of net interest income on a tax equivalent basis and noninterest income on a tax equivalent basis.
(2) The operating efficiency ratio (tax equivalent) is a non-GAAP financial measure. See section titled "Non-GAAP Financial Measures" on the last page of this earnings release for the reconciliation of the operating efficiency ratio (tax equivalent) to the efficiency ratio (tax equivalent).
(3) For the three months ended June 30, 2017.
(4) For the three months ended March 31, 2017.
(5) For the three months ended December 31, 2016. .



QUARTERLY FINANCIAL STATISTICS
Columbia Banking System, Inc.	Three Months Ended
Unaudited	June 30,			March 31,			December 31,			September 30,			June 30,
	2017			2017			2016			2016			2016
	(dollars in thousands except per share)
Earnings
Net interest income	$	86,161		$	86,675		$	85,737		$	85,572		$	82,140
Provision for loan and lease losses	$	3,177		$	2,775		$	18		$	1,866		$	3,640
Noninterest income	$	24,135		$	24,859		$	22,330		$	23,166		$	21,940
Noninterest expense	$	68,867		$	68,986		$	65,014		$	67,264		$	63,790
Acquisition-related expense (included in noninterest expense)	$	1,023		$	1,364		$	291		$	—		$	—
Net income	$	27,132		$	29,199		$	30,718		$	27,484		$	25,405
Per Common Share
Earnings (basic)	$	0.47		$	0.50		$	0.53		$	0.47		$	0.44
Earnings (diluted)	$	0.47		$	0.50		$	0.53		$	0.47		$	0.44
Book value	$	22.23		$	21.86		$	21.52		$	21.96		$	21.93
Averages
Total assets	$	9,597,274		$	9,473,698		$	9,568,214		$	9,493,451		$	9,230,791
Interest-earning assets	$	8,651,735		$	8,520,291		$	8,612,498		$	8,544,876		$	8,285,183
Loans	$	6,325,462		$	6,198,215		$	6,200,506		$	6,179,163		$	5,999,428
Securities, including Federal Home Loan Bank stock	$	2,316,077		$	2,310,490		$	2,314,521		$	2,351,093		$	2,262,012
Deposits	$	7,965,868		$	7,954,653		$	8,105,522		$	7,918,532		$	7,622,266
Interest-bearing deposits	$	4,123,135		$	4,118,604		$	4,151,695		$	4,118,787		$	4,026,384
Interest-bearing liabilities	$	4,367,216		$	4,263,660		$	4,222,820		$	4,295,485		$	4,264,792
Noninterest-bearing deposits	$	3,842,733		$	3,836,049		$	3,953,827		$	3,799,745		$	3,595,882
Shareholders' equity	$	1,295,564		$	1,261,652		$	1,274,388		$	1,278,588		$	1,267,670
Financial Ratios
Return on average assets	1.13		%	1.23		%	1.28		%	1.16		%	1.10		%
Return on average common equity	8.38		%	9.26		%	9.65		%	8.60		%	8.02		%
Average equity to average assets	13.50		%	13.32		%	13.32		%	13.47		%	13.73		%
Net interest margin (tax equivalent)	4.12		%	4.20		%	4.11		%	4.13		%	4.10		%
Period end
Total assets	$	9,685,110		$	9,527,272		$	9,509,607		$	9,586,754		$	9,353,651
Loans, net of unearned income	$	6,423,074		$	6,228,136		$	6,213,423		$	6,259,757		$	6,107,143
Allowance for loan and lease losses	$	72,984		$	71,021		$	70,043		$	70,264		$	69,304
Securities, including Federal Home Loan Bank stock	$	2,280,996		$	2,341,959		$	2,288,817		$	2,372,724		$	2,297,713
Deposits	$	8,072,464		$	8,088,827		$	8,059,415		$	8,057,816		$	7,673,213
Core deposits	$	7,721,766		$	7,794,590		$	7,749,568		$	7,809,064		$	7,447,963
Shareholders' equity	$	1,297,314		$	1,275,343		$	1,251,012		$	1,276,735		$	1,274,479
Nonperforming assets
Nonaccrual loans	$	36,824		$	25,547		$	27,756		$	21,366		$	22,915
OREO and OPPO	4,058			4,519			5,998			8,994			10,613
Total nonperforming assets	$	40,882		$	30,066		$	33,754		$	30,360		$	33,528
Nonperforming loans to period-end loans	0.57		%	0.41		%	0.45		%	0.34		%	0.38		%
Nonperforming assets to period-end assets	0.42		%	0.32		%	0.35		%	0.32		%	0.36		%
Allowance for loan and lease losses to period-end loans	1.14		%	1.14		%	1.13		%	1.12		%	1.13		%
Net loan charge-offs	$	1,214		$	1,797		$	239		$	906		$	3,600



LOAN PORTFOLIO COMPOSITION
Columbia Banking System, Inc.
Unaudited	June 30,			March 31,			December 31,			September 30,			June 30,
	2017			2017			2016			2016			2016
Loan Portfolio Composition - Dollars	(dollars in thousands)
Commercial business	$	2,704,468		$	2,559,247		$	2,551,054		$	2,630,017		$	2,518,682
Real estate:
One-to-four family residential	173,150			172,581			170,331			168,511			172,957
Commercial and multifamily residential	2,787,560			2,783,433			2,719,830			2,686,783			2,651,476
Total real estate	2,960,710			2,956,014			2,890,161			2,855,294			2,824,433
Real estate construction:
One-to-four family residential	139,956			115,219			121,887			130,163			129,195
Commercial and multifamily residential	195,565			172,896			209,118			202,014			185,315
Total real estate construction	335,521			288,115			331,005			332,177			314,510
Consumer	323,187			318,069			329,261			325,741			325,632
Purchased credit impaired	129,853			138,903			145,660			152,764			161,107
Subtotal loans	6,453,739			6,260,348			6,247,141			6,295,993			6,144,364
Less: Net unearned income	(30,665		)	(32,212		)	(33,718		)	(36,236		)	(37,221		)
Loans, net of unearned income	6,423,074			6,228,136			6,213,423			6,259,757			6,107,143
Less: Allowance for loan and lease losses	(72,984		)	(71,021		)	(70,043		)	(70,264		)	(69,304		)
Total loans, net	6,350,090			6,157,115			6,143,380			6,189,493			6,037,839
Loans held for sale	$	6,918		$	3,245		$	5,846		$	3,361		$	7,649



	June 30,		March 31,		December 31,		September 30,		June 30,
Loan Portfolio Composition - Percentages	2017		2017		2016		2016		2016
Commercial business	42.1	%	41.1	%	41.1	%	42.0	%	41.2	%
Real estate:
One-to-four family residential	2.7	%	2.8	%	2.7	%	2.7	%	2.8	%
Commercial and multifamily residential	43.5	%	44.7	%	43.7	%	43.0	%	43.6	%
Total real estate	46.2	%	47.5	%	46.4	%	45.7	%	46.4	%
Real estate construction:
One-to-four family residential	2.2	%	1.8	%	2.0	%	2.1	%	2.1	%
Commercial and multifamily residential	3.0	%	2.8	%	3.4	%	3.2	%	3.0	%
Total real estate construction	5.2	%	4.6	%	5.4	%	5.3	%	5.1	%
Consumer	5.0	%	5.1	%	5.3	%	5.2	%	5.3	%
Purchased credit impaired	2.0	%	2.2	%	2.3	%	2.4	%	2.6	%
Subtotal loans	100.5	%	100.5	%	100.5	%	100.6	%	100.6	%
Less: Net unearned income	(0.5	)%	(0.5	)%	(0.5	)%	(0.6	)%	(0.6	)%
Loans, net of unearned income	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%



DEPOSIT COMPOSITION
Columbia Banking System, Inc.
Unaudited
	June 30,		March 31,		December 31,		September 30,		June 30,
	2017		2017		2016		2016		2016
Deposit Composition - Dollars	(dollars in thousands)
Core deposits:
Demand and other non-interest bearing	$	3,905,652	$	3,958,106	$	3,944,495	$	3,942,434	$	3,652,951
Interest bearing demand	988,532		985,954		985,293		963,242		957,548
Money market	1,787,101		1,798,034		1,791,283		1,873,376		1,818,337
Savings	756,825		759,002		723,667		714,047		692,694
Certificates of deposit, less than $250,000	283,656		293,494		304,830		315,965		326,433
Total core deposits	7,721,766		7,794,590		7,749,568		7,809,064		7,447,963

Certificates of deposit, $250,000 or more	81,861		74,460		79,424		79,590		72,812
Certificates of deposit insured by CDARS®	19,276		20,994		22,039		16,951		22,755
Brokered money market accounts	249,554		198,768		208,348		152,151		129,590
Subtotal	8,072,457		8,088,812		8,059,379		8,057,756		7,673,120
Premium resulting from acquisition date fair value adjustment	7		15		36		60		93
Total deposits	$	8,072,464	$	8,088,827	$	8,059,415	$	8,057,816	$	7,673,213



	June 30,		March 31,		December 31,		September 30,		June 30,
Deposit Composition - Percentages	2017		2017		2016		2016		2016
Core deposits:
Demand and other non-interest bearing	48.4	%	48.9	%	48.9	%	48.9	%	47.6	%
Interest bearing demand	12.2	%	12.2	%	12.2	%	12.0	%	12.5	%
Money market	22.1	%	22.2	%	22.2	%	23.2	%	23.7	%
Savings	9.4	%	9.4	%	9.0	%	8.9	%	9.0	%
Certificates of deposit, less than $250,000	3.5	%	3.6	%	3.8	%	3.9	%	4.3	%
Total core deposits	95.6	%	96.3	%	96.1	%	96.9	%	97.1	%

Certificates of deposit, $250,000 or more	1.0	%	0.9	%	1.0	%	1.0	%	0.9	%
Certificates of deposit insured by CDARS®	0.2	%	0.3	%	0.3	%	0.2	%	0.3	%
Brokered money market accounts	3.2	%	2.5	%	2.6	%	1.9	%	1.7	%
Total	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%



CONSOLIDATED STATEMENTS OF INCOME
Columbia Banking System, Inc.	Three Months Ended									Six Months Ended
Unaudited	June 30,			March 31,			June 30,			June 30,			June 30,
	2017			2017			2016			2017			2016
	(in thousands except per share)
Interest Income
Loans	$	75,579		$	74,120		$	71,651		$	149,699		$	141,967
Taxable securities	9,468			10,986			8,829			20,454			16,846
Tax-exempt securities	2,716			2,691			2,795			5,407			5,598
Deposits in banks	23			19			28			42			66
Total interest income	87,786			87,816			83,303			175,602			164,477
Interest Expense
Deposits	908			787			787			1,695			1,529
Federal Home Loan Bank advances	591			225			241			816			365
Other borrowings	126			129			135			255			273
Total interest expense	1,625			1,141			1,163			2,766			2,167
Net Interest Income	86,161			86,675			82,140			172,836			162,310
Provision for loan and lease losses	3,177			2,775			3,640			5,952			8,894
Net interest income after provision for loan and lease losses	82,984			83,900			78,500			166,884			153,416
Noninterest Income
Deposit account and treasury management fees	7,396			7,287			7,093			14,683			14,082
Card revenue	6,202			5,723			6,051			11,925			11,703
Financial services and trust revenue	3,036			2,839			2,780			5,875			5,601
Loan revenue	2,989			3,593			2,802			6,582			5,064
Merchant processing revenue	2,264			2,019			2,272			4,283			4,374
Bank owned life insurance	1,433			1,280			1,270			2,713			2,386
Investment securities gains, net	—			—			229			—			602
Change in FDIC loss-sharing asset	(173		)	(274		)	(990		)	(447		)	(2,093		)
Other	988			2,392			433			3,380			867
Total noninterest income	24,135			24,859			21,940			48,994			42,586
Noninterest Expense
Compensation and employee benefits	38,393			40,825			37,291			79,218			73,610
Occupancy	7,577			7,191			7,652			14,768			17,825
Merchant processing expense	1,147			1,049			1,118			2,196			2,151
Advertising and promotion	1,137			817			1,043			1,954			1,885
Data processing	4,741			4,208			3,929			8,949			8,075
Legal and professional fees	2,947			3,369			1,777			6,316			3,102
Taxes, licenses and fees	748			1,241			1,298			1,989			2,588
Regulatory premiums	741			776			1,068			1,517			2,209
Net cost (benefit) of operation of other real estate owned	(1		)	152			84			151			188
Amortization of intangibles	1,249			1,349			1,483			2,598			3,066
Other	10,188			8,009			7,047			18,197			14,165
Total noninterest expense	68,867			68,986			63,790			137,853			128,864
Income before income taxes	38,252			39,773			36,650			78,025			67,138
Provision for income taxes	11,120			10,574			11,245			21,694			20,474
Net Income	$	27,132		$	29,199		$	25,405		$	56,331		$	46,664
Earnings per common share
Basic	$	0.47		$	0.50		$	0.44		$	0.97		$	0.80
Diluted	$	0.47		$	0.50		$	0.44		$	0.97		$	0.80
Dividends paid per common share - regular	$	0.22		$	0.22		$	0.19		$	0.44		$	0.37
Dividends paid per common share - special	$	—		$	—		$	0.18		$	—		$	0.38
Dividends paid per common share - total	$	0.22		$	0.22		$	0.37		$	0.44		$	0.75
Weighted average number of common shares outstanding	57,520			57,388			57,185			57,437			57,149
Weighted average number of diluted common shares outstanding	57,525			57,394			57,195			57,442			57,160



CONSOLIDATED BALANCE SHEETS
Columbia Banking System, Inc.
Unaudited				June 30,			March 31,			December 31,
				2017			2017			2016
				(in thousands)
ASSETS
Cash and due from banks				$	197,623		$	169,697		$	193,038
Interest-earning deposits with banks				14,425			13,124			31,200
Total cash and cash equivalents				212,048			182,821			224,238
Securities available for sale at fair value (amortized cost of $2,272,959, $2,349,149 and $2,299,037, respectively)				2,264,636			2,331,359			2,278,577
Federal Home Loan Bank stock at cost				16,360			10,600			10,240
Loans held for sale				6,918			3,245			5,846
Loans, net of unearned income of ($30,665), ($32,212) and ($33,718), respectively				6,423,074			6,228,136			6,213,423
Less: allowance for loan and lease losses				72,984			71,021			70,043
Loans, net				6,350,090			6,157,115			6,143,380
FDIC loss-sharing asset				—			3,239			3,535
Interest receivable				30,856			31,345			30,074
Premises and equipment, net				146,728			148,541			150,342
Other real estate owned				4,058			4,519			5,998
Goodwill				382,762			382,762			382,762
Other intangible assets, net				15,033			16,282			17,631
Other assets				255,621			255,444			256,984
Total assets				$	9,685,110		$	9,527,272		$	9,509,607
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing				$	3,905,652		$	3,958,106		$	3,944,495
Interest-bearing				4,166,812			4,130,721			4,114,920
Total deposits				8,072,464			8,088,827			8,059,415
Federal Home Loan Bank advances				159,474			15,483			6,493
Securities sold under agreements to repurchase				65,895			46,914			80,822
Other liabilities				89,963			100,705			111,865
Total liabilities				8,387,796			8,251,929			8,258,595
Commitments and contingent liabilities
	June 30,	March 31,	December 31,
	2017	2017	2016
Preferred stock (no par value)	(in thousands)
Authorized shares	2,000	2,000	2,000
Issued and outstanding	—	—	9	—			—			2,217
Common stock (no par value)
Authorized shares	115,000	115,000	115,000
Issued and outstanding	58,353	58,329	58,042	1,001,292			999,702			995,837
Retained earnings				302,550			288,247			271,957
Accumulated other comprehensive loss				(6,528		)	(12,606		)	(18,999		)
Total shareholders' equity				1,297,314			1,275,343			1,251,012
Total liabilities and shareholders' equity				$	9,685,110		$	9,527,272		$	9,509,607



AVERAGE BALANCES AND RATES
Columbia Banking System, Inc.
Unaudited
	Three Months Ended						Three Months Ended
	June 30, 2017						June 30, 2016
	Average Balances		Interest Earned / Paid		Average Rate		Average Balances		Interest Earned / Paid		Average Rate
	(dollars in thousands)
ASSETS
Loans, net(1)(2)	$	6,325,462	$	77,030	4.87	%	$	5,999,428	$	72,952	4.86	%
Taxable securities	1,861,895		9,468		2.03	%	1,801,195		8,829		1.96	%
Tax exempt securities (2)	454,182		4,179		3.68	%	460,817		4,300		3.73	%
Interest-earning deposits with banks	10,196		23		0.90	%	23,743		28		0.47	%
Total interest-earning assets	8,651,735		$	90,700	4.19	%	8,285,183		$	86,109	4.16	%
Other earning assets	173,044						154,843
Noninterest-earning assets	772,495						790,765
Total assets	$	9,597,274					$	9,230,791
LIABILITIES AND SHAREHOLDERS’ EQUITY
Certificates of deposit	$	386,361	$	95	0.10	%	$	428,279	$	140	0.13	%
Savings accounts	755,253		19		0.01	%	692,179		18		0.01	%
Interest-bearing demand	983,936		192		0.08	%	949,669		183		0.08	%
Money market accounts	1,997,585		602		0.12	%	1,956,257		446		0.09	%
Total interest-bearing deposits	4,123,135		908		0.09	%	4,026,384		787		0.08	%
Federal Home Loan Bank advances	195,369		591		1.21	%	161,637		241		0.60	%
Other borrowings	48,712		126		1.03	%	76,771		135		0.70	%
Total interest-bearing liabilities	4,367,216		$	1,625	0.15	%	4,264,792		$	1,163	0.11	%
Noninterest-bearing deposits	3,842,733						3,595,882
Other noninterest-bearing liabilities	91,761						102,447
Shareholders’ equity	1,295,564						1,267,670
Total liabilities & shareholders’ equity	$	9,597,274					$	9,230,791
Net interest income (tax equivalent)			$	89,075					$	84,946
Net interest margin (tax equivalent)					4.12	%					4.10	%

Nonaccrual loans have been included in the tables as loans carrying a zero yield. Amortized net deferred loan fees and net unearned discounts on acquired loans were included in the interest income calculations. The amortization of net deferred loan fees was $1.8 million and $1.2 million for the three month periods ended June 30, 2017 and June 30, 2016, respectively. The incremental accretion on acquired loans was $3.1 million and $4.4 million for the three months ended June 30, 2017 and 2016, respectively.

Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $1.5 million and $1.3 million for the three months ended June 30, 2017 and 2016, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.5 million for the three months ended June 30, 2017 and 2016, respectively.



AVERAGE BALANCES AND RATES
Columbia Banking System, Inc.
Unaudited
	Three Months Ended						Three Months Ended
	June 30, 2017						March 31, 2017
	Average Balances		Interest Earned / Paid		Average Rate		Average Balances		Interest Earned / Paid		Average Rate
	(dollars in thousands)
ASSETS
Loans, net(1)(2)	$	6,325,462	$	77,030	4.87	%	$	6,198,215	$	75,514	4.87	%
Taxable securities	1,861,895		9,468		2.03	%	1,861,627		10,986		2.36	%
Tax exempt securities (2)	454,182		4,179		3.68	%	448,863		4,140		3.69	%
Interest-earning deposits with banks	10,196		23		0.90	%	11,586		19		0.66	%
Total interest-earning assets	8,651,735		$	90,700	4.19	%	8,520,291		$	90,659	4.26	%
Other earning assets	173,044						178,091
Noninterest-earning assets	772,495						775,316
Total assets	$	9,597,274					$	9,473,698
LIABILITIES AND SHAREHOLDERS’ EQUITY
Certificates of deposit	$	386,361	$	95	0.10	%	$	399,306	$	95	0.10	%
Savings accounts	755,253		19		0.01	%	738,631		19		0.01	%
Interest-bearing demand	983,936		192		0.08	%	972,560		159		0.07	%
Money market accounts	1,997,585		602		0.12	%	2,008,107		514		0.10	%
Total interest-bearing deposits	4,123,135		908		0.09	%	4,118,604		787		0.08	%
Federal Home Loan Bank advances	195,369		591		1.21	%	81,577		225		1.10	%
Other borrowings	48,712		126		1.03	%	63,479		129		0.81	%
Total interest-bearing liabilities	4,367,216		$	1,625	0.15	%	4,263,660		$	1,141	0.11	%
Noninterest-bearing deposits	3,842,733						3,836,049
Other noninterest-bearing liabilities	91,761						112,337
Shareholders’ equity	1,295,564						1,261,652
Total liabilities & shareholders’ equity	$	9,597,274					$	9,473,698
Net interest income (tax equivalent)			$	89,075					$	89,518
Net interest margin (tax equivalent)					4.12	%					4.20	%

Nonaccrual loans have been included in the tables as loans carrying a zero yield. Amortized net deferred loan fees and net unearned discounts on acquired loans were included in the interest income calculations. The amortization of net deferred loan fees was $1.8 million and $1.6 million for the three month periods ended June 30, 2017 and March 31, 2017. The incremental accretion on acquired loans was $3.1 million and $4.1 million for the three months ended June 30, 2017 and March 31, 2017, respectively.

Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $1.5 million and $1.4 million for the three months ended June 30, 2017 and March 31, 2017, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.5 million and $1.4 million for the three month periods ended June 30, 2017 and March 31, 2017, respectively.



AVERAGE BALANCES AND RATES
Columbia Banking System, Inc.
Unaudited
	Six Months Ended June 30,						Six Months Ended June 30,
	2017						2016
	Average Balances		Interest Earned / Paid		Average Rate		Average Balances		Interest Earned / Paid		Average Rate
	(dollars in thousands)
ASSETS
Loans, net (1)(2)	$	6,262,190	$	152,544	4.87	%	$	5,913,434	$	144,250	4.88	%
Taxable securities	1,861,762		20,454		2.20	%	1,745,242		16,846		1.93	%
Tax exempt securities (2)	451,537		8,319		3.68	%	459,492		8,612		3.75	%
Interest-earning deposits with banks	10,887		42		0.77	%	27,396		66		0.48	%
Total interest-earning assets	8,586,376		$	181,359	4.22	%	8,145,564		$	169,774	4.17	%
Other earning assets	175,554						154,589
Noninterest-earning assets	773,897						789,848
Total assets	$	9,535,827					$	9,090,001
LIABILITIES AND SHAREHOLDERS’ EQUITY
Certificates of deposit	$	392,798	$	190	0.10	%	$	438,597	$	284	0.13	%
Savings accounts	746,988		38		0.01	%	684,027		35		0.01	%
Interest-bearing demand	978,279		351		0.07	%	938,809		352		0.07	%
Money market accounts	2,002,817		1,116		0.11	%	1,943,416		858		0.09	%
Total interest-bearing deposits	4,120,882		1,695		0.08	%	4,004,849		1,529		0.08	%
Federal Home Loan Bank advances	138,787		816		1.18	%	106,103		365		0.69	%
Other borrowings	56,055		255		0.91	%	83,735		273		0.65	%
Total interest-bearing liabilities	4,315,724		$	2,766	0.13	%	4,194,687		$	2,167	0.10	%
Noninterest-bearing deposits	3,839,410						3,529,131
Other noninterest-bearing liabilities	101,991						103,143
Shareholders’ equity	1,278,702						1,263,040
Total liabilities & shareholders’ equity	$	9,535,827					$	9,090,001
Net interest income (tax equivalent)			$	178,593					$	167,607
Net interest margin (tax equivalent)					4.16	%					4.12	%

Nonaccrual loans have been included in the table as loans carrying a zero yield. Amortized net deferred loan fees and net unearned discounts on acquired loans were included in the interest income calculations. The amortization of net deferred loan fees was $3.4 million and $2.3 million for the six months ended June 30, 2017 and 2016, respectively. The incremental accretion on acquired loans was $7.2 million and $9.1 million for the six months ended June 30, 2017 and 2016, respectively.

Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $2.8 million and $2.3 million for the six months ended June 30, 2017 and 2016, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $2.9 million and $3.0 million for the six months ended June 30, 2017 and 2016, respectively.

Non-GAAP Financial Measures

The Company considers its operating net interest margin 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 and operating efficiency ratio to the Company, there are no standardized definitions for them and, as a result, the Company’s calculations may not be comparable with other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.

The following tables reconcile the Company’s calculation of the operating net interest margin and operating efficiency ratio:



	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2017			2017			2016			2017			2016
Operating net interest margin non-GAAP reconciliation:	(dollars in thousands)
Net interest income (tax equivalent) (1)	$	89,075		$	89,518		$	84,946		$	178,593		$	167,607
Adjustments to arrive at operating net interest income (tax equivalent):
Incremental accretion income on FDIC purchased credit impaired loans	(753		)	(2,117		)	(1,300		)	(2,870		)	(2,957		)
Incremental accretion income on other acquired loans	(2,356		)	(1,948		)	(3,074		)	(4,304		)	(6,147		)
Premium amortization on acquired securities	1,669			1,462			2,075			3,131			4,399
Interest reversals on nonaccrual loans	747			265			107			1,012			560
Operating net interest income (tax equivalent) (1)	$	88,382		$	87,180		$	82,754		$	175,562		$	163,462
Average interest earning assets	$	8,651,735		$	8,520,291		$	8,285,183		$	8,586,376		$	8,145,564
Net interest margin (tax equivalent) (1)	4.12		%	4.20		%	4.10		%	4.16		%	4.12		%
Operating net interest margin (tax equivalent) (1)	4.09		%	4.09		%	4.00		%	4.09		%	4.01		%



	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
	2017			2017			2016			2017			2016
Operating efficiency ratio non-GAAP reconciliation:	(dollars in thousands)
Noninterest expense (numerator A)	$	68,867		$	68,986		$	63,790		$	137,853		$	128,864
Adjustments to arrive at operating noninterest expense:
Acquisition-related expenses	(1,023		)	(1,364		)	—			(2,387		)	(2,436		)
Net benefit (cost) of operation of OREO and OPPO	1			(150		)	(84		)	(149		)	(186		)
FDIC clawback liability recovery (expense)	—			54			(70		)	54			(279		)
Loss on asset disposals	(8		)	(6		)	(7		)	(14		)	(167		)
Termination of FDIC loss share agreements charge	(2,409		)	—			—			(2,409		)	—
State of Washington Business and Occupation ("B&O") taxes	(642		)	(1,123		)	(1,204		)	(1,765		)	(2,375		)
Operating noninterest expense (numerator B)	$	64,786		$	66,397		$	62,425		$	131,183		$	123,421

Net interest income (tax equivalent) (1)	$	89,075		$	89,518		$	84,946		$	178,593		$	167,607
Noninterest income	24,135			24,859			21,940			48,994			42,586
Bank owned life insurance tax equivalent adjustment	772			689			685			1,461			1,285
Total revenue (tax equivalent) (denominator A)	$	113,982		$	115,066		$	107,571		$	229,048		$	211,478

Operating net interest income (tax equivalent) (1)	$	88,382		$	87,180		$	82,754		$	175,562		$	163,462
Adjustments to arrive at operating noninterest income (tax equivalent):
Investment securities gains, net	—			—			(229		)	—			(602		)
Gain on asset disposals	(256		)	(29		)	(2		)	(285		)	(56		)
Mortgage loan repurchase liability adjustment	—			(573		)	—			(573		)	—
Change in FDIC loss-sharing asset	173			274			990			447			2,093
Operating noninterest income (tax equivalent)	24,824			25,220			23,384			50,044			45,306
Total operating revenue (tax equivalent) (denominator B)	$	113,206		$	112,400		$	106,138		$	225,606		$	208,768
Efficiency ratio (tax equivalent) (numerator A/denominator A)	60.42		%	59.95		%	59.30		%	60.19		%	60.93		%
Operating efficiency ratio (tax equivalent) (numerator B/denominator B)	57.23		%	59.07		%	58.81		%	58.15		%	59.12		%

(1) Tax-exempt interest income has been adjusted to a tax equivalent basis. The amount of such adjustment was an addition to net interest income of $2.9 million for the three month period ended June 30, 2017, $2.8 million for the three month periods ended March 31, 2017 and June 30, 2016, respectively; and $5.8 million and $5.3 million for the six month periods ended June 30, 2017 and June 30, 2016, respectively.