EX-99.1 2 a991colb4q2020earningsrele.htm PRESS RELEASE - EARNINGS AND DIVIDEND Document

Exhibit 99.1

cbsystemsolidbuga161.jpg

FOR IMMEDIATE RELEASE

January 28, 2021

                        


Columbia Banking System Announces Fourth Quarter and Full Year 2020 Results
and Quarterly Cash Dividend


Notable Items for the Fourth Quarter and Fiscal Year 2020

•Full year 2020 net income of $154.2 million and diluted earnings per share of $2.17
•Record fourth quarter net income of $58.3 million and diluted earnings per share of $0.82
•Deposits increased $269.6 million, or 2%, during the fourth quarter of 2020 and $3.19 billion, or 30%, compared to December 31, 2019
•Net interest margin of 3.52%, an increase of 5 basis points from the linked quarter
•Nonperforming assets to period-end assets ratio decreased to 0.21%
•Loan balances subject to deferral were down 91% from June 30, 2020
•Regular cash dividend declared of $0.28 per share

TACOMA, Washington, January 28, 2021 -- 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 fourth quarter 2020 earnings, “Our financial performance for the quarter and the year is a direct reflection of our bankers’ determination and tireless efforts to maintain our normal business operations throughout the extended duration of the pandemic. Our account officers worked collectively with our credit administration team to create tailored solutions that best served our client’s needs during these challenging times.” Mr. Stein continued, “I would also like to recognize the efforts of our full team for the innovation and dedication they demonstrated in meeting the needs of our clients and communities amid the myriad challenges of 2020.”

1

Balance Sheet
Total assets at December 31, 2020 were $16.58 billion, an increase of $351.4 million from the linked quarter. Loans were $9.43 billion, down $261.3 million from September 30, 2020 as loan originations of $468.1 million were more than offset by loan payments and a decrease in loan utilization as well as a decrease in PPP loans of $301.7 million principally due to loan forgiveness. Total PPP loans decreased from $953.2 million at September 30, 2020 to $651.6 million at December 31, 2020. Interest-earning deposits with banks were $434.9 million, a decrease of $301.6 million from the linked quarter. Debt securities available for sale were $5.21 billion at December 31, 2020, an increase of $928.4 million from $4.28 billion at September 30, 2020 as a result of substantial purchases during the quarter. Total deposits at December 31, 2020 were $13.87 billion, an increase of $269.6 million from September 30, 2020 largely due to an increase of $253.4 million in interest-bearing deposits. The deposit mix remained fairly consistent from September 30, 2020 with 50% noninterest-bearing and 50% interest-bearing.
Chris Merrywell, Columbia’s Executive Vice President and Chief Operating Officer, stated, “Our teams worked diligently during the fourth quarter to process new loan requests and PPP forgiveness. We are very proud of their efforts to put our clients’ needs first.”

Income Statement
Net Interest Income
Net interest income for the fourth quarter of 2020 was $131.1 million, an increase of $6.4 million and $6.3 million from the linked quarter and the prior-year period, respectively. The increase in interest income from loans as compared to the linked quarter was a result of an increase of $4.0 million in PPP loan interest and fee income principally due to the forgiveness of PPP loans as well as a $1.7 million recovery of interest related to a nonaccrual loan that paid-off during the quarter. The increase in net interest income compared to the linked quarter also benefited from an increase in interest income from securities due to two securities that had prepayment activity which contributed $2.5 million in additional interest income. Higher average balances of securities as a result of recent purchases also contributed to the increase in net interest income.

2

Net interest income compared to the prior-year period increased as a result of a reduction in interest expense of $4.2 million on deposits due to the lower rate environment. Interest income from investment securities increased approximately $3.0 million primarily due to higher average balances. Net interest income also benefited from lower interest expense of $1.8 million on FHLB advances due to lower average balances. Partially offsetting these increases to net interest income was a $3.0 million decrease to interest income from loans due to the lower rate environment. 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 fourth quarter of 2020 of $4.7 million compared to net provisions of $7.4 million for the linked quarter and $1.6 million for the comparable quarter in 2019. The net provision recovery for credit losses for the current quarter was primarily due to an improved economic forecast.
Andy McDonald, Columbia’s Executive Vice President and Chief Credit Officer, commented, “We are obviously pleased with the credit metrics posted this quarter. The decline in NPAs and problem loans is notable along with the release from the provision. But, we understand we must remain diligent with respect to credit as government stimulus and other actions may have a delayed effect on the possible impacts to our loan portfolio.”
Noninterest Income
Noninterest income was $23.6 million for the fourth quarter of 2020, an increase of $1.1 million from the linked quarter and $1.8 million from the fourth quarter of 2019. The increase compared to the linked quarter was principally due to loan revenue, specifically, mortgage banking revenue, as a result of a change in the way we sold a portion of our loans held for sale, during the quarter, resulting in more favorable pricing. Additionally, included in the current quarter is an increase of $758 thousand to the fair value of the mortgage loan pipeline. The increase in noninterest income during the fourth quarter of 2020 compared to the same quarter in 2019 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 was due to mortgage banking revenue which increased $3.8 million due to higher loan volume. Partially offsetting this increase was a decrease in treasury management fees of $863 thousand and a decrease in overdraft fees of $889 thousand compared to the same quarter in 2019. The decrease in overdraft fees was 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.
3

Noninterest Expense
Total noninterest expense for the fourth quarter of 2020 was $84.3 million, a decrease of $815 thousand compared to the third quarter of 2020 principally due to lower other noninterest expense as a result of the provision recapture for unfunded loan commitments totaling $1.3 million.
Compared to the fourth quarter of 2019, noninterest expense decreased $2.7 million principally due to decreases in other noninterest expense and legal and professional fees partially offset by an increase in regulatory premiums. Other noninterest expense decreased as a result of the provision recapture for unfunded loan commitments similar to the reduction for the linked quarter and a reduction of $857 thousand in travel and entertainment expense due to COVID-19. The decrease in legal and professional fees was principally due to lower fees on reciprocal money market accounts in 2020. Partially offsetting these decreases was an increase in regulatory premiums. During the fourth quarter of 2019, the Bank utilized a portion of its Small Bank Assessment Credit to pay for FDIC deposit insurance premiums. The final portion of the credit was utilized during the second quarter of 2020.
The provision for unfunded loan commitments for the periods indicated are as follows:
Three Months EndedTwelve Months Ended
December 31, 2020September 30, 2020December 31, 2019December 31, 2020December 31, 2019
(in thousands)
Provision (recapture) for unfunded loan commitments
$(1,300)$800 $(150)$3,300 $(900)

Net Interest Margin
Columbia’s net interest margin (tax equivalent) for the fourth quarter of 2020 was 3.52%, an increase of 5 basis points and a decrease of 59 basis points from the linked quarter and prior-year period, respectively. The increase in the net interest margin (tax equivalent) compared to the linked quarter was due to increased income on PPP loans due to forgiveness activity as well as a recovery of interest on a nonaccrual loan that paid-off during the quarter. Interest income on the securities portfolio also contributed to the rise in the net interest margin due to two securities that had prepayment activity. These increases were partially offset by a shift in the mix of interest-earning assets towards lower-yielding investment securities. Notably, the average cost of total deposits for the quarter was 5 basis points, a decrease of 1 basis point from the third 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.
4

Columbia’s operating net interest margin (tax equivalent)1 was 3.51% for the fourth quarter of 2020, which increased 5 points compared to the linked quarter and decreased 58 basis points compared to the prior-year period. The increase in the operating net interest margin for the fourth quarter of 2020 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 EndedTwelve Months Ended
December 31, 2020September 30, 2020December 31, 2020
Paycheck Protection Program loans(dollars in thousands)
Interest income$9,218 $5,263 $19,071 
Average balance$822,970 $948,034 $601,602 
Yield4.46 %2.21 %3.17 %

Aaron James Deer, Columbia’s Executive Vice President and Chief Financial Officer, stated, “We had a nice increase in the margin during the fourth quarter, although it was largely due to accelerated PPP fee amortization. The recent improvement in the rate outlook gives us some optimism for future asset yield improvement, but the near-term expectation is that loan and securities yields will remain under pressure.”

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.
5

Asset Quality
At December 31, 2020, nonperforming assets to total assets decreased to 0.21% compared to 0.29% at September 30, 2020. Total nonperforming assets decreased $12.5 million from the linked quarter due to decreases in commercial business, agriculture and commercial real estate nonaccrual loans.
The following table sets forth information regarding nonaccrual loans and total nonperforming assets:
December 31, 2020September 30, 2020December 31, 2019
(in thousands)
Nonaccrual loans:
Commercial loans:
Commercial real estate$7,712 $10,362 $3,799 
Commercial business13,222 19,313 20,937 
Agriculture11,614 14,913 5,023 
Construction217 217 — 
Consumer loans:
One-to-four family residential real estate2,001 2,405 3,292 
Other consumer40 21 9 
Total nonaccrual loans34,806 47,231 33,060 
OREO and other personal property owned553 623 552 
Total nonperforming assets$35,359 $47,854 $33,612 

Nonperforming assets to total loans was 0.37% at December 31, 2020 compared to 0.49% at September 30, 2020.

6

The following table provides an analysis of the Company’s allowance for credit losses:
Three Months EndedTwelve Months Ended
December 31, 2020September 30, 2020December 31, 2019December 31, 2020December 31, 2019
(in thousands)
Beginning balance$156,968 $151,546 $82,660 $83,968 $83,369 
Impact of adopting ASC 326— — — 1,632 — 
Charge-offs:
Commercial loans:
Commercial real estate(1,318)— (452)(1,419)(2,160)
Commercial business(2,106)(3,164)(2,845)(12,396)(11,290)
Agriculture(432)(1,269)(51)(6,427)(245)
Construction— — (10)— (242)
Consumer loans:
One-to-four family residential real estate(58)(16)(192)(84)(1,196)
Other consumer(167)(133)(18)(766)(82)
Total charge-offs(4,081)(4,582)(3,568)(21,092)(15,215)
Recoveries:
Commercial loans:
Commercial real estate39 65 576 131 3,377 
Commercial business643 1,124 1,698 3,438 3,066 
Agriculture103 27 110 172 299 
Construction21 11 312 709 3,641 
Consumer loans:
One-to-four family residential real estate78 1,301 549 2,083 1,773 
Other consumer69 76 17 399 165 
Total recoveries953 2,604 3,262 6,932 12,321 
Net charge-offs(3,128)(1,978)(306)(14,160)(2,894)
Provision (recapture) for credit losses(4,700)7,400 1,614 77,700 3,493 
Ending balance$149,140 $156,968 $83,968 $149,140 $83,968 
The allowance for credit losses to period-end loans was 1.58% at December 31, 2020 compared to 1.62% at September 30, 2020. Excluding PPP loans, the allowance for credit losses to period-end loans2 was 1.70% at December 31, 2020 compared to 1.80% at September 30, 2020.
Loan Deferrals
The following table shows the loan balances subject to deferral for the periods indicated:
December 31, 2020September 30, 2020June 30, 2020
(in thousands)
Loan balances subject to deferral$146,725 $114,372 $1,595,615 

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.
7

Organizational Update
Two New Directors
The appointment of two new directors was announced following a regional search during the quarter. Laura Alvarez Schrag and Tracy Mack-Askew formally joined the board on January 1, 2021. Ms. Alvarez Schrag is President of Pondera Consulting and a resident of Nampa, Idaho and Ms. Mack-Askew is General Manager-HD Vocational Platform Development of Daimler Trucks North America and a resident of Portland, Oregon.
“Ms. Alvarez Schrag and Ms. Mack-Askew bring a wealth of expertise in organizational development, governance and operations to the Board,” said Mr. Stein. “We look forward to benefiting from their business expertise and their knowledge of key Northwest markets.”
COVID-19 Update
COVID-19 continues to impact our communities. We continue to monitor changing guidance from state and local healthcare officials and adjust our protocols accordingly. Social distancing, additional cleaning protocols and other safety measures we have taken enabled us to keep our branch lobbies open to serve clients throughout the quarter. Investments in additional video conferencing tools provided a smooth transition for team members resuming remote work arrangements as states reinstituted recommendations from earlier in the spring. Employees continue to balance the challenges of life and work amidst the pandemic, such as managing distance learning routines for their children. The variety of flexibility options we have provided have supported employees while maintaining service standards.

8

Warm Hearts Winter Drive
Our sixth annual Warm Hearts Winter Drive to benefit families and individuals struggling with homelessness during the winter months raised $315,025 for more than 65 homeless and relief shelters across the Northwest.
“In a year made particularly difficult by the pandemic, the Warm Hearts Winter Drive was as important as ever,” said David Moore Devine, Columbia’s Executive Vice President and Chief Marketing & Experience Officer. “I could not be prouder of the way our bankers and other employees across the Northwest stepped up to help their neighbors. Their efforts will make a tremendous difference in the communities we serve this winter.”
The annual drive has raised nearly $1.5 million in combined donations since the program started in 2016.
Cash Dividend Announcement
Columbia will pay a regular cash dividend of $0.28 per common share on February 24, 2021 to shareholders of record as of the close of business on February 10, 2021.
Conference Call Information
    Columbia’s management will discuss the fourth quarter 2020 financial results on a conference call scheduled for Thursday, January 28, 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/vcquk5yf
The conference call can also be accessed on Thursday, January 28, 2021 at 10:00 a.m. Pacific Time (1:00 p.m. ET) by calling 833-301-1160; Conference ID password: 3936658.
A replay of the call will be accessible beginning Friday, January 29, 2021 using the link below:
https://edge.media-server.com/mmc/p/vcquk5yf


9

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 recently honored as #1 in Customer Satisfaction with Retail Banking in the Northwest region by J.D. Power3 in 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.
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.
10

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: (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) the effect of COVID-19 and other infectious illness outbreaks that may arise in the future, which has created significant uncertainties in U.S. and global markets, is expected to continue to adversely affect the businesses in which Columbia is engaged; (3) changes in interest rates could significantly reduce net interest income and negatively affect funding sources; (4) projected business increases following strategic expansion or opening or acquiring new branches may be lower than expected; (5) costs or difficulties related to the integration of acquisitions may be greater than expected; (6) competitive pressure among financial institutions may increase significantly; (7) failure to maintain effective internal control over financial reporting or disclosure controls and procedures may adversely affect our business; (8) reliance on and cost of technology may increase; and (9) changes in governmental policy and regulation, including measures taken in response to economic, business, political and social conditions, including with regard to COVID-19, have adversely affected and may continue to adversely affect the businesses in which Columbia is engaged. We believe the expectations reflected in our forward-looking statements are reasonable, based on information available to us on the date hereof. However, given the described uncertainties and risks, we cannot guarantee our future performance or results of operations and you should not place undue reliance on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the federal securities laws. The factors noted above and the risks and uncertainties described in our SEC filings should be considered when reading any forward-looking statements in this release.

Contacts:Clint Stein,Aaron James Deer,
President andExecutive Vice President and
Chief Executive OfficerChief Financial Officer
Investor Relations
InvestorRelations@columbiabank.com
253-305-1921
(COLB-ER)(COLB&ER)
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CONSOLIDATED BALANCE SHEETS
Columbia Banking System, Inc.
UnauditedDecember 31,September 30,December 31,
202020202019
(in thousands)
ASSETS
Cash and due from banks$218,899 $193,823 $223,541 
Interest-earning deposits with banks434,867 736,422 24,132 
Total cash and cash equivalents653,766 930,245 247,673 
Debt securities available for sale at fair value (amortized cost of $4,997,529, $4,081,118 and $3,703,096, respectively)
5,210,134 4,281,720 3,746,142 
Equity securities13,425 13,425 — 
Federal Home Loan Bank (“FHLB”) stock at cost10,280 10,280 48,120 
Loans held for sale26,481 24,407 17,718 
Loans, net of unearned income9,427,660 9,688,947 8,743,465 
Less: Allowance for credit losses149,140 156,968 83,968 
Loans, net9,278,520 9,531,979 8,659,497 
Interest receivable54,831 56,718 46,839 
Premises and equipment, net162,059 164,049 165,408 
Other real estate owned
553 623 552 
Goodwill765,842 765,842 765,842 
Other intangible assets, net26,734 28,745 35,458 
Other assets382,154 425,391 346,275 
Total assets$16,584,779 $16,233,424 $14,079,524 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing$6,913,214 $6,897,054 $5,328,146 
Interest-bearing6,956,648 6,703,206 5,356,562 
Total deposits13,869,862 13,600,260 10,684,708 
FHLB advances7,414 7,427 953,469 
Securities sold under agreements to repurchase73,859 26,966 64,437 
Subordinated debentures35,092 35,139 35,277 
Other liabilities250,945 261,651 181,671 
Total liabilities14,237,172 13,931,443 11,919,562 
Commitments and contingent liabilities
Shareholders’ equity:
December 31,September 30,December 31,
202020202019
(in thousands)
Preferred stock (no par value)
Authorized shares2,000 2,000 2,000 
Common stock (no par value)
Authorized shares115,000 115,000 115,000 
Issued73,782 73,797 73,577 1,660,998 1,658,203 1,650,753 
Outstanding71,598 71,613 72,124 
Retained earnings575,248 537,011 519,676 
Accumulated other comprehensive income182,195 177,601 40,367 
Treasury stock at cost2,184 2,184 1,453 (70,834)(70,834)(50,834)
Total shareholders’ equity2,347,607 2,301,981 2,159,962 
Total liabilities and shareholders’ equity$16,584,779 $16,233,424 $14,079,524 

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CONSOLIDATED STATEMENTS OF INCOME
Columbia Banking System, Inc.Three Months EndedTwelve Months Ended
UnauditedDecember 31,September 30,December 31,December 31,December 31,
20202020201920202019
Interest Income(in thousands except per share amounts)
Loans$107,402 $105,739 $110,384 $426,003 $448,041 
Taxable securities23,045 19,102 20,074 81,578 69,864 
Tax-exempt securities2,668 2,340 2,498 9,567 10,735 
Deposits in banks181 203 153 661 1,312 
Total interest income133,296 127,384 133,109 517,809 529,952 
Interest Expense
Deposits1,626 2,005 5,809 9,367 22,146 
FHLB advances and Federal Reserve Bank ("FRB") borrowings73 166 1,899 6,264 11,861 
Subordinated debentures467 468 467 1,871 1,871 
Other borrowings18 19 117 196 669 
Total interest expense2,184 2,658 8,292 17,698 36,547 
Net Interest Income131,112 124,726 124,817 500,111 493,405 
Provision (recapture) for credit losses(4,700)7,400 1,614 77,700 3,493 
Net interest income after provision (recapture) for credit losses135,812 117,326 123,203 422,411 489,912 
Noninterest Income
Deposit account and treasury management fees6,481 6,658 8,665 27,019 35,695 
Card revenue3,497 3,834 3,767 13,928 15,198 
Financial services and trust revenue3,349 3,253 3,191 12,830 12,799 
Loan revenue7,960 6,645 3,625 24,802 13,465 
Bank owned life insurance1,619 1,585 1,650 6,418 6,294 
Investment securities gains, net36 — — 16,710 2,132 
Other620 497 909 2,793 11,598 
Total noninterest income23,562 22,472 21,807 104,500 97,181 
Noninterest Expense
Compensation and employee benefits53,704 55,133 54,308 209,722 212,867 
Occupancy9,270 8,734 9,010 36,013 35,176 
Data processing4,566 4,510 4,792 19,370 19,164 
Legal and professional fees3,573 3,000 4,835 12,158 21,645 
Amortization of intangibles2,011 2,193 2,450 8,724 10,479 
Business and Occupation ("B&O") taxes1,543 1,559 1,234 4,970 5,846 
Advertising and promotion1,644 680 1,329 4,466 4,925 
Regulatory premiums1,062 826 18 2,956 1,920 
Net cost (benefit) of operation of other real estate owned33 (160)(10)(315)(692)
Other6,894 8,640 9,012 36,455 34,152 
Total noninterest expense84,300 85,115 86,978 334,519 345,482 
Income before income taxes75,074 54,683 58,032 192,392 241,611 
Provision for income taxes16,774 9,949 11,903 38,148 47,160 
Net Income$58,300 $44,734 $46,129 $154,244 $194,451 
Earnings per common share
Basic$0.82 $0.63 $0.64 $2.17 $2.68 
Diluted$0.82 $0.63 $0.64 $2.17 $2.68 
Dividends declared per common share - regular$0.28 $0.28 $0.28 $1.12 $1.12 
Dividends declared per common share - special— — — 0.22 0.28 
Dividends declared per common share - total$0.28 $0.28 $0.28 $1.34 $1.40 
Weighted average number of common shares outstanding70,732 70,726 71,238 70,835 71,999 
Weighted average number of diluted common shares outstanding
70,838 70,762 71,310 70,880 72,032 
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FINANCIAL STATISTICS
Columbia Banking System, Inc.Three Months EndedTwelve Months Ended
UnauditedDecember 31,September 30,December 31,December 31,December 31,
20202020201920202019
Earnings(dollars in thousands except per share amounts)
Net interest income$131,112 $124,726 $124,817 $500,111 $493,405 
Provision (recapture) for credit losses$(4,700)$7,400 $1,614 $77,700 $3,493 
Noninterest income$23,562 $22,472 $21,807 $104,500 $97,181 
Noninterest expense$84,300 $85,115 $86,978 $334,519 $345,482 
Net income$58,300 $44,734 $46,129 $154,244 $194,451 
Per Common Share
Earnings (basic)$0.82 $0.63 $0.64 $2.17 $2.68 
Earnings (diluted)$0.82 $0.63 $0.64 $2.17 $2.68 
Book value$32.79 $32.14 $29.95 $32.79 $29.95 
Tangible book value per common share (1)$21.72 $21.05 $18.84 $21.72 $18.84 
Averages
Total assets$16,477,246 $15,965,485 $13,750,840 $15,401,219 $13,341,024 
Interest-earning assets$15,010,392 $14,492,435 $12,231,779 $13,916,611 $11,837,633 
Loans$9,533,655 $9,744,336 $8,742,246 $9,411,213 $8,612,478 
Securities, including equity securities and FHLB stock$4,765,158 $3,948,041 $3,453,554 $3,982,918 $3,167,112 
Deposits$13,864,027 $13,318,485 $10,959,434 $12,512,255 $10,523,687 
Interest-bearing deposits$6,873,405 $6,527,695 $5,610,850 $6,208,058 $5,383,746 
Interest-bearing liabilities$6,954,287 $6,659,119 $6,058,319 $6,626,825 $5,923,818 
Noninterest-bearing deposits$6,990,622 $6,790,790 $5,348,584 $6,304,197 $5,139,941 
Shareholders’ equity$2,311,070 $2,293,771 $2,170,879 $2,263,276 $2,116,642 
Financial Ratios
Return on average assets1.42 %1.12 %1.34 %1.00 %1.46 %
Return on average common equity10.09 %7.80 %8.50 %6.82 %9.19 %
Return on average tangible common equity (1)15.79 %12.41 %14.05 %10.99 %15.47 %
Average equity to average assets14.03 %14.37 %15.79 %14.70 %15.87 %
Shareholders' equity to total assets14.16 %14.18 %15.34 %14.16 %15.34 %
Tangible common shareholders’ equity to tangible assets (1)9.85 %9.76 %10.23 %9.85 %10.23 %
Net interest margin (tax equivalent)3.52 %3.47 %4.11 %3.65 %4.24 %
Efficiency ratio (tax equivalent) (2)53.70 %56.95 %58.34 %54.50 %57.52 %
Operating efficiency ratio (tax equivalent) (1)53.03 %56.33 %58.07 %55.34 %57.64 %
Noninterest expense ratio2.05 %2.13 %2.53 %2.17 %2.59 %
December 31,September 30,December 31,
Period-end202020202019
Total assets$16,584,779 $16,233,424 $14,079,524 
Loans, net of unearned income$9,427,660 $9,688,947 $8,743,465 
Allowance for credit losses$149,140 $156,968 $83,968 
Securities, including equity securities and FHLB stock$5,233,839 $4,305,425 $3,794,262 
Deposits$13,869,862 $13,600,260 $10,684,708 
Shareholders’ equity$2,347,607 $2,301,981 $2,159,962 
Nonperforming assets
Nonaccrual loans
$34,806 $47,231 $33,060 
Other real estate owned (“OREO”) and other personal property owned (“OPPO”)
553 623 552 
Total nonperforming assets$35,359 $47,854 $33,612 
Nonperforming loans to period-end loans0.37 %0.49 %0.38 %
Nonperforming assets to period-end assets0.21 %0.29 %0.24 %
Allowance for credit losses to period-end loans1.58 %1.62 %0.96 %
Net loan charge-offs (for the three months ended)$3,128 $1,978 $306 
__________
(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.
15


QUARTERLY FINANCIAL STATISTICS
Columbia Banking System, Inc.Three Months Ended
UnauditedDecember 31,September 30,June 30,March 31,December 31,
20202020202020202019
Earnings(dollars in thousands except per share amounts)
Net interest income$131,112 $124,726 $121,851 $122,422 $124,817 
Provision (recapture) for credit losses$(4,700)$7,400 $33,500 $41,500 $1,614 
Noninterest income$23,562 $22,472 $37,259 $21,207 $21,807 
Noninterest expense$84,300 $85,115 $80,833 $84,271 $86,978 
Net income$58,300 $44,734 $36,582 $14,628 $46,129 
Per Common Share
Earnings (basic)$0.82 $0.63 $0.52 $0.20 $0.64 
Earnings (diluted)$0.82 $0.63 $0.52 $0.20 $0.64 
Book value$32.79 $32.14 $31.80 $30.93 $29.95 
Averages
Total assets$16,477,246 $15,965,485 $15,148,488 $13,995,632 $13,750,840 
Interest-earning assets$15,010,392 $14,492,435 $13,657,719 $12,487,550 $12,231,779 
Loans$9,533,655 $9,744,336 $9,546,099 $8,815,755 $8,742,246 
Securities, including equity securities and FHLB stock$4,765,158 $3,948,041 $3,591,693 $3,618,567 $3,453,554 
Deposits$13,864,027 $13,318,485 $12,220,415 $10,622,379 $10,959,434 
Interest-bearing deposits$6,873,405 $6,527,695 $6,037,107 $5,383,203 $5,610,850 
Interest-bearing liabilities$6,954,287 $6,659,119 $6,514,012 $6,375,931 $6,058,319 
Noninterest-bearing deposits$6,990,622 $6,790,790 $6,183,308 $5,239,176 $5,348,584 
Shareholders’ equity$2,311,070 $2,293,771 $2,254,349 $2,193,051 $2,170,879 
Financial Ratios
Return on average assets1.42 %1.12 %0.97 %0.42 %1.34 %
Return on average common equity10.09 %7.80 %6.49 %2.67 %8.50 %
Average equity to average assets14.03 %14.37 %14.88 %15.67 %15.79 %
Shareholders’ equity to total assets14.16 %14.18 %14.30 %15.77 %15.34 %
Net interest margin (tax equivalent)3.52 %3.47 %3.64 %4.00 %4.11 %
Period-end
Total assets$16,584,779 $16,233,424 $15,920,944 $14,038,503 $14,079,524 
Loans, net of unearned income$9,427,660 $9,688,947 $9,771,898 $8,933,321 $8,743,465 
Allowance for credit losses$149,140 $156,968 $151,546 $122,074 $83,968 
Securities, including equity securities and FHLB stock$5,233,839 $4,305,425 $3,723,492 $3,591,408 $3,794,262 
Deposits$13,869,862 $13,600,260 $13,131,477 $10,812,756 $10,684,708 
Shareholders’ equity$2,347,607 $2,301,981 $2,276,755 $2,213,602 $2,159,962 
Goodwill $765,842 $765,842 $765,842 $765,842 $765,842 
Other intangible assets, net$26,734 $28,745 $30,938 $33,148 $35,458 
Nonperforming assets
Nonaccrual loans$34,806 $47,231 $53,732 $47,647 $33,060 
OREO and OPPO553 623 747 510 552 
Total nonperforming assets$35,359 $47,854 $54,479 $48,157 $33,612 
Nonperforming loans to period-end loans0.37 %0.49 %0.55 %0.53 %0.38 %
Nonperforming assets to period-end assets0.21 %0.29 %0.34 %0.34 %0.24 %
Allowance for credit losses to period-end loans1.58 %1.62 %1.55 %1.37 %0.96 %
Net loan charge-offs$3,128 $1,978 $4,028 $5,026 $306 

16


LOAN PORTFOLIO COMPOSITION
Columbia Banking System, Inc.
UnauditedDecember 31,September 30,June 30,March 31,December 31,
20202020202020202019
Loan Portfolio Composition - Dollars(dollars in thousands)
Commercial loans:
Commercial real estate$4,062,313 $4,027,035 $4,032,643 $3,969,974 $3,945,853 
Commercial business3,597,968 3,836,009 3,859,513 3,169,668 2,989,613 
Agriculture779,627 850,290 845,950 754,491 765,371 
Construction268,663 273,176 304,015 308,186 361,533 
Consumer loans:
One-to-four family residential real estate683,570 665,432 692,837 690,506 637,325 
Other consumer35,519 37,005 36,940 40,496 43,770 
Total loans9,427,660 9,688,947 9,771,898 8,933,321 8,743,465 
Less: Allowance for credit losses(149,140)(156,968)(151,546)(122,074)(83,968)
Total loans, net$9,278,520 $9,531,979 $9,620,352 $8,811,247 $8,659,497 
Loans held for sale$26,481 $24,407 $28,803 $9,701 $17,718 

December 31,September 30,June 30,March 31,December 31,
Loan Portfolio Composition - Percentages20202020202020202019
Commercial loans:
Commercial real estate43.0 %41.5 %41.2 %44.5 %45.1 %
Commercial business38.2 %39.6 %39.5 %35.5 %34.2 %
Agriculture8.3 %8.8 %8.7 %8.4 %8.8 %
Construction2.8 %2.8 %3.1 %3.4 %4.1 %
Consumer loans:
One-to-four family residential real estate7.3 %6.9 %7.1 %7.7 %7.3 %
Other consumer0.4 %0.4 %0.4 %0.5 %0.5 %
Total loans100.0 %100.0 %100.0 %100.0 %100.0 %

17


DEPOSIT COMPOSITION
Columbia Banking System, Inc.
Unaudited
December 31,September 30,June 30,March 31,December 31,
20202020202020202019
Deposit Composition - Dollars(dollars in thousands)
Demand and other noninterest-bearing$6,913,214 $6,897,054 $6,719,437 $5,323,908 $5,328,146 
Money market2,780,922 2,708,949 2,586,376 2,313,717 2,322,644 
Interest-bearing demand1,433,083 1,322,618 1,274,058 1,131,874 1,150,437 
Savings1,169,721 1,109,155 1,035,723 905,931 882,050 
Interest-bearing public funds, other than certificates of deposit
656,273 635,980 623,496 405,810 301,203 
Certificates of deposit, less than $250,000201,805 204,578 210,357 214,449 218,764 
Certificates of deposit, $250,000 or more108,935 105,041 104,330 109,659 151,995 
Certificates of deposit insured by CDARS® 23,105 22,609 17,078 17,171 17,065 
Brokered certificates of deposit5,000 5,000 8,427 12,259 12,259 
Reciprocal money market accounts 577,804 589,276 552,195 377,980 300,158 
Subtotal13,869,862 13,600,260 13,131,477 10,812,758 10,684,721 
Valuation adjustment resulting from acquisition accounting
— — — (2)(13)
Total deposits$13,869,862 $13,600,260 $13,131,477 $10,812,756 $10,684,708 

December 31,September 30,June 30,March 31,December 31,
Deposit Composition - Percentages20202020202020202019
Demand and other noninterest-bearing49.8 %50.7 %51.2 %49.2 %49.9 %
Money market20.1 %19.9 %19.7 %21.4 %21.7 %
Interest-bearing demand10.3 %9.7 %9.7 %10.5 %10.8 %
Savings 8.4 %8.2 %7.9 %8.4 %8.3 %
Interest-bearing public funds, other than certificates of deposit
4.7 %4.7 %4.7 %3.8 %2.8 %
Certificates of deposit, less than $250,0001.5 %1.5 %1.6 %2.0 %2.0 %
Certificates of deposit, $250,000 or more0.8 %0.8 %0.8 %1.0 %1.4 %
Certificates of deposit insured by CDARS®0.2 %0.2 %0.1 %0.2 %0.2 %
Brokered certificates of deposit— %— %0.1 %0.1 %0.1 %
Reciprocal money market accounts 4.2 %4.3 %4.2 %3.4 %2.8 %
Total100.0 %100.0 %100.0 %100.0 %100.0 %

18


AVERAGE BALANCES AND RATES
Columbia Banking System, Inc.
Unaudited
Three Months EndedThree Months Ended
December 31, 2020December 31, 2019
Average
Balances		Interest
Earned / Paid		Average
Rate		Average
Balances		Interest
Earned / Paid		Average
Rate
(dollars in thousands)
ASSETS
Loans, net (1)(2)$9,533,655 $108,576 4.53 %$8,742,246 $111,754 5.07 %
Taxable securities 4,207,607 23,045 2.18 %3,011,521 20,074 2.64 %
Tax exempt securities (2)557,551 3,377 2.41 %442,033 3,163 2.84 %
Interest-earning deposits with banks711,579 181 0.10 %35,979 153 1.69 %
Total interest-earning assets15,010,392 135,179 3.58 %12,231,779 135,144 4.38 %
Other earning assets239,798 231,456 
Noninterest-earning assets1,227,056 1,287,605 
Total assets$16,477,246 $13,750,840 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Money market accounts$3,395,343 $732 0.09 %$2,649,404 $2,277 0.34 %
Interest-bearing demand1,359,222 293 0.09 %1,065,531 446 0.17 %
Savings accounts1,141,165 36 0.01 %888,895 47 0.02 %
Interest-bearing public funds, other than certificates of deposit
638,107 310 0.19 %616,938 2,413 1.55 %
Certificates of deposit339,568 255 0.30 %390,082 626 0.64 %
Total interest-bearing deposits6,873,405 1,626 0.09 %5,610,850 5,809 0.41 %
FHLB advances and FRB borrowings
7,420 73 3.91 %379,975 1,899 1.98 %
Subordinated debentures
35,115 467 5.29 %35,299 467 5.25 %
Other borrowings and interest-bearing liabilities
38,347 18 0.19 %32,195 117 1.44 %
Total interest-bearing liabilities6,954,287 2,184 0.12 %6,058,319 8,292 0.54 %
Noninterest-bearing deposits6,990,622 5,348,584 
Other noninterest-bearing liabilities221,267 173,058 
Shareholders’ equity2,311,070 2,170,879 
Total liabilities & shareholders’ equity
$16,477,246 $13,750,840 
Net interest income (tax equivalent)$132,995 $126,852 
Net interest margin (tax equivalent) 3.52 %4.11 %
__________
(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 $9.1 million and $2.1 million for the three months ended December 31, 2020 and 2019, respectively. The incremental accretion income on acquired loans was $1.3 million and $2.3 million for the three months ended December 31, 2020 and 2019, 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 $1.4 million for the three months ended December 31, 2020 and 2019, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $709 thousand and $665 thousand for the three months ended December 31, 2020 and 2019, respectively.

19


AVERAGE BALANCES AND RATES
Columbia Banking System, Inc.
Unaudited
 Three Months EndedThree Months Ended
 December 31, 2020September 30, 2020
Average
Balances		Interest
Earned / Paid		Average
Rate		Average
Balances		Interest
Earned / Paid		Average
Rate
(dollars in thousands)
ASSETS
Loans, net (1)(2)
$9,533,655 $108,576 4.53 %$9,744,336 $106,945 4.37 %
Taxable securities 4,207,607 23,045 2.18 %3,511,690 19,102 2.16 %
Tax exempt securities (2)557,551 3,377 2.41 %436,351 2,962 2.70 %
Interest-earning deposits with banks
711,579 181 0.10 %800,058 203 0.10 %
Total interest-earning assets15,010,392 135,179 3.58 %14,492,435 129,212 3.55 %
Other earning assets239,798 235,735 
Noninterest-earning assets1,227,056 1,237,315 
Total assets$16,477,246 $15,965,485 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Money market accounts$3,395,343 $732 0.09 %$3,200,407 $947 0.12 %
Interest-bearing demand1,359,222 293 0.09 %1,296,076 337 0.10 %
Savings accounts1,141,165 36 0.01 %1,072,472 36 0.01 %
Interest-bearing public funds, other than certificates of deposit
638,107 310 0.19 %621,786 397 0.25 %
Certificates of deposit339,568 255 0.30 %336,954 288 0.34 %
Total interest-bearing deposits6,873,405 1,626 0.09 %6,527,695 2,005 0.12 %
FHLB advances and FRB borrowings
7,420 73 3.91 %54,173 166 1.22 %
Subordinated debentures
35,115 467 5.29 %35,161 468 5.30 %
Other borrowings and interest-bearing liabilities
38,347 18 0.19 %42,090 19 0.18 %
Total interest-bearing liabilities6,954,287 2,184 0.12 %6,659,119 2,658 0.16 %
Noninterest-bearing deposits6,990,622 6,790,790 
Other noninterest-bearing liabilities221,267 221,805 
Shareholders’ equity2,311,070 2,293,771 
Total liabilities & shareholders’ equity
$16,477,246 $15,965,485 
Net interest income (tax equivalent)$132,995 $126,554 
Net interest margin (tax equivalent)3.52 %3.47 %
__________
(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 $9.1 million and $5.0 million for the three months ended December 31, 2020 and September 30, 2020, respectively. The incremental accretion on acquired loans was $1.3 million and $1.7 million the three months ended December 31, 2020 and September 30, 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 December 31, 2020 and September 30, 2020, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $709 thousand and $622 thousand for the three months ended December 31, 2020 and September 30, 2020, respectively.
20


AVERAGE BALANCES AND RATES
Columbia Banking System, Inc.
Unaudited
 Twelve Months EndedTwelve Months Ended
 December 31, 2020December 31, 2019
Average
Balances		Interest
Earned / Paid		Average
Rate		Average
Balances		Interest
Earned / Paid		Average
Rate
(dollars in thousands)
ASSETS
Loans, net (1)(2)$9,411,213 $430,923 4.58 %$8,612,478 $453,552 5.27 %
Taxable securities3,531,357 81,578 2.31 %2,703,423 69,864 2.58 %
Tax exempt securities (2)451,561 12,110 2.68 %463,689 13,589 2.93 %
Interest-earning deposits with banks522,480 661 0.13 %58,043 1,312 2.26 %
Total interest-earning assets13,916,611 $525,272 3.77 %11,837,633 $538,317 4.55 %
Other earning assets235,491 231,731 
Noninterest-earning assets1,249,117 1,271,660 
Total assets$15,401,219 $13,341,024 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Money market accounts $3,043,731 $4,381 0.14 %$2,591,303 $10,598 0.41 %
Interest-bearing demand 1,248,975 1,453 0.12 %1,064,145 1,676 0.16 %
Savings accounts1,022,388 153 0.01 %892,518 183 0.02 %
Interest-bearing public funds, other than certificates of deposit
544,109 2,003 0.37 %440,359 7,244 1.65 %
Certificates of deposit348,855 1,377 0.39 %395,421 2,445 0.62 %
Total interest-bearing deposits6,208,058 9,367 0.15 %5,383,746 22,146 0.41 %
FHLB advances and FRB borrowings
342,721 6,264 1.83 %470,082 11,861 2.52 %
Subordinated debentures
35,184 1,871 5.32 %35,368 1,871 5.29 %
Other borrowings and interest-bearing liabilities
40,862 196 0.48 %34,622 669 1.93 %
Total interest-bearing liabilities6,626,825 $17,698 0.27 %5,923,818 $36,547 0.62 %
Noninterest-bearing deposits6,304,197 5,139,941 
Other noninterest-bearing liabilities206,921 160,623 
Shareholders’ equity2,263,276 2,116,642 
Total liabilities & shareholders’ equity
$15,401,219 $13,341,024 
Net interest income (tax equivalent)$507,574 $501,770 
Net interest margin (tax equivalent)3.65 %4.24 %
__________
(1)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 $21.6 million and $8.4 million for the twelve months ended December 31, 2020 and 2019, respectively. The incremental accretion on acquired loans was $6.2 million and $9.1 million for the twelve months ended December 31, 2020 and 2019, respectively.
(2)Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $4.9 million and $5.5 million for the twelve months ended December 31, 2020 and 2019, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $2.5 million and $2.9 million for the twelve months ended December 31, 2020 and 2019, respectively.

21

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 EndedTwelve Months Ended
December 31,September 30,December 31,December 31,December 31,
20202020201920202019
Operating net interest margin non-GAAP reconciliation:(dollars in thousands)
Net interest income (tax equivalent) (1)$132,995 $126,554 $126,852 $507,574 $501,770 
Adjustments to arrive at operating net interest income (tax equivalent):
Incremental accretion income on acquired loans (2)(1,323)(1,665)(2,316)(6,154)(9,086)
Premium amortization on acquired securities606 701 1,204 3,409 6,020 
Interest reversals on nonaccrual loans146 393 209 2,000 1,671 
Operating net interest income (tax equivalent) (1)$132,424 $125,983 $125,949 $506,829 $500,375 
Average interest earning assets$15,010,392 $14,492,435 $12,231,779 $13,916,611 $11,837,633 
Net interest margin (tax equivalent) (1)3.52 %3.47 %4.11 %3.65 %4.24 %
Operating net interest margin (tax equivalent) (1)3.51 %3.46 %4.09 %3.64 %4.23 %

Three Months EndedTwelve Months Ended
December 31,September 30,December 31,December 31,December 31,
20202020201920202019
Operating efficiency ratio non-GAAP reconciliation:(dollars in thousands)
Noninterest expense (numerator A)$84,300 $85,115 $86,978 $334,519 $345,482 
Adjustments to arrive at operating noninterest expense:
Net benefit (cost) of operation of OREO and OPPO(32)160 10 324 714 
Loss on asset disposals— — — (224)(5)
Business and Occupation (“B&O”) taxes(1,543)(1,559)(1,234)(4,970)(5,846)
Operating noninterest expense (numerator B)$82,725 $83,716 $85,754 $329,649 $340,345 
Net interest income (tax equivalent) (1)$132,995 $126,554 $126,852 $507,574 $501,770 
Noninterest income23,562 22,472 21,807 104,500 97,181 
Bank owned life insurance tax equivalent adjustment430 422 439 1,706 1,673 
Total revenue (tax equivalent) (denominator A)$156,987 $149,448 $149,098 $613,780 $600,624 
Operating net interest income (tax equivalent) (1)$132,424 $125,983 $125,949 $506,829 $500,375 
Adjustments to arrive at operating noninterest income (tax equivalent):
Investment securities gain, net(36)— — (16,710)(2,132)
Gain on asset disposals(381)(247)(530)(675)(6,634)
Operating noninterest income (tax equivalent)23,575 22,647 21,716 88,821 90,088 
Total operating revenue (tax equivalent) (denominator B)$155,999 $148,630 $147,665 $595,650 $590,463 
Efficiency ratio (tax equivalent) (numerator A/denominator A)53.70 %56.95 %58.34 %54.50 %57.52 %
Operating efficiency ratio (tax equivalent) (numerator B/denominator B)
53.03 %56.33 %58.07 %55.34 %57.64 %
__________
(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, $1.8 million, and $2.0 million for the three months ended December 31, 2020, September 30, 2020, and December 31, 2019, respectively; and $7.5 million and $8.4 million for the twelve months ended December 31, 2020 and 2019, respectively.
(2) Beginning January 2020, incremental accretion income on purchased credit impaired loans is no longer presented separate from incremental accretion income on other acquired loans. Prior period amounts have been reclassified to conform with current period presentation.


22

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 EndedTwelve Months Ended
December 31,September 30,December 31,December 31,December 31,
20202020201920202019
Pre-tax, pre-provision income:(in thousands)
Income before income taxes$75,074 $54,683 $58,032 $192,392 $241,611 
Provision (recapture) for credit losses(4,700)7,400 1,614 77,700 3,493 
Pre-tax, pre-provision income$70,374 $62,083 $59,646 $270,092 $245,104 

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:

December 31,September 30,December 31,
202020202019
Tangible common equity ratio and tangible book value per common share non-GAAP reconciliation:
(dollars in thousands except per share amounts)
Shareholders’ equity (numerator A)$2,347,607 $2,301,981 $2,159,962 
Adjustments to arrive at tangible common equity:
Goodwill(765,842)(765,842)(765,842)
Other intangible assets, net(26,734)(28,745)(35,458)
Tangible common equity (numerator B)$1,555,031 $1,507,394 $1,358,662 
Total assets (denominator A)$16,584,779 $16,233,424 $14,079,524 
Adjustments to arrive at tangible assets:
Goodwill(765,842)(765,842)(765,842)
Other intangible assets, net(26,734)(28,745)(35,458)
Tangible assets (denominator B)$15,792,203 $15,438,837 $13,278,224 
Shareholders’ equity to total assets (numerator A/denominator A)14.16 %14.18 %15.34 %
Tangible common shareholders’ equity to tangible assets (numerator B/denominator B)9.85 %9.76 %10.23 %
Common shares outstanding (denominator C)71,598 71,613 72,124 
Book value per common share (numerator A/denominator C)$32.79 $32.14 $29.95 
Tangible book value per common share (numerator B/denominator C)$21.72 $21.05 $18.84 


23

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:

December 31,September 30,December 31,
202020202019
Allowance for credit losses to period-end loans ratio non-GAAP reconciliation:(dollars in thousands)
Allowance for credit losses ("ACL") (numerator)$149,140 $156,968 $83,968 
Total loans, net of unearned income (denominator A)9,427,660 9,688,947 8,743,465 
Less: PPP loans, net of unearned income (0% ACL)651,585 953,244 — 
Total loans, net of PPP loans (denominator B)$8,776,075 $8,735,703 $8,743,465 
ACL to period-end loans (numerator / denominator A)1.58 %1.62 %0.96 %
ACL to period-end loans, excluding PPP loans (numerator / denominator B)1.70 %1.80 %0.96 %

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 EndedTwelve Months Ended
December 31,September 30,December 31,December 31,December 31,
20202020201920202019
Return on average tangible common equity non-GAAP reconciliation:
(dollars in thousands)
Net income (numerator A)$58,300 $44,734 $46,129 $154,244 $194,451 
Adjustments to arrive at tangible income applicable to common shareholders:
Amortization of intangibles2,011 2,193 2,450 8,724 10,479 
Tax effect on intangible amortization(422)(461)(515)(1,832)(2,201)
Tangible income applicable to common shareholders (numerator B)$59,889 $46,466 $48,064 161,136 $202,729 
Average shareholders’ equity (denominator A)$2,311,070 $2,293,771 $2,170,879 2,263,276 $2,116,642 
Adjustments to arrive at average tangible common equity:
Average intangibles(793,510)(795,650)(802,446)(796,762)(806,358)
Average tangible common equity (denominator B)$1,517,560 $1,498,121 $1,368,433 $1,466,514 $1,310,284 
Return on average common equity (numerator A/denominator A) (1)
10.09 %7.80 %8.50 %6.82 %9.19 %
Return on average tangible common equity (numerator B/denominator B) (2)
15.79 %12.41 %14.05 %10.99 %15.47 %
__________
(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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