March 2024
Investor Presentation
2
Disclaimer
FORWARD-LOOKING STATEMENTS
This presentation includes forward-looking statements within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to various risk factors, including those set forth from time to time in our filings with the Securities and Exchange Commission (the "SEC"). You should not place undue reliance on forward-looking statements, and we undertake no obligation to update any such statements. Forward-looking statements can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects," "target," "projects," "outlook," "forecast," "will," "may," "could," "should," "can" and similar references to future periods. In this press release we make forward-looking statements about strategic and growth initiatives and the result of such activity. Risks that could cause results to differ from forward-looking statements we make include, without limitation: current and future economic and market conditions, including the effects of declines in housing and commercial real estate prices, high unemployment rates, continued inflation and any recession or slowdown in economic growth particularly in the western United States; economic forecast variables that are either materially worse or better than end of quarter projections and deterioration in the economy that could result in increased loan and lease losses, especially those risks associated with concentrations in real estate related loans; our ability to effectively manage problem credits; the impact of bank failures or adverse developments at or news developments concerning other banks on general investor sentiment regarding the liquidity and stability of banks; changes in interest rates that could significantly reduce net interest income and negatively affect asset yields and valuations and funding sources; changes in the scope and cost of FDIC insurance and other coverage; our ability to successfully implement efficiency and operational excellence initiatives; our ability to successfully develop and market new products and technology; changes in laws or regulations; any failure to realize the anticipated benefits of the merger when expected or at all; potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of the merger and integration of the companies; the effect of geopolitical instability, including wars, conflicts and terrorist attacks; and natural disasters and other similar unexpected events outside of our control. We also caution that the amount and timing of any future common stock dividends or repurchases will depend on the earnings, cash requirements and financial condition of Columbia, market conditions, capital requirements, applicable law and regulations (including federal securities laws and federal banking regulations), and other factors deemed relevant by Columbia's Board of Directors, and may be subject to regulatory approval or conditions.
NON-GAAP FINANCIAL MEASURES
In addition to results in accordance with GAAP, this presentation contains certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in the Appendix.
We believe presenting certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends, and our financial position. We utilize these measures for internal planning and forecasting purposes. We, as well as securities analysts, investors, and other interested parties, also use these measures to compare peer company operating performance. We believe that our presentation and discussion, together with the accompanying reconciliations, provide a complete understanding of factors and trends affecting our business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitution for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.
REVERSE ACQUISITION METHOD OF ACCOUNTING
On February 28, 2023, Columbia Banking System, Inc. ("Columbia", "we" or "our") completed its merger with Umpqua Holdings Corporation ("UHC"), combining the two premier banks in the Northwest to create one of the largest banks headquartered in the West (the "merger"). Columbia's financial results for any periods ended prior to February 28, 2023 reflect UHC results only on a standalone basis as the merger was treated as a reverse merger with UHC as the accounting acquirer. In addition, Columbia's reported financial results for the first quarter of 2023 reflect UHC financial results only until the closing of the merger after the close of business on February 28, 2023. As a result of these two factors, Columbia's financial results for each of the quarters of 2023 and the year ended December 31, 2023 may not be directly comparable to prior reported periods. The number of shares issued and outstanding, earnings per share, additional paid-in capital, and all references to share quantities or metrics of Columbia have been retrospectively restated to reflect the equivalent number of shares issued in the merger as the merger was treated as a reverse merger with UHC as the accounting acquirer. Under the reverse acquisition method of accounting, the assets and liabilities of Columbia as of February 28, 2023 ("historical Columbia") were recorded at their respective fair values.
3
Columbia Banking System: A Franchise Like No Other
Columbia at a Glance | West-Focused Regional Powerhouse | Business Bank of Choice | |
Ticker | COLB | ■ | In-market,relationship-based commercial |
banking |
Corporate
of December 31, 2023
Headquarters | Tacoma, Washington |
Offices | 300 in eight states |
Assets | $52 billion |
Loans | $37 billion |
Deposits | $42 billion |
- Attractive footprint in high-growth markets
- Full suite of deposit products and services with contemporary digital capabilities
- Expertise in treasury management, foreign exchange, and global cash management
- Expanding small business platform
- Comprehensive and growing wealth and trust businesses
Financials as
Common Equity | 9.6 % | ■ Niche verticals include diverse agricultural, |
Tier 1 Capital Ratio | ||
healthcare, tribal banking, and equipment | ||
Total Capital Ratio | 11.9 % | finance |
4
Why Columbia?
- Community banking at scale business model drives granular, low-cost core deposit base
- Opportunity to gain share in California and growing metros in the West while increasing density in the Northwest
- Solid capital generation supports long-term organic growth and return to shareholders
- Strong credit quality supported by diversified, well-structured, and conservatively underwritten loan portfolio
- Compelling culture with deep community ties that is reflected in our proven ability to attract and retain top banking talent
- Scaled western franchise that is difficult to replicate provides scarcity value
5
Operating in Large, Attractive Western Markets
Foothold in the West(1)
(population in millions)
Northwest
4.1mm 2.5mm 0.8mm
Seattle, WA | Portland, OR | Boise, ID |
California and Nevada
12.9mm 2.4mm 2.4mm
Los Angeles, CA | Sacramento, CA | Las Vegas, NV |
Other West
5.1mm 3.0mm 1.3mm
Phoenix, AZ | Denver, CO | Salt Lake City, UT |
Top Regional Bank in the NW (WA, OR, ID)(1)
Total | Northwest | ||||
Rank | Bank (HQ State) | Assets ($B) | Deposits ($B) | Mkt Shr | |
1 | Bank of America (NC) | $3,180 | $62 | 17.3 % | |
2 | U.S. Bancorp (MN) | 663 | 51 | 14.4 % | |
3 | JPMorgan (NY) | 3,875 | 47 | 13.3 % | |
4 | Wells Fargo (CA) | 1,932 | 42 | 11.7 % | |
5 | COLB (WA) | 52 | 33 | 9.3 % | |
6 | KeyCorp (OH) | 188 | 18 | 5.0 % | |
7 | WaFd (WA) | 23 | 12 | 3.3 % | |
8 | Banner Corp. (WA) | 16 | 11 | 3.0 % |
5th Largest Bank in our Footprint(1)
Total | Eight-State Footprint | ||||
Rank | Bank (HQ State) | Assets ($B) | Deposits ($B) | Mkt Shr | |
1 | Wells Fargo (CA) | $1,932 | $459 | 16.7 % | |
2 | Zions (UT) | 87 | 61 | 2.2 % | |
3 | Western Alliance (AZ) | 71 | 51 | 1.9 % | |
4 | East West (CA) | 70 | 49 | 1.8 % | |
5 | COLB (WA) | 52 | 41 | 1.5 % | |
6 | Banc of California (CA) | 39 | 29 | 1.1 % | |
7 | FirstBank (CO) | 28 | 24 | 0.9 % | |
8 | Cathay General (CA) | 23 | 15 | 0.6 % |
Established Presence in Attractive Markets(1)
- Our market share in the Northwest stands with large national and super regional banks, at over 9%
- Our foothold in top western markets and scaled franchise provide us the opportunity to increase share in California, Arizona, Colorado, and Utah
- Projected population growth of 3.2% over the next five years in our collective footprint exceeds the national average of 2.4%
- Current household income in our footprint is 109% of the national average, and the five-year growth rate of 10.4% compares favorably to 10.1% nationally
- Population, household income, asset, deposit, and market share data sourced from S&P Global Market Intelligence. Assets as of December 31, 2023; deposits and market share as of June 30, 2023 and adjusted by S&P to include acquisitions announced or closed subsequent to that date.
6
Opportunity to Increase Density and Gain Share throughout Our Footprint
Improve Density in the Northwest | Expand Footprint in California | Broaden Presence in Other Western Markets |
MSA(1) | Population | Deposits ($mm) | COLB | |
(000s) | Market | COLB | Mkt Shr | |
Seattle | 4,107 | $143,835 | $7,561 | 5.2 % |
Portland | 2,537 | 67,109 | 5,673 | 8.5 % |
Boise | 835 | 16,886 | 189 | 1.1 % |
Spokane | 605 | 12,868 | 3,040 | 23.6 % |
MSA(1) | Population | Deposits ($mm) | COLB | |
(000s) | Market | COLB | Mkt Shr | |
Los Angeles | 12,869 | $684,438 | $848 | 0.1 % |
Sacramento | 2,440 | 94,707 | 1,934 | 2.0 % |
San Francisco | 4,592 | 458,774 | 525 | 0.1 % |
San Diego | 3,298 | 105,112 | 16 | < 0.1% |
MSA(1) | Population | Deposits ($mm) | COLB | |
(000s) | Market | COLB | Mkt Shr | |
Phoenix | 5,120 | $166,520 | Opportunity to add | |
Denver | 3,031 | 114,538 | ||
targeted retail | ||||
locations to support | ||||
Salt Lake City | 1,284 | 69,725 | ||
existing commercial | ||||
banking presence | ||||
Las Vegas | 2,368 | 78,063 | ||
(1) Population, deposit, and market share data sourced from S&P Global Market Intelligence. Deposits and market share as of June 30, 2023 and adjusted by S&P to include acquisitions announced or closed subsequent to that date.
7
Performance Improvement: Near-Term Initiatives
1H 2024 Actions to Improve Operational Efficiency
- Ongoing operational review to improve efficiency throughout the organization is expected to result in a Q4 2024 core expense run rate of $965 million to $985 million annualized(1)
- Closed five branches in January to fund the opening of new retail locations in existing commercial banking de novo markets
- Actively managing and selectively reducing deposit offering rates
- Continued evaluation of wholesale funding options to optimize rate while managing duration risk
- Additional product bundling and marketing designed to drive higher levels of new customer acquisition
- Modified underwriting and pricing for FinPac as well as rationalizing its cost structure in light of the current operating environment
- Excludes CDI amortization and non-operating expense, as detailed in the "Outlook" slide and in "Appendix Non-GAAP Reconciliation" slides later in this presentation.
Performance Improvement: Longer-Term
Opportunity to Strategically Reposition Balance Sheet Over Time
8
■ | Our relationship-based lending verticals and a |
strong core deposit base remain the cornerstone | |
of our franchise. | |
■ | Past transactional lending and the wholesale |
$37B
Relationship Lending
- Other Core Banking Franchise
$9B Securities
$2B Single-Family
$4B Multifamily
Assets
Relationship
banking supports strong core franchise value
Opportunity
to reduce
transactional
assets and
liabilities
$45B
Core Deposit Franchise & Capital
$3B Brokered Deposits
$4B Borrowings
Liabilities + Equity
sources that fund these assets have muted the |
balance sheet's profitability, but they have not |
diluted the quality of our core franchise. |
■ Current interest rates make outright asset sales |
unattractive given a lengthy payback period. |
However, longer term, a decline in rates will |
provide the flexibility to minimize or eliminate |
the drag on earnings.(1) |
- While asset classes, like transactional loans within our multifamily and single-family portfolios, have been identified as potential sources for asset sales if interest rates were to decline, assets have not been identified for sale.
FINANCIAL HIGHLIGHTS
Full Year 2023 Highlights
Reported | Operating(1) |
$349 million | $521 million |
Net Income | Net Income |
$684 million | $910 million |
Pre-Provision Net Revenue(1) | Pre-Provision Net Revenue |
$1.78 | $2.66 |
Earnings-per-Share - Diluted(2) | Earnings-per-Share - Diluted(2) |
0.70% | 1.05% |
Return on Assets | Return on Assets |
1.38% | 1.84% |
PPNR Return on Assets(1) | PPNR Return on Assets |
10
- Completed merger with Umpqua Holdings Corporation
- Merger closed February 28, 2023
- Systems conversions completed March 20, 2023
- Consolidated 47 branches in 2023 (and 52 total with five closed in January 2024)
- Realized $143 million in annualized cost savings, net of franchise reinvestment to support deeper relationships with existing customers and new customer acquisition
- Upgraded digital capabilities, including business online banking and remote deposit capture
- Made numerous enhancements to our customer-focused systems, including our wealth management platform
7.81% | 11.67% |
Return on Equity | Return on Equity |
11.46% | 17.13% |
Return on Tangible | Return on Tangible |
Common Equity(1) | Common Equity |
- Organically generated capital increased regulatory ratios post merger closing
- Common equity tier 1 ratio increased to 9.6% as of December 31, 2023 from 8.9% as of March 31, 2023
- Total risk-based capital ratio increased to 11.9% as of December 31, 2023 from 10.9% as of March 31, 2023
- All items in this "Operating" column are non-GAAP financial measures. A reconciliation to the comparable GAAP measurement for each is provided in the appendix of this slide presentation.
- Periods prior to February 28, 2023, have been restated as a result of the adjustment to common shares outstanding based on the exchange ratio from the merger of 0.5958.
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Columbia Banking System Inc. published this content on 04 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 March 2024 23:42:05 UTC.