COLUMBIA BANKING SYSTEM INC
For the period ended Mar 31, 2025. Filed May 6, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 6, 2025
COLB$30.48+0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-05.
0000887343-24-000262
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-06.
0000887343-25-000166
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 196 previous paragraphs and 194 current paragraphs.
98 unchanged; 60 reworded; 34 added; 36 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 24 previous and 24 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (34)
Current report
•risks related to the proposed Merger with Pacific Premier including, among others, (i) failure to complete the Merger or unexpected delays related to the Merger or either party’s inability to obtain regulatory, shareholder, or stockholder approvals, or satisfy other closing conditions required to complete the Merger, (ii) regulatory approvals resulting in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction, (iii) certain restrictions during the pendency of the Merger that may impact the parties’ ability to pursue certain business opportunities or strategic transactions, (iv) diversion of management’s attention from ongoing business operations and opportunities, (v) cost savings and any revenue or expense synergies from the Merger may not be fully realized or may take longer than anticipated to be realized, (vi) deposit attrition, customer or employee loss, and/or revenue loss as a result of the announcement of the Merger, (viii) expenses related to the Merger being greater than expected, and (ix) shareholder litigation that could prevent or delay the closing of the Merger or otherwise negatively impact the Company’s business and operations;
Current report
•the impact of proposed or imposed tariffs by the U.S. government and retaliatory tariffs proposed or imposed by U.S. trading partners that could have an adverse impact on customers;
Current report
Recent Developments
Current report
•On April 23, 2025, we announced that we and Pacific Premier, the parent company of Pacific Premier Bank, National Association, entered into the Merger Agreement, pursuant to which Columbia will acquire Pacific Premier in an all-stock transaction. Pursuant to the terms of the Merger Agreement, Pacific Premier stockholders will receive 0.9150 of a share of Columbia common stock for each Pacific Premier share they own. The combined company will have approximately $70 billion in assets and will be a market leader in the largest banking markets within the Western U.S. The acquisition is expected to close in the second half of 2025, subject to satisfaction of customary closing conditions, including receipt of regulatory, shareholder, and stockholder approvals. The combination is a natural and strategic fit that supports our Business Bank of Choice operating strategy. Pacific Premier’s footprint accelerates and strengthens Columbia’s competitive position in Southern California, and it brings new products and services that enhance our offerings and elevate our ability to provide needs-based solutions for our existing and prospective customers.
Current report
•Earnings per diluted common share was $0.41 for the three months ended March 31, 2025, as compared to $0.68 for the three months ended December 31, 2024. The decrease for the three months ended March 31, 2025, as compared to the prior period, was primarily driven by an increase in non-interest expense, related to a $55.0 million accrual for a legal settlement and $14.6 million in severance expense.
Current report
•Net interest margin, on a tax-equivalent basis, was 3.60% for the three months ended March 31, 2025, as compared to 3.64% for the three months ended December 31, 2024, due to lower earning asset yields which were only partially offset by lower funding costs. Net interest income was $425.0 million for the three months ended March 31, 2025, a decrease of $12.4 million compared to the three months ended December 31, 2024, due to the same factors that impacted net interest margin. Lower accretion income, primarily related to investment securities income, accounted for the majority of the decline in net interest income.
Current report
•Non-interest expense was $340.1 million for the three months ended March 31, 2025, as compared to $266.6 million for the three months ended December 31, 2024. The increase is mainly related to a $55.0 million accrual for a legal settlement and $14.6 million in severance expense recorded in merger and restructuring expense.
Current report
•Net interest margin, on a tax-equivalent basis, was 3.60% for the three months ended March 31, 2025, as compared to 3.52% for the three months ended March 31, 2024. The increase for the three months ended March 31, 2025 compared to the prior year period was due to lower funding costs, which were partially offset by lower earning asset yields due to fluctuating interest rates and product repricing between the periods. A favorable balance sheet mix shift to lower-cost customer deposits from higher-cost wholesale funding sources between periods contributed positively to net interest margin. Net interest income increased $1.6 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, due to the same factors that impacted net interest margin, partially offset by slight contraction in the balance of average interest-earning assets between periods.
Current report
•Non-interest expense was $340.1 million for the three months ended March 31, 2025, as compared to $287.5 million for the three months ended March 31, 2024. The increase for the three months ended March 31, 2025 is mainly related to a $55.0 million accrual for a legal settlement and $14.6 million in severance expense recorded in merger and restructuring expense. This increase was partially offset by a decrease in salaries and employee benefits, as a result of operational efficiency activities undertaken in 2024.
Current report
•Total loans and leases were $37.6 billion as of March 31, 2025, a decrease of $64.8 million, as compared to December 31, 2024. The decrease in total loans and leases was primarily in commercial and residential loan balances, partially offset by an increase in commercial real estate balances. The contraction was driven by loan payoffs and slower origination volume, offset by draws in CRE construction loans and growth in owner-occupied term CRE balances.
Current report
•The ACL was $438.9 million as of March 31, 2025, a decrease of $1.9 million compared to December 31, 2024. The decrease in the ACL reflects credit migration trends, changes in the economic assumptions used in credit models, and a recalibration of the commercial real estate, residential mortgage, and home equity line of credit CECL models in the first quarter of 2025.
Current report
For the three months ended March 31, 2025, the Company had net income of $86.6 million, compared to net income of $124.1 million for the same period in the prior year. The decrease in net income was mainly attributable to increases in non-interest expense, partially offset by an increase in non-interest income. The $52.6 million increase in non-interest expense was primarily driven by a $55.0 million accrual for a legal settlement and $14.6 million in severance expense recorded in merger and restructuring expense, partially offset by decreases in salaries and employee benefits related to operational efficiencies gained in 2024. The increase of $16.0 million in non-interest income was primarily driven by fluctuations in the fair value adjustments and MSR hedging activity driven by changes in interest rates during the periods.
Current report
Net interest income for the three months ended March 31, 2025 was $425.0 million, a decrease of $12.4 million compared to the three months ended December 31, 2024. The decrease was driven by a $29.3 million decrease in interest income, partially offset by lower funding costs, due in part to the reductions in the federal funds rate that occurred in the last quarter of 2024. Lower accretion income related to investment securities income contributed to the decline in net interest income.
Current report
The net interest margin (net interest income as a percentage of average interest-earning assets) on a fully tax-equivalent basis was 3.60% for the three months ended March 31, 2025, as compared to 3.64% for the three months ended December 31, 2024. Lower earning asset yields were only partially offset by lower funding costs. Lower accretion income contributed to a decline in the yield on investment securities. The yield on loans and leases for the three months ended March 31, 2025 was 5.92%, a decrease of 13 basis points compared to the three months ended December 31, 2024. The cost of interest-bearing liabilities for the three months ended March 31, 2025 was 2.80%, a decrease of 18 basis points compared to the three months ended December 31, 2024.
Current report
Net interest income for the three months ended March 31, 2025 was $425.0 million, an increase of $1.6 million compared to the three months ended March 31, 2024. The change in net interest income was mainly due to lower interest rates, driven by the reductions in the federal funds rate in the latter half of 2024, which resulted in lower rates on interest-bearing liabilities, almost completely offset by lower yields on interest-earning assets for the three months ended March 31, 2025 compared to the prior year period.
Current report
The net interest margin on a fully tax-equivalent basis was 3.60% for the three months ended March 31, 2025, as compared to 3.52% for the three months ended March 31, 2024. The increase for the three months ended March 31, 2025 compared to the prior year period was due to lower funding costs, partially offset by lower earning yields. A favorable balance sheet mix shift to lower-cost customer deposits from higher-cost wholesale funding sources between periods contributed positively to net interest margin. The yield on loans and leases for the three months ended March 31, 2025 and 2024 was 5.92% and 6.13%, respectively, a decrease of 21 basis points, primarily due to the declining rate environment. The cost of interest-bearing liabilities was 2.80% for the three months ended March 31, 2025, compared to 3.25% for the three months ended March 31, 2024, a decrease of 45 basis points, due to the reductions in the federal funds rate, the favorable balance sheet mix shift, and the positive impact of a comprehensive review related to how we evaluate and approve deposit pricing that took place during the first quarter of 2024.
Current report
The Federal Reserve lowered the target range for the federal funds rate by 0.50% in September 2024 and an additional 0.25% in both November and December 2024. During the March 2025 meeting, the Federal Reserve maintained the target rate at 4.25%-4.50%. The balance sheet remained in a slightly liability-sensitive position as of March 31, 2025. We expect customer deposit balance trends to be a driver of net interest margin performance, as we continue to target a lower funding contribution from wholesale sources, like FHLB Advances and brokered deposits.
Current report
The Company had a $27.4 million provision for credit losses for the three months ended March 31, 2025, as compared to $17.1 million for the three months ended March 31, 2024. The increase was primarily driven by credit migration trends and changes in the economic forecasts used in credit models. As an annualized percentage of average outstanding loans and leases, the provision for credit losses recorded for the three months ended March 31, 2025 was 0.29%, as compared to 0.18% for the three months ended March 31, 2024.
Current report
Gain (loss) on certain loans held for investment, at fair value for the three months ended March 31, 2025, as compared to the three months ended December 31, 2024, increased due to interest rate fluctuations between periods that resulted in a gain on the fair value of certain loans held for investment of $7.0 million, as compared to a loss of $7.4 million for the prior quarter.
Current report
Other income for the three months ended March 31, 2025, as compared to the three months ended December 31, 2024, decreased primarily due to interest rate fluctuations between periods that resulted in an unfavorable change of $5.1 million in swap derivatives due to a loss in the current quarter compared to a gain in the prior quarter.
Current report
Residential mortgage banking revenue increased during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The variance was driven by the MSR hedge gain of $3.2 million during the three months ended March 31, 2025, as compared to a loss of $4.3 million in the prior year period, partially offset by interest rate fluctuations, which decreased the fair value of the MSR asset during the three months ended March 31, 2025. Additionally, higher closed loan volume resulted in origination and sale income of $4.4 million during the three months ended March 31, 2025, as compared to $2.9 million in the prior year.
Current report
Merger and restructuring expense increased during the three months ended March 31, 2025, as compared to the three months ended December 31, 2024, mainly due to an increase of $14.6 million in severance expense in the current period.
Current report
Legal settlement increased during the three months ended March 31, 2025, as compared to the three months ended December 31, 2024, due to the $55.0 million accrual related to a legal settlement. Refer to Note 7 –Commitments and Contingencies for further information.
Current report
Merger and restructuring expense increased during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, mainly due to an increase of $14.6 million in severance expense, which was partially offset by lower merger-related expenses as compared to the three months ended March 31, 2024.
Current report
Legal settlement increased during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, due to the $55.0 million accrual related to a legal settlement reached in the first quarter of 2025. Refer to Note 7 –Commitments and Contingencies for further information.
Current report
Loan Origination/Risk Management
Current report
The Bank has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.
Current report
The Bank maintains an independent loan review department that reviews and validates the credit risk program on a periodic basis. Results of these reviews are presented to management and the appropriate committees of our Board of Directors. The loan review process evaluates that the risk identification and assessment decisions made by lenders and credit personnel are in line with our policies and procedures.
Current report
For a more comprehensive discussion of our loan and lease underwriting criteria, refer to discussion in the "Loans and Leases" section of Management's Discussion and Analysis included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.
Current report
The Bank manages asset quality and controls credit risk through diversification of the loan and lease portfolio and the application of policies designed to promote sound underwriting and loan and lease monitoring practices. The Bank's Credit Quality Administration department is charged with monitoring asset quality, establishing credit policies and procedures, and enforcing the consistent application of these policies and procedures across the Bank. Reviews of non-performing, past due loans and leases, and larger credits, designed to identify potential charges to the ACL, and to determine the adequacy of the ACL, are conducted on an ongoing basis. These reviews consider such factors as the financial strength of borrowers, the value of the applicable collateral, loan and lease loss experience, estimated loan and lease losses, growth in the loan and lease portfolio, prevailing economic conditions, and other factors.
Current report
The ACL represents management's best estimate of lifetime credit losses for loans and leases and unfunded commitments. The ACL totaled $438.9 million as of March 31, 2025, a decrease of $1.9 million from $440.8 million as of December 31, 2024. The changes in the ACL estimate during the three months ended March 31, 2025 reflect credit migration trends, changes in the economic assumptions used in the credit models, and a recalibration of the commercial real estate, residential mortgage, and home equity line of credit CECL models in the first quarter of 2025.
Current report
Total deposits were $42.2 billion as of March 31, 2025, an increase of $497.0 million as compared to December 31, 2024. The increase was due to customer deposit growth, driven by focused campaigns run by our branch network and other commercial customer balance growth.
Current report
(1)Represents estimated uninsured deposits as calculated based on the methodologies and assumptions used for the Bank's Call Report less intercompany deposits, which are eliminated through consolidation, of $8.4 million and $5.2 million as of March 31, 2025 and December 31, 2024, respectively.
Current report
The following table presents total deposits by the categories shown below as of the dates presented:
Removed paragraphs (36)
Previous report
•the possibility that the anticipated benefits of the Merger are not realized when expected, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where we do business;
Previous report
•potential adverse reactions or changes to business or employee relationships, including those resulting from the integration of the two companies and banks;
Previous report
•Net interest margin, on a tax-equivalent basis, was 3.56% for the three months ended September 30, 2024, unchanged from the three months ended June 30, 2024. A favorable balance sheet funding mix shift into lower-cost deposits and a slight increase in loan yields offset a lower yield on securities, contributing to margin stability between periods.
Previous report
•Non-interest expense was $271.4 million for the three months ended September 30, 2024, as compared to $279.2 million for the three months ended June 30, 2024. The decrease is mainly due to a decrease in restructuring expenses, partially offset by an increase in salaries and employee benefits, as prior quarter's expense was reduced by a $7.7 million reversal of a compensation-related accrual. Due to staff reductions that took place in the second quarter, salaries and wages were down by $5.7 million in the third quarter related to the enterprise-wide evaluation of our operations, which resulted in consolidated positions and simplified reporting and organizational structures, which partially offset the impact of the second quarter's accrual reversal that did not repeat in the current quarter.
Previous report
•Earnings per diluted common share was $1.87 for the nine months ended September 30, 2024, as compared to $1.33 for the nine months ended September 30, 2023. The increase for the nine months ended September 30, 2024, as compared to the prior year period, was primarily driven by a decrease in the provision for credit losses, due to the initial provision for historical Columbia non-PCD loans that was recorded in the first quarter of 2023. Non-interest expense also decreased, primarily due to lower expenses related to the Merger. These favorable changes were partially offset by a decrease in net interest income due to higher rates on interest-bearing liabilities, partially offset by higher average yields on interest-earning assets.
Previous report
•Net interest margin, on a tax-equivalent basis, was 3.55% for the nine months ended September 30, 2024, as compared to 3.96% for the nine months ended September 30, 2023. The decrease for the nine months ended September 30, 2024 compared to the prior year period was due to higher funding costs that reflect deposit repricing and a shift in product mix. Net interest income decreased $58.5 million for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, due to higher rates on interest-bearing liabilities, partially offset by higher average yields on interest-earning assets and higher average balances due to the Merger.
Previous report
•Non-interest expense was $838.1 million for the nine months ended September 30, 2024, as compared to $975.5 million for the nine months ended September 30, 2023. The decrease for the nine months ended September 30, 2024 reflects a decrease in merger and restructuring expenses of $143.0 million and a decrease in salaries and employee benefits, partially offset by an increase in amortization of intangible assets added in connection with the Merger, largely due to the impact of nine months as a combined company in the current period, compared to only seven months as a combined company for the prior year period.
Previous report
•Total loans and leases were $37.5 billion as of September 30, 2024, an increase of $61.1 million, as compared to December 31, 2023. The increase in total loans and leases was primarily in the commercial real estate and commercial loan balances, partially offset by a decrease in residential balances. The increase was driven by commercial line utilization and new originations, partially offset by loan payoffs. Balances were also impacted by a decline in transactional real estate loans, which trended lower as we organically remix the portfolio into relationship-driven commercial loans.
Previous report
•The allowance for credit losses was $438.3 million as of September 30, 2024, a decrease of $25.8 million compared to December 31, 2023. The decrease in the allowance for credit losses was due to changes in the economic assumptions used in credit models and a recalibration in the first quarter of 2024 of our CECL calculation for non-homogeneous commercial loans and leases and residential development loans.
Previous report
Columbia's financial results for any periods ended prior to February 28, 2023, the Merger Date, reflect UHC results only on a standalone basis. Accordingly, Columbia's reported financial results for the first quarter of 2023 reflect only UHC financial results through the closing of the Merger. As a result of these two factors, Columbia's financial results for the nine months ended September 30, 2023 may not be directly comparable to prior or future reported periods.
Previous report
For the nine months ended September 30, 2024, the Company had net income of $390.4 million, compared to net income of $255.2 million for the same period in the prior year. The increase in net income was mainly attributable to decreases in non-interest expense and provision for credit losses, partially offset by a decrease in net interest income. The $137.4 million decrease in non-interest expense was primarily due to a decrease in merger and restructuring expenses, as the bulk of the merger expenses associated with the Merger were recognized in 2023. The decrease of $80.6 million in provision for credit losses was impacted by the initial provision of $88.4 million for historical Columbia non-PCD loans that was recorded in the first quarter of 2023. The decrease of $58.5 million in net interest income was due to higher rates on interest-bearing liabilities, partially offset by higher average yields on interest-earning assets and a larger average balance sheet for the nine months ended September 30, 2024. The Company paid off $250.0 million in BTFP borrowings during the third quarter to continue to rebalance our funding sources in support of our liquidity management program and lower the cost of liabilities. During the first quarter of 2024, the Company conducted an enterprise-wide evaluation of our operations, which resulted in consolidated positions and simplified reporting and organizational structures. As of September 30, 2024, the Company realized $82 million in annualized cost savings, or $70 million net of planned reinvestment associated with recent operational initiatives, which support our expectations for an annualized Q4 2024 core expense run rate of $965 million to $985 million. The expected core expense run rate excludes CDI amortization, merger and restructuring expense, exit and disposal costs, and the FDIC special assessment.
Previous report
Net interest income for the three months ended September 30, 2024 was $430.2 million, an increase of $2.8 million compared to the three months ended June 30, 2024. The increase was driven by a $3.4 million increase in interest income, largely driven by higher income earned on loans due to higher average rates, which occurred despite a reduction in accretion income, and relatively stable funding costs prior to the reduction in the federal funds rate that occurred in the latter part of September.
Previous report
The net interest margin (net interest income as a percentage of average interest-earning assets) on a fully tax-equivalent basis was 3.56% for the three months ended September 30, 2024, unchanged from the three months ended June 30, 2024. A favorable balance sheet funding mix shift into lower-cost deposits and a slight increase in loan yields offset lower yields on securities and
Previous report
contributed to margin stability between periods. The yield on loans and leases for the three months ended September 30, 2024 was 6.22%, an increase of 2 basis points compared to the three months ended June 30, 2024.
Previous report
The cost of interest-bearing liabilities for the three months ended September 30, 2024 was 3.29%, a decrease of 2 basis points compared to the three months ended June 30, 2024. Anticipated seasonal deposit inflows and focused campaigns run by our branch network contributed to customer balance growth during the third quarter.
Previous report
Net interest income for the nine months ended September 30, 2024 was $1.3 billion, a decrease of $58.5 million compared to the nine months ended September 30, 2023. The decrease was due to higher rates on interest-bearing liabilities, partially offset by higher average yields on interest-earning assets and a larger average balance sheet for the nine months ended September 30, 2024 compared to the prior year period, as a result of the Merger.
Previous report
The net interest margin on a fully tax-equivalent basis was 3.55% for the nine months ended September 30, 2024, as compared to 3.96% for the nine months ended September 30, 2023. The decrease for the nine months ended September 30, 2024 compared to the prior year period was due to higher funding costs that reflect deposit repricing and a shift in product mix.
Previous report
The yield on loans and leases for the nine months ended September 30, 2024 and September 30, 2023 was 6.18% and 5.88%, respectively, an increase of 30 basis points, primarily attributable to the rising interest rate environment and purchase accounting accretion and amortization related to the Merger.
Previous report
The cost of interest-bearing liabilities was 3.28% for the nine months ended September 30, 2024, compared to 2.38% for the nine months ended September 30, 2023, an increase of 90 basis points, due to a higher mix of higher-cost time deposits and term borrowing balances, as well as rising interest rates. Our net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, as well as changes in the yields earned on interest-earning assets and rates paid on deposits and borrowed funds.
Previous report
The Federal Reserve lowered the target range for the federal funds rate by 0.50% in September 2024 and is expected to continue rate cuts into 2025 and 2026. However, between March 2022 and July 2023, the Federal Reserve raised the target range for the federal funds rate by 5.25%. During that period, our net interest margin expanded as our asset sensitive balance sheet became increasingly profitable due to active rate increases by the Federal Reserve and the lagged impact to deposit pricing. After the Federal Reserve ceased increasing the federal funds rate, we experienced an increase in our funding costs that outpaced the increase in our earning asset yields, as our deposits continued to reprice higher and our funding base experienced a shift toward higher-cost sources, as Federal Reserve actions reduced available liquidity within the banking industry. As a result, our net interest margin contracted during the latter half of 2023 due to the impact of higher funding costs and minimal change to the average yield on earning assets. Our net interest margin began to stabilize in the 3.5% to 3.6% range beginning in February 2024 following a comprehensive review related to how we evaluate and approve deposit pricing. Further, the impact of balance sheet composition changes and the higher interest rate environment shifted the interest rate sensitivity position of the balance sheet to a liability sensitive position as of September 30, 2024 from an asset sensitive position at the onset of the rising rate environment.
Previous report
The Company had a $77.7 million provision for credit losses for the nine months ended September 30, 2024, as compared to $158.3 million for the nine months ended September 30, 2023. The decrease was primarily driven by the $88.4 million initial provision for historical Columbia non-PCD loans that was recorded in the first quarter of 2023. As an annualized percentage of average outstanding loans and leases, the provision for credit losses recorded for the nine months ended September 30, 2024 was 0.28%, as compared to 0.61% for the nine months ended September 30, 2023. During the first quarter of 2024, we recalibrated the commercial CECL model to be more reflective of the post-Merger loan portfolio after a full year operating as a combined organization. We believe the recalibrated model is more reflective of the quality of our underwriting and borrower profiles.
Previous report
Salaries and employee benefits increased during the three months ended September 30, 2024, as compared to the three months ended June 30, 2024, due primarily to the prior period including a $7.7 million reversal of a compensation-related accrual, which did not repeat in the current period, partially offset by a decrease in the current quarter related to salaries and wages largely due to staff reductions that occurred predominantly over the second quarter.
Previous report
Merger and restructuring expense decreased during the three months ended September 30, 2024, as compared to the three months ended June 30, 2024, mainly due to the prior quarter including restructuring expense of $12.0 million, which was primarily severance payments. During the first quarter of 2024, the Company conducted a comprehensive evaluation of our operations, resulting in streamlined roles, simplified reporting, and organizational structures. These actions contributed to expense reductions.
Previous report
Intangible amortization increased during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, primarily due to the current year including nine months of amortization associated with the core deposit intangible asset added as a result of the Merger, compared to only seven months of amortization during the nine months ended September 30, 2023.
Previous report
Merger and restructuring expense decreased during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, with the largest drivers of the decrease being lower legal and professional fees and premises and equipment expense related to the Merger. Columbia closed the Merger and completed the core systems conversion during the first quarter of 2023. The decrease in Merger expenses was partially offset by $12.0 million in restructuring expenses during the nine months ended September 30, 2024.
Previous report
(1)Includes $88.4 million initial provision related to non-PCD loans acquired during the first quarter of 2023.
Previous report
The provision for credit losses includes the provision for loan and lease losses and the provision for unfunded commitments. The change in the three months ended September 30, 2024, as compared to the three months ended June 30, 2024, reflects credit migration trends and changes in the economic forecasts used in credit models. The decrease in the provision for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, reflects the $88.4 million initial provision for historical Columbia non-PCD loans related to the Merger in 2023. This initial provision, as well as changes in the economic assumptions used in credit models and a recalibration of our CECL calculation in the first quarter of 2024, contributed to the change when compared to the same period in the current year. Net charge-offs were driven by the commercial loan portfolio, comprising $27.4 million of the net charge-offs for the third quarter of 2024 and $29.4 million for the second quarter of 2024.
Previous report
In September 2023, the Company closed the sale of $57.5 million in residential mortgage servicing rights, which related to the non-relationship component of the serviced loan portfolio.
Previous report
Goodwill and Other Intangible Assets
Previous report
As of September 30, 2024 and December 31, 2023, the Company had $1.0 billion in goodwill, which was recorded as a result of the Merger. Goodwill is recorded in connection with business combinations and represents the excess of the purchase price over the estimated fair value of the net assets acquired.
Previous report
As of September 30, 2024, we had other intangible assets of $513.3 million, as compared to $603.7 million at December 31, 2023. As part of a business acquisition, the fair value of identifiable intangible assets such as core deposits, which includes all deposits except certificates of deposit, was recognized at the Merger Date. Intangible assets with definite useful lives are amortized to their estimated residual values over their respective estimated useful lives. The core deposit intangible assets recorded are amortized on an accelerated basis over a period of 10 years using the sum-of-the-years-digits method. Intangible assets are evaluated for impairment if events and circumstances indicate a possible impairment. No impairment losses have been recognized in the periods presented.
Previous report
Total deposits were $41.5 billion as of September 30, 2024, a decrease of $92.3 million as compared to December 31, 2023. The decrease was due to a reduction in brokered deposits, partially offset by customer deposit growth, largely in commercial customer balances, driven by focused campaigns run by our branch network. The interest-bearing deposit mix increased mainly due to a migration from non-interest-bearing to interest-bearing accounts as customers seek higher rates in the current interest rate environment.
Previous report
The FDIC generally insures up to $250,000 per depositor for each account ownership category, as defined by the FDIC. Depositors may qualify for coverage of accounts over $250,000 if they have funds in different ownership categories and all applicable FDIC requirements are met. All deposits that an account owner has in the same ownership category at the same bank are added together and insured up to the standard insurance amount. As of September 30, 2024 and December 31, 2023, approximately $27.5 billion and $28.1 billion, respectively, of the Bank’s deposits were estimated to be insured. Uninsured deposits are an estimated amount based on the methodologies and assumptions used for the Bank's regulatory requirements. Estimated uninsured deposits were $14.0 billion and $13.5 billion as of September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024, total available liquidity was $19.4 billion, or 138% of estimated uninsured deposits.
Previous report
(1) The Federal Reserve’s Bank Term Funding Program was discontinued for new borrowings in March 2024. We present associated balances as of September 30, 2024.
Previous report
Off-balance-Sheet Arrangements
Previous report
In 2020, the federal bank regulatory authorities finalized a rule to provide banking organizations that implemented CECL in 2020 the option to delay the estimated impact on regulatory capital by up to two years, with a three-year transition period to phase out the cumulative benefit to regulatory capital provided during the two-year delay. The Company elected this capital relief to delay the estimated regulatory capital impact of adopting CECL, relative to the incurred loss methodology's effect on regulatory capital. Currently, the Company is phasing out the cumulative adjustment as calculated at the end of 2021, by adjusting it by 75% in 2022, 50% through 2023, and 25% in 2024, culminating with a fully phased in regulatory capital calculation beginning in 2025. All regulatory ratios exceeded regulatory “well-capitalized” requirements.
Reworded paragraphs (60)
Previous wording
We make forward-looking statements including, but not limited to, statements made about the combined company’s prospects and results following the merger with Umpqua Holdings Corporation and the merger of Columbia State Bank into Umpqua Bank, completed in the first quarter of 2023; derivatives and hedging; the results and performance of models and economic assumptions used in our calculation of the ACL; projected sources of funds and the Company's liquidity position and deposit level and types; our securities portfolio; loan sales; adequacy of our ACL, including the reserve for unfunded commitments; provision for credit losses; non-performing loans and future losses; our commercial real estate portfolio, its collectability and subsequent charge-offs; resolution of non-accrual loans; mortgage volumes and the impact of rate changes; the economic environment; inflation and interest rates generally; litigation; dividends; junior subordinated debentures; fair values of certain assets and liabilities, including MSR values and sensitivity analyses; tax rates; deposit pricing; and the effect of accounting pronouncements and changes in accounting methodology.
Current wording
We make forward-looking statements including, but not limited to, statements about derivatives and hedging; the results and performance of models and economic assumptions used in our calculation of the ACL; projected sources of funds and the Company's liquidity position and deposit level and types; our securities portfolio; loan sales; adequacy of our ACL, including the RUC; provision for credit losses; non-performing loans and future losses; our commercial real estate portfolio, its collectability and subsequent charge-offs; resolution of non-accrual loans; mortgage volumes and the impact of rate changes; the economic environment; inflation and interest rates generally; litigation; dividends; junior subordinated debentures; fair values of certain assets and liabilities, including MSR values and sensitivity analyses; tax rates; deposit pricing; and the effect of accounting pronouncements and changes in accounting methodology.
Previous wording
•uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve or the effects of any declines in housing and commercial real estate prices, high or increasing unemployment rates, continued inflation, or any recession or slowdown in economic growth particularly in the western United States;
Current wording
•uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve or the effects of any declines in housing and commercial real estate prices, high or increasing unemployment rates, continued or renewed inflation, or any recession or slowdown in economic growth particularly in the western United States;
Previous wording
Through the Bank, we provide a broad range of banking, private banking, mortgage and other financial services to corporate, institutional, small business, and individual customers. FinPac, a commercial equipment leasing company, is a subsidiary of the Bank. Along with its subsidiaries, the Company is subject to the regulations of state and federal agencies and undergoes regular examinations by these regulatory agencies.
Current wording
Columbia Banking System, Inc. (referred to in this Quarterly Report on Form 10-Q as “we,” “our,” “the Company” and “Columbia”) is a registered financial holding company, which wholly owns the Bank. Through the Bank, we provide a broad range of banking, private banking, mortgage and other financial services to corporate, institutional, small business, and individual customers. FinPac, a commercial equipment leasing company, is a subsidiary of the Bank. Along with its subsidiaries, the Company is subject to the regulations of state and federal agencies and undergoes regular examinations by these regulatory agencies.
Previous wording
The following is a discussion of our results for the three and nine months ended September 30, 2024, as compared to the applicable prior periods.
Current wording
The following is a discussion of our results for the three months ended March 31, 2025, as compared to the applicable prior periods.
Previous wording
•Non-interest income was $66.2 million for the three months ended September 30, 2024, as compared to $44.7 million for the three months ended June 30, 2024. The increase was driven by fluctuations in fair value adjustments and MSR hedging activity due to rate changes, which collectively resulted in a net fair value gain of $6.6 million in the third quarter compared to a net fair value loss of $9.7 million in the second quarter.
Current wording
•Non-interest income was $66.4 million for the three months ended March 31, 2025, as compared to $49.7 million for the three months ended December 31, 2024. The increase was driven by fluctuations in fair value adjustments and MSR hedging activity due to rate changes, which collectively resulted in a net fair value gain of $9.5 million in the first quarter, compared to a net fair value loss of $5.5 million in the prior period.
Previous wording
•Earnings per diluted common share was $0.70 for the three months ended September 30, 2024, as compared to $0.57 for the three months ended June 30, 2024. The increase for the three months ended September 30, 2024, as compared to the prior period, was primarily driven by an increase in non-interest income due to quarterly fluctuations in fair value adjustments and MSR hedging activity and a favorable change in non-interest expense due to the prior quarter including $12.0 million in restructuring expenses. Net interest income increased due to higher income earned on loans.
Current wording
•Earnings per diluted common share was $0.41 for the three months ended March 31, 2025, as compared to $0.59 for the three months ended March 31, 2024. The decrease for the three months ended March 31, 2025, as compared to the prior year period, was primarily driven by an increase in non-interest expense, due to the litigation accrual and severance, as noted above.
Previous wording
•Non-interest income was $161.2 million for the nine months ended September 30, 2024, as compared to $138.4 million for the nine months ended September 30, 2023. The increase was partially due to fluctuations in fair value adjustments and MSR hedging activity, which collectively resulted in a favorable change due to a net fair value loss of $7.0 million for the nine months ended September 30, 2024, compared to a net fair value loss of $23.2 million for the nine months ended September 30, 2023. In addition, there were increases in most categories, largely due to the impact of nine months as a combined company compared to only seven months as a combined company for the prior year period, as well as increasing fee-generating product traction with our customer base.
Current wording
•Non-interest income was $66.4 million for the three months ended March 31, 2025, as compared to $50.4 million for the three months ended March 31, 2024. The increase was mainly due to fluctuations in fair value adjustments for certain loans held for sale and MSR hedging activity, which collectively resulted in a favorable change due to a net fair value gain of $9.5 million for the three months ended March 31, 2025, compared to a net fair value loss of $3.9 million for the three months ended March 31, 2024.
Previous wording
•Total deposits were $41.5 billion as of September 30, 2024, a decrease of $92.3 million, as compared to December 31, 2023. The decrease was due to a reduction in brokered deposits, partially offset by customer deposit growth, largely in commercial customer balances, driven by focused campaigns run by our branch network.
Current wording
•Total deposits were $42.2 billion as of March 31, 2025, an increase of $497.0 million, as compared to December 31, 2024. The increase was due to customer deposit growth, driven by focused campaigns run by our branch network and other commercial customer deposit growth, slightly offset by a reduction in brokered deposits.
Previous wording
•Total consolidated assets were $51.9 billion as of September 30, 2024, compared to $52.2 billion as of December 31, 2023.
Current wording
•Total consolidated assets were $51.5 billion as of March 31, 2025, compared to $51.6 billion as of December 31, 2024.
Previous wording
•Non-performing assets increased to $167.6 million, or 0.32% of total assets, as of September 30, 2024, compared to $113.9 million, or 0.22% of total assets, as of December 31, 2023. Non-performing loans and leases were $165.2 million, or 0.44% of total loans and leases, as of September 30, 2024, compared to $112.9 million, or 0.30% of total loans and leases, as of December 31, 2023. As of September 30, 2024, non-performing loans included $65.8 million in government guarantees.
Current wording
•Non-performing assets increased to $178.0 million, or 0.35% of total assets, as of March 31, 2025, compared to $169.6 million, or 0.33% of total assets, as of December 31, 2024. Non-performing loans and leases were $175.1 million, or 0.47% of total loans and leases, as of March 31, 2025, compared to $166.9 million, or 0.44% of total loans and leases, as of December 31, 2024. As of March 31, 2025, non-performing loans included $66.5 million in government guarantees.
Previous wording
•The Company had a provision for credit losses of $28.8 million and $77.7 million for the three and nine months ended September 30, 2024, respectively. This compares to a provision for credit losses of $31.8 million for the three months ended June 30, 2024 and $158.3 million for the nine months ended September 30, 2023. The decrease for the three months ended September 30, 2024 compared to the prior quarter was mainly due to credit migration trends and changes in the economic forecasts used in credit models. The nine months ended September 30, 2023 included an $88.4 million initial provision for historical Columbia non-PCD loans related to the Merger. This initial provision, as well as changes in the economic assumptions used in credit models and a recalibration of our CECL calculation in the first quarter of 2024, contributed to the change when compared to the same period in the current year.
Current wording
•The Company had a provision for credit losses of $27.4 million for the three months ended March 31, 2025. This compares to a provision for credit losses of $28.2 million for the three months ended December 31, 2024 and $17.1 million for the three months ended March 31, 2024. The decrease for the three months ended March 31, 2025 compared to the prior quarter was mainly due to credit migration trends and changes in the economic forecasts, as well as a recalibration of CECL models in the first quarter of 2025. The increase for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, was mainly due to credit migration trends, changes in the economic forecasts used in credit models, and a recalibration of our CECL models which contributed to the change when compared to the prior period.
Previous wording
•Total cash and cash equivalents were $2.1 billion as of September 30, 2024, a decrease of $51.5 million from December 31, 2023. The Company manages its cash position as part of management's strategy to maintain a high-quality liquid asset position to support balance sheet flexibility, fund growth in lending and investment portfolios, and deleverage the balance sheet by decreasing debt and non-deposit liabilities as economic conditions permit.
Current wording
•Total cash and cash equivalents were $2.1 billion as of March 31, 2025, an increase of $194.5 million from December 31, 2024, due mainly to increased deposits at quarter end. The Company manages its cash position as part of management's strategy to maintain a high-quality liquid asset position to support balance sheet flexibility, fund growth in lending and investment portfolios, and deleverage the balance sheet by decreasing debt and non-deposit liabilities as economic conditions permit.
Previous wording
•Including secured off-balance sheet lines of credit, total available liquidity was $19.4 billion as of September 30, 2024, representing 37% of total assets, 47% of total deposits, and 138% of estimated uninsured deposits.
Current wording
•Including secured off-balance sheet lines of credit, total available liquidity was $19.0 billion as of March 31, 2025, representing 37% of total assets, 45% of total deposits, and 131% of estimated uninsured deposits.
Previous wording
•The Company's total risk-based capital ratio was 12.5% and its common equity tier 1 ("CET1") capital ratio was 10.3% as of September 30, 2024. As of December 31, 2023, the Company's total risk-based capital ratio was 11.9% and its CET1 capital ratio was 9.6%.
Current wording
•The Company's total risk-based capital ratio was 12.9% and its common equity tier 1 ("CET1") capital ratio was 10.6% as of March 31, 2025. As of December 31, 2024, the Company's total risk-based capital ratio was 12.8% and its CET1 capital ratio was 10.5%.
Previous wording
Our critical accounting estimates are described in detail in the Critical Accounting Estimates section of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 27, 2024. The condensed consolidated financial statements are prepared in conformity with GAAP and follow general practices within the financial services industry, in which the Company operates. This preparation requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, actual results could differ from the estimates, assumptions, and judgments reflected in the financial statements. Certain estimates inherently have a greater reliance on the use of assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. Management believes that the estimates for ACL, business combinations, and goodwill are important to the portrayal of the Company's financial condition and results of operations and require difficult, subjective, or complex judgments. There have been no material changes in the methodology of these estimates during the nine months ended September 30, 2024.
Current wording
Our critical accounting estimates are described in detail in the Critical Accounting Estimates section of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 25, 2025. The condensed consolidated financial statements are prepared in conformity with GAAP and follow general practices within the financial services industry, in which the Company operates. This preparation requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, actual results could differ from the estimates, assumptions, and judgments reflected in the financial statements. Certain estimates inherently have a greater reliance on the use of assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. Management believes that the estimates for ACL and goodwill are important to the portrayal of the Company's financial condition and results of operations and require difficult, subjective, or complex judgments. There have been no material changes in the methodology of these estimates during the three months ended March 31, 2025.
Previous wording
The Company had net income of $146.2 million for the three months ended September 30, 2024, compared to net income of $120.1 million for the three months ended June 30, 2024. The increase in net income was mainly attributable to increases in non-interest income and net interest income as well as decreases in non-interest expense and provision for credit losses, partially offset by an increase in provision for income taxes. The increase of $21.5 million in non-interest income was primarily driven by quarterly fluctuations in fair value adjustments and MSR hedging activity driven by changes in interest rates. The increase of $2.8 million in net interest income reflects higher income earned on loans, which occurred despite a reduction in purchase accounting accretion income, and relatively stable funding costs prior to the late-quarter decline in the federal funds rate. The decrease of $7.9 million in non-interest expense was mainly due to a decrease in merger and restructuring expense driven by $12.0 million in restructuring expenses during the three months ended June 30, 2024. The restructuring expense was due to an enterprise-wide evaluation of our operations during the first quarter of 2024, which resulted in consolidated positions and simplified reporting and organizational structures, with changes carried out primarily in the second quarter. The decrease of $3.1 million in provision for credit losses reflects credit migration trends and changes in the economic forecasts used in credit models.
Current wording
The Company had net income of $86.6 million for the three months ended March 31, 2025, compared to net income of $143.3 million for the three months ended December 31, 2024. The decrease in net income was mainly attributable to an increase in non-interest expense and decrease in net interest income, partially offset by an increase in non-interest income and a decrease in the provision for income taxes. The increase of $73.5 million in non-interest expense was primarily driven by a $55.0 million accrual for a legal settlement and $14.6 million in severance expense recorded in merger and restructuring expense. The increase of $16.6 million in non-interest income was primarily driven by quarterly fluctuations in fair value adjustments and MSR hedging activity driven by changes in interest rates. The decrease of $12.4 million in net interest income reflects lower interest income that was only partially offset by lower funding costs. Lower accretion income, primarily related to investment securities income, contributed to the decrease in net interest income.
Previous wording
The Company had a $28.8 million provision for credit losses for the three months ended September 30, 2024, as compared to a $31.8 million provision for the three months ended June 30, 2024. As an annualized percentage of average outstanding loans and leases, the provision for credit losses recorded for the three months ended September 30, 2024 was 0.30%, as compared to 0.34% for the three months ended June 30, 2024. The change in provision for credit losses reflects credit migration trends and changes in the economic forecasts used in credit models.
Current wording
The Company had a $27.4 million provision for credit losses for the three months ended March 31, 2025, as compared to a $28.2 million provision for the three months ended December 31, 2024. As an annualized percentage of average outstanding loans and leases, the provision for credit losses recorded for the three months ended March 31, 2025 was 0.29%, as compared to 0.30% for the three months ended December 31, 2024. The change in provision for credit losses reflects credit migration trends and changes in the economic forecasts used in credit models, as well as a recalibration of CECL models in the first quarter of 2025.
Previous wording
For the three months ended September 30, 2024, net charge-offs were $29.1 million, as compared to $30.4 million for the three months ended June 30, 2024. As an annualized percentage of average outstanding loans and leases, net charge-offs for the three months ended September 30, 2024 were 0.31%, as compared to 0.32% for the three months ended June 30, 2024. Net charge-offs in the FinPac portfolio were $20.0 million for the three months ended September 30, 2024, a $4.7 million decrease from the three months ended June 30, 2024, which is reflective of lower delinquencies in the transportation sector of the portfolio, which resulted in lower charge-off activity.
Current wording
For the three months ended March 31, 2025, net charge-offs were $29.3 million, as compared to $25.7 million for the three months ended December 31, 2024. As an annualized percentage of average outstanding loans and leases, net charge-offs for the three months ended March 31, 2025 were 0.32%, as compared to 0.27% for the three months ended December 31, 2024. Net charge-offs in the FinPac portfolio were $16.8 million for the three months ended March 31, 2025, a $2.4 million decrease from the three months ended December 31, 2024, as improvement continues in the transportation sector of the FinPac portfolio. Net charge-offs, exclusive of the FinPac portfolio, were $12.6 million, as compared to $6.5 million in the prior period, which reflects the partial charge-off of a single relationship with a previously established reserve.
Previous wording
For the nine months ended September 30, 2024, net charge-offs were $103.6 million, as compared to $67.9 million for the nine months ended September 30, 2023. As an annualized percentage of average outstanding loans and leases, net charge-offs for the nine months ended September 30, 2024 were 0.37%, as compared to 0.26% for the nine months ended September 30, 2023. Net charge-offs in the FinPac portfolio were $68.5 million for the nine months ended September 30, 2024, as compared to $64.1 million for the nine months ended September 30, 2023. Net charge-offs were $35.1 million for the Bank for the nine months ended September 30, 2024.
Current wording
For the three months ended March 31, 2025, net charge-offs were $29.3 million, as compared to $44.0 million for the three months ended March 31, 2024. As an annualized percentage of average outstanding loans and leases, net charge-offs for the three months ended March 31, 2025 were 0.32%, as compared to 0.47% for the three months ended March 31, 2024. Net charge-offs in the FinPac portfolio were $16.8 million for the three months ended March 31, 2025, as compared to $23.8 million for the three months ended March 31, 2024, which is reflective of continued improvement in the transportation sector of the lease portfolio. Net charge-offs were $12.6 million for the Bank for the three months ended March 31, 2025, a decrease of $7.7 million, as the prior period reflects the charge-off of a single commercial credit.
Previous wording
Typically, loans in a non-accrual status will not have an allowance for credit loss as they will be written down to their net realizable value or charged-off. However, the net realizable value for homogeneous leases and equipment finance agreements are determined by the loss given default calculated by the CECL model, and therefore homogeneous leases and equipment finance agreements on non-accrual will have an allowance for credit loss amount until they become 181 days past due, at which time they are charged-off. The non-accrual leases and equipment finance agreements of $23.3 million as of September 30, 2024 have a related allowance for credit losses of $19.6 million, with the remaining loans written-down to the estimated fair value of the collateral, less estimated costs to sell, and are expected to be resolved with no additional material loss, absent further decline in market prices.
Current wording
Typically, loans in a non-accrual status will not have an ACL as they will be written down to their net realizable value or charged off. However, the net realizable value for homogeneous leases and equipment finance agreements are determined by the loss given default calculated by the CECL model, and therefore homogeneous leases and equipment finance agreements on non-accrual will have an ACL amount until they become 181 days past due, at which time they are charged off. The non-accrual leases and equipment finance agreements of $18.1 million as of March 31, 2025 have a related ACL of $16.0 million, with the remaining loans written-down to the estimated fair value of the collateral, less estimated costs to sell, and are expected to be resolved with no additional material loss, absent further decline in market prices.
Previous wording
Other income for the three months ended September 30, 2024, as compared to the three months ended June 30, 2024, increased primarily due to interest rate fluctuations resulting in the current quarter including a gain on the fair value of certain loans held for investment of $9.4 million, as compared to loss of $10.1 million for the prior quarter. These fair value adjustments are inversely influenced by the change in longer-term interest rates.
Current wording
Gain (loss) on certain loans held for investment, at fair value for the three months ended March 31, 2025, as compared to the three months ended December 31, 2024, increased due to interest rate fluctuations between periods that resulted in a gain on the fair value of certain loans held for investment of $7.0 million in the current period, as compared to a loss of $2.4 million in the prior year period.
Previous wording
Other income for the nine months ended September 30, 2024 increased, as compared to the nine months ended September 30, 2023, primarily due to interest rate fluctuations resulting in a loss on the fair value of certain loans held for investment of $3.1 million in the current period as compared to a loss of $16.7 million in the prior year period. Further, our business growth strategy incorporates a collaborative team approach to deliver needs-based solutions to our customers, which deepens relationships and provides growth in sustainable fee income to the Bank. Trends in the current period as compared to the prior year period reflect a growing contribution from treasury management and card fees, financial services and trust revenue, and international banking fees. The increase was partially offset by the impact of rate fluctuations on swap derivatives with a loss in the current period compared to a gain in the prior year period, resulting in an unfavorable change of $5.4 million.
Current wording
Other income decreased during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to interest rate fluctuations between periods that resulted in an unfavorable change of $2.7 million in swap derivatives due to a loss in the current period compared to a gain in the prior year period.
Previous wording
Salaries and employee benefits decreased during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, due primarily to reduction in employees related to the merger synergies realized in 2023 and the additional operational efficiency related activities in 2024, partially offset by the current year including nine months as a combined company, compared to only seven months during the nine months ended September 30, 2023.
Current wording
Salaries and employee benefits decreased during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, due primarily to a reduction in employees related to operational efficiency activities in 2024.
Previous wording
The Company's effective tax rate for the three months ended September 30, 2024 was 25.5%, as compared to 25.4% for the three months ended June 30, 2024, and 25.8% for both the nine months ended September 30, 2024 and 2023. The effective tax rates differed from the statutory rate principally because of state taxes, non-deductible FDIC assessments, and income on tax-exempt investment securities.
Current wording
The Company's effective tax rate for the three months ended March 31, 2025 was 30.1%, as compared to 25.5% and 26.6% for the three months ended December 31, 2024, and March 31, 2024, respectively. The effective tax rates differed from the statutory rate principally because of state taxes, non-deductible compensation, non-deductible FDIC assessments, and income on tax-exempt investment securities and loans. The change to the effective tax rate for the three months ended March 31, 2025, as compared to the prior periods, was primarily attributable to an increase in non-deductible compensation.
Previous wording
Investment debt securities available for sale were $8.7 billion as of September 30, 2024, compared to $8.8 billion as of December 31, 2023. The decrease was primarily due to paydowns, calls, and maturities of $385.4 million, partially offset by an increase of $139.5 million in fair value of investment securities available for sale, due to lower rates during the period.
Current wording
Investment debt securities available for sale were $8.2 billion as of March 31, 2025, compared to $8.3 billion as of December 31, 2024. The decrease was primarily due to paydowns, calls, and maturities of $189.8 million, partially offset by an increase of $130.3 million in fair value of investment securities available for sale, due to lower rates during the period.
Previous wording
The following tables present the par value, amortized cost, unrealized gains, unrealized losses, and approximate fair values of debt securities as available for sale and held to maturity investment debt securities portfolio by major type as of the dates presented:
Current wording
The following tables present the par value, amortized cost, and fair values of debt securities as available for sale and held to maturity investment debt securities portfolio by major type as of the dates presented:
Previous wording
As of September 30, 2024, the available for sale investment portfolio had gross unrealized losses of $400.3 million. Unrealized losses consisted primarily of unrealized losses on mortgage-backed securities and collateralized mortgage obligations of $328.0 million. The unrealized losses were attributable to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities and are not attributable to changes in credit quality. In the opinion of management, no ACL was considered necessary on these debt securities as of September 30, 2024.
Current wording
As of March 31, 2025, the available for sale investment portfolio had gross unrealized losses of $482.4 million. Unrealized losses consisted primarily of unrealized losses on mortgage-backed securities and collateralized mortgage obligations of $391.5 million. The unrealized losses were attributable to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities and are not attributable to changes in credit quality. In the opinion of management, no ACL was considered necessary on these debt securities as of March 31, 2025.
Previous wording
Total loans and leases outstanding as of September 30, 2024 were $37.5 billion, an increase of $61.1 million as compared to December 31, 2023. The increase was primarily attributable to organic loan growth of $296.5 million, partially offset by charge-offs of $120.9 million and loan sales of $115.0 million. The loan to deposit ratio was 90% as of both September 30, 2024 and December 31, 2023.
Current wording
Total loans and leases outstanding as of March 31, 2025 were $37.6 billion, a decrease of $64.8 million as compared to December 31, 2024. The decrease was primarily attributable to loan paydowns and charge-offs of $34.1 million. The loan to deposit ratio was 89% as of March 31, 2025, as compared to 90% as of December 31, 2024.
Previous wording
The following table presents the concentration distribution of the loan and lease portfolio, net of deferred fees and costs, as of the dates presented:
Current wording
The following table presents the concentration distribution of the loan and lease portfolio as of the dates presented:
Previous wording
Commercial real estate and commercial loans are the largest classifications within earning assets, representing 41% and 20%, respectively, of average earning assets for both the three and nine months ended September 30, 2024 and 40% and 20%, respectively, as of December 31, 2023. The increase in commercial real estate and commercial loan balances between September 30, 2024 and December 31, 2023 was driven by commercial line utilization and new originations, partially offset by loan payoffs.
Current wording
Commercial real estate and commercial loans are the largest classifications within earning assets, representing 41% and 21%, respectively, of average earning assets for the three months ended March 31, 2025 and 41% and 20%, respectively, for the three months ended December 31, 2024.
Previous wording
Delinquency and non-accrual loan movements during the period reflect an anticipated move toward a normalized credit environment following a phase of exceptional high credit quality. Non-performing loans during the quarter include $65.8 million in government guarantees on the commercial real estate, commercial, and residential portfolios, which offsets our credit exposure in those portfolios.
Current wording
Delinquency and non-accrual loan movements during the period reflect an anticipated move toward a normalized credit environment following a phase of exceptional high credit quality. Non-performing loans during the quarter include $66.5 million in government guarantees on the commercial real estate, commercial, and residential portfolios, which offsets our credit exposure in those portfolios.
Previous wording
The commercial real estate portfolio includes loans to developers and institutional sponsors supporting income-producing or for-sale commercial real estate properties. We seek to mitigate our risk on these loans by requiring collateral values that exceed the loan amount and underwriting the loan with projected cash flow in excess of the debt service requirement.
Current wording
The commercial real estate portfolio includes loans to developers and institutional sponsors supporting income-producing or for-sale commercial real estate properties. We mitigate our risk on these loans by requiring collateral values that exceed the loan amount and underwriting the loan with projected cash flow in excess of the debt service requirement. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans. Owner-occupied real estate loans are based on cash flows from ongoing operations and the borrower must generally occupy more than 50% of rentable space or pay more than 50% of rents. As of March 31, 2025, approximately 27.0% of the outstanding principal balance of our commercial real estate loan portfolio, which includes multifamily properties, were secured by owner-occupied properties.
Previous wording
As of September 30, 2024, commercial real estate loans held in our loan portfolio were $19.6 billion, an increase of $161.1 million compared to December 31, 2023. Commercial real estate concentrations are managed with a goal of optimizing relationship-driven commercial loans, as well as geographic, and business diversity, primarily in our footprint.
Current wording
As of March 31, 2025, the commercial real estate loan portfolio was $19.6 billion, an increase of $69.4 million compared to December 31, 2024, driven by construction and development loan and line utilization. Commercial real estate concentrations are managed with a goal of optimizing relationship-driven commercial loans, as well as geographic, and business diversity, primarily in our footprint.
Previous wording
(1)Commercial real estate non-accrual loans are inclusive of government guarantees of $12.1 million and $7.7 million as of September 30, 2024 and December 31, 2023, respectively.
Current wording
(1)Commercial real estate non-accrual loans are inclusive of government guarantees of $17.9 million and $16.3 million as of March 31, 2025 and December 31, 2024, respectively.
Previous wording
The following table provides detail on the geographic distribution of our commercial real estate portfolio as of September 30, 2024:
Current wording
The following table provides detail on the geographic distribution of our commercial real estate portfolio as of the periods indicated:
Previous wording
Loans secured by multifamily properties, including construction, represented approximately 19% of the total loan portfolio as of both September 30, 2024 and December 31, 2023. These assets continue to perform well due to demand for rental properties in our geographic footprint. Although management believes such concentrations have no more than the normal risk of collectability, a substantial decline in the economy in general, material increases in interest rates, changes in tax and rent control policies, tightening credit or refinancing markets, or a decline in real estate values in the Bank's primary geographic footprint in particular, could have an adverse impact on the repayment of these loans.
Current wording
Loans secured by multifamily properties, including construction, represented 20% of the total loan portfolio at March 31, 2025 and 19% at December 31, 2024. These assets continue to perform well due to demand for rental properties in our geographic footprint. Although management believes such concentrations have no more than the normal risk of collectability, a substantial decline in the economy in general, material increases in interest rates, changes in tax and rent control policies, tightening credit or refinancing markets, or a decline in real estate values in the Bank's primary geographic footprint in particular, could have an adverse impact on the repayment of these loans.
Previous wording
Loans secured by office properties represented approximately 8% of our total loan portfolio at both September 30, 2024 and December 31, 2023, comprised of 57% non-owner occupied, 40% owner occupied, and 3% construction loans at September 30, 2024, compared to 57% non-owner occupied, 39% owner occupied, and 4% construction loans at December 31, 2023. Excluding floating rate loans, which have already repriced to prevailing rates, only 5% of our office portfolio reprices through 2025. Office properties located in suburban markets secure the majority of our office portfolio as only 6% of non-owner occupied loans are located in downtown core business districts.
Current wording
Loans secured by office properties, which are predominantly located in suburban markets, represented approximately 8% of our total loan portfolio at both March 31, 2025 and December 31, 2024, and were comprised of 56% non-owner occupied, 41% owner occupied, and 3% construction loans at March 31, 2025, compared to 57% non-owner occupied, 40% owner occupied, and 3% construction loans at December 31, 2024.
Previous wording
Commercial loans are made to commercial customers for use in normal business operations to finance working capital needs, equipment purchases, or other projects. We focus on borrowers doing business within our geographic markets. Commercial loans are generally underwritten individually and secured with the assets of the company and/or the personal guarantee of the business owners. Lease and equipment financing products are designed to address the diverse financing needs of small to large companies, primarily for the acquisition of equipment. As of September 30, 2024, commercial loans held in our loan portfolio were $9.7 billion, an increase of $43.9 million compared to December 31, 2023, which is mainly attributable to credit line utilization during the period.
Current wording
Commercial loans are made to commercial customers for use in normal business operations to finance working capital needs, equipment purchases, or other projects. We focus on borrowers doing business within our geographic markets. Commercial loans are generally underwritten individually and secured with the assets of the company and/or the personal guarantee of the business owners. Lease and equipment financing products are designed to address the diverse financing needs of small to large companies, primarily for the acquisition of equipment. As of March 31, 2025, commercial loans held in our loan portfolio were $9.9 billion, a decrease of $80.2 million compared to December 31, 2024, which is mainly attributable to paydowns during the period.
Previous wording
The leases and equipment finance portfolio represents approximately 17% of the commercial portfolio and 4% of the total loan portfolio as of September 30, 2024, as compared to 18% of the commercial portfolio and 5% of the total loan portfolio as of December 31, 2023. The leasing portfolio has non-performing leases and charge-offs centered in the trucking and transportation portion of the portfolio. Net charge-offs in the FinPac lease portfolio were $20.0 million for the three months ended September 30, 2024, as compared to $24.7 million for the three months ended June 30, 2024, and net charge-offs were up $2.7 million in the remaining commercial portfolio from the prior quarter. Lower delinquencies in the transportation sector of the portfolio resulted in lower charge-off activity for the quarter. Delinquencies and non-accrual loan movements in the transportation and trucking portfolio over the year were anticipated and a slow recovery is in process for this portfolio.
Current wording
The leases and equipment finance portfolio represents approximately 17% of the commercial portfolio and 4% of the total loan portfolio as of March 31, 2025 and December 31, 2024. Net charge-offs in the FinPac lease portfolio were $16.8 million for the three months ended March 31, 2025, as compared to $19.2 million for the three months ended December 31, 2024, reflecting improvements in the trucking and transportation sector of the portfolio. Net charge-offs were up $9.1 million in the remaining commercial portfolio from the prior quarter, which reflects the partial charge-off of a loan with a previously established reserve.
Previous wording
(1)Commercial non-accrual loans and leases are inclusive of government guarantees of $26.8 million and $11.7 million as of September 30, 2024 and December 31, 2023, respectively.
Current wording
(1)Commercial non-accrual loans and leases are inclusive of government guarantees of $24.4 million and $25.2 million as of March 31, 2025 and December 31, 2024, respectively.
Showing the first 40 of 60 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
The following table provides detail on the geographic distribution of our commercial real estate portfolio secured by office properties:
Current report — wording carried from elsewhere
As of March 31, 2025 there were $54.0 million or 0.14% of total loans, modified due to borrowers experiencing financial difficulties, compared to $110.7 million or 0.29% as of December 31, 2024.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Columbia Banking System, Inc. (referred to in this Quarterly Report on Form 10-Q as “we,” “our,” “the Company” and “Columbia”) is a registered financial holding company, which wholly owns the Bank. Columbia completed its previously-announced merger with Umpqua Holdings Corporation on February 28, 2023.
Previous report — wording carried elsewhere
Information regarding Off-Balance-Sheet Arrangements is included in Note 9 of the Notes to Condensed Consolidated Financial Statements.