0000887343July 23, 2020false00008873432020-07-232020-07-23

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 23, 2020

COLUMBIA BANKING SYSTEM, INC.
(Exact name of registrant as specified in its charter)
Washington 000-20288 91-1422237
(State or other jurisdiction
of incorporation) 		(Commission
File Number) 		(IRS Employer
Identification No.)
1301 A Street
Tacoma, WA 98402-2156
(Address of principal executive offices and zip code)
(253) 305-1900
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

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

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

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

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol Name of each exchange on which registered
Common Stock, No Par Value COLB The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Items to be Included in this Report

Item 2.02 Results of Operations and Financial Condition
On July 23, 2020, Columbia Banking System, Inc. (the "Company") issued a press release reporting its financial results for the quarter ended June 30, 2020 and reporting a quarterly cash dividend of $0.28 per share. The dividend will be paid on August 19, 2020 to shareholders of record at the close of business on August 5, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference in its entirety.
Item 8.01 Other Events
The information concerning the Company's quarterly dividend included in Item 2.02 is incorporated by reference into this Item 8.01.
Item 9.01 Financial Statements and Exhibits
(d)
99.1 Press release dated July 23, 2020 reporting the financial results of Columbia Banking System, Inc. for the quarter ended June 30, 2020 and a quarterly cash dividend for the quarter ended June 30, 2020.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
COLUMBIA BANKING SYSTEM, INC.
Date: July 23, 2020 /s/ CLINT E. STEIN
Clint E. Stein
President and
Chief Executive Officer




Exhibit 99.1

CBSYSTEMSOLIDBUGA161.JPG

FOR IMMEDIATE RELEASE

July 23, 2020

             


Columbia Banking System Announces Second Quarter 2020 Results
and Quarterly Cash Dividend


Notable Items for Second Quarter 2020

•Quarterly net income of $36.6 million and diluted earnings per share of $0.52
•Net loans increased $838.6 million, or 9% during the second quarter of 2020 from regular second quarter production of $295 million supplemented by Paycheck Protection Program loan originations
•Deposits increased $2.32 billion, or 21% during the second quarter of 2020
•Net interest margin of 3.64%, a decrease of 36 basis points from the linked quarter
•Nonperforming assets to period-end assets ratio remained stable at 0.34%
•Regular cash dividend declared of $0.28 per share

TACOMA, Washington, July 23, 2020 -- Clint Stein, President and Chief Executive Officer of Columbia Banking System, Inc. and Columbia Bank (NASDAQ: COLB) (“Columbia”), said today upon the release of Columbia’s second quarter 2020 earnings, “I’m proud of the accomplishments by our team of bankers during one of the most challenging quarters in our 27 year history. They came together to execute on our pandemic response plan while supporting each other through the professional and personal challenges of COVID-19.” Mr. Stein continued, “In addition, our bankers continued to support our clients and our communities through uninterrupted access to our banking services as well as our ongoing philanthropic activities.”

1

Balance Sheet
Total assets at June 30, 2020 were $15.92 billion, an increase of $1.88 billion from the linked quarter. Loans were $9.77 billion, up $838.6 million from March 31, 2020 as a result of loan originations of $1.26 billion partially offset by payments. Included in the loan originations for the quarter were $962.0 million of loans originated under the Paycheck Protection Program (“PPP”). Interest-earning deposits with banks were $880.2 million, an increase of $854.9 million from the linked quarter due to the surge in deposits. Debt securities available for sale were $3.69 billion at June 30, 2020, an increase of $140.7 million from $3.55 billion at March 31, 2020. Total deposits at June 30, 2020 were $13.13 billion, an increase of $2.32 billion from March 31, 2020 largely due to an increase of $1.40 billion in demand and other noninterest-bearing deposits. The deposit mix remained fairly consistent from March 31, 2020 with 51% noninterest-bearing and 49% interest-bearing. The average cost of total deposits for the quarter was 7 basis points, a decrease of 7 basis points from the first quarter of 2020. For additional information regarding this calculation, see the “Net Interest Margin” section.
Chris Merrywell, Columbia’s Executive Vice President and Chief Operating Officer, stated, “Our dedicated team of bankers worked tirelessly during the quarter assisting our clients with their PPP loan applications and loan deferral requests while providing an exceptional level of customer service during these challenging times. Their efforts resulted in robust growth in our balance sheet increasing both loans and deposits while also reducing our cost of deposits by 50%.”

2

Income Statement
Net Interest Income
Net interest income for the second quarter of 2020 was $121.9 million, a decrease of $571 thousand and $3.3 million from the linked quarter and the prior-year period, respectively. The decrease from the linked quarter was primarily due to lower interest income on loans as the lower rate environment more than offset the increase in interest income from the rise in average loan balances. Interest income from securities decreased as a result of $1.9 million of interest income and discount accretion, in the first quarter of 2020, related to the early payoff of three securities as well as lower rates in the current quarter. Partially offsetting these decreases in interest income was a favorable variance in deposit interest expense due to the lower rate environment and lower interest expense on FHLB borrowings as a result of lower average borrowing balances. Net interest income compared to the prior-year period decreased as a result of interest income on loans being down due to the lower rate environment partially offset by an increase in interest income on securities due to higher average balances. The decrease in interest income was partially offset by favorable decreases in interest expense on interest-bearing deposits and FHLB advances resulting from lower rates. For additional information regarding net interest income, see the “Net Interest Margin” section and the “Average Balances and Rates” tables.
Provision for Credit Losses
The Bank’s provision for credit losses for the second quarter of 2020 was $33.5 million compared to $41.5 million for the linked quarter and $218 thousand for the comparable quarter in 2019. The provision for credit losses for the second quarter of 2020 remained elevated relative to the prior year principally as a result of COVID-19 and the downturn in the national and global economies. As a result, we added $33.5 million to our allowance for credit losses. For more information, please see the “COVID-19 Update” section of this earnings release.
3

Andy McDonald, Columbia’s Executive Vice President and Chief Credit Officer, commented, “We continue to see modest downward pressure in credit quality migration in our loan portfolio, relative to the first quarter. Weaknesses in the retail and hospitality sectors were the primary cause, which is not surprising given the current pandemic environment. Loans migrating to nonaccrual status and net charge-offs during the quarter continue to be from issues with clients that arose prior to COVID-19. Currently, loan payment deferral requests have declined. To illustrate, in June, we extended loan payment deferrals on approximately $58 million in loans as compared to over $1.2 billion in loans in April. While our credit metrics remained stable in the second quarter, we recognize that many challenges associated with the current downturn may not materialize until later this year or next year due to uncertainty with respect to how the pandemic evolves, additional government stimulus, and the effectiveness of loan deferrals, among other factors.”
Noninterest Income
Noninterest income was $37.3 million for the second quarter of 2020, an increase of $16.1 million from the linked quarter and $11.6 million from the second quarter of 2019, respectively. The increases compared to the linked quarter and the same quarter in 2019 were principally due to the sale of 17,360 shares of Visa Class B restricted stock by the Bank for a gain of $3.0 million, which resulted in an observable market price. As a result, the Company wrote up its remaining 77,683 Visa Class B restricted shares to fair value resulting in a gain of $13.4 million, for a total gain of $16.4 million. Based on the existing transfer restriction and uncertainty of Visa’s litigation, the shares were previously carried at a zero-cost basis. We also recognized an $875 thousand gain on the sale of a loan that had previously been charge-off. Partially offsetting these gains were decreases in overdraft fees of $1.1 million and $1.2 million compared to the linked quarter and second quarter of 2019, respectively. The decrease in overdraft fees was due to an overall decrease in the number of transactions during this pandemic time period as well as clients generally carrying higher cash balances in their deposit accounts. In addition, the increase from the prior-year period was partially offset by a $1.1 million current period decrease in treasury management fees and a $3.0 million bank-owned life insurance benefit that was recognized during the second quarter of 2019.
4

Noninterest Expense
Total noninterest expense for the second quarter of 2020 was $80.8 million, a decrease of $3.4 million compared to the first quarter of 2020 principally due to lower compensation and benefits expense. Labor costs related to the origination of PPP loans during the quarter are treated as a contra expense and reduce compensation and benefits expense. These labor costs are capitalized and amortized as a reduction to interest income over the life of the loan. This decrease in noninterest expense was partially offset by an increase in regulatory premiums and provision for unfunded loan commitments. We utilized the remaining $283 thousand of our Small Bank Assessment Credit this quarter related to our FDIC deposit insurance premiums compared to an applied credit of $967 thousand during the first quarter of 2020. The provision for unfunded loan commitments increased by $1.8 million compared to the linked quarter.
Compared to the second quarter of 2019, noninterest expense decreased $5.9 million principally due to the deferral of loan origination costs related to the PPP loans discussed above. Legal and professional fees also declined compared to one year. Partially offsetting these decreases was the $2.6 million increase in the provision for unfunded loan commitments due to higher estimated loss rates and higher amounts of unfunded loan commitments.
The provision for unfunded loan commitments for the periods indicated are as follows:
Three Months Ended Six Months Ended
June 30, 2020 March 31, 2020 June 30, 2019 June 30, 2020 June 30, 2019
(in thousands)
Provision (recapture) for unfunded loan commitments
$ 2,800    $ 1,000    $ 200    $ 3,800    $ (350)  

Net Interest Margin
Columbia’s net interest margin (tax equivalent) for the second quarter of 2020 was 3.64%, a decrease of 36 basis points and 76 basis points from the linked quarter and prior-year period, respectively. The decrease in the net interest margin (tax equivalent) compared to the linked quarter and prior-year period was driven by higher average interest-earning deposits with banks at an average rate of 11 basis points as well as lower rates on the loan and securities portfolios, which were exacerbated by PPP.
5

Columbia’s operating net interest margin (tax equivalent)1 was 3.64% for the second quarter of 2020, which decreased 38 and 74 basis points compared to the linked quarter and the prior-year period, respectively. The decreases in the operating net interest margin for the second quarter of 2020 compared to the linked quarter and the prior-year period were due to the items noted in the preceding paragraph.
The following table highlights the yield on our paycheck protection program loans:
Three Months Ended
June 30, 2020
Paycheck Protection Program loans (dollars in thousands)
Interest income $ 4,590   
Average balance $ 643,966   
Yield 2.87  %

Aaron Deer, Columbia’s Executive Vice President and Chief Financial Officer, stated, “The margin compression we experienced during the quarter was largely due to excess liquidity created by record deposit inflows. Of course, historically low interest rates also contributed to the pressure and, unfortunately, the rate environment may remain a challenge for some time. We will take a measured approach in deploying our excess liquidity given uncertainty as to PPP funds utilization and depositor behavior generally in the current environment.”
Asset Quality
At June 30, 2020, nonperforming assets to total assets remained unchanged at 0.34% compared to March 31, 2020. Total nonperforming assets increased $6.3 million from the linked quarter due to a modest increase in commercial real estate and agriculture nonaccrual loans.
1 Operating net interest margin (tax equivalent) is a non-GAAP financial measure. See the section titled “Non-GAAP Financial Measures” in this earnings release for the reconciliation of operating net interest margin (tax equivalent) to net interest margin.
6

The following table sets forth information regarding nonaccrual loans and total nonperforming assets:
June 30, 2020 March 31, 2020 December 31, 2019
(in thousands)
Nonaccrual loans:
Commercial loans:
Commercial real estate $ 11,155    $ 5,518    $ 3,799   
Commercial business 20,525    24,395    20,937   
Agriculture 19,162    15,083    5,023   
Construction 217    —    —   
Consumer loans:
One-to-four family residential real estate 2,662    2,643    3,292   
Other consumer 11    8    9   
Total nonaccrual loans 53,732    47,647    33,060   
OREO and other personal property owned 747    510    552   
Total nonperforming assets $ 54,479    $ 48,157    $ 33,612   

7

The following table provides an analysis of the Company’s allowance for credit losses:
Three Months Ended Six Months Ended
June 30, 2020 March 31, 2020 June 30, 2019 June 30, 2020 June 30, 2019
(in thousands)
Beginning balance $ 122,074    $ 83,968    $ 83,274    $ 83,968    $ 83,369   
Impact of adopting ASC 326 —    1,632    —    1,632    —   
Charge-offs:
Commercial loans:
Commercial real estate —    (101)   (564)   (101)   (1,242)  
Commercial business (5,442)   (1,684)   (4,316)   (7,126)   (5,822)  
Agriculture —    (4,726)   (61)   (4,726)   (139)  
Construction —    —    (20)   —    (215)  
Consumer loans:
One-to-four family residential real estate —    (10)   (321)   (10)   (802)  
Other consumer (198)   (268)   (5)   (466)   (55)  
Total charge-offs (5,640)   (6,789)   (5,287)   (12,429)   (8,275)  
Recoveries:
Commercial loans:
Commercial real estate 13    14    556    27    1,070   
Commercial business 811    860    492    1,671    1,019   
Agriculture 1    41    64    42    122   
Construction 235    442    691    677    774   
Consumer loans:
One-to-four family residential real estate 422    282    450    704    784   
Other consumer 130    124    59    254    74   
Total recoveries 1,612    1,763    2,312    3,375    3,843   
Net charge-offs (4,028)   (5,026)   (2,975)   (9,054)   (4,432)  
Provision for credit losses 33,500    41,500    218    75,000    1,580   
Ending balance $ 151,546    $ 122,074    $ 80,517    $ 151,546    $ 80,517   
The allowance for credit losses to period-end loans was 1.55% at June 30, 2020 compared to 1.37% at March 31, 2020. Excluding PPP loans, the allowance for credit losses to period-end loans2 was 1.72%.
2 Allowance for credit losses to period-end loans, excluding PPP is a non-GAAP financial measure. See the section titled “Non-GAAP Financial Measures” in this earnings release for the reconciliation of allowance for credit losses to period-end loans to allowance for credit losses to period-end loans, excluding PPP loans.
8

Organizational Update
COVID-19 Update
Columbia launched two community focused initiatives in response to the pandemic, putting more than $1 million to work in support of our local communities. The Pass It On Project is designed to provide small businesses more than $500,000 to perform services for community members whose lives have been adversely impacted by the pandemic or the economic downturn it caused. The program will support more than 350 small businesses and many more individuals in the Northwest as we continue to manage through the pandemic and economic recovery. The COVID-19 Community Relief fund put more than $500,000 in the hands of 25 non-profit organizations working to provide relief for those affected by the pandemic in the Northwest.
“Each of our community programs developed in response to the pandemic honor our deep commitment to support businesses and respond to the evolving needs in our local communities,” said David Moore Devine, Columbia’s Executive Vice President and Chief Marketing & Experience Officer. “Small businesses are the lifeblood of our communities and by helping them thrive through the Pass It On Project, we create a ripple effect of support throughout the Northwest.”
Recognition
Columbia was honored to earn recognition as the #1 bank in the Northwest region by JD Powers in the 2020 Retail Banking Satisfaction Study. The award reflects our ongoing commitment to meeting the needs of our clients with exceptional service.
Boise NeighborHub
The Bank recently announced the expansion of its new retail branch service concept to the Boise, Idaho market with the construction of a new NeighborHub, located in downtown Boise. The NeighborHub concept combines sales and support focused technology with the elevated skill set of a team of bankers with universal knowledge and expertise in handling all business and consumer needs. The location will open in the fall of 2020 and will also serve the broader community as a hub for educational seminars, local events and community functions in the evenings.
“We are excited to bring our signature NeighborHub style of banking to downtown Boise this year,” said Mr. Stein. “The new location will expand our presence in the Treasure Valley and further build upon the success of the first NeighborHub location in the Seattle market.”
9

Cash Dividend Announcement
Columbia will pay a regular cash dividend of $0.28 per common share on August 19, 2020 to shareholders of record as of the close of business on August 5, 2020.
Conference Call Information
        Columbia’s management will discuss the second quarter 2020 financial results on a conference call scheduled for Thursday, July 23, 2020 at 10:00 a.m. Pacific Time (1:00 p.m. ET). Interested parties may join the live-streamed event by using the site:
https://engage.vevent.com/rt/columbiabankingsysteminc/index.jsp?seid=166

The conference call can also be accessed on Thursday, July 23, 2020 at 10:00 a.m. Pacific Time (1:00 p.m. ET) by calling 888-286-8956; Conference ID: 3787244.
A replay of the call can be accessed beginning Friday, July 24, 2020 using the site:
https://engage.vevent.com/rt/columbiabankingsysteminc/index.jsp?seid=166

About Columbia
Headquartered in Tacoma, Washington, Columbia Banking System, Inc. is the holding company of Columbia Bank, a Washington state-chartered full-service commercial bank with locations throughout Washington, Oregon and Idaho. The bank has been named one of Puget Sound Business Journal's “Washington’s Best Workplaces,” more than 10 times and was recently honored as the #1 bank in the Northwest region by JD Power in the 2020 Retail Banking Satisfaction Study. Columbia was named the #1 bank in the Northwest on the Forbes 2020 list of “America’s Best Banks” marking nearly 10 consecutive years on the publication’s list of top financial institutions.
More information about Columbia can be found on its website at www.columbiabank.com.
10

Note Regarding Forward-Looking Statements
This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, descriptions of Columbia’s management’s expectations regarding future events and developments such as future operating results, growth in loans and deposits, continued success of Columbia’s style of banking and the strength of the local economy as well as the potential effects of the COVID-19 pandemic on Columbia’s business, operations, financial performance and prospects. The words “will,” “believe,” “expect,” “intend,” “should,” and “anticipate” or the negative of these words or words of similar construction are intended in part to help identify forward-looking statements. Future events are difficult to predict, and the expectations described above are necessarily subject to risks and uncertainties, many of which are outside our control, that may cause actual results to differ materially and adversely. In addition to discussions about risks and uncertainties set forth from time to time in Columbia’s filings with the Securities and Exchange Commission, available at the U.S. Securities and Exchange Commission’s (the “SEC”) website at www.sec.gov and the Company’s website at www.columbiabank.com, include the “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our annual reports on Form 10-K and quarterly reports on Form 10-Q (as applicable), factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following: (1) local, national and international economic conditions may be less favorable than expected or have a more direct and pronounced effect on Columbia than expected and adversely affect Columbia’s ability to continue its internal growth at historical rates and maintain the quality of its earning assets; (2) the effect of COVID-19 and other infectious illness outbreaks that may arise in the future, which has created significant uncertainties in U.S. and global markets, is expected to continue to adversely affect the businesses in which Columbia is engaged; (3) changes in interest rates could significantly reduce net interest income and negatively affect funding sources; (4) projected business increases following strategic expansion or opening or acquiring new branches may be lower than expected; (5) costs or difficulties related to the integration of acquisitions may be greater than expected; (6) competitive pressure among financial institutions may increase significantly; (7) failure to maintain effective internal control over financial reporting or disclosure controls and procedures may adversely affect our business; (8) reliance on and cost of technology may increase; and (9) changes in governmental policy and regulation, including measures taken in response to economic, business, political and social conditions, including with regard to COVID-19, have adversely affected and may continue to adversely affect the businesses in which Columbia is engaged. We believe the expectations reflected in our forward-looking statements are reasonable, based on information available to us on the date hereof. However, given the described uncertainties and risks, we cannot guarantee our future performance or results of operations and you should not place undue reliance on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the federal securities laws. The factors noted above and the risks and uncertainties described in our SEC filings should be considered when reading any forward-looking statements in this release.

Contacts: Clint Stein, Aaron Deer,
President and Executive Vice President and
Chief Executive Officer Chief Financial Officer
Investor Relations
InvestorRelations@columbiabank.com
253-305-1921

11



CONSOLIDATED BALANCE SHEETS
Columbia Banking System, Inc.
Unaudited June 30, March 31, December 31,
2020 2020 2019
(in thousands)
ASSETS
Cash and due from banks $ 217,461    $ 190,399    $ 223,541   
Interest-earning deposits with banks 880,232    25,357    24,132   
Total cash and cash equivalents 1,097,693    215,756    247,673   
Debt securities available for sale at fair value (amortized cost of $3,491,307, $3,406,492 and $3,703,096, respectively)
3,693,787    3,553,128    3,746,142   
Equity securities 13,425    —    —   
Federal Home Loan Bank (“FHLB”) stock at cost 16,280    38,280    48,120   
Loans held for sale 28,803    9,701    17,718   
Loans, net of unearned income 9,771,898    8,933,321    8,743,465   
Less: Allowance for credit losses 151,546    122,074    83,968   
Loans, net 9,620,352    8,811,247    8,659,497   
Interest receivable 59,149    44,577    46,839   
Premises and equipment, net 164,362    164,626    165,408   
Other real estate owned 747    510    552   
Goodwill 765,842    765,842    765,842   
Other intangible assets, net 30,938    33,148    35,458   
Other assets 429,566    401,688    346,275   
Total assets $ 15,920,944    $ 14,038,503    $ 14,079,524   
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing $ 6,719,437    $ 5,323,908    $ 5,328,146   
Interest-bearing 6,412,040    5,488,848    5,356,562   
Total deposits 13,131,477    10,812,756    10,684,708   
FHLB advances and Federal Reserve Bank ("FRB") borrowings 157,441    712,455    953,469   
Securities sold under agreements to repurchase 51,479    29,252    64,437   
Subordinated debentures 35,185    35,231    35,277   
Revolving line of credit —    5,000    —   
Other liabilities 268,607    230,207    181,671   
Total liabilities 13,644,189    11,824,901    11,919,562   
Commitments and contingent liabilities
Shareholders’ equity:
June 30, March 31, December 31,
2020 2020 2019
(in thousands)
Preferred stock (no par value)
Authorized shares 2,000    2,000    2,000   
Common stock (no par value)
Authorized shares 115,000    115,000    115,000   
Issued 73,770    73,759    73,577    1,654,129    1,651,399    1,650,753   
Outstanding 71,586    71,575    72,124   
Retained earnings 512,383    495,830    519,676   
Accumulated other comprehensive income 181,077    137,207    40,367   
Treasury stock at cost 2,184    2,184    1,453    (70,834)   (70,834)   (50,834)  
Total shareholders’ equity 2,276,755    2,213,602    2,159,962   
Total liabilities and shareholders’ equity $ 15,920,944    $ 14,038,503    $ 14,079,524   

12


CONSOLIDATED STATEMENTS OF INCOME
Columbia Banking System, Inc. Three Months Ended Six Months Ended
Unaudited June 30, March 31, June 30, June 30, June 30,
2020 2020 2019 2020 2019
Interest Income (in thousands except per share amounts)
Loans $ 105,496    $ 107,366    $ 116,585    $ 212,862    $ 225,001   
Taxable securities 18,343    21,088    15,918    39,431    33,333   
Tax-exempt securities 2,257    2,302    2,712    4,559    5,681   
Deposits in banks 136    141    207    277    295   
Total interest income 126,232    130,897    135,422    257,129    264,310   
Interest Expense
Deposits 2,094    3,642    4,976    5,736    9,474   
FHLB advances and FRB borrowings 1,796    4,229    4,708    6,025    7,393   
Subordinated debentures 468    468    468    936    936   
Other borrowings 23    136    154    159    369   
Total interest expense 4,381    8,475    10,306    12,856    18,172   
Net Interest Income 121,851    122,422    125,116    244,273    246,138   
Provision for credit losses 33,500    41,500    218    75,000    1,580   
Net interest income after provision for credit losses 88,351    80,922    124,898    169,273    244,558   
Noninterest Income
Deposit account and treasury management fees 6,092    7,788    9,035    13,880    18,015   
Card revenue 3,079    3,518    3,763    6,597    7,425   
Financial services and trust revenue 3,163    3,065    3,425    6,228    6,382   
Loan revenue 5,607    4,590    3,596    10,197    5,985   
Bank owned life insurance 1,618    1,596    1,597    3,214    3,116   
Investment securities gains, net 16,425    249    285    16,674    2,132   
Other 1,275    401    3,947    1,676    4,289   
Total noninterest income 37,259    21,207    25,648    58,466    47,344   
Noninterest Expense
Compensation and employee benefits 46,043    54,842    52,015    100,885    104,100   
Occupancy 8,812    9,197    8,712    18,009    17,521   
Data processing 5,454    4,840    4,601    10,294    9,270   
Legal and professional fees 3,483    2,102    6,554    5,585    11,127   
Amortization of intangibles 2,210    2,310    2,649    4,520    5,397   
Business and Occupation ("B&O") taxes 1,244    624    1,411    1,868    3,287   
Advertising and promotion 837    1,305    870    2,142    1,844   
Regulatory premiums 1,034    34    956    1,068    1,940   
Net cost (benefit) of operation of other real estate owned (200)   12    (705)   (188)   (592)  
Other 11,916    9,005    9,665    20,921    17,534   
Total noninterest expense 80,833    84,271    86,728    165,104    171,428   
Income before income taxes 44,777    17,858    63,818    62,635    120,474   
Provision for income taxes 8,195    3,230    12,094    11,425    22,879   
Net Income $ 36,582    $ 14,628    $ 51,724    $ 51,210    $ 97,595   
Earnings per common share
Basic $ 0.52    $ 0.20    $ 0.71    $ 0.72    $ 1.33   
Diluted $ 0.52    $ 0.20    $ 0.71    $ 0.72    $ 1.33   
Dividends declared per common share - regular $ 0.28    $ 0.28    $ 0.28    $ 0.56    $ 0.56   
Dividends declared per common share - special —    0.22    0.14    0.22    0.28   
   Dividends declared per common share - total $ 0.28    $ 0.50    $ 0.42    $ 0.78    $ 0.84   
Weighted average number of common shares outstanding 70,679    71,206    72,451    70,942    72,486   
Weighted average number of diluted common shares outstanding
70,711    71,264    72,451    70,981    72,487   

13


FINANCIAL STATISTICS
Columbia Banking System, Inc. Three Months Ended Six Months Ended
Unaudited June 30, March 31, June 30, June 30, June 30,
2020 2020 2019 2020 2019
Earnings (dollars in thousands except per share amounts)
Net interest income $ 121,851    $ 122,422    $ 125,116    $ 244,273    $ 246,138   
Provision for credit losses $ 33,500    $ 41,500    $ 218    $ 75,000    $ 1,580   
Noninterest income $ 37,259    $ 21,207    $ 25,648    $ 58,466    $ 47,344   
Noninterest expense $ 80,833    $ 84,271    $ 86,728    $ 165,104    $ 171,428   
Net income $ 36,582    $ 14,628    $ 51,724    $ 51,210    $ 97,595   
Per Common Share
Earnings (basic) $ 0.52    $ 0.20    $ 0.71    $ 0.72    $ 1.33   
Earnings (diluted) $ 0.52    $ 0.20    $ 0.71    $ 0.72    $ 1.33   
Book value $ 31.80    $ 30.93    $ 29.26    $ 31.80    $ 29.26   
Tangible book value per common share (1) $ 20.67    $ 19.76    $ 18.20    $ 20.67    $ 18.20   
Averages
Total assets $ 15,148,488    $ 13,995,632    $ 13,096,413    $ 14,572,060    $ 13,072,360   
Interest-earning assets $ 13,657,719    $ 12,487,550    $ 11,606,727    $ 13,072,635    $ 11,584,301   
Loans $ 9,546,099    $ 8,815,755    $ 8,601,819    $ 9,180,927    $ 8,504,781   
Securities, including equity securities and FHLB stock $ 3,591,693    $ 3,618,567    $ 2,969,749    $ 3,605,131    $ 3,054,504   
Deposits $ 12,220,415    $ 10,622,379    $ 10,186,371    $ 11,421,397    $ 10,228,459   
Interest-bearing deposits $ 6,037,107    $ 5,383,203    $ 5,174,875    $ 5,710,155    $ 5,200,493   
Interest-bearing liabilities $ 6,514,012    $ 6,375,931    $ 5,841,425    $ 6,444,971    $ 5,822,301   
Noninterest-bearing deposits $ 6,183,308    $ 5,239,176    $ 5,011,496    $ 5,711,242    $ 5,027,966   
Shareholders’ equity $ 2,254,349    $ 2,193,051    $ 2,096,157    $ 2,223,700    $ 2,070,636   
Financial Ratios
Return on average assets 0.97  % 0.42  % 1.58  % 0.70  % 1.49  %
Return on average common equity 6.49  % 2.67  % 9.87  % 4.61  % 9.43  %
Return on average tangible common equity (1) 10.53  % 4.72  % 16.71  % 7.69  % 16.15  %
Average equity to average assets 14.88  % 15.67  % 16.01  % 15.26  % 15.84  %
Shareholders' equity to total assets 14.30  % 15.77  % 16.30  % 14.30  % 16.30  %
Tangible common shareholders’ equity to tangible assets (1) 9.79  % 10.68  % 10.80  % 9.79  % 10.80  %
Net interest margin (tax equivalent) 3.64  % 4.00  % 4.40  % 3.82  % 4.36  %
Efficiency ratio (tax equivalent) (2) 50.09  % 57.73  % 56.57  % 53.72  % 57.43  %
Operating efficiency ratio (tax equivalent) (1) 54.91  % 57.24  % 56.34  % 56.08  % 56.93  %
Noninterest expense ratio 2.13  % 2.41  % 2.65  % 2.27  % 2.62  %
June 30, March 31, December 31,
Period-end 2020 2020 2019
Total assets $ 15,920,944    $ 14,038,503    $ 14,079,524   
Loans, net of unearned income $ 9,771,898    $ 8,933,321    $ 8,743,465   
Allowance for credit losses $ 151,546    $ 122,074    $ 83,968   
Securities, including equity securities and FHLB stock $ 3,723,492    $ 3,591,408    $ 3,794,262   
Deposits $ 13,131,477    $ 10,812,756    $ 10,684,708   
Shareholders’ equity $ 2,276,755    $ 2,213,602    $ 2,159,962   
Nonperforming assets
Nonaccrual loans $ 53,732    $ 47,647    $ 33,060   
Other real estate owned (“OREO”) and other personal property owned (“OPPO”)
747    510    552   
Total nonperforming assets $ 54,479    $ 48,157    $ 33,612   
Nonperforming loans to period-end loans 0.55  % 0.53  % 0.38  %
Nonperforming assets to period-end assets 0.34  % 0.34  % 0.24  %
Allowance for credit losses to period-end loans 1.55  % 1.37  % 0.96  %
Net loan charge-offs (for the three months ended) $ 4,028    $ 5,026    $ 306   
__________
(1) This is a non-GAAP measure. See section titled "Non-GAAP Financial Measures" on the last three pages of this earnings release for a reconciliation to the most comparable GAAP measure.
(2) Noninterest expense divided by the sum of net interest income on a tax equivalent basis and noninterest income on a tax equivalent basis.
14


QUARTERLY FINANCIAL STATISTICS
Columbia Banking System, Inc. Three Months Ended
Unaudited June 30, March 31, December 31, September 30, June 30,
2020 2020 2019 2019 2019
Earnings (dollars in thousands except per share amounts)
Net interest income $ 121,851    $ 122,422    $ 124,817    $ 122,450    $ 125,116   
Provision for credit losses $ 33,500    $ 41,500    $ 1,614    $ 299    $ 218   
Noninterest income $ 37,259    $ 21,207    $ 21,807    $ 28,030    $ 25,648   
Noninterest expense $ 80,833    $ 84,271    $ 86,978    $ 87,076    $ 86,728   
Net income $ 36,582    $ 14,628    $ 46,129    $ 50,727    $ 51,724   
Per Common Share
Earnings (basic) $ 0.52    $ 0.20    $ 0.64    $ 0.70    $ 0.71   
Earnings (diluted) $ 0.52    $ 0.20    $ 0.64    $ 0.70    $ 0.71   
Book value $ 31.80    $ 30.93    $ 29.95    $ 29.90    $ 29.26   
Averages
Total assets $ 15,148,488    $ 13,995,632    $ 13,750,840    $ 13,459,774    $ 13,096,413   
Interest-earning assets $ 13,657,719    $ 12,487,550    $ 12,231,779    $ 11,941,578    $ 11,606,727   
Loans $ 9,546,099    $ 8,815,755    $ 8,742,246    $ 8,694,592    $ 8,601,819   
Securities, including equity securities and FHLB stock $ 3,591,693    $ 3,618,567    $ 3,453,554    $ 3,102,213    $ 2,969,749   
Deposits $ 12,220,415    $ 10,622,379    $ 10,959,434    $ 10,668,767    $ 10,186,371   
Interest-bearing deposits $ 6,037,107    $ 5,383,203    $ 5,610,850    $ 5,517,171    $ 5,174,875   
Interest-bearing liabilities $ 6,514,012    $ 6,375,931    $ 6,058,319    $ 5,989,042    $ 5,841,425   
Noninterest-bearing deposits $ 6,183,308    $ 5,239,176    $ 5,348,584    $ 5,151,596    $ 5,011,496   
Shareholders’ equity $ 2,254,349    $ 2,193,051    $ 2,170,879    $ 2,152,916    $ 2,096,157   
Financial Ratios
Return on average assets 0.97  % 0.42  % 1.34  % 1.51  % 1.58  %
Return on average common equity 6.49  % 2.67  % 8.50  % 9.42  % 9.87  %
Average equity to average assets 14.88  % 15.67  % 15.79  % 16.00  % 16.01  %
Shareholders’ equity to total assets 14.30  % 15.77  % 15.34  % 15.71  % 16.30  %
Net interest margin (tax equivalent) 3.64  % 4.00  % 4.11  % 4.14  % 4.40  %
Period-end
Total assets $ 15,920,944    $ 14,038,503    $ 14,079,524    $ 13,757,760    $ 13,090,808   
Loans, net of unearned income $ 9,771,898    $ 8,933,321    $ 8,743,465    $ 8,756,355    $ 8,646,990   
Allowance for credit losses $ 151,546    $ 122,074    $ 83,968    $ 82,660    $ 80,517   
Securities, including equity securities and FHLB stock $ 3,723,492    $ 3,591,408    $ 3,794,262    $ 3,397,252    $ 2,894,218   
Deposits $ 13,131,477    $ 10,812,756    $ 10,684,708    $ 10,855,716    $ 10,211,599   
Shareholders’ equity $ 2,276,755    $ 2,213,602    $ 2,159,962    $ 2,161,577    $ 2,133,638   
Goodwill $ 765,842    $ 765,842    $ 765,842    $ 765,842    $ 765,842   
Other intangible assets, net $ 30,938    $ 33,148    $ 35,458    $ 37,908    $ 40,540   
Nonperforming assets
Nonaccrual loans $ 53,732    $ 47,647    $ 33,060    $ 37,021    $ 39,038   
OREO and OPPO 747    510    552    625    1,118   
Total nonperforming assets $ 54,479    $ 48,157    $ 33,612    $ 37,646    $ 40,156   
Nonperforming loans to period-end loans 0.55  % 0.53  % 0.38  % 0.42  % 0.45  %
Nonperforming assets to period-end assets 0.34  % 0.34  % 0.24  % 0.27  % 0.31  %
Allowance for credit losses to period-end loans 1.55  % 1.37  % 0.96  % 0.94  % 0.93  %
Net loan charge-offs (recoveries) $ 4,028    $ 5,026    $ 306    $ (1,844)   $ 2,975   

15


LOAN PORTFOLIO COMPOSITION
Columbia Banking System, Inc.
Unaudited June 30, March 31, December 31, September 30, June 30,
2020 2020 2019 2019 2019
Loan Portfolio Composition - Dollars (dollars in thousands)
Commercial loans:
Commercial real estate $ 4,032,643    $ 3,969,974    $ 3,945,853    $ 3,746,365    $ 3,689,282   
Commercial business 3,859,513    3,169,668    2,989,613    3,057,669    3,059,066   
Agriculture 845,950    754,491    765,371    777,619    744,481   
Construction 304,015    308,186    361,533    479,171    446,101   
Consumer loans:
One-to-four family residential real estate 692,837    690,506    637,325    654,077    667,037   
Other consumer 36,940    40,496    43,770    41,454    41,023   
Total loans 9,771,898    8,933,321    8,743,465    8,756,355    8,646,990   
Less: Allowance for credit losses (151,546)   (122,074)   (83,968)   (82,660)   (80,517)  
Total loans, net $ 9,620,352    $ 8,811,247    $ 8,659,497    $ 8,673,695    $ 8,566,473   
Loans held for sale $ 28,803    $ 9,701    $ 17,718    $ 15,036    $ 12,189   

June 30, March 31, December 31, September 30, June 30,
Loan Portfolio Composition - Percentages 2020 2020 2019 2019 2019
Commercial loans:
Commercial real estate 41.2  % 44.5  % 45.1  % 42.7  % 42.6  %
Commercial business 39.5  % 35.5  % 34.2  % 34.9  % 35.4  %
Agriculture 8.7  % 8.4  % 8.8  % 8.9  % 8.6  %
Construction 3.1  % 3.4  % 4.1  % 5.5  % 5.2  %
Consumer loans:
One-to-four family residential real estate 7.1  % 7.7  % 7.3  % 7.5  % 7.7  %
Other consumer 0.4  % 0.5  % 0.5  % 0.5  % 0.5  %
Total loans 100.0  % 100.0  % 100.0  % 100.0  % 100.0  %

16


DEPOSIT COMPOSITION
Columbia Banking System, Inc.
Unaudited
June 30, March 31, December 31, September 30, June 30,
2020 2020 2019 2019 2019
Deposit Composition - Dollars (dollars in thousands)
Demand and other noninterest-bearing $ 6,719,437    $ 5,323,908    $ 5,328,146    $ 5,320,435    $ 5,082,219   
Money market 2,586,376    2,313,717    2,322,644    2,295,229    2,240,522   
Interest-bearing demand 1,274,058    1,131,874    1,150,437    1,059,502    1,058,545   
Savings 1,035,723    905,931    882,050    892,438    887,172   
Interest-bearing public funds, other than certificates of deposit
623,496    405,810    301,203    629,797    270,398   
Certificates of deposit, less than $250,000 210,357    214,449    218,764    223,249    228,920   
Certificates of deposit, $250,000 or more 104,330    109,659    151,995    107,506    105,782   
Certificates of deposit insured by CDARS® 17,078    17,171    17,065    17,252    16,559   
Brokered certificates of deposit 8,427    12,259    12,259    18,852    40,502   
Reciprocal money market accounts 552,195    377,980    300,158    291,542    281,247   
Subtotal 13,131,477    10,812,758    10,684,721    10,855,802    10,211,866   
     Valuation adjustment resulting from acquisition accounting
—    (2)   (13)   (86)   (267)  
Total deposits $ 13,131,477    $ 10,812,756    $ 10,684,708    $ 10,855,716    $ 10,211,599   

June 30, March 31, December 31, September 30, June 30,
Deposit Composition - Percentages 2020 2020 2019 2019 2019
Demand and other noninterest-bearing 51.2  % 49.2  % 49.9  % 49.0  % 49.8  %
Money market 19.7  % 21.4  % 21.7  % 21.1  % 21.9  %
Interest-bearing demand 9.7  % 10.5  % 10.8  % 9.8  % 10.4  %
Savings 7.9  % 8.4  % 8.3  % 8.2  % 8.7  %
Interest-bearing public funds, other than certificates of deposit
4.7  % 3.8  % 2.8  % 5.8  % 2.7  %
Certificates of deposit, less than $250,000 1.6  % 2.0  % 2.0  % 2.1  % 2.2  %
Certificates of deposit, $250,000 or more 0.8  % 1.0  % 1.4  % 1.0  % 1.0  %
Certificates of deposit insured by CDARS® 0.1  % 0.2  % 0.2  % 0.2  % 0.2  %
Brokered certificates of deposit 0.1  % 0.1  % 0.1  % 0.2  % 0.4  %
Reciprocal money market accounts 4.2  % 3.4  % 2.8  % 2.6  % 2.7  %
Total 100.0  % 100.0  % 100.0  % 100.0  % 100.0  %

17


AVERAGE BALANCES AND RATES
Columbia Banking System, Inc.
Unaudited
Three Months Ended Three Months Ended
June 30, 2020 June 30, 2019
Average
Balances 		Interest
Earned / Paid 		Average
Rate 		Average
Balances 		Interest
Earned / Paid 		Average
Rate
(dollars in thousands)
ASSETS
Loans, net (1)(2) $ 9,546,099    $ 106,737    4.50  % $ 8,601,819    $ 117,984    5.50  %
Taxable securities 3,189,805    18,343    2.31  % 2,506,672    15,918    2.55  %
Tax exempt securities (2) 401,888    2,857    2.86  % 463,077    3,433    2.97  %
Interest-earning deposits with banks 519,927    136    0.11  % 35,159    207    2.36  %
Total interest-earning assets 13,657,719    128,073    3.77  % 11,606,727    137,542    4.75  %
Other earning assets 234,019    233,273   
Noninterest-earning assets 1,256,750    1,256,413   
Total assets $ 15,148,488    $ 13,096,413   
LIABILITIES AND SHAREHOLDERS’ EQUITY
Money market accounts (3) $ 2,939,657    $ 974    0.13  % $ 2,539,757    $ 2,896    0.46  %
Interest-bearing demand (3) 1,213,182    339    0.11  % 1,066,876    428    0.16  %
Savings accounts (3) 976,785    38    0.02  % 891,341    43    0.02  %
Interest-bearing public funds, other than certificates of deposit (3)
559,256    393    0.28  % 273,387    1,023    1.50  %
Certificates of deposit 348,227    350    0.40  % 403,514    586    0.58  %
Total interest-bearing deposits 6,037,107    2,094    0.14  % 5,174,875    4,976    0.39  %
FHLB advances and FRB borrowings 407,035    1,796    1.77  % 602,041    4,708    3.14  %
Subordinated debentures 35,207    468    5.35  % 35,392    468    5.30  %
Other borrowings and interest-bearing liabilities
34,663    23    0.27  % 29,117    154    2.12  %
Total interest-bearing liabilities 6,514,012    4,381    0.27  % 5,841,425    10,306    0.71  %
Noninterest-bearing deposits 6,183,308    5,011,496   
Other noninterest-bearing liabilities 196,819    147,335   
Shareholders’ equity 2,254,349    2,096,157   
Total liabilities & shareholders’ equity $ 15,148,488    $ 13,096,413   
Net interest income (tax equivalent) $ 123,692    $ 127,236   
Net interest margin (tax equivalent) 3.64  % 4.40  %
__________
(1)Nonaccrual loans have been included in the tables as loans carrying a zero yield. Amortized net deferred loan fees and net unearned discounts on acquired loans were included in the interest income calculations. The amortization of net deferred loan fees was $5.1 million and $2.1 million for the three months ended June 30, 2020 and 2019, respectively. The incremental accretion income on acquired loans was $1.7 million and $2.7 million for the three months ended June 30, 2020 and 2019, respectively.
(2)Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $1.2 million and $1.4 million for the three months ended June 30, 2020 and 2019, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $600 thousand and $721 thousand for the three months ended June 30, 2020 and 2019, respectively.
(3)Beginning July 2019, interest-bearing public funds, other than certificates of deposit, are presented separately in this table. Prior period amounts have been reclassified to conform to current period presentation.
18


AVERAGE BALANCES AND RATES
Columbia Banking System, Inc.
Unaudited
  Three Months Ended Three Months Ended
  June 30, 2020 March 31, 2020
Average
Balances 		Interest
Earned / Paid 		Average
Rate 		Average
Balances 		Interest
Earned / Paid 		Average
Rate
(dollars in thousands)
ASSETS
Loans, net (1)(2) $ 9,546,099    $ 106,737    4.50  % $ 8,815,755    $ 108,665    4.96  %
Taxable securities 3,189,805    18,343    2.31  % 3,209,110    21,088    2.64  %
Tax exempt securities (2) 401,888    2,857    2.86  % 409,457    2,914    2.86  %
Interest-earning deposits with banks 519,927    136    0.11  % 53,228    141    1.07  %
Total interest-earning assets 13,657,719    128,073    3.77  % 12,487,550    132,808    4.28  %
Other earning assets 234,019    232,361   
Noninterest-earning assets 1,256,750    1,275,721   
Total assets $ 15,148,488    $ 13,995,632   
LIABILITIES AND SHAREHOLDERS’ EQUITY
Money market accounts $ 2,939,657    $ 974    0.13  % $ 2,633,931    $ 1,728    0.26  %
Interest-bearing demand 1,213,182    339    0.11  % 1,125,691    484    0.17  %
Savings accounts 976,785    38    0.02  % 897,276    43    0.02  %
Interest-bearing public funds, other than certificates of deposit
559,256    393    0.28  % 355,401    903    1.02  %
Certificates of deposit 348,227    350    0.40  % 370,904    484    0.52  %
Total interest-bearing deposits 6,037,107    2,094    0.14  % 5,383,203    3,642    0.27  %
FHLB advances and FRB borrowings 407,035    1,796    1.77  % 909,110    4,229    1.87  %
Subordinated debentures 35,207    468    5.35  % 35,253    468    5.34  %
Other borrowings and interest-bearing liabilities
34,663    23    0.27  % 48,365    136    1.13  %
Total interest-bearing liabilities 6,514,012    4,381    0.27  % 6,375,931    8,475    0.53  %
Noninterest-bearing deposits 6,183,308    5,239,176   
Other noninterest-bearing liabilities 196,819    187,474   
Shareholders’ equity 2,254,349    2,193,051   
Total liabilities & shareholders’ equity $ 15,148,488    $ 13,995,632   
Net interest income (tax equivalent) $ 123,692    $ 124,333   
Net interest margin (tax equivalent) 3.64  % 4.00  %
__________
(1)Nonaccrual loans have been included in the tables as loans carrying a zero yield. Amortized net deferred loan fees and net unearned discounts on acquired loans were included in the interest income calculations. The amortization of net deferred loan fees was $5.1 million and $2.4 million for the three months ended June 30, 2020 and March 31, 2020, respectively. The incremental accretion on acquired loans was $1.7 million and $1.5 million for the three months ended June 30, 2020 and March 31, 2020, respectively.
(2)Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $1.2 million and $1.3 million for the three months ended June 30, 2020 and March 31, 2020, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $600 thousand and $612 thousand for the three months ended June 30, 2020 and March 31, 2020, respectively.
19


AVERAGE BALANCES AND RATES
Columbia Banking System, Inc.
Unaudited
  Six Months Ended Six Months Ended
  June 30, 2020 June 30, 2019
Average
Balances 		Interest
Earned / Paid 		Average
Rate 		Average
Balances 		Interest
Earned / Paid 		Average
Rate
(dollars in thousands)
ASSETS
Loans, net (1)(2) $ 9,180,927    $ 215,402    4.72  % $ 8,504,781    $ 227,699    5.40  %
Taxable securities 3,199,458    39,431    2.48  % 2,571,692    33,333    2.61  %
Tax exempt securities (2) 405,673    5,771    2.86  % 482,812    7,191    3.00  %
Interest-earning deposits with banks 286,577    277    0.19  % 25,016    295    2.38  %
Total interest-earning assets 13,072,635    $ 260,881    4.01  % 11,584,301    $ 268,518    4.67  %
Other earning assets 233,190    232,678   
Noninterest-earning assets 1,266,235    1,255,381   
Total assets $ 14,572,060    $ 13,072,360   
LIABILITIES AND SHAREHOLDERS’ EQUITY
Money market accounts (3) $ 2,786,794    $ 2,702    0.19  % $ 2,562,742    $ 5,481    0.43  %
Interest-bearing demand (3) 1,169,436    823    0.14  % 1,070,715    792    0.15  %
Savings accounts (3) 937,030    81    0.02  % 893,913    86    0.02  %
Interest-bearing public funds, other than certificates of deposit (4)
457,328    1,296    0.57  % 268,105    1,953    1.47  %
Certificates of deposit 359,567    834    0.47  % 405,018    1,162    0.58  %
Total interest-bearing deposits 5,710,155    5,736    0.20  % 5,200,493    9,474    0.37  %
FHLB advances and FRB borrowings 658,072    6,025    1.84  % 551,018    7,393    2.71  %
Subordinated debentures 35,230    936    5.34  % 35,415    936    5.33  %
Other borrowings and interest-bearing liabilities
41,514    159    0.77  % 35,375    369    2.10  %
Total interest-bearing liabilities 6,444,971    $ 12,856    0.40  % 5,822,301    $ 18,172    0.63  %
Noninterest-bearing deposits 5,711,242    5,027,966   
Other noninterest-bearing liabilities 192,147    151,457   
Shareholders’ equity 2,223,700    2,070,636   
Total liabilities & shareholders’ equity $ 14,572,060    $ 13,072,360   
Net interest income (tax equivalent) $ 248,025    $ 250,346   
Net interest margin (tax equivalent) 3.82  % 4.36  %
__________
(1)Nonaccrual loans have been included in the table as loans carrying a zero yield. Amortized net deferred loan fees and net unearned discounts on acquired loans were included in the interest income calculations. The amortization of net deferred loan fees was $7.5 million and $4.3 million for the six months ended June 30, 2020 and 2019, respectively. The incremental accretion on acquired loans was $3.2 million and $4.7 million for the six months ended June 30, 2020 and 2019, respectively.
(2)Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $2.5 million and $2.7 million for the six months ended June 30, 2020 and 2019, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.2 million and $1.5 million for the six months ended June 30, 2020 and 2019, respectively.
(3)Beginning July 2019, interest-bearing public funds, other than certificates of deposit, are presented separately in this table. Prior period amounts have been reclassified to conform to current period presentation.
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Non-GAAP Financial Measures
The Company considers its operating net interest margin (tax equivalent) and operating efficiency ratios to be useful measurements as they more closely reflect the ongoing operating performance of the Company. Despite the usefulness of the operating net interest margin (tax equivalent) and operating efficiency ratio to the Company, there are no standardized definitions for them. As a result, the Company’s calculations may not be comparable with other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.
The following tables reconcile the Company’s calculation of the operating net interest margin (tax equivalent) and operating efficiency ratio:
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2020 2020 2019 2020 2019
Operating net interest margin non-GAAP reconciliation: (dollars in thousands)
Net interest income (tax equivalent) (1) $ 123,692    $ 124,333    $ 127,236    $ 248,025    $ 250,346   
Adjustments to arrive at operating net interest income (tax equivalent):
Incremental accretion income on acquired loans (2) (1,675)   (1,491)   (2,663)   (3,166)   (4,698)  
Premium amortization on acquired securities 975    1,127    1,651    2,102    3,430   
Interest reversals on nonaccrual loans 673    788    662    1,461    1,288   
Operating net interest income (tax equivalent) (1) $ 123,665    $ 124,757    $ 126,886    $ 248,422    $ 250,366   
Average interest earning assets $ 13,657,719    $ 12,487,550    $ 11,606,727    $ 13,072,635    $ 11,584,301   
Net interest margin (tax equivalent) (1) 3.64  % 4.00  % 4.40  % 3.82  % 4.36  %
Operating net interest margin (tax equivalent) (1) 3.64  % 4.02  % 4.38  % 3.82  % 4.36  %

Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2020 2020 2019 2020 2019
Operating efficiency ratio non-GAAP reconciliation: (dollars in thousands)
Noninterest expense (numerator A) $ 80,833    $ 84,271    $ 86,728    $ 165,104    $ 171,428   
Adjustments to arrive at operating noninterest expense:
Net benefit (cost) of operation of OREO and OPPO 200    (4)   705    196    591   
Loss on asset disposals (220)   (4)   —    (224)   —   
Business and Occupation (“B&O”) taxes (1,244)   (624)   (1,411)   (1,868)   (3,287)  
Operating noninterest expense (numerator B) $ 79,569    $ 83,639    $ 86,022    $ 163,208    $ 168,732   
Net interest income (tax equivalent) (1) $ 123,692    $ 124,333    $ 127,236    $ 248,025    $ 250,346   
Noninterest income 37,259    21,207    25,648    58,466    47,344   
Bank owned life insurance tax equivalent adjustment 430    424    424    854    828   
Total revenue (tax equivalent) (denominator A) $ 161,381    $ 145,964    $ 153,308    $ 307,345    $ 298,518   
Operating net interest income (tax equivalent) (1) $ 123,665    $ 124,757    $ 126,886    $ 248,422    $ 250,366   
Adjustments to arrive at operating noninterest income (tax equivalent):
Investment securities loss (gain), net (16,425)   (249)   (285)   (16,674)   (2,132)  
Gain on asset disposals (26)   (21)   —    (47)   —   
Operating noninterest income (tax equivalent) 21,238    21,361    25,787    42,599    46,040   
Total operating revenue (tax equivalent) (denominator B) $ 144,903    $ 146,118    $ 152,673    $ 291,021    $ 296,406   
Efficiency ratio (tax equivalent) (numerator A/denominator A) 50.09  % 57.73  % 56.57  % 53.72  % 57.43  %
Operating efficiency ratio (tax equivalent) (numerator B/denominator B)
54.91  % 57.24  % 56.34  % 56.08  % 56.93  %
__________
(1) Tax-exempt interest income has been adjusted to a tax equivalent basis. The amount of such adjustment was an addition to net interest income of $1.8 million, $1.9 million, and $2.1 million for the three months ended June 30, 2020, March 31, 2020, and June 30, 2019, respectively, and $3.8 million and $4.2 million for the six months ended June 30, 2020 and 2019, respectively.
(2) Beginning January 2020, incremental accretion income on purchased credit impaired loans is no longer presented separate from incremental accretion income on other acquired loans. Prior period amounts have been reclassified to conform with current period presentation.


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Non-GAAP Financial Measures - Continued
The Company considers its pre-tax, pre-provision income to be a useful measurement in evaluating the earnings of the Company as it provides a method to assess income. Despite the usefulness of this measure to the Company, there is not a standardized definition for it. As a result, the Company’s calculation may not always be comparable with other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.

The following table reconciles the Company’s calculation of the pre-tax, pre-provision income:
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2020 2020 2019 2020 2019
Pre-tax, pre-provision income: (in thousands)
Income before income taxes $ 44,777    $ 17,858    $ 63,818    $ 62,635    $ 120,474   
Provision for credit losses 33,500    41,500    218    75,000    1,580   
Pre-tax, pre-provision income $ 78,277    $ 59,358    $ 64,036    $ 137,635    $ 122,054   

The Company considers its tangible common equity ratio and tangible book value per share ratio to be useful measurements in evaluating the capital adequacy of the Company as they provide a method to assess management’s success in utilizing our tangible capital. Despite the usefulness of these ratios to the Company, there is not a standardized definition for them. As a result, the Company’s calculation may not always be comparable with other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.

The following tables reconcile the Company’s calculation of the tangible common equity ratio:

June 30, March 31, June 30,
2020 2020 2019
Tangible common equity ratio and tangible book value per common share non-GAAP reconciliation:
(dollars in thousands except per share amounts)
Shareholders’ equity (numerator A) $ 2,276,755    $ 2,213,602    $ 2,133,638   
Adjustments to arrive at tangible common equity:
Goodwill (765,842)   (765,842)   (765,842)  
Other intangible assets, net (30,938)   (33,148)   (40,540)  
Tangible common equity (numerator B) $ 1,479,975    $ 1,414,612    $ 1,327,256   
Total assets (denominator A) $ 15,920,944    $ 14,038,503    $ 13,090,808   
Adjustments to arrive at tangible assets:
Goodwill (765,842)   (765,842)   (765,842)  
Other intangible assets, net (30,938)   (33,148)   (40,540)  
Tangible assets (denominator B) $ 15,124,164    $ 13,239,513    $ 12,284,426   
Shareholders’ equity to total assets (numerator A/denominator A) 14.30  % 15.77  % 16.30  %
Tangible common shareholders’ equity to tangible assets (numerator B/denominator B) 9.79  % 10.68  % 10.80  %
Common shares outstanding (denominator C) 71,586    71,575    72,924   
Book value per common share (numerator A/denominator C) $ 31.80    $ 30.93    $ 29.26   
Tangible book value per common share (numerator B/denominator C) $ 20.67    $ 19.76    $ 18.20   


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Non-GAAP Financial Measures - Continued
The Company considers its ratio of allowance for credit losses to period-end loans, excluding PPP loans, to be a useful measurement in evaluating the adequacy of the amount of allowance for credit losses to loans of the Company as PPP loans are guaranteed by the U.S. Small Business Administration and thus do not require the same amount of reserve for credit losses as do other loans. Despite the usefulness of this ratio to the Company, there is not a standardized definition for it. As a result, the Company’s calculation may not always be comparable with other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.

The following table reconciles the Company’s calculation of the allowance for credit losses to period-end loans:

June 30, March 31, June 30,
2020 2020 2019
Allowance for credit losses to period-end loans ratio non-GAAP reconciliation: (dollars in thousands)
Allowance for credit losses ("ACL") (numerator) $ 151,546    $ 122,074    $ 80,517   
Total loans, net of unearned income (denominator A) 9,771,898    8,933,321    8,646,990   
Less: PPP loans, net of unearned income (0% ACL) 941,373    —    —   
Total loans, net of PPP loans (denominator B) $ 8,830,525    $ 8,933,321    $ 8,646,990   
ACL to period-end loans (numerator / denominator A) 1.55  % 1.37  % 0.93  %
ACL to period-end loans, excluding PPP loans (numerator / denominator B) 1.72  % 1.37  % 0.93  %

The Company also considers its return on average tangible common equity ratio to be a useful measurement as it evaluates the Company’s ongoing ability to generate returns for its common shareholders. By removing the impact of intangible assets and their related amortization and tax effects, the performance of the business can be evaluated, whether acquired or developed internally. Despite the usefulness of this ratio to the Company, there is not a standardized definition for it. As a result, the Company’s calculation may not always be comparable with other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.

The following tables reconcile the Company’s calculation of the return on average tangible common shareholders' equity ratio:
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2020 2020 2019 2020 2019
Return on average tangible common equity non-GAAP reconciliation:
(dollars in thousands)
Net income (numerator A) $ 36,582    $ 14,628    $ 51,724    $ 51,210    $ 97,595   
Adjustments to arrive at tangible income applicable to common shareholders:
Amortization of intangibles 2,210    2,310    2,649    4,520    5,397   
Tax effect on intangible amortization (464)   (485)   (556)   (949)   (1,133)  
Tangible income applicable to common shareholders (numerator B) $ 38,328    $ 16,453    $ 53,817    54,781    $ 101,859   
Average shareholders’ equity (denominator A) $ 2,254,349    $ 2,193,051    $ 2,096,157    2,223,700    $ 2,070,636   
Adjustments to arrive at average tangible common equity:
Average intangibles (797,855)   (800,079)   (807,678)   (798,967)   (809,020)  
Average tangible common equity (denominator B) $ 1,456,494    $ 1,392,972    $ 1,288,479    $ 1,424,733    $ 1,261,616   
Return on average common equity (numerator A/denominator A) (1) 6.49  % 2.67  % 9.87  % 4.61  % 9.43  %
Return on average tangible common equity (numerator B/denominator B) (2)
10.53  % 4.72  % 16.71  % 7.69  % 16.15  %
__________
(1) For the purpose of this ratio, interim net income has been annualized.
(2) For the purpose of this ratio, interim tangible income applicable to common shareholders has been annualized.


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