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

Net interest income for the first quarter of 2020 was $122.4 million, a decrease of $2.4 million and an increase of $1.4 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 a result of the lower rate environment and higher interest expense on FHLB advances due to higher average advance balances. The decrease to net interest income from the linked quarter was partially offset by an increase in interest income on securities primarily due to $1.9 million of interest income and discount accretion related to the early payoff of three securities and a decrease in interest expense on money market deposits principally due to lower rates. Net interest income compared to the prior year period increased as a result of interest income and discount accretion from the early payoff on securities mentioned previously and higher average balances of securities partially offset by higher interest expense due to higher average balances of FHLB advances. For additional information regarding net interest income, see the "Net Interest Margin" section and the "Average Balances and Rates" tables.

Provision for Credit Losses

Effective January 1, 2020, Columbia adopted Accounting Standards Update 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments ("ASU 2016-13") and all related amendments. The allowance for credit losses under ASU 2016-13 utilizes a Current Expected Credit Losses ("CECL") methodology which estimates the expected loan losses over the contractual life of the loans in the loan portfolio of Columbia Bank (the "Bank"). Prior to January 1, 2020, the Allowance for Loan and Lease Losses ("ALLL") methodology was used which estimated the amount of loan losses that had been incurred at the balance sheet date. The day 1 adoption of ASU 2016-13 and related amendments resulted in an increase of $1.6 million to the Bank's allowance for credit losses, an increase of $1.6 million to the Bank's allowance for unfunded commitments and letters of credit and a net-of-tax cumulative-effect adjustment of $2.5 million to decrease the beginning balance of retained earnings.

The Bank's provision for credit losses for the first quarter of 2020, under the new CECL methodology, was $41.5 million compared to $1.6 million and $1.4 million for the linked quarter and comparable quarter in 2019, respectively, which were calculated under the old ALLL methodology. The significant increase in the provision for the first quarter of 2020 was principally the result of the recent novel coronavirus ("COVID-19") pandemic outbreak that has created significant volatility in the local, national and world economies. With the national guidance regarding social distancing and state and county mandates to shelter or stay at home, many large and small businesses have had to close and there has been a dramatic increase in new unemployment claims. As a result, we have increased our reserves for lifetime credit losses as a result of the economic impact of COVID-19. For more information, please see Note 1 to the Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of our annual report on Form 10-K for the 2019 fiscal year and the "COVID-19 Update" section of this earnings release.

Andy McDonald, Columbia's Executive Vice President and Chief Credit Officer, commented, "The increase in the provision was driven by our economic forecast reflecting the changes in the outlook for the economy driven by measures to mitigate health concerns surrounding COVID-19. Also contributing to the rise in the provision for the quarter was the negative migration in the portfolio which came about, not from customer past dues for example, but from our deep dive into the industries we believe that will be most impacted."

Noninterest Income

Noninterest income was $21.2 million for the first quarter of 2020, a decrease of $600 thousand from the linked quarter and a decrease of $489 thousand from the first quarter of 2019. The linked quarter decrease was principally due to decreases in deposit and other fees partially offset by an increase in loan fees. The decrease from the prior year period was primarily due to lower deposit fees and lower net securities gains partially offset by higher loan revenue.

Noninterest Expense

Total noninterest expense for the first quarter of 2020 was $84.3 million, a decrease of $2.7 million from the fourth quarter of 2019 due to lower legal and professional fees. The decrease in legal and professional fees was principally due to lower fees on reciprocal money market accounts in 2020 as well as lower expenses related to corporate initiatives during the first quarter of 2020.

Compared to the first quarter of 2019, noninterest expense decreased $429 thousand. Although total noninterest expense was relatively unchanged, legal and professional fees and Business and Occupation ("B&O") taxes decreased $2.5 million and $1.3 million, respectively, these decreases were partially offset by an increase of $2.8 million in compensation and employee benefits expense. The decrease in professional fees was due to lower fees on reciprocal money market account fees as well as lower expenses related to corporate initiatives. B&O tax expense benefited from a refund for a prior year.

Net Interest Margin

Columbia's net interest margin (tax equivalent) for the first quarter of 2020 was 4.00%, a decrease of 11 basis points and 32 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 was driven by lower rates on the loan portfolio and higher premium amortization on taxable securities. Compared to the prior year period, the decreased net interest margin (tax equivalent) was driven by lower rates on loans and higher average balances of FHLB advances.

Columbia's operating net interest margin (tax equivalent)⁽¹⁾ was 4.02% for the first quarter of 2020, which decreased 7 and 31 basis points compared to the linked quarter and the prior year period, respectively. The decreases in the operating net interest margin for the first quarter of 2020 compared to the linked quarter and the prior year quarter were due to the items noted in the preceding paragraph.

Asset Quality

At March 31, 2020, nonperforming assets to total assets were 0.34% compared to 0.24% at December 31, 2019. Total nonperforming assets increased $14.5 million from the linked quarter due to an increase in agriculture and commercial business nonaccrual loans.

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

The following table provides an analysis of the Company's allowance for credit losses:

	Three Months Ended
	March 31, 2020				December 31, 2019				March 31, 2019
	(in thousands)
Prior year ending balance	$	83,968			$	82,660			$	83,369
CECL day 1 adjustment	1,632				—				—
Beginning balance	85,600				82,660				83,369
Charge-offs:
Commercial loans:
Commercial real estate	(101)				(452)				(678)
Commercial business	(1,684)				(2,845)				(1,506)
Agriculture	(4,726)				(51)				(78)
Construction	—				(10)				(195) Werbung Mehr Nachrichten zur Columbia Banking System Inc Aktie kostenlos abonnieren E-Mail-Adresse Bitte überprüfe deine die E-Mail-Adresse. Benachrichtigungen von ARIVA.DE (Mit der Bestellung akzeptierst du die Datenschutzhinweise) -1 Vielen Dank, dass du dich für unseren Newsletter angemeldet hast. Du erhältst in Kürze eine E-Mail mit einem Aktivierungslink. Hinweis: ARIVA.DE veröffentlicht in dieser Rubrik Analysen, Kolumnen und Nachrichten aus verschiedenen Quellen. Die ARIVA.DE AG ist nicht verantwortlich für Inhalte, die erkennbar von Dritten in den „News“-Bereich dieser Webseite eingestellt worden sind, und macht sich diese nicht zu Eigen. Diese Inhalte sind insbesondere durch eine entsprechende „von“-Kennzeichnung unterhalb der Artikelüberschrift und/oder durch den Link „Um den vollständigen Artikel zu lesen, klicken Sie bitte hier.“ erkennbar; verantwortlich für diese Inhalte ist allein der genannte Dritte. Andere Nutzer interessierten sich auch für folgende News 08:15 - PR Newswire Samson Rock Capital LLP - Form 8.3 - Kin and Carta Plc 07:10 - PR Newswire Invesco Select Trust Plc - Dividend Declaration 07:01 - PR Newswire BlackRock Frontiers Investment Trust Plc - Portfolio Update Gefragter denn je...:    Explosive Nachfrage und Schockierendes Defizit! Auf den Schwingen des Silbers jetzt abheben! weiterlesen» Anzeige wo-site-teaser-box-16670_site-teaser-box_2024-04-16_08%253A00%253A00_2024-04-17_09%253A00%253A59