Columbia Banking System, Inc. reports Q4 2023 results
Columbia Banking System, Inc. (Columbia) realized $143 million in annualized net merger-related cost-savings as of December 31, 2023, outpacing the $135 million target communicated when the combination was announced.
As the integration process is now largely complete, we do not intend to provide future updates on cost savings realizations.
However, Columbia has a history of prudent expense management, and the company will continue to evaluate opportunities for improved efficiency as part of the normal course of business to offset franchise development investments. As previously disclosed, Umpqua Bank, the primary subsidiary of Columbia, consolidated five branches during January 2024.
On February 28, 2023, Columbia completed its merger with Umpqua Holdings Corporation (UHC), combining the two premier banks in the Northwest to create one of the largest banks headquartered in the West (the merger).
Columbia's financial results for any periods ended prior to February 28, 2023 reflect UHC results only on a standalone basis. In addition, Columbia's reported financial results for the first quarter of 2023 reflect UHC financial results only until the closing of the merger after the close of business on February 28, 2023.
As a result of these two factors, Columbia's financial results for each of the quarters of 2023 and the year ended December 31, 2023 may not be directly comparable to prior reported periods. The number of shares issued and outstanding, earnings per share, additional paid-in capital, and all references to share quantities or metrics of Columbia have been retrospectively restated to reflect the equivalent number of shares issued in the merger as the merger was treated as a reverse merger.
Under the reverse acquisition method of accounting, the assets and liabilities of Columbia as of February 28, 2023 (historical Columbia) were recorded at their respective fair values.
Net interest income was $454 million for the fourth quarter of 2023, down $27 million from the prior quarter.
The decline reflects higher deposit costs that more than offset a decline in the cost of wholesale borrowings. Columbia's net interest margin was 3.78 percent for the fourth quarter of 2023, down 13 basis points from 3.91 percent for the third quarter of 2023.
The cost of interest-bearing deposits increased 53 basis points on a linked-quarter basis to 2.54 percent for the fourth quarter of 2023, which compares to 2.71 percent for the month of December and 2.75 percent at December 31, 2023.
Deposit costs were impacted by the full quarter's run rate of brokered deposits added during the third quarter to replace maturing FHLB advances.
Further, higher public deposit balances, which reflect seasonal tax-related trends and a focused effort to attract relationship-based public funds in local communities as we work to reduce wholesale funding, also had an impact. Public balances tend to carry a higher interest rate than most other non-maturity deposit balances.
Time deposits also contributed to the quarter's increased cost of deposits as many maturing balances repriced over 200 basis points higher at the expiration of their 12- and 13-month terms.
Columbia's cost of interest-bearing liabilities increased 30 basis points on a linked-quarter basis to 3.02 percent for the fourth quarter of 2023, which compares to 3.15 percent for the month of December and 3.19 percent at December 31, 2023.