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Published: 2023-01-24 00:00:00 ET

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Exhibit 99.1

FOR IMMEDIATE RELEASE

January 24, 2023

Columbia Banking System Announces Fourth Quarter and Full Year 2022 Results and Quarterly Cash Dividend

Notable Items for Fourth Quarter and Fiscal Year 2022

•Record full year net income of $250.2 million and diluted earnings per share of $3.20

•Record quarterly net income of $68.9 million and diluted earnings per share of $0.88, which included a $0.05 per share reduction stemming from merger-related expenses

•Net interest margin of 3.64%, an increase of 17 basis points from the linked quarter

•Fourth quarter loan production of $402.5 million and full year production of $2.20 billion

•Nonperforming assets to period-end assets ratio of 0.07%

•Expect to close the merger with Umpqua Holdings after close of business on February 28, 2023, subject to the satisfaction of closing conditions

•Regular cash dividend declared of $0.30 per share

TACOMA, Washington, January 24, 2023 -- Columbia Banking System, Inc. (NASDAQ: COLB) (“Columbia”, “we” or “us”), the parent company of Columbia Bank (the “Bank”), announced record earnings for the fourth quarter of $68.9 million and diluted earnings per share of $0.88. Clint Stein, President and Chief Executive Officer said today upon the release of Columbia’s earnings, “Words cannot describe how proud I am of what our team accomplished in 2022. Their determination and commitment to our stakeholders resulted in record performance for the quarter and year while preparing for our transformative merger with Umpqua Holdings.” He continued, “Record annual and quarterly revenue and earnings reflect the continued energy, commitment and discipline of our bankers on our frontline and in our back office as they continue to concentrate on doing what is best for our customers and communities over the long term.”

Balance Sheet

Total assets at December 31, 2022 were $20.27 billion, a decrease of $139.5 million from the linked quarter. Loans were $11.61 billion, down $81.3 million from September 30, 2022, mainly attributable to loan payments partially offset by loan originations of $402.5 million. Debt securities in total were $6.62 billion, a decrease of $156.2 million from $6.78 billion at September 30, 2022 substantially driven by maturities and repayments partially offset by fair value movement related to the available-for-sale portfolio. Total deposits at December 31, 2022 were $16.71 billion, a decrease of $1.23 billion from September 30, 2022. The deposit mix remained consistent from September 30, 2022 with 50% noninterest-bearing and 50% interest-bearing.

Chris Merrywell, Columbia’s Executive Vice President and Chief Operating Officer, stated, “While loans declined slightly during the quarter from normal seasonality, loan growth for the year was strong and the overall loan portfolio yield rose as we selectively considered the long-term impact of deals in our pipeline.” He continued, “We continue to focus on the whole client relationship including loans, deposits and investments.”

Income Statement

Net Interest Income

Net interest income for the fourth quarter of 2022 was $166.7 million, an increase of $4.2 million from the linked quarter and an increase of $21.2 million from the prior-year period. The increase from the linked quarter was primarily due to higher loan interest income as a result of increased average rates partially offset by lower interest income from securities due to decreased average balances. In addition, there was higher interest expense due to increased average balances and higher rates of FHLB advances and increased deposit interest expense driven by higher average rates. The increase in net interest income from the prior-year period was mainly due to higher interest income from loans partially offset by higher deposit interest expense due to higher average rates, increased average balances of FHLB advances and lower interest income from securities. For additional information regarding net interest income, see the “Net Interest Margin” section and the “Average Balances and Rates” tables.

Provision for Credit Losses

Columbia recorded a $2.4 million provision for credit losses for the fourth quarter of 2022 compared to a $5.3 million provision for the linked quarter and an $11.1 million provision for the comparable quarter in 2021. The provision for credit losses was mainly due to a less favorable economic forecast.

Noninterest Income

Noninterest income was $23.3 million for the fourth quarter of 2022, a decrease of $3.3 million from the linked quarter and a decrease of $909 thousand from the fourth quarter of 2021. The linked quarter decrease was primarily due to a $3.7 million gain from the sale-leaseback of owned real estate recorded in the prior period partially offset by current quarter bank owned life insurance gains of $354 thousand. The decrease in noninterest income during the fourth quarter of 2022 compared to the same quarter in 2021 was mainly due to lower loan revenue, principally a result of lower mortgage banking revenue and loan-related fees. This was partially offset by higher financial services revenue and increased deposit account and treasury management fees.

Noninterest Expense

Total noninterest expense for the fourth quarter of 2022 was $100.5 million, a decrease of $941 thousand compared to the third quarter of 2022. Total merger-related expenses for the quarter were $4.9 million, which compares to the linked quarter of $3.2 million. The largest contributor to the decrease in noninterest expense was related to lower net loan expenses and lower compensation and employee benefits driven by decreased incentive expense. This was partially offset by increased merger-related data processing and legal expenses incurred during the quarter. Compared to the fourth quarter of 2021, noninterest expense decreased $2.1 million, mostly attributable to a decrease in merger-related compensation and employee benefit expenses related to our fourth quarter 2021 acquisition of Bank of Commerce Holdings. Decreased merger-related expenses also contributed to the decrease from the prior-year period.

The provision for credit losses on unfunded loan commitments, a component of other noninterest expense, for the periods indicated are as follows:


	Three Months Ended						Twelve Months Ended
	December 31,		September 30,		December 31,		December 31,		December 31,
	2022		2022		2021		2022		2021

	(in thousands)
Provision (recapture) for credit losses on unfunded loan commitments	$	(500)	$	(500)	$	(2,000)	$	(500)	$	200

Net Interest Margin

Columbia’s net interest margin (tax equivalent) for the fourth quarter of 2022 was 3.64%, an increase of 17 basis points from the linked quarter and an increase of 59 basis points from the prior-year period. The increase in the net interest margin (tax equivalent) compared to the linked quarter and prior-year period was predominantly driven by higher average loan rates and a stronger earning assets mix. This was partially offset by a shift in the funding mix from deposits to higher-costing FHLB advances. The average cost of total deposits for the quarter was 18 basis points compared to 10 basis points for the linked quarter. The increase was predominantly related to higher rates associated with public funds deposits and money market accounts. For additional information regarding net interest margin, see the “Average Balances and Rates” tables.

Columbia’s operating net interest margin (tax equivalent)1 was 3.67% for the fourth quarter of 2022, an increase of 17 basis points from the linked quarter and an increase of 59 basis points from the prior-year period. The increase in the operating net interest margin for the fourth quarter of 2022 compared to the linked quarter and the prior-year period were both due to higher average loan rates and a stronger earning assets mix partially offset by a higher-costing funding mix as noted above.

Aaron James Deer, Columbia’s Executive Vice President and Chief Financial Officer, said, “Our margin benefited from the continued impact of rising rates on the loan portfolio, which was partly offset by the impact of the shift in funding mix from deposits to higher-costing borrowings.” He continued, “Our cost of funds is still among the lowest in the industry on the strength of our low-cost, relationship-focused deposit base.”

Asset Quality

Nonperforming assets to total assets were 0.07% at December 31, 2022 and September 30, 2022. Total nonperforming assets decreased $44 thousand from the linked quarter, primarily due to decreases in commercial business, commercial real estate and other consumer nonaccrual loans, nearly offset by increases in agriculture and one-to-four family residential real estate 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.

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


	December 31, 2022		September 30, 2022		December 31, 2021

	(in thousands)
Nonaccrual loans:
Commercial loans:
Commercial real estate	$	3,244	$	3,431	$	1,872
Commercial business	5,133		7,181		13,321
Agriculture	4,367		2,179		5,396

Consumer loans:
One-to-four family residential real estate	685		602		2,433
Other consumer	12		92		19
Total nonaccrual loans	13,441		13,485		23,041
OREO and other personal property owned	—		—		381
Total nonperforming assets	$	13,441	$	13,485	$	23,422

Nonperforming assets to total loans were 0.12% at December 31, 2022 and September 30, 2022.

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


	Three Months Ended						Twelve Months Ended
	December 31,		September 30,		December 31,		December 31,		December 31,
	2022		2022		2021		2022		2021

	(in thousands)
Beginning balance	$	154,871	$	149,935	$	142,785	$	155,578	$	149,140
Initial ACL recorded for PCD loans acquired during the period	—		—		2,616		—		2,616
Charge-offs:
Commercial loans:
Commercial real estate	—		—		(728)		(299)		(1,044)
Commercial business	(89)		(296)		(871)		(2,108)		(6,364)
Agriculture	(69)		(706)		(200)		(799)		(322)

Consumer loans:
One-to-four family residential real estate	—		—		(24)		(3)		(170)
Other consumer	(322)		(430)		(355)		(1,240)		(1,163)
Total charge-offs	(480)		(1,432)		(2,178)		(4,449)		(9,063)
Recoveries:
Commercial loans:
Commercial real estate	35		11		63		207		633
Commercial business	613		482		446		2,183		4,862
Agriculture	622		98		332		869		355
Construction	234		9		18		387		593
Consumer loans:
One-to-four family residential real estate	27		331		150		943		907
Other consumer	116		187		246		770		735
Total recoveries	1,647		1,118		1,255		5,359		8,085
Net (charge-offs) recoveries	1,167		(314)		(923)		910		(978)
Provision for credit losses	2,400		5,250		11,100		1,950		4,800
Ending balance	$	158,438	$	154,871	$	155,578	$	158,438	$	155,578

The allowance for credit losses to period-end loans was 1.36% at December 31, 2022 compared to 1.32% at September 30, 2022. Excluding PPP loans, the allowance for credit losses to period-end loans2 was 1.37% at December 31, 2022 compared to 1.33% at September 30, 2022.

2 Allowance for credit losses to period-end loans, excluding PPP loans 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.

Organizational Update

Umpqua Merger

On January 9, 2023, we announced that we had received approval of the Federal Deposit Insurance Corporation (“FDIC”) related to the merger with Umpqua Holdings Corporation, the final outstanding regulatory approval necessary to complete the transaction, and the deal is expected to close after close of business on February 28, 2023 with a core-system conversion anticipated soon thereafter. “The dedication and perseverance of each and every one of our associates over the past 15 months as they worked to build on the existing relationships while simultaneously supporting and executing merger integration planning efforts has been outstanding,” said Clint Stein. He continued, "Every single associate has contributed, and I could not be more confident in what we will accomplish as we work to serve all of our clients and communities as a premier western regional bank.”

Warm Hearts

The 2022 “Warm Hearts Winter Drive” to end homelessness raised $278 thousand in the fourth quarter, bringing our eight-year drive total to $2.1 million. Funds raised this year benefited nearly 70 shelters across the Columbia Bank footprint. “The commitment and passion of our associates and clients to help families struggling with homelessness during the difficult winter months is inspiring,” said David Moore Devine, Chief Marketing and Experience Officer. He continued, "It has been especially gratifying to see our associates’ care, focus and dedication to supporting the drive and their communities notwithstanding responsibilities associated with the merger and other activities.”

Cash Dividend Announcement

Columbia will pay a regular cash dividend of $0.30 per common share on February 21, 2023 to shareholders of record as of the close of business on February 6, 2023.

Conference Call Information

Columbia’s management will discuss the fourth quarter and full-year 2022 financial results on a conference call scheduled for Tuesday, January 24, 2023 at 11:00 a.m. Pacific Time (2:00 p.m. ET). Interested parties may register for the call to receive dial-in details and their own unique PIN using the following link:

https://register.vevent.com/register/BIb1b0b02fb69840d9bf7c2798adcdc01a

Alternatively, the webcast can be joined by using the following link:

https://edge.media-server.com/mmc/p/sgycoxq4

A replay of the webcast will be accessible beginning Wednesday, January 25, 2023 using the link below:

https://edge.media-server.com/mmc/p/sgycoxq4

About Columbia

Headquartered in Tacoma, Washington, Columbia Banking System, Inc. (NASDAQ: COLB) is the holding company of Columbia Bank, a Washington state-chartered full-service commercial bank with offices in Washington, Oregon, California, Idaho, Utah, and Arizona. The bank has been named one of Puget Sound Business Journal's “Washington’s Best Workplaces,” more than 10 times. Columbia was named on the Forbes 2022 list of “America’s Best Banks” marking 11 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.

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 (the “SEC”), available at the SEC’s website at www.sec.gov and the Company’s website at www.columbiabank.com, including 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:

•national and global economic conditions could be less favorable than expected or could have a more direct and pronounced effect on us than expected and adversely affect our ability to continue internal growth and maintain the quality of our earning assets;

•the markets where we operate and make loans could face challenges;

•the risks presented by the economy, which could adversely affect credit quality, collateral values, including real estate collateral, investment values, liquidity and loan originations and loan portfolio delinquency rates;

•continued increases in inflation, and the risk that information may differ, possibly materially, from expectations, and actions taken by the Board of Governors of the Federal Reserve System in response to inflation and their potential impact on economic conditions including the possibility of a recession or economic downturn;

•risks related to the proposed merger with Umpqua including, among others, (i) failure to complete the merger with Umpqua or unexpected delays related to the merger or either party’s inability to satisfy other closing conditions required to complete the merger, (ii) certain restrictions during the pendency of the proposed transaction with Umpqua that may impact the parties’ ability to pursue certain business opportunities or strategic transactions, (iii) diversion of management’s attention from ongoing business operations and opportunities, (iv) cost savings and any revenue synergies from the merger may not be fully realized or may take longer than anticipated to be realized, (v) the integration of each party’s management, personnel and operations will not be successfully achieved or may be materially delayed or will be more costly or difficult than expected, (vi) deposit attrition, customer or employee loss and/or revenue loss as a result of the proposed merger, and (vii) expenses related to the proposed merger being greater than expected;

•the efficiencies and enhanced financial and operating performance we expect to realize from investments in personnel, acquisitions and infrastructure may not be realized;

•the ability to successfully integrate future acquired entities;

•interest rate changes could significantly reduce net interest income and negatively affect asset yields and funding sources;

•the effect of the discontinuation or replacement of LIBOR;

•results of operations following strategic expansion, including the impact of acquired loans on our earnings, could differ from expectations;

•changes in the scope and cost of FDIC insurance and other coverages;

•changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies could materially affect our financial statements and how we report those results, and expectations and preliminary analysis relating to how such changes will affect our financial results could prove incorrect;

•changes in laws and regulations affecting our businesses, including changes in the enforcement and interpretation of such laws and regulations by applicable governmental and regulatory agencies;

•increased competition among financial institutions and nontraditional providers of financial services;

•continued consolidation in the financial services industry resulting in the creation of larger financial institutions that have greater resources could change the competitive landscape;

•the goodwill we have recorded in connection with acquisitions could become impaired, which may have an adverse impact on our earnings and capital;

•our ability to identify and address cyber-security risks, including security breaches, “denial of service attacks,” “hacking” and identity theft;

•any material failure or interruption of our information and communications systems;

•inability to keep pace with technological changes;

•our ability to effectively manage credit risk, interest rate risk, market risk, operational risk, legal risk, liquidity risk and regulatory and compliance risk;

•failure to maintain effective internal control over financial reporting or disclosure controls and procedures;

•the effect of geopolitical instability, including wars, conflicts and terrorist attacks, including the impacts of Russia’s invasion of Ukraine;

•our profitability measures could be adversely affected if we are unable to effectively manage our capital;

•the risks from climate change and its potential to disrupt our business and adversely impact the operations and creditworthiness of our customers;

•natural disasters, including earthquakes, tsunamis, flooding, fires and other unexpected events;

•the effect of COVID-19 and other infectious illness outbreaks that may arise in the future, which has created significant impacts and uncertainties in U.S. and global markets;

•changes in governmental policy and regulation, including measures taken in response to economic, business, political and social conditions, including with regard to COVID-19; and

•the effects of any damage to our reputation resulting from developments related to any of the items identified above.

Additional factors that could cause results to differ materially from those described above can be found in Columbia’s Annual Report on Form 10-K for the year ended December 31, 2021, which is on file with the SEC and available on Columbia’s website, www.columbiabank.com, under the heading “Financial Information” and in other documents Columbia files with the SEC, and in Umpqua’s Annual Report on Form 10-K for the year ended December 31, 2021, which is on file with the SEC and available on Umpqua’s investor relations website, www.umpquabank.com, under the heading “Financials,” and in other documents Umpqua files with the SEC.

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. Neither Columbia nor Umpqua assumes any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws.


Contacts:	Clint Stein,	Aaron James Deer,
	President and	Executive Vice President and
	Chief Executive Officer	Chief Financial Officer

	Investor Relations
	InvestorRelations@columbiabank.com
	253-471-4065
	(COLB-ER)	(COLB&ER)


CONSOLIDATED BALANCE SHEETS
Columbia Banking System, Inc.
Unaudited				December 31,		September 30,		December 31,
				2022		2022		2021

				(in thousands)
ASSETS
Cash and due from banks				$	262,458	$	263,551	$	153,414
Interest-earning deposits with banks				29,283		54,124		671,300
Total cash and cash equivalents				291,741		317,675		824,714
Debt securities available for sale at fair value (amortized cost of $5,282,846, $5,447,566 and $5,898,041, respectively)				4,589,099		4,700,821		5,910,999
Debt securities held to maturity at amortized cost (fair value of $1,722,778, $1,747,282 and $2,122,606, respectively)				2,034,792		2,079,285		2,148,327
Equity securities				13,425		13,425		13,425
Federal Home Loan Bank (“FHLB”) stock at cost				48,160		10,560		10,280
Loans held for sale				76,843		1,251		9,774
Loans, net of unearned income				11,610,973		11,692,261		10,641,937
Less: Allowance for credit losses				158,438		154,871		155,578
Loans, net				11,452,535		11,537,390		10,486,359
Interest receivable				64,908		61,652		56,019
Premises and equipment, net				160,578		161,853		172,144
Other real estate owned				—		—		381
Goodwill				823,172		823,172		823,172
Other intangible assets, net				25,949		27,921		34,647
Other assets				684,641		670,364		455,092
Total assets				$	20,265,843	$	20,405,369	$	20,945,333
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing				$	8,373,350	$	8,911,267	$	8,856,714
Interest-bearing				8,338,100		9,030,058		9,153,401
Total deposits				16,711,450		17,941,325		18,010,115
FHLB advances				954,315		14,322		7,359
Securities sold under agreements to repurchase				95,168		48,733		86,013
Subordinated debentures				10,000		10,000		10,000

Junior subordinated debentures				10,310		10,310		10,310
Other liabilities				271,447		265,198		232,794
Total liabilities				18,052,690		18,289,888		18,356,591
Commitments and contingent liabilities
Shareholders’ equity:
	December 31,	September 30,	December 31,
	2022	2022	2021

	(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	80,830	80,831	80,695	1,944,471		1,940,385		1,930,187
Outstanding	78,646	78,647	78,511
Retained earnings				850,011		804,774		694,227
Accumulated other comprehensive income (loss)				(510,495)		(558,844)		35,162
Treasury stock at cost	2,184	2,184	2,184	(70,834)		(70,834)		(70,834)
Total shareholders’ equity				2,213,153		2,115,481		2,588,742
Total liabilities and shareholders’ equity				$	20,265,843	$	20,405,369	$	20,945,333


CONSOLIDATED STATEMENTS OF INCOME
Columbia Banking System, Inc.	Three Months Ended						Twelve Months Ended
Unaudited	December 31,		September 30,		December 31,		December 31,		December 31,
	2022		2022		2021		2022		2021

Interest Income	(in thousands except per share amounts)
Loans	$	146,769	$	130,908	$	110,575	$	495,829	$	415,770
Taxable securities	29,313		31,987		33,654		133,084		107,594
Tax-exempt securities	3,678		3,662		3,447		14,820		11,746
Deposits in banks	375		1,191		360		2,748		955
Total interest income	180,135		167,748		148,036		646,481		536,065
Interest Expense
Deposits	7,827		4,446		1,807		16,533		6,186
FHLB advances and Federal Reserve Bank ("FRB") borrowings	4,406		109		74		4,659		291
Subordinated debentures	271		220		561		807		1,932
Other borrowings	938		481		71		1,646		137
Total interest expense	13,442		5,256		2,513		23,645		8,546
Net Interest Income	166,693		162,492		145,523		622,836		527,519
Provision for credit losses	2,400		5,250		11,100		1,950		4,800
Net interest income after provision for credit losses	164,293		157,242		134,423		620,886		522,719
Noninterest Income
Deposit account and treasury management fees	7,992		8,181		7,155		31,498		27,107
Card revenue	5,200		4,988		5,108		20,186		18,503
Financial services and trust revenue	4,543		4,292		3,877		17,659		15,753
Loan revenue	2,655		2,853		4,977		12,582		22,044
Bank owned life insurance	1,885		1,939		1,753		7,636		6,533
Investment securities gains (losses), net	(9)		—		—		(9)		314
Other	1,065		4,374		1,370		9,592		3,840
Total noninterest income	23,331		26,627		24,240		99,144		94,094
Noninterest Expense
Compensation and employee benefits	59,930		60,744		64,169		241,139		224,034
Occupancy	10,040		10,469		10,076		41,150		37,815
Data processing and software	11,060		10,548		9,130		41,117		33,498
Legal and professional fees	4,839		4,022		7,937		20,578		18,910
Amortization of intangibles	1,972		2,219		2,376		8,698		7,987
Business and Occupation ("B&O") taxes	1,853		1,771		1,571		6,797		5,903
Advertising and promotion	1,198		830		1,357		3,962		3,383
Regulatory premiums	1,840		1,782		1,481		6,619		4,912
Net cost (benefit) of operation of other real estate owned	(8)		(4)		14		114		66
Other	7,781		9,065		4,511		32,209		23,796
Total noninterest expense	100,505		101,446		102,622		402,383		360,304
Income before income taxes	87,119		82,423		56,041		317,647		256,509
Provision for income taxes	18,213		17,481		13,130		67,469		53,689
Net Income	$	68,906	$	64,942	$	42,911	$	250,178	$	202,820
Earnings per common share
Basic	$	0.88	$	0.83	$	0.55	$	3.20	$	2.79
Diluted	$	0.88	$	0.83	$	0.55	$	3.20	$	2.78
Dividends declared per common share (1)	$	0.30	$	0.30	$	—	$	1.20	$	1.14

Weighted average number of common shares outstanding	78,104		78,100		77,784		78,047		72,683
Weighted average number of diluted common shares outstanding	78,371		78,233		77,977		78,193		72,873

.__________

(1) No dividends were declared during the three months ended December 31, 2021 as dividends were declared on September 30, 2021. Accordingly, the three months ended September 30, 2021 included both the July 29, 2021 declaration and the September 30, 2021 declaration.


FINANCIAL STATISTICS
Columbia Banking System, Inc.	Three Months Ended									Twelve Months Ended
Unaudited	December 31,			September 30,			December 31,			December 31,			December 31,
	2022			2022			2021			2022			2021

Earnings	(dollars in thousands except per share amounts)
Net interest income	$	166,693		$	162,492		$	145,523		$	622,836		$	527,519
Provision for credit losses	$	2,400		$	5,250		$	11,100		$	1,950		$	4,800
Noninterest income	$	23,331		$	26,627		$	24,240		$	99,144		$	94,094
Noninterest expense	$	100,505		$	101,446		$	102,622		$	402,383		$	360,304
Merger-related expense (included in noninterest expense)	$	4,897		$	3,246		$	11,812		$	19,101		$	14,514
Net income	$	68,906		$	64,942		$	42,911		$	250,178		$	202,820
Per Common Share
Earnings (basic)	$	0.88		$	0.83		$	0.55		$	3.20		$	2.79
Earnings (diluted)	$	0.88		$	0.83		$	0.55		$	3.20		$	2.78
Book value	$	28.14		$	26.90		$	32.97		$	28.14		$	32.97
Tangible book value per common share (1)	$	17.34		$	16.08		$	22.05		$	17.34		$	22.05
Averages
Total assets	$	20,270,911		$	20,698,252		$	20,857,983		$	20,671,949		$	18,448,135
Interest-earning assets	$	18,378,384		$	18,864,445		$	19,186,398		$	18,868,795		$	16,910,818
Loans	$	11,663,093		$	11,513,653		$	10,545,172		$	11,211,442		$	9,832,385
Securities, including debt securities, equity securities and FHLB stock	$	6,666,850		$	7,130,114		$	7,693,659		$	7,320,503		$	6,353,278
Deposits	$	17,367,875		$	18,075,358		$	17,935,311		$	17,922,958		$	15,722,403
Interest-bearing deposits	$	8,671,874		$	9,196,381		$	9,147,184		$	9,149,447		$	7,910,523
Interest-bearing liabilities	$	9,173,526		$	9,292,615		$	9,255,214		$	9,342,996		$	8,008,221
Noninterest-bearing deposits	$	8,696,001		$	8,878,977		$	8,788,127		$	8,773,511		$	7,811,880
Shareholders’ equity	$	2,129,671		$	2,271,012		$	2,584,110		$	2,307,453		$	2,402,455
Financial Ratios
Return on average assets	1.36		%	1.26		%	0.82		%	1.21		%	1.10		%
Return on average common equity	12.94		%	11.44		%	6.64		%	10.84		%	8.44		%
Return on average tangible common equity (1)	22.03		%	18.81		%	10.36		%	17.68		%	13.10		%
Average equity to average assets	10.51		%	10.97		%	12.39		%	11.16		%	13.02		%
Shareholders' equity to total assets	10.92		%	10.37		%	12.36		%	10.92		%	12.36		%
Tangible common shareholders’ equity to tangible assets (1)	7.03		%	6.47		%	8.62		%	7.03		%	8.62		%
Net interest margin (tax equivalent)	3.64		%	3.47		%	3.05		%	3.34		%	3.17		%
Efficiency ratio (tax equivalent) (2)	52.29		%	52.84		%	59.57		%	54.95		%	57.09		%
Operating efficiency ratio (tax equivalent) (1)	48.38		%	50.73		%	51.48		%	51.14		%	53.92		%
Noninterest expense ratio	1.98		%	1.96		%	1.97		%	1.95		%	1.95		%
Core noninterest expense ratio (1)	1.89		%	1.90		%	1.74		%	1.85		%	1.87		%

	December 31,			September 30,			December 31,
Period-end	2022			2022			2021
Total assets	$	20,265,843		$	20,405,369		$	20,945,333
Loans, net of unearned income	$	11,610,973		$	11,692,261		$	10,641,937
Allowance for credit losses	$	158,438		$	154,871		$	155,578
Securities, including debt securities, equity securities and FHLB stock	$	6,685,476		$	6,804,091		$	8,083,031
Deposits	$	16,711,450		$	17,941,325		$	18,010,115
Shareholders’ equity	$	2,213,153		$	2,115,481		$	2,588,742
Nonperforming assets
Nonaccrual loans	$	13,441		$	13,485		$	23,041
Other real estate owned (“OREO”) and other personal property owned (“OPPO”)	—			—			381
Total nonperforming assets	$	13,441		$	13,485		$	23,422

Nonperforming loans to period-end loans	0.12		%	0.12		%	0.22		%
Nonperforming assets to period-end assets	0.07		%	0.07		%	0.11		%
Allowance for credit losses to period-end loans	1.36		%	1.32		%	1.46		%
Net loan charge-offs (recoveries) (for the three months ended)	$	(1,167)		$	314		$	923

__________

(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.


QUARTERLY FINANCIAL STATISTICS
Columbia Banking System, Inc.	Three Months Ended
Unaudited	December 31,			September 30,			June 30,			March 31,			December 31,
	2022			2022			2022			2022			2021

Earnings	(dollars in thousands except per share amounts)
Net interest income	$	166,693		$	162,492		$	147,451		$	146,200		$	145,523
Provision (recapture) for credit losses	$	2,400		$	5,250		$	2,100		$	(7,800)		$	11,100
Noninterest income	$	23,331		$	26,627		$	25,006		$	24,180		$	24,240
Noninterest expense	$	100,505		$	101,446		$	95,379		$	105,053		$	102,622
Merger-related expense (included in noninterest expense)	$	4,897		$	3,246		$	3,901		$	7,057		$	11,812
Net income	$	68,906		$	64,942		$	58,808		$	57,522		$	42,911
Per Common Share
Earnings (basic)	$	0.88		$	0.83		$	0.75		$	0.74		$	0.55
Earnings (diluted)	$	0.88		$	0.83		$	0.75		$	0.74		$	0.55
Book value	$	28.14		$	26.90		$	28.53		$	30.02		$	32.97
Averages
Total assets	$	20,270,911		$	20,698,252		$	20,770,202		$	20,955,666		$	20,857,983
Interest-earning assets	$	18,378,384		$	18,864,445		$	18,975,517		$	19,266,644		$	19,186,398
Loans	$	11,663,093		$	11,513,653		$	10,989,493		$	10,665,242		$	10,545,172
Securities, including debt securities, equity securities and FHLB stock	$	6,666,850		$	7,130,114		$	7,491,299		$	8,010,607		$	7,693,659
Deposits	$	17,367,875		$	18,075,358		$	18,157,075		$	18,097,872		$	17,935,311
Interest-bearing deposits	$	8,671,874		$	9,196,381		$	9,335,004		$	9,402,040		$	9,147,184
Interest-bearing liabilities	$	9,173,526		$	9,292,615		$	9,414,361		$	9,495,579		$	9,255,214
Noninterest-bearing deposits	$	8,696,001		$	8,878,977		$	8,822,071		$	8,695,832		$	8,788,127
Shareholders’ equity	$	2,129,671		$	2,271,012		$	2,298,611		$	2,535,376		$	2,584,110
Financial Ratios
Return on average assets	1.36		%	1.26		%	1.13		%	1.10		%	0.82		%
Return on average common equity	12.94		%	11.44		%	10.23		%	9.08		%	6.64		%
Average equity to average assets	10.51		%	10.97		%	11.07		%	12.10		%	12.39		%
Shareholders’ equity to total assets	10.92		%	10.37		%	10.91		%	11.26		%	12.36		%
Net interest margin (tax equivalent)	3.64		%	3.47		%	3.16		%	3.12		%	3.05		%
Period-end
Total assets	$	20,265,843		$	20,405,369		$	20,564,390		$	20,963,958		$	20,945,333
Loans, net of unearned income	$	11,610,973		$	11,692,261		$	11,322,387		$	10,759,684		$	10,641,937
Allowance for credit losses	$	158,438		$	154,871		$	149,935		$	146,949		$	155,578
Securities, including debt securities, equity securities and FHLB stock	$	6,685,476		$	6,804,091		$	7,295,528		$	7,753,513		$	8,083,031
Deposits	$	16,711,450		$	17,941,325		$	17,956,926		$	18,299,213		$	18,010,115
Shareholders’ equity	$	2,213,153		$	2,115,481		$	2,243,218		$	2,360,779		$	2,588,742
Goodwill	$	823,172		$	823,172		$	823,172		$	823,172		$	823,172
Other intangible assets, net	$	25,949		$	27,921		$	30,140		$	32,359		$	34,647
Nonperforming assets
Nonaccrual loans	$	13,441		$	13,485		$	16,998		$	17,441		$	23,041
OREO and OPPO	—			—			33			381			381
Total nonperforming assets	$	13,441		$	13,485		$	17,031		$	17,822		$	23,422

Nonperforming loans to period-end loans	0.12		%	0.12		%	0.15		%	0.16		%	0.22		%
Nonperforming assets to period-end assets	0.07		%	0.07		%	0.08		%	0.09		%	0.11		%
Allowance for credit losses to period-end loans	1.36		%	1.32		%	1.32		%	1.37		%	1.46		%
Net loan charge-offs (recoveries)	$	(1,167)		$	314		$	(886)		$	829		$	923


LOAN PORTFOLIO COMPOSITION
Columbia Banking System, Inc.
Unaudited	December 31,		September 30,		June 30,		March 31,		December 31,
	2022		2022		2022		2022		2021

Loan Portfolio Composition - Dollars	(dollars in thousands)
Commercial loans:
Commercial real estate	$	5,352,785	$	5,375,051	$	5,251,100	$	5,047,472	$	4,981,263
Commercial business	3,750,564		3,783,696		3,646,956		3,492,307		3,423,268
Agriculture	848,903		903,260		853,099		765,319		795,715
Construction	540,861		512,308		482,211		409,242		384,755
Consumer loans:
One-to-four family residential real estate	1,077,494		1,071,222		1,042,190		1,003,157		1,013,908
Other consumer	40,366		46,724		46,831		42,187		43,028
Total loans	11,610,973		11,692,261		11,322,387		10,759,684		10,641,937
Less: Allowance for credit losses	(158,438)		(154,871)		(149,935)		(146,949)		(155,578)
Total loans, net	$	11,452,535	$	11,537,390	$	11,172,452	$	10,612,735	$	10,486,359
Loans held for sale	$	76,843	$	1,251	$	3,718	$	4,271	$	9,774


	December 31,		September 30,		June 30,		March 31,		December 31,
Loan Portfolio Composition - Percentages	2022		2022		2022		2022		2021
Commercial loans:
Commercial real estate	46.1	%	45.9	%	46.4	%	46.9	%	46.8	%
Commercial business	32.3	%	32.4	%	32.2	%	32.5	%	32.2	%
Agriculture	7.3	%	7.7	%	7.5	%	7.1	%	7.5	%
Construction	4.7	%	4.4	%	4.3	%	3.8	%	3.6	%
Consumer loans:
One-to-four family residential real estate	9.3	%	9.2	%	9.2	%	9.3	%	9.5	%
Other consumer	0.3	%	0.4	%	0.4	%	0.4	%	0.4	%
Total loans	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%


DEPOSIT COMPOSITION
Columbia Banking System, Inc.
Unaudited
	December 31,		September 30,		June 30,		March 31,		December 31,
	2022		2022		2022		2022		2021

Deposit Composition - Dollars	(dollars in thousands)
Demand and other noninterest-bearing	$	8,373,350	$	8,911,267	$	8,741,488	$	8,790,138	$	8,856,714
Money market	2,972,838		3,355,705		3,402,555		3,501,723		3,525,299
Interest-bearing demand	1,980,631		2,047,169		2,104,118		2,103,053		1,999,407
Savings	1,555,765		1,657,799		1,646,363		1,637,451		1,617,546
Interest-bearing public funds, other than certificates of deposit	670,580		701,741		737,297		775,048		779,146
Certificates of deposit, less than $250,000	215,848		221,087		232,063		239,863		249,120
Certificates of deposit, $250,000 or more	124,411		127,229		138,945		145,372		160,490
Certificates of deposit insured by the CD Option of IntraFi Network Deposits	21,828		22,730		29,178		32,608		35,611

Reciprocal money market accounts	796,199		896,414		924,552		1,073,405		786,046
Subtotal	16,711,450		17,941,141		17,956,559		18,298,661		18,009,379
Valuation adjustment resulting from acquisition accounting	—		184		367		552		736
Total deposits	$	16,711,450	$	17,941,325	$	17,956,926	$	18,299,213	$	18,010,115


	December 31,		September 30,		June 30,		March 31,		December 31,
Deposit Composition - Percentages	2022		2022		2022		2022		2021
Demand and other noninterest-bearing	50.1	%	49.8	%	48.7	%	48.1	%	49.1	%
Money market	17.8	%	18.7	%	18.9	%	19.1	%	19.6	%
Interest-bearing demand	11.9	%	11.4	%	11.7	%	11.5	%	11.1	%
Savings	9.3	%	9.2	%	9.2	%	8.9	%	9.0	%
Interest-bearing public funds, other than certificates of deposit	4.0	%	3.9	%	4.1	%	4.2	%	4.3	%
Certificates of deposit, less than $250,000	1.3	%	1.2	%	1.3	%	1.3	%	1.4	%
Certificates of deposit, $250,000 or more	0.7	%	0.7	%	0.8	%	0.8	%	0.9	%
Certificates of deposit insured by the CD Option of IntraFi Network Deposits	0.1	%	0.1	%	0.2	%	0.2	%	0.2	%

Reciprocal money market accounts	4.8	%	5.0	%	5.1	%	5.9	%	4.4	%
Total	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%


AVERAGE BALANCES AND RATES
Columbia Banking System, Inc.
Unaudited
	Three Months Ended						Three Months Ended
	December 31, 2022						December 31, 2021
	Average Balances		Interest Earned / Paid		Average Rate		Average Balances		Interest Earned / Paid		Average Rate

	(dollars in thousands)
ASSETS
Loans, net (1)(2)	$	11,663,093	$	147,487	5.02	%	$	10,545,172	$	111,709	4.20	%
Taxable securities	5,998,033		29,313		1.94	%	6,934,477		33,654		1.93	%
Tax exempt securities (2)	668,817		4,656		2.76	%	759,182		4,364		2.28	%
Interest-earning deposits with banks	48,441		375		3.07	%	947,567		360		0.15	%
Total interest-earning assets	18,378,384		181,831		3.93	%	19,186,398		150,087		3.10	%
Other earning assets	307,831						276,828
Noninterest-earning assets	1,584,696						1,394,757
Total assets	$	20,270,911					$	20,857,983
LIABILITIES AND SHAREHOLDERS’ EQUITY
Money market accounts	$	4,025,034	$	2,760	0.27	%	$	4,339,959	$	951	0.09	%
Interest-bearing demand	1,991,397		673		0.13	%	1,967,559		376		0.08	%
Savings accounts	1,604,668		69		0.02	%	1,593,434		78		0.02	%
Interest-bearing public funds, other than certificates of deposit	681,829		3,961		2.30	%	787,395		252		0.13	%
Certificates of deposit	368,946		364		0.39	%	458,837		150		0.13	%
Total interest-bearing deposits	8,671,874		7,827		0.36	%	9,147,184		1,807		0.08	%
FHLB advances and FRB borrowings	425,059		4,406		4.11	%	7,368		74		3.98	%
Subordinated debentures	10,000		271		10.75	%	43,859		561		5.07	%
Other borrowings and interest-bearing liabilities	66,593		938		5.59	%	56,803		71		0.50	%
Total interest-bearing liabilities	9,173,526		13,442		0.58	%	9,255,214		2,513		0.11	%
Noninterest-bearing deposits	8,696,001						8,788,127
Other noninterest-bearing liabilities	271,713						230,532
Shareholders’ equity	2,129,671						2,584,110
Total liabilities & shareholders’ equity	$	20,270,911					$	20,857,983
Net interest income (tax equivalent)			$	168,389					$	147,574
Net interest margin (tax equivalent)					3.64	%					3.05	%

__________

(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 $2.1 million and $6.2 million for the three months ended December 31, 2022 and 2021, respectively. The net incremental amortization on acquired loans was $669 thousand for the three months ended December 31, 2022 compared to net incremental accretion of $16 thousand for the three months ended December 31, 2021.

(2)Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $718 thousand and $1.1 million for the three months ended December 31, 2022 and 2021, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $978 thousand and $917 thousand for the three months ended December 31, 2022 and 2021, respectively.


AVERAGE BALANCES AND RATES
Columbia Banking System, Inc.
Unaudited
	Three Months Ended						Three Months Ended
	December 31, 2022						September 30, 2022
	Average Balances		Interest Earned / Paid		Average Rate		Average Balances		Interest Earned / Paid		Average Rate

	(dollars in thousands)
ASSETS
Loans, net (1)(2)	$	11,663,093	$	147,487	5.02	%	$	11,513,653	$	132,302	4.56	%
Taxable securities	5,998,033		29,313		1.94	%	6,419,977		31,987		1.98	%
Tax exempt securities (2)	668,817		4,656		2.76	%	710,137		4,635		2.59	%
Interest-earning deposits with banks	48,441		375		3.07	%	220,678		1,191		2.14	%
Total interest-earning assets	18,378,384		181,831		3.93	%	18,864,445		170,115		3.58	%
Other earning assets	307,831						306,200
Noninterest-earning assets	1,584,696						1,527,607
Total assets	$	20,270,911					$	20,698,252
LIABILITIES AND SHAREHOLDERS’ EQUITY
Money market accounts	$	4,025,034	$	2,760	0.27	%	$	4,342,054	$	1,378	0.13	%
Interest-bearing demand	1,991,397		673		0.13	%	2,085,124		419		0.08	%
Savings accounts	1,604,668		69		0.02	%	1,658,078		82		0.02	%
Interest-bearing public funds, other than certificates of deposit	681,829		3,961		2.30	%	724,502		2,410		1.32	%
Certificates of deposit	368,946		364		0.39	%	386,623		157		0.16	%
Total interest-bearing deposits	8,671,874		7,827		0.36	%	9,196,381		4,446		0.19	%
FHLB advances and FRB borrowings	425,059		4,406		4.11	%	11,512		109		3.76	%
Subordinated debentures	10,000		271		10.75	%	10,000		220		8.73	%
Other borrowings and interest-bearing liabilities	66,593		938		5.59	%	74,722		481		2.55	%
Total interest-bearing liabilities	9,173,526		13,442		0.58	%	9,292,615		5,256		0.22	%
Noninterest-bearing deposits	8,696,001						8,878,977
Other noninterest-bearing liabilities	271,713						255,648
Shareholders’ equity	2,129,671						2,271,012
Total liabilities & shareholders’ equity	$	20,270,911					$	20,698,252
Net interest income (tax equivalent)			$	168,389					$	164,859
Net interest margin (tax equivalent)					3.64	%					3.47	%

__________

(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 $2.1 million for both the three months ended December 31, 2022 and September 30, 2022, respectively. The net incremental amortization on acquired loans was $669 thousand and $871 thousand for the three months ended December 31, 2022 and September 30, 2022, respectively.

(2)Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $718 thousand and $1.4 million for the three months ended December 31, 2022 and September 30, 2022, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $978 thousand and $973 thousand for the three months ended December 31, 2022 and September 30, 2022, respectively.


AVERAGE BALANCES AND RATES
Columbia Banking System, Inc.
Unaudited
	Twelve Months Ended						Twelve Months Ended
	December 31, 2022						December 31, 2021
	Average Balances		Interest Earned / Paid		Average Rate		Average Balances		Interest Earned / Paid		Average Rate

	(dollars in thousands)
ASSETS
Loans, net (1)(2)	$	11,211,442	$	500,112	4.46	%	$	9,832,385	$	420,439	4.28	%
Taxable securities	6,595,476		133,084		2.02	%	5,701,810		107,594		1.89	%
Tax exempt securities (2)	725,027		18,759		2.59	%	651,468		14,869		2.28	%
Interest-earning deposits with banks	336,850		2,748		0.82	%	725,155		955		0.13	%
Total interest-earning assets	18,868,795		$	654,703	3.47	%	16,910,818		$	543,857	3.22	%
Other earning assets	305,683						252,476
Noninterest-earning assets	1,497,471						1,284,841
Total assets	$	20,671,949					$	18,448,135
LIABILITIES AND SHAREHOLDERS’ EQUITY
Money market accounts	$	4,324,611	$	6,098	0.14	%	$	3,805,723	$	3,083	0.08	%
Interest-bearing demand	2,056,059		1,877		0.09	%	1,637,531		1,225		0.07	%
Savings accounts	1,633,354		306		0.02	%	1,382,277		217		0.02	%
Interest-bearing public funds, other than certificates of deposit	734,667		7,582		1.03	%	721,090		1,005		0.14	%
Certificates of deposit	400,756		670		0.17	%	363,902		656		0.18	%
Total interest-bearing deposits	9,149,447		16,533		0.18	%	7,910,523		6,186		0.08	%
FHLB advances and FRB borrowings	113,683		4,659		4.10	%	7,388		291		3.94	%
Subordinated debentures	10,000		807		8.07	%	37,258		1,932		5.19	%
Other borrowings and interest-bearing liabilities	69,866		1,646		2.36	%	53,052		137		0.26	%
Total interest-bearing liabilities	9,342,996		$	23,645	0.25	%	8,008,221		$	8,546	0.11	%
Noninterest-bearing deposits	8,773,511						7,811,880
Other noninterest-bearing liabilities	247,989						225,579
Shareholders’ equity	2,307,453						2,402,455
Total liabilities & shareholders’ equity	$	20,671,949					$	18,448,135
Net interest income (tax equivalent)			$	631,058					$	535,311
Net interest margin (tax equivalent)					3.34	%					3.17	%

__________

(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 $11.2 million and $32.2 million for the twelve months ended December 31, 2022 and 2021, respectively. The net incremental amortization on acquired loans was $3.9 million for the twelve months ended December 31, 2022 compared to net incremental accretion of $2.8 million for the twelve months ended December 31, 2021.

(2)Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $4.3 million and $4.7 million for the twelve months ended December 31, 2022 and 2021, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $3.9 million and $3.1 million for the twelve months ended December 31, 2022 and 2021, respectively.

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 these metrics. As a result, the Company’s calculations may not be comparable with those of 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									Twelve Months Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2022			2022			2021			2022			2021

Operating net interest margin non-GAAP reconciliation:	(dollars in thousands)
Net interest income (tax equivalent) (1)	$	168,389		$	164,859		$	147,574		$	631,058		$	535,311
Adjustments to arrive at operating net interest income (tax equivalent):
Premium amortization (discount accretion) on acquired loans	669			871			(16)			3,943			(2,811)
Premium amortization on acquired securities	812			877			1,278			3,852			2,752
Operating net interest income (tax equivalent) (1)	$	169,870		$	166,607		$	148,836		$	638,853		$	535,252

Average interest earning assets	$	18,378,384		$	18,864,445		$	19,186,398		$	18,868,795		$	16,910,818
Net interest margin (tax equivalent) (1)	3.64		%	3.47		%	3.05		%	3.34		%	3.17		%
Operating net interest margin (tax equivalent) (1)	3.67		%	3.50		%	3.08		%	3.39		%	3.17		%


	Three Months Ended									Twelve Months Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2022			2022			2021			2022			2021

Operating efficiency ratio non-GAAP reconciliation:	(dollars in thousands)
Noninterest expense (numerator A)	$	100,505		$	101,446		$	102,622		$	402,383		$	360,304
Adjustments to arrive at operating noninterest expense:
Merger-related expenses	(4,897)			(3,246)			(11,812)			(19,101)			(14,514)
Net benefit (cost) of operation of OREO and OPPO	8			4			(14)			(114)			(56)
Loss on asset disposals	(46)			(13)			(10)			(99)			(29)
B&O taxes	(1,853)			(1,771)			(1,571)			(6,797)			(5,903)
Operating noninterest expense (numerator B)	$	93,717		$	96,420		$	89,215		$	376,272		$	339,802

Net interest income (tax equivalent) (1)	$	168,389		$	164,859		$	147,574		$	631,058		$	535,311
Noninterest income	23,331			26,627			24,240			99,144			94,094
Bank owned life insurance tax equivalent adjustment	501			516			466			2,030			1,737
Total revenue (tax equivalent) (denominator A)	$	192,221		$	192,002		$	172,280		$	732,232		$	631,142

Operating net interest income (tax equivalent) (1)	$	169,870		$	166,607		$	148,836		$	638,853		$	535,252
Adjustments to arrive at operating noninterest income (tax equivalent):
Investment securities loss (gain), net	9			—			—			9			(314)
Gain on asset disposals	(11)			(3,696)			(242)			(4,218)			(529)
Operating noninterest income (tax equivalent)	23,830			23,447			24,464			96,965			94,988
Total operating revenue (tax equivalent) (denominator B)	$	193,700		$	190,054		$	173,300		$	735,818		$	630,240
Efficiency ratio (tax equivalent) (numerator A/denominator A)	52.29		%	52.84		%	59.57		%	54.95		%	57.09		%
Operating efficiency ratio (tax equivalent) (numerator B/denominator B)	48.38		%	50.73		%	51.48		%	51.14		%	53.92		%

__________

(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 $1.7 million and $2.4 million for the three months ended December 31, 2022 and September 30, 2022, respectively, $2.1 million for the three months ended December 31, 2021 and $8.2 million and $7.8 million for the twelve months ended December 31, 2022 and December 31, 2021, respectively.

Non-GAAP Financial Measures - Continued

The Company also considers its core noninterest expense ratio to be a useful measurement as it more closely reflects the ongoing operating performance of the Company. Despite the usefulness of the core noninterest expense ratio to the Company, there is not a standardized definition for it, as a result, the Company’s calculations may not be comparable with those of 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 core noninterest expense ratio:


	Three Months Ended									Twelve Months Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2022			2022			2021			2022			2021

Core noninterest expense ratio non-GAAP reconciliation:	(dollars in thousands)
Noninterest expense (numerator A)	$	100,505		$	101,446		$	102,622		$	402,383		$	360,304
Adjustments to arrive at core noninterest expense:

Merger-related expenses	(4,897)			(3,246)			(11,812)			(19,101)			(14,514)

Core noninterest expense (numerator B)	$	95,608		$	98,200		$	90,810		$	383,282		$	345,790

Average assets (denominator)	$	20,270,911		$	20,698,252		$	20,857,983		$	20,671,949		$	18,448,135
Noninterest expense ratio (numerator A/denominator) (1)	1.98		%	1.96		%	1.97		%	1.95		%	1.95		%
Core noninterest expense ratio (numerator B/denominator)	1.89		%	1.90		%	1.74		%	1.85		%	1.87		%

__________

(1) For the purpose of this ratio, interim noninterest expense has been annualized.

(2) For the purpose of this ratio, interim core noninterest expense has been annualized.

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 those of 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						Twelve Months Ended
	December 31,		September 30,		December 31,		December 31,		December 31,
	2022		2022		2021		2022		2021

Pre-tax, pre-provision income:	(in thousands)
Income before income taxes	$	87,119	$	82,423	$	56,041	$	317,647	$	256,509
Provision (recapture) for credit losses	2,400		5,250		11,100		1,950		4,800
Provision (recapture) for unfunded commitments	(500)		(500)		(2,000)		(500)		200
B&O taxes	1,853		1,771		1,571		6,797		5,903
Pre-tax, pre-provision income	$	90,872	$	88,944	$	66,712	$	325,894	$	267,412

Non-GAAP Financial Measures - Continued

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 these metrics. As a result, the Company’s calculation may not always be comparable with those of 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 tangible common equity ratio and tangible book value per share ratio:


	December 31,			September 30,			December 31,
	2022			2022			2021

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)	$	2,213,153		$	2,115,481		$	2,588,742
Adjustments to arrive at tangible common equity:
Goodwill	(823,172)			(823,172)			(823,172)
Other intangible assets, net	(25,949)			(27,921)			(34,647)
Tangible common equity (numerator B)	$	1,364,032		$	1,264,388		$	1,730,923

Total assets (denominator A)	$	20,265,843		$	20,405,369		$	20,945,333
Adjustments to arrive at tangible assets:
Goodwill	(823,172)			(823,172)			(823,172)
Other intangible assets, net	(25,949)			(27,921)			(34,647)
Tangible assets (denominator B)	$	19,416,722		$	19,554,276		$	20,087,514

Shareholders’ equity to total assets (numerator A/denominator A)	10.92		%	10.37		%	12.36		%
Tangible common shareholders’ equity to tangible assets (numerator B/denominator B)	7.03		%	6.47		%	8.62		%
Common shares outstanding (denominator C)	78,646			78,647			78,511
Book value per common share (numerator A/denominator C)	$	28.14		$	26.90		$	32.97
Tangible book value per common share (numerator B/denominator C)	$	17.34		$	16.08		$	22.05

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 those of 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, excluding PPP loans:


	December 31,			September 30,			December 31,
	2022			2022			2021

Allowance coverage ratio non-GAAP reconciliation:	(dollars in thousands)
Allowance for credit losses ("ACL") (numerator)	$	158,438		$	154,871		$	155,578

Total loans (denominator A)	11,610,973			11,692,261			10,641,937
Less: PPP loans (0% Allowance)	9,997			15,378			184,132
Total loans, net of PPP loans (denominator B)	$	11,600,976		$	11,676,883		$	10,457,805

ACL to period end loans (numerator / denominator A)	1.36		%	1.32		%	1.46		%
ACL to period end loans, excluding PPP loans (numerator / denominator B)	1.37		%	1.33		%	1.49		%

Non-GAAP Financial Measures - Continued

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 those of 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 return on average tangible common shareholders' equity ratio:


	Three Months Ended									Twelve Months Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2022			2022			2021			2022			2021

Return on average tangible common equity non-GAAP reconciliation:	(dollars in thousands)
Net income (numerator A)	$	68,906		$	64,942		$	42,911		$	250,178		$	202,820
Adjustments to arrive at tangible income applicable to common shareholders:
Amortization of intangibles	1,972			2,219			2,376			8,698			7,987
Tax effect on intangible amortization	(414)			(466)			(499)			(1,827)			(1,677)
Tangible income applicable to common shareholders (numerator B)	$	70,464		$	66,695		$	44,788		257,049			$	209,130

Average shareholders’ equity (denominator A)	$	2,129,671		$	2,271,012		$	2,584,110		2,307,453			$	2,402,455
Adjustments to arrive at average tangible common equity:
Average intangibles	(850,331)			(852,468)			(854,985)			(853,622)			(806,345)
Average tangible common equity (denominator B)	$	1,279,340		$	1,418,544		$	1,729,125		$	1,453,831		$	1,596,110

Return on average common equity (numerator A/denominator A) (1)	12.94		%	11.44		%	6.64		%	10.84		%	8.44		%
Return on average tangible common equity (numerator B/denominator B) (2)	22.03		%	18.81		%	10.36		%	17.68		%	13.10		%

__________

(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.