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COLUMBIA BANKING SYSTEM, INC. (COLB)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered stable core profitability with diluted EPS $0.68 and operating diluted EPS $0.71, supported by net interest margin expansion to 3.64% and disciplined expense control; GAAP revenue was $492.7M (operating) and $487.1M (GAAP) .
  • Net interest income rose $7M q/q to $437.4M as deposit repricing and funding mix shifts lowered interest-bearing deposit costs to 2.66%; NIM improved 8 bps q/q to 3.64% .
  • Management signaled near-term NIM pressure in Q1 2025 from seasonal deposits and up to $0.5B of wholesale funding additions at ~4.4–4.5%, but expects margin trajectory to be more dependent on core deposit flows than on the number of Fed cuts .
  • 2025 guidance tightened: operating expenses ex CDI guided to ~$1.00–$1.01B, CDI amortization ~$105M for 2025, tax rate ~25.7%, and five retail branches slated to open; CET1 rose to an estimated 10.5% and total risk-based capital to 12.6%, reinforcing potential capital return optionality .
  • Catalysts: continued deposit repricing and expense discipline; watch for Q1 seasonal deposit outflows and wholesale funding mix as near-term stock reaction drivers; capital build raises buyback probability later in 2025 .

What Went Well and What Went Wrong

What Went Well

  • Net interest margin expanded to 3.64% (+8 bps q/q) as deposit costs fell and funding mix improved; interest-bearing deposit costs declined to 2.66% in Q4 (December spot 2.51%) .
  • Operating discipline: operating non-interest expense declined $5M q/q; operating efficiency ratio improved to 52.51% from 53.89% in Q3 .
  • Strategic loan mix: commercial loans grew 2% q/q (annualized), offsetting expected contraction in transactional real estate; deposits rose $206M q/q .
    • Quote: “Our optimized expense base, improved pricing strategies, and targeted franchise investments… supported deposit-driven net interest margin expansion and relationship-driven commercial loan growth.” – Clint Stein, CEO .

What Went Wrong

  • Non-interest income fell $16M q/q largely due to fair value and MSR hedge swings (net fair value loss $6M vs +$7M in Q3) and a loss on sale of loans, partly offset by core fee growth .
  • Book value per share declined to $24.43 (vs $25.17 in Q3) as AOCI worsened with higher unrealized losses on AFS securities; TBV/share down to $17.20 .
  • Near-term NIM headwind expected in Q1 2025 from seasonal deposit declines and added wholesale funding (~$0.5B at ~4.4–4.5% cost), putting NIM in the lower half of recent quarters .

Financial Results

Quarterly comparison (q/q)

MetricQ2 2024Q3 2024Q4 2024
Revenue (GAAP, $MM)$472.2 $496.4 $487.1
Operating Revenue ($MM)$481.9 $489.8 $492.7
Net Interest Income ($MM)$427.4 $430.2 $437.4
Non-Interest Income ($MM)$44.7 $66.2 $49.7
Non-Interest Expense ($MM)$279.2 $271.4 $266.6
Diluted EPS ($)$0.57 $0.70 $0.68
Operating Diluted EPS ($)$0.67 $0.69 $0.71
Net Interest Margin (%)3.56% 3.56% 3.64%
Efficiency Ratio (%)59.02% 54.56% 54.61%

Year-over-year comparison (Q4)

MetricQ4 2023Q4 2024
Revenue (GAAP, $MM)$519.2 $487.1
Operating Revenue ($MM)$506.4 $492.7
Net Interest Income ($MM)$454.7 $438.4
Non-Interest Income ($MM)$65.5 $49.7
Non-Interest Expense ($MM)$337.2 $266.6
Diluted EPS ($)$0.45 $0.68
Operating Diluted EPS ($)$0.56 $0.71
Net Interest Margin (%)3.78% 3.64%
Efficiency Ratio (%)64.81% 54.61%

Balance sheet and mix

MetricQ3 2024Q4 2024
Total Assets ($B)$51.9 $51.6
Loans & Leases ($B)$37.5 $37.7
Deposits ($B)$41.5 $41.7
Book Value/Share ($)$25.17 $24.43
Tangible BV/Share ($)$17.81 $17.20

Deposit composition

Category ($MM)Q3 2024 AmountQ4 2024 AmountQ3 2024 MixQ4 2024 Mix
Non-interest-bearing Demand$13,534 $13,308 33% 32%
Interest-bearing Demand$8,444 $8,476 20% 20%
Money Market$11,351 $11,475 27% 27%
Savings$2,451 $2,360 6% 6%
Time$5,734 $6,102 14% 15%
Total Deposits$41,515 $41,721 100% 100%

Credit and capital KPIs

KPIQ2 2024Q3 2024Q4 2024
Provision for Credit Losses ($MM)$31.8 $28.8 $28.2
Net Charge-offs / Avg Loans (annualized)0.32% 0.31% 0.27%
ACL to Loans & Leases (%)1.16% 1.17% 1.17%
NPA / Assets (%)0.30% 0.32% 0.33%
CET1 (estimated) (%)9.9% 10.3% 10.5%
Total Risk-Based Capital (estimated) (%)12.1% 12.5% 12.6%
Dividend per Share ($)$0.36 $0.36 $0.36

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest MarginQ1 2025No specific q/q guide; Q3 commentary described NIM “upper end of 3.45–3.60% range” in Q3 Expect NIM in lower half of last few quarters due to seasonal deposits and ~$0.5B wholesale funding at ~4.4–4.5% cost Lower near term
Wholesale Funding Level/CostQ1 2025Deleveraging in Q3; tailwinds from $8B repricing over 6 months Up to $0.5B increase at ~4.4–4.5% cost; CDs/debt repricing down from mid-4%–5% levels Increase in level; lower cost on repricing
Operating Expenses ex CDIFY 2025Annualized run rate $965–$985M (Q3 exit) ~$1.00–$1.01B for 2025 (ex CDI), normalized Q4 base ~$960–$975M Raised
CDI AmortizationFY 2025N/A~$105M; ~$26M from Q2 onward New detail
Tax RateFY 2025N/A~25.7% (use as planning rate) New detail
Branch Openings2025Mesa AZ planned; expansion in de novo markets Five new branches planned; reinvestment of $12M of savings Expanded
DividendOngoing$0.36/share declared Aug 12; paid Sep 9 $0.36/share declared Nov 15 (paid Dec 16) ; $0.36/share next dividend payable Mar 17, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
NIM & Deposit BetasQ2: NIM up 4 bps to 3.56% with pricing stabilization ; Q3: NIM 3.56%, deposit betas ~52% down-cycle NIM 3.64% (+8 bps); December spot deposit cost 2.51%; expect Q1 NIM lower half of recent range; through-cycle deposit beta ~55% Positive q/q; cautious near-term
Funding Mix & CDs RepricingQ2/Q3: Reduced brokered CDs; $8B repricing tailwinds ~$1.2B CDs maturing in Q1; many mid-4% rolling to ~3.75% specials; term debt 5.04% rolling to mid-4% Accretive as repricing proceeds
Loan Mix & GrowthQ2: +68M loans with line utilization ; Q3: -$207M as transactional RE declines; targeting low single-digit growth Commercial +2% q/q; total loans +$178M; 2025 total low single-digit; C&I low-to-mid single-digit Portfolio remix toward C&I
Transactional Real Estate RunoffIdentified ~$6B non-relationship pools; amortize/reprice over time Continue amortization; avoid hard-coded sales until rates lower Ongoing runoff
Technology & Fee IncomeQ2/Q3: CRM upgrade, TM/card growth Investing in real-time payments, data analytics; TM +11% and card +8% in 2024; wealth/trust revenue up Fee momentum building
Credit Quality & FinPacQ2/Q3: Normalization; FinPac losses improving NCOs 0.27%; FinPac delinquencies and NCOs improving; bank-only NCO ~7 bps Gradual improvement

Management Commentary

  • CEO prepared remarks: “Our fourth quarter and 2024 results reflect significant strides toward top-quartile performance… deposit-driven net interest margin expansion, relationship-driven commercial loan growth, and higher income from core fee-generating products.” – Clint Stein .
  • CFO on margin and deposit costs: “NIM increased 8 bps to 3.64%… interest-bearing deposit cost was 2.59% in December, spot 2.51%… ~50% beta… demonstrates slightly liability-sensitive positioning” – Ron Farnsworth .
  • President on deposit campaigns: “Campaigns generated approximately $700 million in new deposits in 2024… retention mid-80%… strong cross-sell into merchant and corporate card” – Christopher Merrywell .
  • Credit head: “No systemic issues… FinPac delinquencies decreasing… net charge-offs annualized 27 bps in Q4” – Frank Namdar .
  • Strategic focus: “We remain focused on driving balanced growth… capital position continues to build… flexibility for additional returns to shareholders” – Clint Stein .

Q&A Highlights

  • Capital deployment optionality: Above long-term regulatory targets; TCE ~7.2% (ex-AOCI higher); management will be opportunistic on capital actions in 2025 (including buybacks) .
  • NIM outlook: Expect Q1 NIM in lower half of Q2/Q3–Q4 range due to seasonal deposit outflows and wholesale funding additions; margin trajectory more tied to deposit flows than Fed cadence .
  • Repricing runway: ~$1.2B CDs maturing (many mid-4% rates moving to ~3.75%); $2.6B debt at 5.04% repricing to mid-4% in next 3 months; brokered cost ~4.4–4.5% .
  • Loan growth: 2025 total low single-digit, C&I low-to-mid single-digit; pipelines steady with mix shifting toward C&I; disciplined pricing (passing on “presidential pricing”) .
  • Residential mortgage: Maintain relationship-based origination and secondary market sales; over time aim to reduce single-family resi share on balance sheet .

Estimates Context

  • We attempted to retrieve Wall Street consensus for Q4 2024 EPS and revenue via S&P Global but encountered a daily request limit error; therefore consensus figures were unavailable at this time [GetEstimates error].
  • Implication: Without published consensus, we cannot quantify a beat/miss; however, operating EPS improved q/q to $0.71 with NIM expansion and expense reduction, while GAAP revenue declined q/q on non-interest income volatility .

Key Takeaways for Investors

  • Near-term: Expect Q1 margin pressure from seasonal deposit dynamics and added wholesale funding; watch deposit flow seasonality and repricing execution across ~$8B CDs/wholesale funding as primary drivers of NIM path .
  • Margin play: December spot deposit costs at 2.51% and demonstrated ~55% down-cycle betas support continued liability-sensitive tailwinds if deposit flows normalize and repricing continues .
  • Expense discipline: Raised 2025 operating expense guide ($1.00–$1.01B ex CDI), but strong efficiency (52.51% operating efficiency ratio) and ongoing reinvestments aim to drive sustainable core revenue growth .
  • Mix shift: Ongoing runoff of transactional real estate and growth in relationship-driven C&I should enhance risk-adjusted returns; total loan growth targeted low single-digit in 2025 .
  • Credit: NCOs moderated to 27 bps; FinPac normalization progressing; ACL/loans steady at 1.17% with NPAs/Assets at 0.33%—credit remains manageable .
  • Capital: CET1 10.5% and total RBC 12.6% provide flexibility; management reiterated openness to capital returns later in 2025 as ratios build .
  • Dividend: $0.36/share maintained, with continued payouts (next payable Mar 17, 2025) .

Notes on Non-GAAP Adjustments

  • Operating results adjust for merger/restructuring, exit/disposal costs, FDIC special assessment, and fair value/MSR items; Q4 operating revenue $492.7M vs GAAP $487.1M due to excluding non-operating fair value swings .
  • Q4 operating non-interest expense was $263.5M vs GAAP $266.6M; operating PPNR $229.2M vs PPNR $220.5M .

All data and quotes are sourced from the Q4 2024 earnings press release and materials, Q4 earnings call transcript, and prior quarter releases/calls as cited above.