# COLUMBIA BANKING SYSTEM, INC. (COLB) FY 2024 MD&A Verbatim Item 7 Management's Discussion and Analysis from COLUMBIA BANKING SYSTEM, INC.'s 10-K for fiscal year 2024. SEC filing source: https://www.sec.gov/Archives/edgar/data/887343/000088734325000054/colb-20241231.htm Accession: 0000887343-25-000054 Filing date: 2025-02-25 Report date: 2024-12-31 Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Company profile: /company/COLB/ All MD&A years: /company/COLB/mda/ Previous year: /company/COLB/mda/fy2023/ (FY 2023) Next year: /company/COLB/mda/fy2025/ (FY 2025) ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS AND RISK FACTORS  See the discussion of forward-looking statements and risk factors in Part I Item 1 and Item 1A of this Annual Report on Form 10-K. The following discussion and analysis of our financial condition and results of operations constitutes management's review of the factors that affected our financial and operating performance for the years ended December 31, 2024 and 2023. This discussion should be read in conjunction with the consolidated financial statements and notes thereto contained elsewhere in this Annual Report on Form 10-K. For a discussion of the year ended December 31, 2022, including a comparison to the year ended December 31, 2023, see Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, on Registrant's Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 27, 2024. EXECUTIVE OVERVIEW Financial Performance  •Earnings per diluted common share were $2.55 for the year ended December 31, 2024, compared to $1.78 for the year ended December 31, 2023. The increase for the year ended December 31, 2024, as compared to the prior year, was primarily driven by a decrease in non-interest expense due to lower expenses related to the Merger, as the majority were recognized in 2023. In addition, provision for credit losses decreased, primarily due to the initial provision for historical Columbia non-PCD loans that was recorded in the first quarter of 2023, as well as credit migration trends, charge-off activity, changes in the economic forecasts used in credit models, and a recalibration of the commercial CECL model in the first quarter of 2024. These favorable changes were partially offset by a decrease in net interest income. •Net interest income was $1.7 billion for the year ended December 31, 2024, as compared to $1.8 billion for the year ended December 31, 2023. The decrease was primarily driven by higher rates on interest-bearing liabilities and a shift in the funding mix into higher-cost sources, partially offset by higher average yields on interest-earning assets and higher average balances. •Net interest margin, on a tax equivalent basis, was 3.57% for the year ended December 31, 2024, compared to 3.91% for the year ended December 31, 2023. The decrease is primarily due to higher funding costs that reflect deposit repricing and a shift in product mix. This was partially offset by an increase in interest-earning asset yields given interest rate movements, with the most impactful average rate increase in the loan and leases category. •Non-interest income was $211.0 million for the year ended December 31, 2024, compared to $203.9 million for the year ended December 31, 2023. The increase was partially due to a favorable change in the net fair value loss of the MSR asset as a result of a $15.9 million loss for the year ended December 31, 2024, compared to a net fair value loss of $28.5 million for the prior year. In addition, there were increases in many other non-interest income categories, largely due to the impact of a full year as a combined company compared to only ten months as a combined company for the prior year, as well as increasing fee-generating product traction with our customer base as we execute our Business Bank of Choice operating strategy. These favorable changes were partially offset by a decrease in other income of $8.0 million, largely driven by interest rate fluctuations impacting the fair value of certain loans held for investment, partially offset by the impact of rate fluctuations on swap derivatives. •Non-interest expense was $1.1 billion for the year ended December 31, 2024, compared to $1.3 billion for the year ended December 31, 2023. This reflects a decrease in merger and restructuring expenses of $147.9 million and decreases in FDIC assessments, which was impacted by the $32.9 million special assessment expense that was incurred in 2023. Salaries and employee benefits also decreased, largely due a reduction in employees as a result of Merger synergies realized in 2023 and operational efficiency activities in 2024. 39 Table of Contents •Total loans and leases were $37.7 billion as of December 31, 2024, an increase of $239.0 million, or 0.6%, compared to December 31, 2023. The increase in total loans and leases was primarily due to increases in the commercial and commercial real estate loan balances, partially offset by a decrease in residential balances. The increase was driven by commercial line utilization and new originations, partially offset by charge-offs and loan payoffs. Balances were also impacted by a decline in transactional multifamily and residential loans, which trended lower as we organically remix the portfolio into relationship-driven commercial loans. •Total deposits were $41.7 billion as of December 31, 2024, an increase of $113.7 million, or 0.3%, from December 31, 2023. The increase was primarily due to an increase in customer deposits with the largest change being in the commercial customer balances, reflective of our Business Bank of Choice operating strategy. This was partially offset by a decrease in brokered deposits. The interest-bearing deposit mix increased mainly due to a migration from non-interest-bearing to interest-bearing accounts as customers seek higher rates in the current interest rate environment. •Total consolidated assets were $51.6 billion as of December 31, 2024, compared to $52.2 billion as of December 31, 2023. The reduction is primarily due to decline in investment debt securities, driven by paydowns, calls, maturities, and a reduction in fair value given interest rate changes during the year. Additionally, there was a decrease in cash and cash equivalents, reflecting the deleveraging of wholesale borrowings. These reductions were partially offset by an increase in loans and leases, primarily driven by organic loan growth. Credit Quality •Non-performing assets increased to $169.6 million, or 0.33% of total assets, as of December 31, 2024, compared to $113.9 million, or 0.22% of total assets, as of December 31, 2023. Non-performing loans were $166.9 million, or 0.44% of total loans and leases, as of December 31, 2024, compared to $112.9 million, or 0.30% of total loans and leases, as of December 31, 2023. As of December 31, 2024, non-performing loans included $73.6 million in government guarantees. The rise in non-performing assets was mainly due to migration in our SBA portfolio, an owner-occupied commercial real estate property, and the end of certain COVID-related designations in the residential mortgage portfolio. •The ACL was $440.8 million, or 1.17% of loans and leases, as of December 31, 2024, a decrease of $23.3 million, as compared to $464.1 million, or 1.24% of loans and leases, as of December 31, 2023. The change in the ACL was due to changes in the economic assumptions used in credit models, credit migration trends, and a recalibration of the commercial CECL model in the first quarter of 2024. •The Company had a provision for credit losses of $105.9 million for the year ended December 31, 2024, compared to a provision for credit losses of $213.2 million in the prior year. The decrease in provision expense for the year ended December 31, 2024 as compared to the prior year was due to the prior year including an $88.4 million initial provision for historical Columbia non-PCD loans related to the Merger. This initial provision, as well as changes in the economic assumptions used in credit models and a recalibration of the commercial CECL model in the first quarter of 2024, contributed to the change when compared to the same period in the current year. As a percentage of average outstanding loans and leases, the provision for credit losses for the year ended December 31, 2024 was 0.28%, as compared to 0.60% for the prior year. Liquidity •Total cash and cash equivalents were $1.9 billion as of December 31, 2024, a decrease of $284.3 million from December 31, 2023. The Company manages its cash position as part of management's strategy to maintain a high-quality liquid asset position to support balance sheet flexibility, fund growth in lending and investment portfolios, and deleverage the balance sheet by decreasing debt and non-deposit liabilities as economic conditions permit. •Including secured off-balance sheet lines of credit, total available liquidity was $18.0 billion as of December 31, 2024, representing 35% of total assets, 43% of total deposits, and 128% of estimated uninsured deposits. Capital •The Company's total risk-based capital ratio was 12.8% and its CET1 risk-based capital ratio was 10.5% as of December 31, 2024, as compared to 11.9% and 9.6%, respectively, as of December 31, 2023. •The Company paid cash dividends of $1.44 per common share during the year ended December 31, 2024. 40 Table of Contents California Wildfires •Southern California has experienced unprecedented wildfires in recent years, which have impacted the Bank's customers and associates. While some of our businesses and associates have been directly affected by the damage, the response from our teams across the organization has been truly inspiring. As a company, we have established grant programs to support communities in the wake of disasters like wildfires. We actively collaborate with community organizations to aid in recovery efforts as they unfold. Our commitment to our communities, customers, and associates is unwavering, and we are dedicated to supporting, rebuilding, and restoring the communities affected by these devastating fires. CRITICAL ACCOUNTING ESTIMATES In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. The consolidated financial statements are prepared in conformity with GAAP and follow general practices within the financial services industry, in which the Company operates. This preparation requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, actual results could differ from the estimates, assumptions, and judgments reflected in the financial statements. Certain estimates inherently have a greater reliance on the use of assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported. Management believes the ACL and goodwill estimates are important to the portrayal of the Company's financial condition and results of operations and requires difficult, subjective, or complex judgments and, therefore, management considers them to be critical accounting estimates. Allowance for Credit Losses The ACL represents management's best estimate of lifetime credit losses for loans and leases and unfunded commitments. The ACL was $440.8 million at December 31, 2024 and $464.1 million at December 31, 2023. Under CECL, Management has flexibility in selecting the methodology for estimating expected credit losses, which must be calculated over the asset’s contractual term, and adjusted for prepayments, utilizing quantitative and qualitative factors. Management uses complex models to forecast future economic conditions based on specific macroeconomic variables for each loan and lease portfolio. The adequacy of the ACL is monitored regularly, considering factors such as: CECL model outputs; loan portfolio quality and risk ratings; economic conditions; loan concentrations and growth rates; past-due and non-performing trends; specific loss estimates for significant problem loans; historical charge-off and recovery experience. As of December 31, 2024, the Bank used Moody's Analytics' November 2024 consensus forecast to estimate the ACL. To assess sensitivity, the Bank applied the Moody's Analytics' November 2024 S2 scenario, which predicts a 75% probability of better economic performance and a 25% probability of worse performance. For additional information related to the economic scenario, see Note 6 – Allowance for Credit Losses in Item 8 of this Annual Report on Form 10-K. This scenario would result in a quantitative lifetime loss estimate approximately 1.2 times our modeled period-end ACL, an increase of approximately $87 million, without qualitative adjustments. This analysis pertains solely to the modeled credit loss estimate and does not encompass the overall period-end ACL, which incorporates qualitative adjustments. The determination of the ACL considers both quantitative and qualitative factors. This sensitivity analysis does not necessarily reflect the nature and extent of future changes in the ACL or what the ACL would be under these economic circumstances. Instead, it highlights the impact of adverse macroeconomic changes on modeled loss estimates. The hypothetical determination does not incorporate management judgment or other qualitative factors that could be applied in the actual estimation of the ACL and does not imply any expected future deterioration in loss rates. 41 Table of Contents Since economic conditions and forecasts can change, and future events are inherently difficult to predict, the estimated credit losses on loans, and therefore the appropriateness of the ACL, could change significantly. It is challenging to estimate how changes in any single economic factor or input might affect the overall allowance, as many factors and inputs are considered. These changes may not occur at the same rate or be consistent across all product types. Additionally, improvements in one factor may offset deterioration in others. For additional information related to the Company's ACL, see Note 1 – Summary of Significant Accounting Policies in Item 8 of this Annual Report on Form 10-K. Goodwill Goodwill is tested for impairment at the reporting unit level on an annual basis as of October 31 each year, and more frequently if events or circumstances indicate that there may be impairment. Goodwill impairment is determined by comparing the fair value of a reporting unit to its carrying amount. If the fair value of the reporting unit is less than its carrying value, the difference is the amount of impairment and goodwill is written down to the fair value of the reporting unit. The Company has a single reporting unit. In testing goodwill, the Company may assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. In this qualitative assessment, the Company evaluates events and circumstances which may include, but are not limited to: the general economic environment; banking industry and market conditions; a significant adverse change in legal factors; significant decline in our stock price and market capitalization; unanticipated competition; the testing for recoverability of a significant asset group within the reporting unit; and an adverse action or assessment by a regulator. If the quantitative impairment test is required or the decision to bypass the qualitative assessment is elected, the Company performs the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The determination of the fair value of a reporting unit is a subjective process that involves the use of estimates and judgments about economic and industry factors and the growth and earnings prospects of the Bank. Variability in the market and changes in assumptions or subjective measurements used to estimate fair value are reasonably possible and may have a material impact on our consolidated financial statements or results of operations. Based on the results of the annual goodwill impairment test, it was determined that no goodwill impairment charges were required as our single reporting unit’s fair value exceeded its carrying amount. The determination of the fair value is a subjective process that involves the use of estimates and judgments, particularly related to the appropriate discount rates and an applicable control premium. The Company determined the fair value utilizing average acquisition multiples as well as calculating its market capitalization based on the closing price of the Company’s stock at the measurement date, incorporating an additional control premium, and comparing this market-based fair value measurement to the aggregate fair value of the Company. The percentage at which the fair value exceeded the carrying value is approximately 25%. As of October 31, 2024, a decrease in market multiples and utilizing an average stock price for market capitalization would reduce estimated entity fair value by approximately $1 million and would not result in any impairment. As of December 31, 2024, we determined there were no events or circumstances which would more likely than not reduce the fair value of our reporting unit below its carrying amount. RECENT ACCOUNTING PRONOUNCEMENTS  Information regarding Recent Accounting Pronouncements is included in Note 1 of the Notes to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K. RESULTS OF OPERATIONS Columbia's financial results for any periods ended prior to February 28, 2023, the Merger Date, reflect UHC results only on a standalone basis. Accordingly, Columbia's reported financial results for the first quarter of 2023 reflect only UHC financial results through the closing of the Merger. As a result of these two factors, Columbia's financial results for the year ended December 31, 2023, may not be directly comparable to prior or future reported periods. 42 Table of Contents Comparison of current year to prior year For the year ended December 31, 2024, the Company had net income of $533.7 million, compared to net income of $348.7 million for the same period in the prior year. The increase in net income was mainly attributable to decreases in non-interest expense and provision for credit losses, partially offset by a decrease in net interest income. The $208.0 million decrease in non-interest expense was primarily due to a decrease in merger and restructuring expenses, as the majority of the merger expenses associated with the Merger were recognized in 2023. The decrease of $107.3 million in provision for credit losses was impacted by the initial provision of $88.4 million for historical Columbia non-PCD loans that was recorded in the first quarter of 2023, in addition to credit migration trends, charge-off activity, changes in the economic forecasts used in credit models, and the recalibration of the commercial CECL model in the first quarter of 2024. The decrease of $74.8 million in net interest income was due to higher rates on interest-bearing liabilities and a shift in the funding mix into higher-cost sources, partially offset by higher average yields on interest-earning assets and a larger average balance sheet for the year ended December 31, 2024. The Company paid down term debt and reduced brokered deposit balances during the year to continue to rebalance our funding sources in support of our liquidity management program and lower the cost of liabilities. During the first quarter of 2024, the Company conducted an enterprise-wide evaluation of our operations, which resulted in consolidated positions and simplified reporting and organizational structures. As of December 31, 2024, the Company incurred $12.9 million in restructuring expenses, but achieved $82 million in annualized cost savings, or $70 million net of planned reinvestment associated with recent operational initiatives. The Company will continue to invest in customer-focused technology, experienced bankers, and strategic locations going forward. There are five branches slated to open in 2025, as well as technological enhancements that are targeted to create additional operational efficiencies and bring additional revenue opportunities to the Company in the future. The following table presents the return on average assets (GAAP), average common shareholders' equity (GAAP), and average tangible common shareholders' equity (non-GAAP) for the years ended December 31, 2024, 2023, and 2022. For each period presented, the table includes the calculated ratios based on reported net income. To the extent return on average common shareholders' equity is used to compare our performance with other financial institutions that do not have merger and acquisition-related intangible assets, we believe it is beneficial to also consider the return on average tangible common shareholders' equity. This measure is useful for evaluating the performance of a business as it calculates the return available to common shareholders without the impact of intangible assets and their related amortization. Return on average tangible common shareholders' equity is also used as part of our incentive compensation program for our executive officers. The return on average tangible common shareholders' equity is calculated by dividing net income by average shareholders' common equity less average goodwill and other intangible assets, net (excluding MSR). The return on average tangible common shareholders' equity is considered a non-GAAP financial measure and should be viewed in conjunction with the return on average common shareholders' equity. Return on Average Assets, Common Shareholders' Equity and Tangible Common Shareholders' Equity  For the years ended December 31, 2024, 2023, and 2022: [[GREPCENT_TABLE]] [["(dollars in thousands)","2024","","2023","","2022"],["Return on average assets","1.03","%","","0.70","%","","1.09","%"],["Return on average common shareholders' equity","10.55","%","","7.81","%","","13.07","%"],["Return on average tangible common shareholders' equity","15.31","%","","11.46","%","","13.11","%"],["Calculation of average common tangible shareholders' equity:"],["Average common shareholders' equity","$","5,060,365","","","$","4,466,725","","","$","2,575,577"],["Less: average goodwill and other intangible assets, net","1,573,712","","","1,423,075","","","6,847"],["Average tangible common shareholders' equity","$","3,486,653","","","$","3,043,650","","","$","2,568,730"]] [[/GREPCENT_TABLE]] 43 Table of Contents Additionally, management believes tangible common equity and the tangible common equity ratio are meaningful measures of capital adequacy. Columbia believes the exclusion of certain intangible assets in the computation of tangible common equity and the tangible common equity ratio provides a meaningful base for period-to-period and company-to-company comparisons, which management believes will assist investors in analyzing the operating results and capital of the Company. Tangible common equity is calculated as total shareholders' equity less goodwill and other intangible assets, net (excluding MSR). In addition, tangible assets are total assets less goodwill and other intangible assets, net (excluding MSR). The tangible common equity ratio is calculated as tangible common shareholders' equity divided by tangible assets. Tangible common equity and the tangible common equity ratio are considered non-GAAP financial measures and should be viewed in conjunction with total shareholders' equity and the total shareholders' equity ratio. The following table provides a reconciliation of ending shareholders' equity (GAAP) to ending tangible common equity (non-GAAP), and ending assets (GAAP) to ending tangible assets (non-GAAP) as of December 31, 2024, and 2023:  [[GREPCENT_TABLE]] [["(dollars in thousands)","December 31, 2024","","December 31, 2023"],["Total shareholders' equity","$","5,118,224","","","$","4,995,034"],["Less: Goodwill","1,029,234","","","1,029,234"],["Less: Other intangible assets, net","484,248","","","603,679"],["Tangible common shareholders' equity","$","3,604,742","","","$","3,362,121"],["Total assets","$","51,576,397","","","$","52,173,596"],["Less: Goodwill","1,029,234","","","1,029,234"],["Less: Other intangible assets, net","484,248","","","603,679"],["Tangible assets","$","50,062,915","","","$","50,540,683"],["Total shareholders' equity to total assets ratio","9.92","%","","9.57","%"],["Tangible common equity to tangible assets ratio","7.20","%","","6.65","%"]] [[/GREPCENT_TABLE]] Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not reviewed or audited. Although we believe these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP. 44 Table of Contents NET INTEREST INCOME  Net interest income for 2024 was $1.7 billion, a decrease of $74.8 million, or 4%, compared to the same period in 2023. The decrease was due to higher rates on interest-bearing liabilities and a shift in the funding mix into higher-cost sources, partially offset by higher average yields on interest-earning assets and a larger average balance sheet for the year ended December 31, 2024 compared to the prior year, as a result of the Merger. The net interest margin (net interest income as a percentage of average interest-earning assets) on a fully tax equivalent basis was 3.57% for 2024, as compared to 3.91% for 2023, a decrease of 34 basis points. This decrease for the year ended December 31, 2024 compared to the prior year was due to higher funding costs that reflect deposit repricing and a shift in product mix. The yield on loans and leases for 2024 and 2023 was 6.15% and 5.95%, respectively, an increase of 20 basis points, primarily attributable to the higher interest rate environment during most of 2024. The cost of interest-bearing liabilities was 3.21% for the year ended December 31, 2024, compared to 2.56% for the year ended December 31, 2023. This increase of 65 basis points reflects a mix of higher-cost interest-bearing demand, money market, and time deposits and higher interest rates not offset by a reduction in borrowing and borrowing rates. Our net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, as well as changes in the yields earned on interest-earning assets and rates paid on deposits and borrowed funds. The Federal Reserve lowered the target range for the federal funds rate by 0.50% in September 2024 and an additional 0.25% in both November and December 2024. During the January 2025 meeting, the Federal Reserve maintained the target rate at 4.25%-4.50%. Between March 2022 and July 2023, the Federal Reserve raised the target range for the federal funds rate by 5.25%. During that period, our net interest margin expanded as our balance sheet became increasingly profitable due to active rate increases by the Federal Reserve and the lagged impact to deposit pricing compared to earning asset repricing. After the Federal Reserve ceased increasing the federal funds rate, we experienced an increase in our funding costs that outpaced the increase in our earning asset yields, as our deposits continued to reprice higher and our funding base experienced a shift toward higher-cost sources as Federal Reserve actions reduced available liquidity within the banking industry. As a result, our net interest margin contracted during the latter half of 2023 due to the impact of higher funding costs and minimal change to the average yield on earning assets. Our net interest margin began to stabilize in the 3.5% to 3.6% range beginning in February 2024, following a comprehensive review related to how we evaluate and approve deposit pricing. Further, the impact of balance sheet composition changes and the higher interest rate environment shifted the interest rate sensitivity position of the balance sheet to a liability sensitive position as of December 31, 2024 from an asset sensitive position at the onset of the rising rate environment. 45 Table of Contents The following table presents condensed average balance sheet information, together with interest income and yields on average interest-earning assets, and interest expense and rates paid on average interest-bearing liabilities for the years ended December 31, 2024, 2023, and 2022:  [[GREPCENT_TABLE]] [["","2024","","2023","","2022"],["(dollars in thousands)","Average Balance","","Interest Income or Expense","","Average Yields or Rates","","Average Balance","","Interest Income or Expense","","Average Yields or Rates","","Average Balance","","Interest Income or Expense","","Average Yields or Rates"],["INTEREST-EARNING ASSETS:"],["Loans held for sale","$","69,348","","","$","4,505","","","6.50","%","","$","87,675","","","$","3,871","","","4.42","%","","$","208,141","","","$","8,812","","","4.23","%"],["Loans and leases (1)","37,585,426","","","2,315,859","","","6.15","%","","35,412,594","","","2,109,744","","","5.95","%","","24,225,518","","","1,041,446","","","4.29","%"],["Taxable securities","7,928,449","","","317,134","","","4.00","%","","7,479,573","","","289,944","","","3.88","%","","3,343,721","","","72,702","","","2.17","%"],["Non-taxable securities (2)","833,915","","","31,499","","","3.78","%","","740,376","","","28,236","","","3.81","%","","216,943","","","6,669","","","3.07","%"],["Temporary investments and interest-bearing cash","1,696,070","","","90,227","","","5.32","%","","2,147,348","","","111,659","","","5.20","%","","1,561,808","","","19,706","","","1.26","%"],["Total interest-earning assets (1)(2)","48,113,208","","","2,759,224","","","5.73","%","","45,867,566","","","2,543,454","","","5.54","%","","29,556,131","","","1,149,335","","","3.88","%"],["Goodwill and other intangible assets","1,573,712","","","","","","","1,423,075","","","","","","","6,847"],["Other assets","2,228,134","","","","","","","2,205,678","","","","","","","1,254,418"],["Total assets","$","51,915,054","","","","","","","$","49,496,319","","","","","","","$","30,817,396"],["INTEREST-BEARING LIABILITIES:"],["Interest-bearing demand deposits","$","8,265,535","","","$","214,869","","","2.60","%","","$","6,280,333","","","$","97,162","","","1.55","%","","$","3,886,390","","","$","8,185","","","0.21","%"],["Money market deposits","10,998,452","","","299,741","","","2.73","%","","9,962,837","","","185,035","","","1.86","%","","7,552,666","","","26,415","","","0.35","%"],["Savings deposits","2,528,828","","","3,409","","","0.13","%","","2,994,333","","","3,384","","","0.11","%","","2,411,448","","","880","","","0.04","%"],["Time deposits","6,219,996","","","284,787","","","4.58","%","","4,743,615","","","176,073","","","3.71","%","","1,743,988","","","12,715","","","0.73","%"],["Total interest-bearing deposits","28,012,811","","","802,806","","","2.87","%","","23,981,118","","","461,654","","","1.93","%","","15,594,492","","","48,195","","","0.31","%"],["Repurchase agreements and federal funds purchased","212,235","","","4,873","","","2.30","%","","269,853","","","3,923","","","1.45","%","","465,600","","","997","","","0.21","%"],["Borrowings","3,691,530","","","190,241","","","5.15","%","","4,522,656","","","242,914","","","5.37","%","","226,665","","","8,920","","","3.94","%"],["Junior and other subordinated debentures","419,459","","","38,918","","","9.28","%","","421,195","","","37,665","","","8.94","%","","399,568","","","19,889","","","4.98","%"],["Total interest-bearing liabilities","32,336,035","","","1,036,838","","","3.21","%","","29,194,822","","","746,156","","","2.56","%","","16,686,325","","","78,001","","","0.47","%"],["Non-interest-bearing deposits","13,608,946","","","","","","","14,927,443","","","","","","","11,053,921"],["Other liabilities","909,708","","","","","","","907,329","","","","","","","501,573"],["Total liabilities","46,854,689","","","","","","","45,029,594","","","","","","","28,241,819"],["Common equity","5,060,365","","","","","","","4,466,725","","","","","","","2,575,577"],["Total liabilities and shareholders' equity","$","51,915,054","","","","","","","$","49,496,319","","","","","","","$","30,817,396"],["NET INTEREST INCOME (2)","","","$","1,722,386","","","","","","","$","1,797,298","","","","","","","$","1,071,334"],["NET INTEREST SPREAD (2)","","","","","2.52","%","","","","","","2.98","%","","","","","","3.41","%"],["NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN","","","","","3.57","%","","","","","","3.91","%","","","","","","3.62","%"]] [[/GREPCENT_TABLE]] (1)Non-accrual loans and leases are included in the average balance.  (2)Tax-exempt income was adjusted to a tax equivalent basis at a 21% tax rate. The amount of such adjustment was an addition to recorded income of approximately $4.0 million, $4.1 million, and $1.3 million for the years ended December 31, 2024, 2023, and 2022, respectively. 46 Table of Contents The following table sets forth a summary of the changes in tax equivalent net interest income due to changes in average asset and liability balances (volume) and changes in average rates (rate) for 2024 compared to 2023, as well as between 2023 and 2022. Changes in tax equivalent interest income and expense, which are not attributable specifically to either volume or rate, are allocated proportionately between both variances.  [[GREPCENT_TABLE]] [["","2024 compared to 2023","","2023 compared to 2022"],["","Increase (decrease) in interest income and expense due to changes in","","Increase (decrease) in interest income and expense due to changes in"],["(in thousands)","Volume","","Rate","","Total","","Volume","","Rate","","Total"],["Interest-earning assets:"],["Loans held for sale","$","(926)","","","$","1,560","","","$","634","","","$","(5,304)","","","$","363","","","$","(4,941)"],["Loans and leases","132,620","","","73,495","","","206,115","","","581,254","","","487,044","","","1,068,298"],["Taxable securities","17,763","","","9,427","","","27,190","","","133,038","","","84,204","","","217,242"],["Non-taxable securities (1)","3,535","","","(272)","","","3,263","","","19,611","","","1,956","","","21,567"],["Temporary investments and interest-bearing cash","(23,954)","","","2,522","","","(21,432)","","","9,861","","","82,092","","","91,953"],["Total interest-earning assets (1)","129,038","","","86,732","","","215,770","","","738,460","","","655,659","","","1,394,119"],["Interest-bearing liabilities:"],["Interest-bearing demand deposits","37,341","","","80,366","","","117,707","","","7,873","","","81,104","","","88,977"],["Money market","20,869","","","93,837","","","114,706","","","10,935","","","147,685","","","158,620"],["Savings","(571)","","","596","","","25","","","259","","","2,245","","","2,504"],["Time deposits","62,111","","","46,603","","","108,714","","","48,352","","","115,006","","","163,358"],["Repurchase agreements","(719)","","","1,669","","","950","","","(810)","","","3,736","","","2,926"],["Borrowings","(43,159)","","","(9,514)","","","(52,673)","","","229,574","","","4,420","","","233,994"],["Junior subordinated debentures","(155)","","","1,408","","","1,253","","","1,131","","","16,645","","","17,776"],["Total interest-bearing liabilities","75,717","","","214,965","","","290,682","","","297,314","","","370,841","","","668,155"],["Net increase (decrease) in net interest income (1)","$","53,321","","","$","(128,233)","","","$","(74,912)","","","$","441,146","","","$","284,818","","","$","725,964"]] [[/GREPCENT_TABLE]] (1) Tax-exempt income was adjusted to a tax equivalent basis at a 21% tax rate. PROVISION FOR CREDIT LOSSES The Company had a $105.9 million provision for credit losses for 2024, as compared to a $213.2 million provision for credit losses for 2023. The change was primarily driven by the $88.4 million initial provision for historical Columbia non-PCD loans that was recorded in the first quarter of 2023, in addition to credit migration trends, charge-off activity, and changes in the economic forecasts used in credit models. Additionally, during the first quarter of 2024, we recalibrated the commercial CECL model to be more reflective of the post-Merger loan portfolio after a full year operating as a combined organization. We believe the recalibrated model is more reflective of the quality of our underwriting and borrower profiles. As a percentage of average outstanding loans and leases, the provision for credit losses recorded for 2024 was 0.28%, as compared to 0.60% for the prior period. Net charge-offs were $129.2 million for 2024, or 0.34% of average loans and leases, compared to net charge-offs of $96.7 million, or 0.27% of average loans and leases, for 2023. Net charge-offs in the FinPac portfolio were $87.6 million for the year ended December 31, 2024, as compared to $87.3 million for the year ended December 31, 2023. Net charge-offs for the Bank were $41.6 million and $9.4 million for the years ended December 31, 2024 and 2023, respectively. Net charge-offs for the Bank in 2024 reflect the transition to a more typical credit environment after a period of exceptional quality and a charge-off in the first quarter of 2024 centered in a single commercial credit. 47 Table of Contents Typically, loans in non-accrual status will not have an ACL as they will be written down to their net realizable value or charged off. However, the net realizable value for homogeneous leases and equipment finance agreements are determined by the loss given default calculated by the CECL model, and therefore, homogeneous leases and equipment finance agreements on non-accrual will have an ACL amount until they become 181 days past due, at which time they are charged off. The non-accrual leases and equipment finance agreements of $21.0 million as of December 31, 2024 have a related ACL of $18.3 million, with the remaining loans written down to the estimated fair value of the collateral, less estimated costs to sell, and are expected to be resolved with no additional material loss, absent further decline in market prices.  NON-INTEREST INCOME The following table presents the key components of non-interest income and the related dollar and percentage change for the years ended December 31, 2024 and 2023: [[GREPCENT_TABLE]] [["","2024 compared to 2023"],["(dollars in thousands)","2024","","2023","","Change Amount","","Change Percent"],["Service charges on deposits","$","71,517","","","$","65,525","","","$","5,992","","","9","%"],["Card-based fees","57,089","","","55,263","","","1,826","","","3","%"],["Financial services and trust revenue","20,208","","","13,471","","","6,737","","","50","%"],["Residential mortgage banking revenue, net","24,108","","","16,789","","","7,319","","","44","%"],["Gain on sale of debt securities, net","24","","","13","","","11","","","85","%"],["(Loss) gain on equity securities, net","(392)","","","2,300","","","(2,692)","","","(117)","%"],["(Loss) gain on loan and lease sales, net","(2,853)","","","4,414","","","(7,267)","","","(165)","%"],["Bank owned life insurance income","18,760","","","15,624","","","3,136","","","20","%"],["Other income","22,505","","","30,528","","","(8,023)","","","(26)","%"],["Total non-interest income","$","210,966","","","$","203,927","","","$","7,039","","","3","%"]] [[/GREPCENT_TABLE]] Service charges on deposits, card-based fees, and financial services and trust revenue increased in 2024 compared to 2023. The increases reflect the impact of a full year as a combined company compared to only ten months as a combined company for the prior year period, as well as increasing fee-generating product traction with our customer base as we execute our Business Bank of Choice operating strategy. We continue to focus on generating sustainable core fee income with new and existing customers. Residential mortgage banking revenue increased in 2024 compared to 2023. The variance was due to a favorable change in the net fair value loss of the MSR asset as a result of a $15.9 million loss for the year ended December 31, 2024, compared to a net fair value loss of $28.5 million for the same period in 2023, which is inclusive of MSR hedge losses of $8.6 million for the current year compared to $4.7 million in the prior year. While there was an increase in the origination and sale of mortgages during 2024 when compared to 2023, it was more than offset by a decrease in servicing revenue. The decrease in servicing revenue was expected for 2024 due to a reduction in the serviced loan portfolio size as result of the September 2023 sale of approximately one-third of the MSR portfolio. This sale was the result of strategic actions taken by the Company to restructure its mortgage business given the lower mortgage origination volume in the higher rate environment and focus on relationship banking that drives balanced growth in loans, deposits, and core fee income. These changes were intended to reduce expenses, limit the impact of fair value changes to the statement of income, and moderate portfolio mortgage growth. (Loss) gain on loan and lease sales, net had an unfavorable change in 2024 compared to 2023, largely driven by lower volume of SBA loan sales combined with strategic sales of existing loans that had greater potential for charge-offs in the future. Other income in 2024 compared to 2023 decreased primarily due to an unfavorable change of $13.1 million in the fair value of certain loans held for investment, as the impact of interest rate fluctuations resulted in a loss of $10.5 million in the current year as compared to a gain of $2.6 million in the prior year. The decrease was partially offset by the impact of rate fluctuations on swap derivatives with a gain in the current year compared to a loss in the prior year, resulting in a favorable change of $6.3 million. 48 Table of Contents NON-INTEREST EXPENSE The following table presents the key elements of non-interest expense and the related dollar and percentage change for the years ended December 31, 2024 and 2023: [[GREPCENT_TABLE]] [["","2024 compared to 2023"],["(dollars in thousands)","2024","","2023","","Change Amount","","Change Percent"],["Salaries and employee benefits","$","588,830","","","$","616,103","","","$","(27,273)","","","(4)","%"],["Occupancy and equipment, net","182,372","","","183,480","","","(1,108)","","","(1)","%"],["Communications","13,871","","","16,252","","","(2,381)","","","(15)","%"],["Marketing","11,036","","","11,399","","","(363)","","","(3)","%"],["Services","57,614","","","57,641","","","(27)","","","\u2014","%"],["FDIC assessments","41,577","","","71,402","","","(29,825)","","","(42)","%"],["Intangible amortization","119,431","","","111,296","","","8,135","","","7","%"],["Merger and restructuring expense","23,713","","","171,659","","","(147,946)","","","(86)","%"],["Other expenses","66,250","","","73,468","","","(7,218)","","","(10)","%"],["Total non-interest expense","$","1,104,694","","","$","1,312,700","","","$","(208,006)","","","(16)","%"]] [[/GREPCENT_TABLE]] Salaries and employee benefits decreased in 2024 compared to 2023 due primarily to a reduction in employees related to the merger synergies realized in 2023 and the additional operational efficiency activities in 2024, partially offset by the current year including a full year as a combined company, compared to only ten months during the year ended December 31, 2023. FDIC assessments decreased in 2024 compared to 2023 due to the prior period including $32.9 million in expense related to the FDIC special assessment to replenish the DIF following bank closures in March 2023, whereas the current period includes $5.7 million in FDIC special assessment expense. Merger and restructuring expense decreased in 2024 compared to 2023, with the largest drivers of the decrease being lower legal and professional fees and premises and equipment expense related to the Merger. Columbia closed the Merger and completed the core systems conversion during the first quarter of 2023. The decrease in Merger expenses was partially offset by $12.9 million in restructuring expenses during the year ended December 31, 2024. INCOME TAXES Our consolidated effective tax rate for 2024 was 25.7%, compared to 26.0% for 2023. The 2024 effective tax rate differed from the federal statutory rate of 21% principally because of state taxes, net tax-exempt income on investment securities, non-deductible FDIC assessments, and tax credits and benefits arising from low-income housing investments. Refer to Note 25 – Income Taxes in Item 8 of this Annual Report on Form 10-K for more information about the Company's taxes. FINANCIAL CONDITION  CASH AND CASH EQUIVALENTS  Cash and cash equivalents were $1.9 billion as of December 31, 2024, compared to $2.2 billion at December 31, 2023. Excess cash was used to pay down borrowings, as well as to fund loan portfolio growth of $239.0 million. INVESTMENT SECURITIES  The composition of our investment securities portfolio reflects management's investment strategy of maintaining an appropriate level of liquidity while providing a relatively stable source of interest income. The investment securities portfolio provides a vehicle for the investment of available funds, a source of liquidity (by pledging as collateral or through repurchase agreements) and collateral for certain public funds deposits. Equity and other securities consist primarily of investments in fixed income mutual funds to support our CRA initiatives and securities invested in rabbi trusts for the benefit of certain current or former executives and employees as required by the underlying agreements. Equity and other securities were $78.1 million at December 31, 2024, compared to $77.0 million as of December 31, 2023. 49 Table of Contents Investment debt securities available for sale were $8.3 billion as of December 31, 2024, compared to $8.8 billion as of December 31, 2023. The decrease was primarily due to paydowns, calls, and maturities of $552.4 million and a decrease of $150.8 million in fair value of investment securities available for sale, due to changes in market interest rates during the period, partially offset by net accretion and purchases, which have been focused on CRA qualifying investments. The following tables present the par value, amortized cost, and fair values of debt securities as available for sale and held to maturity investment debt securities portfolio by major type as of the dates presented:  [[GREPCENT_TABLE]] [["","December 31, 2024","","December 31, 2023"],["(dollars in thousands)","Current Par","","Amortized Cost","","Fair Value","","% of Portfolio","","Current Par","","Amortized Cost","","Fair Value","","% of Portfolio"],["Available for sale:"],["U.S. Treasury and agencies","$","1,486,374","","","$","1,495,542","","","$","1,422,787","","","17","%","","$","1,546,374","","","$","1,551,074","","","$","1,478,392","","","17","%"],["Obligations of states and political subdivisions","1,115,198","","","1,055,535","","","1,026,053","","","12","%","","1,135,345","","","1,073,264","","","1,072,105","","","12","%"],["Mortgage-backed securities and collateralized mortgage obligations","6,701,037","","","6,307,252","","","5,825,775","","","71","%","","7,103,633","","","6,638,439","","","6,279,373","","","71","%"],["Total available for sale securities","$","9,302,609","","","$","8,858,329","","","$","8,274,615","","","100","%","","$","9,785,352","","","$","9,262,777","","","$","8,829,870","","","100","%"],["Held to maturity:"],["Mortgage-backed securities and collateralized mortgage obligations","$","3,186","","","$","2,101","","","$","2,703","","","100","%","","$","3,564","","","$","2,300","","","$","3,025","","","100","%"],["Total held to maturity securities","$","3,186","","","$","2,101","","","$","2,703","","","100","%","","$","3,564","","","$","2,300","","","$","3,025","","","100","%"]] [[/GREPCENT_TABLE]] The following table presents information regarding the amortized cost, fair value, average yield, and maturity structure of the debt securities portfolio as of December 31, 2024: [[GREPCENT_TABLE]] [["(dollars in thousands)","Amortized Cost","","Fair Value","","Average Yield (1)"],["U.S. treasury and agencies"],["One year or less","$","162,718","","","$","162,819","","","4.15","%"],["One to five years","1,302,294","","","1,234,259","","","2.86","%"],["Five to ten years","30,530","","","25,709","","","2.48","%"],["Total U.S. treasury and agencies","1,495,542","","","1,422,787","","","3.00","%"],["Obligations of states and political subdivisions"],["One year or less","72,079","","","71,807","","","4.11","%"],["One to five years","495,442","","","484,327","","","3.72","%"],["Five to ten years","283,013","","","266,894","","","3.90","%"],["Over ten years","205,001","","","203,025","","","5.31","%"],["Total obligations of states and political subdivisions","1,055,535","","","1,026,053","","","4.11","%"],["Other Securities"],["Mortgage-backed securities and collateralized mortgage obligations","6,309,353","","","5,828,478","","","3.83","%"],["Total debt securities","$","8,860,430","","","$","8,277,318","","","3.72","%"]] [[/GREPCENT_TABLE]] (1) The weighted average yields represent a projected yield to maturity given current cash flow projections for MBS/CMOs and is a yield to worst for callable securities. For adjustable MBS, the projected book yield represents the yield to maturity based on current index levels. Yields are calculated on an amortized cost basis and are stated on a federal tax equivalent basis of 21%. 50 Table of Contents The mortgage-related securities in the table above include both pooled mortgage-backed issues and high-quality collateralized mortgage obligation structures, with an average duration of 5.1 years. These mortgage-related securities provide yield spread to U.S. Treasury or agency securities; however, the cash flows arising from them can be volatile due to refinancing of the underlying mortgage loans. We review investment securities on an ongoing basis for the presence of impairment, taking into consideration current market conditions, fair value in relationship to cost, extent and nature of the change in fair value, issuer rating changes and trends, whether we intend to sell a security or if it is more likely than not that we will be required to sell the security before recovery of our amortized cost basis of the investment, which may be maturity, and other factors.  As December 31, 2024, the available for sale investment portfolio had gross unrealized losses of $591.5 million. Unrealized losses included unrealized losses on mortgage-backed securities and collateralized mortgage obligations of $485.4 million. The unrealized losses were primarily attributable to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities and are not attributable to changes in credit quality. In the opinion of management, no ACL was considered necessary on these debt securities as of December 31, 2024. RESTRICTED EQUITY SECURITIES Restricted equity securities were $150.0 million and $179.3 million as of December 31, 2024 and 2023, respectively, the majority of which represents the Bank's investment in the FHLB. The decrease is attributable to redemptions of FHLB stock due to decreased FHLB borrowing activity during the period. FHLB stock is carried at par and does not have a readily determinable fair value. Ownership of FHLB stock is restricted to the FHLB and member institutions, and can only be purchased and redeemed at par. As of December 31, 2024, the Bank's minimum required investment in FHLB stock was $149.5 million. LOANS AND LEASES Total loans and leases outstanding as of December 31, 2024 were $37.7 billion, an increase of $239.0 million compared to December 31, 2023. The increase was primarily attributable to organic loan growth of $538.6 million, partially offset by charge-offs of $151.2 million and loan sales of $148.5 million. The loan to deposit ratio as of both December 31, 2024 and 2023 was 90%. The following table presents the concentration distribution of our loan and lease portfolio by major type as of December 31, 2024 and 2023: [[GREPCENT_TABLE]] [["","December 31, 2024","","December 31, 2023"],["(dollars in thousands)","Amount","","%","","Amount","","%"],["Commercial real estate"],["Non-owner occupied term, net","$","6,278,154","","","17","%","","$","6,482,940","","","17","%"],["Owner occupied term, net","5,270,294","","","14","%","","5,195,605","","","14","%"],["Multifamily, net","5,804,364","","","15","%","","5,704,734","","","15","%"],["Construction & development, net","1,983,213","","","5","%","","1,747,302","","","5","%"],["Residential development, net","231,647","","","1","%","","323,899","","","1","%"],["Commercial"],["Term, net","5,537,618","","","15","%","","5,536,765","","","15","%"],["Lines of credit & other, net","2,769,643","","","7","%","","2,430,127","","","6","%"],["Leases & equipment finance, net","1,660,835","","","4","%","","1,729,512","","","5","%"],["Residential"],["Mortgage, net","5,933,352","","","16","%","","6,157,166","","","16","%"],["Home equity loans & lines, net","2,031,653","","","5","%","","1,938,166","","","5","%"],["Consumer & other, net","180,128","","","1","%","","195,735","","","1","%"],["Total, net of deferred fees and costs","$","37,680,901","","","100","%","","$","37,441,951","","","100","%"]] [[/GREPCENT_TABLE]] 51 Table of Contents The following table presents the maturity distribution of our loan and lease portfolios and the rate sensitivity of these loans to changes in interest rates as of December 31, 2024: [[GREPCENT_TABLE]] [["","By Maturity","","Loans Over One Year by Rate Sensitivity"],["(in thousands)","One Year or Less","","One Through Five Years","","Five Through 15 Years","","Over 15 Years","","Total","","Fixed Rate","","Floating/Adjustable Rate"],["Commercial real estate"],["Non-owner occupied term, net","$","588,133","","","$","2,426,756","","","$","3,130,558","","","$","132,707","","","$","6,278,154","","","$","2,071,358","","","$","3,618,663"],["Owner occupied term, net","214,045","","","1,426,072","","","3,249,581","","","380,596","","","5,270,294","","","2,570,931","","","2,485,318"],["Multifamily, net","59,516","","","645,334","","","1,262,313","","","3,837,201","","","5,804,364","","","975,762","","","4,769,086"],["Construction & development, net","1,142,259","","","662,042","","","159,779","","","19,133","","","1,983,213","","","189,805","","","651,149"],["Residential development, net","164,464","","","66,586","","","597","","","\u2014","","","231,647","","","605","","","66,578"],["Commercial"],["Term, net","2,083,715","","","1,700,989","","","1,555,888","","","197,026","","","5,537,618","","","2,198,895","","","1,255,008"],["Lines of credit & other, net","1,685,284","","","864,211","","","172,096","","","48,052","","","2,769,643","","","152,780","","","931,579"],["Leases & equipment finance, net","96,475","","","1,403,072","","","161,288","","","\u2014","","","1,660,835","","","1,564,360","","","\u2014"],["Residential"],["Mortgage, net","2,270","","","4,284","","","506,134","","","5,420,664","","","5,933,352","","","2,038,941","","","3,892,141"],["Home equity loans & lines, net","2,709","","","5,507","","","320,457","","","1,702,980","","","2,031,653","","","305,270","","","1,723,674"],["Consumer & other, net","16,026","","","146,439","","","17,014","","","649","","","180,128","","","51,946","","","112,156"],["Total loans and leases","$","6,054,896","","","$","9,351,292","","","$","10,535,705","","","$","11,739,008","","","$","37,680,901","","","$","12,120,653","","","$","19,505,352"]] [[/GREPCENT_TABLE]] Loan Origination/Risk Management The Bank has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions. The Bank maintains an independent loan review department that reviews and validates the credit risk program on a periodic basis. Results of these reviews are presented to management and the appropriate committees of our board of directors. The loan review process evaluates that the risk identification and assessment decisions made by lenders and credit personnel are in line with our policies and procedures. Commercial Real Estate and Commercial Loans Commercial real estate and commercial loans are the largest classifications within earning assets, representing 41% and 20%, respectively, of average earning assets for the year ended December 31, 2024, as compared to 40% and 20%, respectively, for the year ended December 31, 2023. The increase in commercial real estate and commercial loan balances between December 31, 2024 and December 31, 2023 was driven by commercial line utilization and new originations, partially offset by loan payoffs. Delinquency and non-accrual loan movements during the period reflect an anticipated move toward a normalized credit environment following a phase of exceptional high credit quality. Non-performing loans as of December 31, 2024 included $73.6 million in government guarantees on the commercial real estate, commercial, and residential portfolios, which offsets our credit exposure in those portfolios. 52 Table of Contents Commercial Real Estate Loans The commercial real estate portfolio includes loans to developers and institutional sponsors supporting income-producing or for-sale commercial real estate properties. We mitigate our risk on these loans by requiring collateral values that exceed the loan amount and underwriting the loan with projected cash flow in excess of the debt service requirement. Commercial real estate loans are underwritten after evaluating and understanding the borrower's ability to operate profitably and are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the commercial real estate portfolio are diverse in terms of type and geographic location. This diversity helps reduce the exposure to adverse economic events that affect any single market or industry. Management monitors and evaluates commercial real estate loans based on debt service coverage, collateral, and risk grade criteria. As a general rule, we avoid financing single-purpose projects unless other underwriting factors are present to help mitigate risk. Third-party experts are also utilized to provide insight and guidance about economic conditions and trends affecting market areas we serve. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans. Owner-occupied real estate loans are based on cash flows from ongoing operations and the borrower must generally occupy more than 50% of rentable space or pay more than 50% of rents. At December 31, 2024, approximately 26.9% of the outstanding principal balance of our commercial real estate loan portfolio were secured by owner-occupied properties. As of December 31, 2024, the commercial real estate loan portfolio was $19.6 billion, an increase of $113.2 million compared to December 31, 2023, driven by construction and development loan and line utilization, offset by loan payoffs. Commercial real estate concentrations are managed with a goal of optimizing relationship-driven commercial loans, as well as geographic and business diversity, primarily in our footprint. The following table provides detail on commercial real estate loans by property type: [[GREPCENT_TABLE]] [["","","December 31, 2024","","December 31, 2023"],["(in thousands)","","Outstanding","","Non-accrual (1)","","% of Total Commercial Real Estate","","Outstanding","","Non-accrual (1)","","% of Total Commercial Real Estate"],["Commercial real estate loans by property type:"],["Multifamily","","$","7,311,500","","","$","\u2014","","","\u2014","%","","$","6,978,498","","","$","\u2014","","","\u2014","%"],["Office","","2,873,561","","","10,304","","","0.05","%","","2,980,240","","","13,335","","","0.07","%"],["Industrial","","2,981,161","","","5,010","","","0.03","%","","2,812,295","","","2,053","","","0.01","%"],["Retail","","2,000,141","","","2,389","","","0.01","%","","2,083,960","","","3,715","","","0.02","%"],["Special Purpose","","1,317,463","","","14,751","","","0.08","%","","1,348,343","","","4,566","","","0.03","%"],["Hotel/Motel","","724,271","","","13","","","\u2014","%","","755,132","","","2,622","","","0.01","%"],["Other","","2,359,575","","","6,865","","","0.03","%","","2,496,012","","","2,398","","","0.01","%"],["Total commercial real estate loans","","$","19,567,672","","","$","39,332","","","0.20","%","","$","19,454,480","","","$","28,689","","","0.15","%"]] [[/GREPCENT_TABLE]] (1) Commercial real estate non-accrual loans are inclusive of government guarantees of $16.3 million and $7.7 million as of December 31, 2024 and 2023, respectively. 53 Table of Contents The following table provides detail on the geographic distribution of our commercial real estate portfolio as of the periods indicated: [[GREPCENT_TABLE]] [["","","December 31, 2024","","December 31, 2023"],["(in thousands)","","Amount","","% of total","","Amount","","% of total"],["Southern California","","$","3,752,705","","","19","%","","$","3,847,758","","","20","%"],["Puget Sound","","3,712,306","","","19","%","","3,700,923","","","19","%"],["Oregon Other","","2,908,835","","","15","%","","2,795,472","","","14","%"],["Portland Metro","","2,643,814","","","14","%","","2,774,515","","","14","%"],["Northern California (excluding the Bay Area)","","2,027,906","","","10","%","","1,993,323","","","10","%"],["Bay Area","","1,404,444","","","7","%","","1,419,485","","","7","%"],["Washington Other","","1,297,715","","","7","%","","1,293,619","","","7","%"],["Other","","1,819,947","","","9","%","","1,629,385","","","9","%"],["Total commercial real estate loans","","$","19,567,672","","","100","%","","$","19,454,480","","","100","%"]] [[/GREPCENT_TABLE]] Loans secured by multifamily properties, including construction, represented 19% of the total loan portfolio at both December 31, 2024 and 2023. These assets continue to perform well due to demand for rental properties in our geographical footprint. Although management believes such concentrations have no more than the normal risk of collectability, a substantial decline in the economy in general, material increases in interest rates, changes in tax and rent control policies, tightening credit or refinancing markets, or a decline in real estate values in the Bank's primary geographic footprint in particular, could have an adverse impact on the repayment of these loans. Loans secured by office properties, which are predominantly located in suburban markets, represented approximately 8% of our total loan portfolio at both December 31, 2024 and December 31, 2023, and were comprised of 57% non-owner occupied, 40% owner occupied, and 3% construction loans at December 31, 2024, compared to 57% non-owner occupied, 39% owner occupied, and 4% construction loans at December 31, 2023. Excluding floating rate loans, which have already repriced to prevailing rates, only 5% of our office portfolio reprices through 2025. The following table provides detail on the geographic distribution of our commercial real estate portfolio secured by office properties: [[GREPCENT_TABLE]] [["","","December 31, 2024","","December 31, 2023"],["(in thousands)","","Amount","","Percent of total","","Amount","","Percent of total"],["Southern California","","$","582,112","","","20","%","","$","610,257","","","20","%"],["Puget Sound","","579,471","","","20","%","","648,642","","","22","%"],["Oregon Other","","459,815","","","16","%","","451,272","","","15","%"],["Portland Metro","","344,500","","","12","%","","361,618","","","12","%"],["Northern California (excluding the Bay Area)","","313,251","","","11","%","","326,997","","","11","%"],["Bay Area","","166,367","","","6","%","","162,133","","","5","%"],["Washington Other","","149,546","","","5","%","","166,002","","","6","%"],["Other","","278,499","","","10","%","","253,319","","","9","%"],["Total commercial real estate loans","","$","2,873,561","","","100","%","","$","2,980,240","","","100","%"]] [[/GREPCENT_TABLE]] Commercial Loans and Leases Commercial loans are made to commercial customers for use in normal business operations to finance working capital needs, equipment purchases, or other projects. The Bank focuses on borrowers doing business within our geographic markets. Commercial loans are generally underwritten individually and secured with the assets of the company and/or the personal guarantee of the business owners. Underwriting standards are designed to promote relationship banking rather than transactional banking. Once it is determined that the borrower’s management possesses sound ethics and solid business acumen, current and projected cash flows are examined to determine the ability of the borrower to repay their obligations as agreed. 54 Table of Contents Commercial loans and leases are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans and leases are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers. As of December 31, 2024, commercial loans held in our loan portfolio were $10.0 billion, an increase of $271.7 million compared to December 31, 2023, which is mainly attributable to relationship driven commercial loan growth and line utilization. Lease and equipment financing products are designed to address the diverse financing needs of small to large companies, primarily for the acquisition of equipment. The leases and equipment finance portfolio represented 17% of the commercial portfolio and 4% of the total loan portfolio as of December 31, 2024, as compared to 18% of the commercial portfolio and 5% of the total loan portfolio as of December 31, 2023. The leasing portfolio has had non-performing leases and charge-offs centered in the trucking and transportation portion of the portfolio. Net charge-offs in the FinPac lease portfolio were $87.6 million for the year ended December 31, 2024, as compared to $87.3 million for the year ended December 31, 2023. Net charge-offs were up $27.6 million in the remaining commercial portfolio from the prior year, largely due to a charge-off on a single commercial credit in the first quarter as well as the transition to a more typical credit environment after a period of exceptional quality. Delinquencies and non-accrual loan movements in the transportation and trucking portion of the FinPac lease portfolio over the year were anticipated and a slow recovery is in process for this portfolio. The following table provides detail on commercial loans by industry type: [[GREPCENT_TABLE]] [["","","December 31, 2024","","December 31, 2023"],["(in thousands)","","Outstanding","","Non-accrual (1)","","% of Total Commercial","","Outstanding","","Non-accrual (1)","","% of Total Commercial"],["Agriculture","","$","899,205","","","$","7,289","","","0.07","%","","$","829,555","","","$","2,167","","","0.02","%"],["Contractors","","771,109","","","5,621","","","0.06","%","","733,531","","","6,143","","","0.06","%"],["Dentist","","679,528","","","791","","","0.01","%","","715,348","","","886","","","0.01","%"],["Finance/Insurance","","742,712","","","\u2014","","","\u2014","%","","754,115","","","3","","","\u2014","%"],["Gaming","","827,865","","","1,775","","","0.02","%","","532,698","","","\u2014","","","\u2014","%"],["Healthcare","","471,093","","","2,380","","","0.02","%","","312,788","","","2,062","","","0.02","%"],["Manufacturing","","701,794","","","1,910","","","0.02","%","","736,298","","","2,636","","","0.03","%"],["Professional","","371,975","","","1,491","","","0.01","%","","445,455","","","3,113","","","0.03","%"],["Public Admin","","598,462","","","19","","","\u2014","%","","649,895","","","7","","","\u2014","%"],["Rental and Leasing","","640,247","","","210","","","\u2014","%","","692,101","","","165","","","\u2014","%"],["Retail","","283,459","","","14,770","","","0.15","%","","225,223","","","1,276","","","0.01","%"],["Support Services","","437,001","","","1,413","","","0.01","%","","411,565","","","1,047","","","0.01","%"],["Transportation/Warehousing","","764,119","","","11,568","","","0.12","%","","852,735","","","21,951","","","0.23","%"],["Wholesale","","742,549","","","3,486","","","0.03","%","","673,349","","","396","","","0.01","%"],["Other","","1,036,978","","","4,423","","","0.05","%","","1,131,748","","","3,830","","","0.04","%"],["Total commercial portfolio","","$","9,968,096","","","$","57,146","","","0.57","%","","$","9,696,404","","","$","45,682","","","0.47","%"]] [[/GREPCENT_TABLE]] (1) Commercial non-accrual loans and leases are inclusive of government guarantees of $25.2 million and $11.7 million as of December 31, 2024 and 2023, respectively. Residential Real Estate Loans Residential real estate loans represent mortgage loans and lines of credit to consumers for the purchase or refinance of a residence. The properties securing our residential mortgage and home equity portfolios are primarily located within our geographic footprint. We originate first-lien residential home mortgages considered to be of prime quality. We generally hold variable-rate loans in our portfolio and sell conforming fixed-rate loans to third parties for which representations are made that the loans meet certain underwriting and collateral documentation standards. 55 Table of Contents The Bank underwrites all residential mortgage applications centrally, with a focus on higher quality borrowers. We do not originate residential mortgages that allow negative amortization or allow the borrower multiple payment options. Residential mortgages are originated based on a completed full appraisal during the credit underwriting process. The values are updated in compliance with applicable regulations to facilitate our portfolio management, as well as our workout and loss mitigation functions. As of December 31, 2024, residential real estate loans held in our loan portfolio were $8.0 billion, a decrease of $130.3 million as compared to December 31, 2023. The decrease was primarily attributable to greater originations of loans sold on the secondary market, rather than being retained in our loans held for investment portfolio. Consumer Loans Consumer loans, including secured and unsecured personal loans, home equity and personal lines of credit, and motor vehicle loans, decreased $15.6 million to $180.1 million as of December 31, 2024, as compared to December 31, 2023. The decrease was due to normal business activity. Consumer loans are originated utilizing a credit scoring analysis to supplement the underwriting process. To monitor and manage consumer loan risk, policies and procedures are developed and modified, as needed, jointly by line and staff personnel. This activity, coupled with relatively small loan amounts that are spread across many individual borrowers, minimizes risk. Additionally, trend and outlook reports are reviewed by management on a regular basis. 56 Table of Contents ASSET QUALITY AND NON-PERFORMING ASSETS The Bank manages asset quality and controls credit risk through diversification of the loan and lease portfolio and the application of policies designed to promote sound underwriting and loan and lease monitoring practices. The Bank's Credit Quality Administration department is charged with monitoring asset quality, establishing credit policies and procedures, and enforcing the consistent application of these policies and procedures across the Bank. Reviews of non-performing, past due loans and leases and larger credits, designed to identify potential charges to the allowance for credit losses, and to determine the adequacy of the allowance, are conducted on an ongoing basis. These reviews consider such factors as the financial strength of borrowers, the value of the applicable collateral, loan and lease loss experience, estimated loan and lease losses, growth in the loan and lease portfolio, prevailing economic conditions, and other factors. The following table summarizes our non-performing assets as of December 31, 2024 and 2023: [[GREPCENT_TABLE]] [["(dollars in thousands)","December 31, 2024","","December 31, 2023"],["Non-performing assets: (1)"],["Loans and leases on non-accrual status"],["","Commercial real estate, net","$","39,332","","","$","28,689"],["","Commercial, net","57,146","","","45,682"],["","Total loans and leases on non-accrual status","96,478","","","74,371"],["Loans and leases past due 90 days or more and accruing (2)"],["","Commercial real estate, net","\u2014","","","870"],["","Commercial, net","4,684","","","8,232"],["","Residential, net (2)","65,552","","","29,102"],["","Consumer & other, net","179","","","326"],["","Total loans and leases past due 90 days or more and accruing (2)","70,415","","","38,530"],["Total non-performing loans and leases (1), (2)","166,893","","","112,901"],["Other real estate owned","2,666","","","1,036"],["Total non-performing assets (1), (2)","$","169,559","","","$","113,937"],["ACLLL","$","424,629","","","$","440,871"],["Reserve for unfunded commitments","16,168","","","23,208"],["ACL","$","440,797","","","$","464,079"],["Asset quality ratios:"],["","Non-performing assets to total assets (1), (2)","0.33","%","","0.22","%"],["","Non-performing loans and leases to total loans and leases (1), (2)","0.44","%","","0.30","%"],["","Non-accrual loans and leases to total loans and leases (2)","0.26","%","","0.20","%"],["","ACLLL to total loans and leases","1.13","%","","1.18","%"],["","ACL to total loans and leases","1.17","%","","1.24","%"],["","ACL to non-accrual loans and leases","457","%","","624","%"],["","ACL to total non-performing loans and leases","264","%","","411","%"]] [[/GREPCENT_TABLE]] (1) Non-accrual and 90+ days past due loans include government guarantees of $41.5 million and $32.1 million, respectively, as of December 31, 2024. As of December 31, 2023, non-accrual and 90+ days past due loans include government guarantees of and $19.3 million and $12.3 million, respectively. (2) Excludes certain mortgage loans guaranteed by GNMA, which Columbia has the unilateral right to repurchase but has not done so, totaling $2.4 million as of December 31, 2024 and $1.0 million at December 31, 2023. As of December 31, 2024, there were approximately $110.7 million of loans and leases, or 0.29% of total loans and leases, modified due to borrowers experiencing financial difficulties, as compared to $138.1 million or 0.37% as of December 31, 2023. A decline in economic conditions and other factors could adversely impact individual borrowers or the loan portfolio in general. Accordingly, there can be no assurance that loans will not become 90 days or more past due, placed on non-accrual status, restructured, or transferred to other real estate owned in the future. As of December 31, 2024, there was an increase in non-performing loans as compared to December 31, 2023, which is representative of a more normalized credit environment. 57 Table of Contents ALLOWANCE FOR CREDIT LOSSES The ACL represents management's best estimate of lifetime credit losses for loans and leases and unfunded commitments. The ACL totaled $440.8 million as of December 31, 2024, a decrease of $23.3 million from the $464.1 million as of December 31, 2023. The changes in the ACL estimate during the year ended December 31, 2024 reflect credit migration trends, changes in the economic assumptions used in the credit models, and the recalibration of the commercial CECL model during the first quarter of 2024. The following table shows the activity in the ACL for the years ended December 31, 2024 and 2023: [[GREPCENT_TABLE]] [["(dollars in thousands)","2024","","2023"],["Allowance for credit losses on loans and leases"],["","Balance, beginning of period","$","440,871","","","$","301,135"],["","Initial ACL recorded for PCD loans acquired during the period","\u2014","","","26,492"],["","Provision for credit losses on loans and leases (1)","112,964","","","209,979"],["","Charge-offs:"],["","Commercial real estate, net","(3,681)","","","(803)"],["","Commercial, net","(139,218)","","","(109,862)"],["","Residential, net","(1,956)","","","(547)"],["","Consumer & other, net","(6,339)","","","(5,762)"],["","Total loans charged-off","(151,194)","","","(116,974)"],["","Recoveries:"],["","Commercial real estate, net","956","","","333"],["","Commercial, net","18,292","","","16,884"],["","Residential, net","887","","","1,123"],["","Consumer & other, net","1,853","","","1,899"],["","Total recoveries","21,988","","","20,239"],["","Net (charge-offs) recoveries:"],["","Commercial real estate, net","(2,725)","","","(470)"],["","Commercial, net","(120,926)","","","(92,978)"],["","Residential, net","(1,069)","","","576"],["","Consumer & other, net","(4,486)","","","(3,863)"],["","Total net charge-offs","(129,206)","","","(96,735)"],["","Balance, end of period","$","424,629","","","$","440,871"],["Reserve for unfunded commitments"],["","Balance, beginning of period","$","23,208","","","$","14,221"],["","Initial ACL recorded for unfunded commitments acquired during the period","\u2014","","","5,767"],["","(Recapture) provision for credit losses on unfunded commitments","(7,040)","","","3,220"],["","Balance, end of period","16,168","","","23,208"],["Total allowance for credit losses","$","440,797","","","$","464,079"],["As a percentage of average loans and leases (annualized):"],["","Net charge-offs","0.34","%","","0.27","%"],["","Commercial real estate, net","0.01","%","","\u2014","%"],["","Commercial, net","1.24","%","","1.04","%"],["","Residential, net","0.01","%","","(0.01)","%"],["","Consumer & other, net","2.13","%","","1.93","%"],["","Provision for credit losses","0.28","%","","0.60","%"],["Recoveries as a percentage of charge-offs","14.54","%","","17.30","%"]] [[/GREPCENT_TABLE]] (1) For the year ended December 31, 2023, the provision for credit losses on loans and leases includes $88.4 million initial provision related to non-PCD loans acquired during the period. 58 Table of Contents The following table shows the change in the ACL from December 31, 2024 to December 31, 2023: [[GREPCENT_TABLE]] [["(dollars in thousands)","","December 31, 2023","","2024 net (charge-offs) recoveries","","Reserve build","","December 31, 2024","","% of loans and leases outstanding"],["Commercial real estate","","$","137,058","","","$","(2,725)","","","$","26,012","","","$","160,345","","","0.82","%"],["Commercial","","252,662","","","(120,926)","","","93,867","","","225,603","","","2.26","%"],["Residential","","64,944","","","(1,069)","","","(17,091)","","","46,784","","","0.59","%"],["Consumer & other","","9,415","","","(4,486)","","","3,136","","","8,065","","","4.48","%"],["Total allowance for credit losses","","$","464,079","","","$","(129,206)","","","$","105,924","","","$","440,797","","","1.17","%"],["% of loans and leases outstanding","","1.24","%","","","","","","1.17","%"]] [[/GREPCENT_TABLE]] To calculate the ACL, the CECL models use a forecast of future economic conditions and are dependent upon specific macroeconomic variables that are relevant to each of the Bank's loan and lease portfolios, as well as qualitative factors to address uncertainty not measured within the quantitative analysis. In estimating the December 31, 2024 ACL, the Bank used Moody's Analytics' November 2024 consensus economic forecast to project the variables used in the models and used upward qualitative overlays, mainly in the commercial portfolio, to align with the S2 scenario and to account for the transportation segment of the lease portfolio. The 2024 forecast is projecting higher GDP growth and unemployment rates with average federal funds rates trending lower. Refer to Note 6 – Allowance for Credit Losses in Item 8 of this Annual Report on Form 10-K for further information. Refer to Note 1 – Summary of Significant Accounting Policies in Item 8 of this Annual Report on Form 10-K for a description of the ACL methodology. The models for calculating the ACL are sensitive to changes to economic variables, which could result in volatility as these assumptions change over time. We believe that the ACL as of December 31, 2024 is sufficient to absorb losses inherent in the loan and lease portfolio and in credit commitments outstanding as of that date based on the information available. If the economic conditions decline, the Bank may need additional provisions for credit losses in future periods. The following table sets forth the allocation of the ACLLL and percent of loans and leases in each category to total loans and leases, net of deferred fees, as of December 31 for each of the last two years: [[GREPCENT_TABLE]] [["","December 31, 2024","","December 31, 2023"],["(dollars in thousands)","Amount","","%","","Amount","","%"],["Commercial real estate","$","154,413","","","52","%","","$","125,888","","","52","%"],["Commercial","218,668","","","26","%","","244,821","","","26","%"],["Residential","44,700","","","21","%","","62,004","","","21","%"],["Consumer & other","6,848","","","1","%","","8,158","","","1","%"],["Allowance for credit losses on loans and leases","$","424,629","","","100","%","","$","440,871","","","100","%"]] [[/GREPCENT_TABLE]] RESIDENTIAL MORTGAGE SERVICING RIGHTS The following table presents the key elements of our residential mortgage servicing rights asset as of December 31, 2024, 2023, and 2022:  [[GREPCENT_TABLE]] [["(dollars in thousands)","2024","","2023","","2022"],["Balance, beginning of period","$","109,243","","","$","185,017","","","$","123,615"],["Additions for new MSR capitalized","6,452","","","5,347","","","24,137"],["Sale of MSR assets","\u2014","","","(57,305)","","","\u2014"],["Changes in fair value:"],["Changes due to collection/realization of expected cash flows over time","(12,566)","","","(17,694)","","","(20,272)"],["Changes due to valuation inputs or assumptions (1)","5,229","","","(6,122)","","","57,537"],["Balance, end of period","$","108,358","","","$","109,243","","","$","185,017"]] [[/GREPCENT_TABLE]] (1) The changes in valuation inputs and assumptions principally reflect changes in discount rates and prepayment speeds, which are primarily affected by changes in interest rates. 59 Table of Contents Information related to our serviced loan portfolio as of December 31, 2024 and 2023 were as follows:  [[GREPCENT_TABLE]] [["(dollars in thousands)","December 31, 2024","","December 31, 2023"],["Balance of loans serviced for others","$","7,939,445","","","$","8,175,664"],["MSR as a percentage of serviced loans","1.36","%","","1.34","%"]] [[/GREPCENT_TABLE]] Residential MSR are adjusted to fair value quarterly with the change recorded in residential mortgage banking revenue on the Consolidated Statements of Income. The value of servicing rights can fluctuate based on changes in interest rates and other factors. Generally, as interest rates decline and borrowers are able to take advantage of a refinance incentive, prepayments increase, and the total value of existing servicing rights declines as expectations of future servicing fee collections decline. Historically, the fair value of our residential MSR will increase as market rates for mortgage loans rise and decrease if market rates fall. Due to changes to inputs in the valuation model including changes in discount rates and prepayment speeds, the fair value of the MSR asset increased by $5.2 million for the year ended December 31, 2024, as compared to a decrease of $6.1 million for the year ended December 31, 2023. The fair value of the MSR asset decreased by $12.6 million in 2024 due to the passage of time, including the impact of regularly scheduled repayments, paydowns, and payoffs, as compared to a decrease of $17.7 million in 2023. In September 2023, the Company closed the sale of $57.3 million in mortgage servicing rights, which related to the non-relationship component of the serviced loan portfolio. GOODWILL AND OTHER INTANGIBLE ASSETS As of December 31, 2024 and 2023, the Company had $1.0 billion in goodwill, which was recorded as a result of the Merger. Goodwill is recorded in connection with business combinations and represents the excess of the purchase price over the estimated fair value of the net assets acquired. Goodwill is reviewed for potential impairment annually, on October 31, or more frequently if events or circumstances indicate a potential impairment. For the years ended December 31, 2024 and 2023, there were no goodwill impairment losses recognized. As of December 31, 2024, we had other intangible assets of $484.2 million, compared to $603.7 million as of December 31, 2023. As part of a business combination, the fair value of identifiable intangible assets such as core deposits, which includes all deposits except certificates of deposit, was recognized at the acquisition date. Intangible assets with definite useful lives are amortized to their estimated residual values over their respective estimated useful lives. The core deposit intangible assets recorded are amortized on an accelerated basis over a period of 10 years using the sum-of-the-years-digits method. Intangible assets are evaluated for impairment if events and circumstances indicate a possible impairment. No impairment losses have been recognized in the periods presented. DEPOSITS Total deposits were $41.7 billion as of December 31, 2024, an increase of $113.7 million, or 0.3%, compared to December 31, 2023. The increase was due to an increase in customer deposits with the largest change being in the commercial customer balances, reflective of our Business Bank of Choice strategy, partially offset by a decrease in brokered deposits. The interest-bearing deposit mix increased mainly due to a migration from non-interest-bearing to interest-bearing accounts as customers seek higher rates in the current interest rate environment. The following table presents the deposit balances by major category as of December 31, 2024 and 2023: [[GREPCENT_TABLE]] [["","December 31, 2024","","December 31, 2023"],["(dollars in thousands)","Amount","","%","","Amount","","%"],["Non-interest-bearing demand","$","13,307,905","","","32","%","","$","14,256,452","","","34","%"],["Interest-bearing demand","8,475,693","","","20","%","","8,044,432","","","19","%"],["Money market","11,475,055","","","27","%","","10,324,454","","","25","%"],["Savings","2,360,040","","","6","%","","2,754,113","","","7","%"],["Time, greater than $250,000","1,201,887","","","3","%","","1,034,094","","","2","%"],["Time, $250,000 or less","4,900,152","","","12","%","","5,193,475","","","13","%"],["Total deposits","$","41,720,732","","","100","%","","$","41,607,020","","","100","%"]] [[/GREPCENT_TABLE]] 60 Table of Contents The following table presents total deposits by the categories shown below as of December 31, 2024 and 2023: [[GREPCENT_TABLE]] [["(in thousands)","","December 31, 2024","","December 31, 2023"],["Customer deposits","","$","35,565,779","","","$","35,374,709"],["Public deposits","","2,986,948","","","2,904,337"],["Brokered and administrative deposits","","3,168,005","","","3,327,974"],["Total deposits","","$","41,720,732","","","$","41,607,020"]] [[/GREPCENT_TABLE]] The following table presents the time deposits in excess of the FDIC insurance limit, which is currently $250,000, by time remaining until maturity as of December 31, 2024: [[GREPCENT_TABLE]] [["(in thousands)","Amount"],["Three months or less","$","488,050"],["Over three months through six months","447,128"],["Over six months through twelve months","224,121"],["Over twelve months","42,588"],["Uninsured deposits, greater than $250,000","$","1,201,887"]] [[/GREPCENT_TABLE]] The Company's total core deposits, which are deposits less time deposits greater than $250,000 and all brokered deposits, were $37.5 billion as of December 31, 2024, compared to $37.4 billion as of December 31, 2023. The Company's total brokered deposits were $3.0 billion or 7% of total deposits as of December 31, 2024, compared to $3.1 billion or 8% of total deposits as of December 31, 2023. The FDIC generally provides a standard amount of insurance of $250,000 per depositor for each account ownership category defined by the FDIC. Depositors may qualify for coverage of accounts over $250,000 if they have funds in different ownership categories and all FDIC requirements are met. All deposits that an account owner has in the same ownership category at the same bank are added together and insured up to the standard insurance amount. As of December 31, 2024 and December 31, 2023, $27.7 billion, or 66%, and $28.1 billion, or 68%, respectively, of the Bank’s deposits were estimated to be insured. Uninsured deposits as of December 31, 2024, totaled $14.0 billion, as compared to $13.5 billion as of December 31, 2023. Uninsured deposits are an estimated amount based on the methodologies and assumptions used for the Bank's regulatory requirements. As of December 31, 2024, total available liquidity was $18.0 billion, or 128% of estimated uninsured deposits. BORROWINGS As of December 31, 2024, the Bank had outstanding securities sold under agreements to repurchase of $236.6 million, a decrease of $15.5 million from December 31, 2023. As of December 31, 2024, the Bank had no outstanding federal funds purchased balances. The Bank had outstanding borrowings consisting of FHLB advances of $3.1 billion as of December 31, 2024. Total borrowings decreased $850.0 million since December 31, 2023, primarily due to repayment of borrowings as well as general liquidity management. The FHLB advances have fixed rates ranging from 4.48% to 5.25% and are set to mature in 2025. Advances from the FHLB are secured by investment securities and loans secured by real estate. The Bank's FRB BTFP borrowings were paid off during 2024 and the ability to take new advances under this program ended in March 2024. JUNIOR AND OTHER SUBORDINATED DEBENTURES  We had junior and other subordinated debentures with carrying values of $438.6 million and $424.3 million as of December 31, 2024 and 2023, respectively. The increase is mainly due to an increase of $14.8 million in fair value for the junior subordinated debentures elected to be carried at fair value. The change in fair value was driven by increases in credit spreads and changes in swap rates during 2024. As of December 31, 2024, substantially all of the junior subordinated debentures had interest rates that are adjustable on a quarterly basis based on a spread over three-month term SOFR. The $10.0 million subordinated debenture matures in December 2025. 61 Table of Contents LIQUIDITY AND SOURCES OF FUNDS The principal objective of our liquidity management program is to maintain the Bank's ability to meet the day-to-day cash flow requirements of our customers who either wish to withdraw funds or to draw upon credit facilities to meet their cash needs. The Bank's liquidity strategy includes maintaining sufficient on-balance sheet liquidity to support balance sheet flexibility, fund growth in lending and investment portfolios, and deleverage non-deposit liabilities as economic conditions permit. As a result, the Company believes that it has sufficient cash and access to borrowings to effectively manage through the current economic conditions, as well as meet its working capital and other needs. The Company will continue to prudently evaluate and maintain liquidity sources, including the ability to fund future loan growth and manage our borrowing sources. We monitor the sources and uses of funds daily to maintain an acceptable liquidity position. One source of funds includes public deposits. Individual state laws require banks to collateralize public deposits, typically as a percentage of their public deposit balance in excess of FDIC insurance. Public deposits represented 7% of total deposits at both December 31, 2024 and 2023. The amount of collateral required varies by state and may also vary by institution within each state, depending on the individual state's risk assessment of depository institutions. Changes in the pledging requirements for uninsured public deposits may require pledging additional collateral to secure these deposits, drawing on other sources of funds to finance the purchase of assets that would be available to be pledged to satisfy a pledging requirement, or could lead to the withdrawal of certain public deposits from the Bank. The Banks’s diversified deposit base provides a sizeable source of relatively stable and low-cost funding, while reducing the Bank’s reliance on the wholesale markets. Total core deposits were $37.5 billion as of December 31, 2024, compared with $37.4 billion as of December 31, 2023. The Bank also has liquidity from excess bond collateral of $3.1 billion. In addition to liquidity from core deposits and the repayments and maturities of loans and investment securities, the Bank can sell securities under agreements to repurchase, issue brokered certificates of deposit, or utilize off-balance sheet funding sources. The Bank maintains a substantial level of total available liquidity in the form of off-balance sheet funding sources. These liquidity sources include capacity to borrow from uncommitted lines of credit, advances from the FHLB, and the Federal Reserve Bank’s Discount Window. Availability of the uncommitted lines of credit is subject to federal funds balances available for loan and continued borrower eligibility. These lines are intended to support short-term liquidity needs, and the agreements may restrict consecutive day usage. The following table presents total off-balance sheet liquidity as of the date presented: [[GREPCENT_TABLE]] [["","December 31, 2024"],["(dollars in thousands)","Gross Availability","","Utilization","","Net Availability"],["FHLB lines","$","10,923,275","","","$","3,119,833","","","$","7,803,442"],["Federal Reserve Discount Window","4,870,488","","","\u2014","","","4,870,488"],["Uncommitted lines of credit","600,000","","","\u2014","","","600,000"],["Total off-balance sheet liquidity","$","16,393,763","","","$","3,119,833","","","$","13,273,930"]] [[/GREPCENT_TABLE]] The following table presents total available liquidity as of the date presented: [[GREPCENT_TABLE]] [["(dollars in thousands)","December 31, 2024"],["Total off-balance sheet liquidity","$","13,273,930"],["Cash and cash equivalents, less reserve requirements","1,606,673"],["Excess bond collateral","3,106,386"],["Total available liquidity","$","17,986,989"]] [[/GREPCENT_TABLE]] The Company is a separate entity from the Bank and must provide for its own liquidity. Substantially all of the Company's revenues are obtained from dividends declared and paid by the Bank. There were $360.0 million of dividends paid by the Bank to the Company in 2024. There are statutory and regulatory provisions that limit the ability of the Bank to pay dividends to the Company. FDIC and Oregon Division of Financial Regulation approval is required for quarterly dividends from the Bank to the Company. 62 Table of Contents Although we expect the Bank's and the Company's liquidity positions to remain satisfactory during 2025, it is possible that our deposit balances may not be maintained at previous levels due to pricing pressure or customers' behavior in the current economic environment. In addition, in order to generate deposit growth, our pricing may need to be adjusted in a manner that results in increased interest expense on deposits. We may utilize borrowings or other funding sources, which are generally more costly than deposit funding, to support our liquidity levels. Commitments and Other Contractual Obligations - The Company participates in many different contractual arrangements which may or may not be recorded on its balance sheet, under which the Company has an obligation to pay certain amounts, provide credit or liquidity enhancements, or provide market risk support. Our material contractual obligations are primarily for time deposits, borrowings, and subordinated debentures. As of December 31, 2024, time deposits totaled $6.1 billion, of which $6.0 billion matures in a year or less. Total FHLB advances as of December 31, 2024 were $3.1 billion, all of which mature within one year. The Company also has a $10.0 million subordinated debenture that matures within one year. These arrangements also include off-balance sheet commitments to extend credit, letters of credit and various forms of guarantees. As of December 31, 2024, our loan commitments were $10.1 billion and letter of credit commitments were $216.4 million. A portion of the commitments will eventually result in funded loans and increase our profitability through net interest income when drawn and unused commitment fees prior to being drawn. Refer to Note 16 – Commitments and Contingencies and Related-Party Transactions in Item 8 of this Annual Report on Form 10-K for further information. Financing commitments, letters of credit and deferred purchase commitments are presented at contractual amounts and do not necessarily reflect future cash outflows as many are expected to expire unused or partially used. CONCENTRATIONS OF CREDIT RISK Information regarding Concentrations of Credit Risk is included in Notes 3, 5, and 16 of the Notes to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K. CAPITAL RESOURCES  Shareholders' equity as of December 31, 2024 was $5.1 billion, an increase of $123.2 million from December 31, 2023. The fluctuation in shareholders' equity during the year ended December 31, 2024 was principally due to net income of $533.7 million, partially offset by cash dividends paid of $303.4 million during the period and other comprehensive loss of $121.8 million. The Federal Reserve Board has guidelines in place for risk-based capital requirements applicable to U.S. banks and bank/financial holding companies. These risk-based capital guidelines take into consideration risk factors, as defined by regulation, associated with various categories of assets, both on and off-balance sheet. Refer to the discussion of the capital adequacy requirements in Supervision and Regulation in Item 1 of this Annual Report on Form 10-K. Under the Basel III guidelines, capital strength is measured in three tiers, which are used in conjunction with risk-adjusted assets to determine the risk-based capital ratios. The guidelines require an 8% total risk-based capital ratio, of which 6% must be Tier 1 capital and 4.5% must be CET1. Our CET1 capital primarily includes shareholders' equity less certain deductions for goodwill and other intangibles, net of taxes, net unrealized gains (losses) on AFS securities, net of tax, net unrealized gains (losses) related to fair value of liabilities, net of tax, and certain deferred tax assets that arise from tax loss and credit carry-forwards, and totaled $4.2 billion as of December 31, 2024. Tier 1 capital is primarily comprised of CET1 capital, less certain additional deductions applied during the phase-in period, and totaled $4.2 billion as of December 31, 2024. Tier 2 capital components include all, or a portion of, the ACL in excess of Tier 1 statutory limits and combined trust preferred security debt issuances. The total of Tier 1 capital plus Tier 2 capital components is referred to as Total Risk-Based Capital and was $5.1 billion as of December 31, 2024. A minimum leverage ratio is required in addition to the risk-based capital standards and is defined as period-end shareholders' equity, less accumulated other comprehensive income, goodwill, and deposit-based intangibles, divided by average assets as adjusted for goodwill and other intangible assets. Although a minimum leverage ratio of 4% is required for the highest-rated financial holding companies that are not undertaking significant expansion programs, the Federal Reserve may require a financial holding company to maintain a leverage ratio greater than 4% if it is experiencing or anticipating significant growth or is operating with less than well-diversified risks in the opinion of the Federal Reserve. The Federal Reserve uses the leverage and risk-based capital ratios to assess capital adequacy of banks and financial holding companies. 63 Table of Contents The following table sets forth the Company's and the Bank's capital ratios as of December 31, 2024 and 2023: [[GREPCENT_TABLE]] [["","Company","","Bank"],["","2024","","2023","","2024","","2023"],["CET1 risk-based capital ratio","10.54","%","","9.64","%","","11.37","%","","10.52","%"],["Tier 1 risk-based capital ratio","10.54","%","","9.64","%","","11.37","%","","10.52","%"],["Total risk-based capital ratio","12.75","%","","11.86","%","","12.42","%","","11.57","%"],["Leverage ratio","8.31","%","","7.60","%","","8.97","%","","8.30","%"]] [[/GREPCENT_TABLE]] Basel III also requires all banking organizations to maintain a 2.50% capital conservation buffer above the minimum risk-based capital requirements to avoid certain limitations on capital distributions, stock repurchases, and discretionary bonus payments to executive officers. The capital conservation buffer is exclusively comprised of CET1 capital, and it applies to each of the three risk-based capital ratios but not to the leverage ratio. The CET1, Tier 1, and total capital ratio minimums inclusive of the capital conservation buffer were 7.00%, 8.50%, and 10.50%, respectively. As of December 31, 2024, the Company and Bank were in compliance with the capital conservation buffer requirements. As of December 31, 2024, the most recent notification from the FDIC categorized the Bank as "well-capitalized" under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank's regulatory capital category. Along with enactment of the CARES Act, the federal bank regulatory authorities issued an interim final rule to provide banking organizations that are required to implement CECL before the end of 2020 the option to delay the estimated impact on regulatory capital by up to two years, with a three-year transition period to phase out the cumulative benefit to regulatory capital provided during the two-year delay. The Company elected this capital relief and delayed the estimated regulatory capital impact of adopting CECL, relative to the incurred loss methodology's effect on regulatory capital. As of December 31, 2024, all four of the capital ratios of the Bank exceeded the minimum ratios required by federal regulation. Management monitors these ratios on a regular basis to ensure that the Bank remains within regulatory guidelines. The Company's dividend policy considers, among other things, earnings, regulatory capital levels, the overall payout ratio and expected asset growth to determine the amount of dividends declared, if any, on a quarterly basis. There is no assurance that future cash dividends on common shares will be declared or increased. We cannot predict the extent of the economic decline that could result in inadequate earnings, regulatory restrictions and limitations, changes to our capital requirements, or a decision to increase capital by retention of earnings, that may result in the inability to pay dividends at previous levels, or at all. During 2024, Columbia declared a cash dividend of $0.36 per common share for all four quarters. These dividends were made pursuant to our existing dividend policy and in consideration of, among other things, earnings, regulatory capital levels, the overall payout ratio, and expected asset growth. The payment of future cash dividends is at the discretion of our Board and subject to a number of factors, including results of operations, general business conditions, growth, financial condition, and other factors deemed relevant by the Board. Further, our ability to pay future cash dividends is subject to certain regulatory requirements and restrictions discussed in the Supervision and Regulation section in Item 1 of this Annual Report on Form 10-K. The following table presents cash dividends declared and dividend payout ratios (dividends declared per common share divided by basic earnings per common share) for the years ended December 31, 2024, 2023, and 2022: [[GREPCENT_TABLE]] [["","2024","","2023","","2022"],["Dividend declared per common share (1)","$","1.44","","","$","1.43","","","$","1.40"],["Dividend payout ratio","56","%","","80","%","","54","%"]] [[/GREPCENT_TABLE]] (1) Periods prior to February 28, 2023 were restated in 2023 as a result of the adjustment to common shares outstanding based on the exchange ratio from the Merger of 0.5958. As of December 31, 2024, the Company does not have a share repurchase authorization from its Board. The Company did not repurchase any shares during either 2024 or 2023. The timing and amount of future repurchases will depend upon the market price for our common stock, securities laws restricting repurchases, asset growth, earnings, our capital plan, and bank or bank holding company regulatory approvals. In addition, our stock plans provide that award holders may pay for the exercise price and tax withholdings in part or entirely by tendering previously held shares. 64 Table of Contents