Columbia Banking System(COLB) - 2024 Q1 - Quarterly Results

Executive Summary CEO Commentary CEO Clint Stein highlighted early progress in improving financial performance and shareholder value through enhanced expense control and stabilizing deposit costs - CEO Clint Stein highlights early progress in improving financial performance and shareholder value through tighter expense control and stabilizing deposit costs in the latter part of the quarter[2] - Columbia remains focused on regaining its placement as a top-quartile bank across financial metrics to drive long-term, consistent, repeatable performance[2] 1Q24 Highlights (Key Financial Data & Performance Metrics) Columbia Banking System improved Q1 2024 profitability with diluted EPS rising to $0.59, driven by reduced non-interest expense despite lower net interest income Key Financial Data (1Q24 vs. 4Q23 vs. 1Q23) | Metric | 1Q24 ($) | 4Q23 ($) | 1Q23 ($) | | :---------------------------------------- | :---------- | :---------- | :---------- | | Earnings per diluted common share | $0.59 | $0.45 | ($0.09) | | Operating earnings per diluted common share | $0.65 | $0.56 | $0.46 | | Book value per common share | $23.68 | $23.95 | $23.44 | | Tangible book value per common share | $16.03 | $16.12 | $15.12 | | Return on average assets | 0.96% | 0.72% | (0.14)% | | Return on average common equity | 10.01% | 7.90% | (1.70)% | | Net interest income (in thousands) | $423,362 | $453,623 | $374,698 | | Non-interest income (in thousands) | $50,357 | $65,533 | $54,735 | | Non-interest expense (in thousands) | $287,516 | $337,176 | $342,818 | | Total assets (in billions) | $52.2 | $52.2 | $54.0 | | Total deposits (in billions) | $41.7 | $41.6 | $41.6 | - Net interest income decreased by $30 million on a linked-quarter basis[5] - Non-interest expense decreased by $50 million due to lower discretionary spend and the fourth quarter's larger FDIC special assessment[5] - Net interest margin was 3.52%, down 26 basis points from the prior quarter[5] Company Updates Organizational Update Columbia completed its merger with Umpqua Holdings Corporation in February 2023 and conducted a Q1 2024 evaluation, leading to simplified structures and an improved profitability outlook - Merger with Umpqua Holdings Corporation completed on February 28, 2023, creating one of the largest banks headquartered in the West[6] - An enterprise-wide evaluation in Q1 2024 resulted in consolidated positions, simplified structures, and an improved profitability outlook, with changes expected during Q2 and Q3 2024[22] Detailed Financial Review Net Interest Income and Net Interest Margin (NIM) Net interest income declined by $30 million to $423 million due to higher deposit costs, with net interest margin contracting by 26 basis points to 3.52% Net Interest Income & Margin (QoQ) | Metric | 1Q24 ($ in millions) | 4Q23 ($ in millions) | Change (QoQ) ($ in millions/bps) | | :------------------ | :------------------- | :------------------- | :------------------------------- | | Net Interest Income | $423 | $453 | -$30 | | Net Interest Margin | 3.52% | 3.78% | -26 bps | - The decline in net interest income reflects higher deposit costs and lower income earned on investment securities due to slower prepayment activity[5][7] - The cost of interest-bearing liabilities increased 23 basis points on a linked-quarter basis to 3.25% for Q1 2024, benefiting from a $1.4 billion movement in FHLB Advances to the Federal Reserve's Bank Term Funding Program, lowering costs by approximately 75 basis points[8] - The cost of interest-bearing deposits increased 34 basis points linked-quarter to 2.88% but stabilized in the latter part of Q1 due to enhanced deposit pricing visibility[23] Non-Interest Income Non-interest income decreased by $15 million to $50 million, primarily due to fair value adjustments and MSR hedging, though it increased by $1 million excluding these items Non-Interest Income (QoQ) | Metric | 1Q24 ($ in millions) | 4Q23 ($ in millions) | Change (QoQ) ($ in millions) | | :------------------ | :------------------- | :------------------- | :--------------------------- | | Non-interest income | $50 | $65 | -$15 | - The decline was driven by quarterly fluctuations in fair value adjustments and MSR hedging activity, resulting in a net fair value loss of $4 million in Q1 2024 compared to a net fair value gain of $13 million in Q4 2023[9] - Excluding these items, non-interest income increased by $1 million from the prior quarter[5][9] Non-Interest Expense Non-interest expense decreased by $50 million to $288 million, with operating non-interest expense (excluding specific items) down $17 million to $277 million Non-Interest Expense (QoQ) | Metric | 1Q24 ($ in millions) | 4Q23 ($ in millions) | Change (QoQ) ($ in millions) | | :----------------- | :------------------- | :------------------- | :--------------------------- | | Non-interest expense | $288 | $337 | -$50 | - The decrease was due to lower discretionary spending and the fourth quarter's larger FDIC special assessment[5][10] - Excluding merger-related expense, exit and disposal costs, and accruals for the FDIC special assessment, non-interest expense was $277 million, down $17 million from the prior quarter[10] - Incurred $4 million in merger-related expense and $5 million in expense related to an FDIC special assessment in Q1 2024[5] Balance Sheet Overview Total assets remained stable at $52.2 billion, with deposits increasing to $41.7 billion and gross loans growing 2% annualized to $37.6 billion Key Balance Sheet Items (as of Mar 31, 2024 vs. Dec 31, 2023) | Metric | Mar 31, 2024 ($) | Dec 31, 2023 ($) | Change (QoQ) ($) | | :---------------------------- | :--------------- | :--------------- | :--------------- | | Total assets | $52.2 billion | $52.2 billion | Unchanged | | Cash & cash equivalents | $2.2 billion | $2.2 billion | Unchanged | | Available-for-sale securities | $8.6 billion | $8.8 billion | -$213 million | | Total deposits | $41.7 billion | $41.6 billion | +$99 million | | Gross loans and leases | $37.6 billion | $37.4 billion | +$200 million | Loans and Leases Gross loans and leases increased by $200 million to $37.6 billion, a 2% annualized growth, driven by commercial line utilization and construction activity - Gross loans and leases were $37.6 billion as of March 31, 2024, an increase of $200 million relative to December 31, 2023, representing 2% annualized loan growth[26] - Commercial line utilization and construction project activity were the primary contributors to the loan growth[26] - Higher commercial real estate (CRE) term balances reflect projects that transitioned from construction to permanent financing[26] Deposits Total deposits increased by $99 million to $41.7 billion, driven by customer deposits, allowing for a reduction in brokered deposits and borrowings Total Deposits (QoQ) | Metric | Mar 31, 2024 ($) | Dec 31, 2023 ($) | Change (QoQ) ($) | | :------------- | :--------------- | :--------------- | :--------------- | | Total deposits | $41.7 billion | $41.6 billion | +$99 million | - Customer deposits drove the quarter's increase, enabling a slight reduction in brokered deposits and borrowings[11] - Management teams are focused on customer deposit generation to reduce wholesale funding sources that create a drag on earnings power[11] Credit Quality Net charge-offs increased to 0.47% of average loans, and non-performing assets rose to 0.28% of total assets, driven by commercial and SBA portfolio migrations Credit Quality Metrics (1Q24 vs. 4Q23) | Metric | 1Q24 | 4Q23 | Change (QoQ) (pp) | | :-------------------------------------- | :---- | :---- | :---------------- | | Net charge-offs (% of average loans) | 0.47% | 0.31% | +0.16 | | Non-performing assets to total assets | 0.28% | 0.22% | +0.06 | - Net charge-offs in the commercial portfolio were up $14 million from the prior quarter, with the increase centered in a single credit[27] - The quarter's increase in non-performing assets was driven primarily by migration in the SBA portfolio and an owner-occupied CRE property[27] Allowance for Credit Losses Allowance for credit losses decreased to $437 million (1.16% of loans), with provision for credit losses at $17 million, reflecting credit migration and CECL model recalibration Allowance for Credit Losses (as of Mar 31, 2024 vs. Dec 31, 2023) | Metric | Mar 31, 2024 ($ in millions) | Dec 31, 2023 ($ in millions) | Change (QoQ) ($ in millions/pp) | | :-------------------------------------- | :--------------------------- | :--------------------------- | :------------------------------ | | Allowance for credit losses | $437 | $464 | -$27 | | Allowance for credit losses (% of loans)| 1.16% | 1.24% | -0.08 pp | | Provision for credit losses | $17 | $55 | -$38 | - The provision for credit losses was $17 million for Q1 2024, reflecting credit migration trends, changes in economic forecasts, charge-off activity, and a change within the CECL methodology[12] - The commercial CECL model was recalibrated to be more reflective of the post-merger loan portfolio after a full year operating as a combined organization[5][12] Non-performing Assets Non-performing assets increased to $144 million (0.28% of total assets), driven by migrations in the SBA portfolio and an owner-occupied CRE property Non-performing Assets (as of Mar 31, 2024 vs. Dec 31, 2023) | Metric | Mar 31, 2024 ($ in millions) | Dec 31, 2023 ($ in millions) | Change (QoQ) ($ in millions/pp) | | :------------------------------------ | :--------------------------- | :--------------------------- | :------------------------------ | | Non-performing assets | $144 | $114 | +$30 | | Non-performing assets (% of total assets) | 0.28% | 0.22% | +0.06 pp | - The quarter's increase in non-performing assets was driven primarily by migration in the SBA portfolio and an owner-occupied CRE property[27] - Nonperforming assets as of March 31, 2024, included $43 million of government guarantees[27] Capital Columbia's total risk-based capital ratio improved to 12.0% and CET1 to 9.8%, both exceeding regulatory minimums and reaching the long-term target for total risk-based capital Capital Ratios (as of Mar 31, 2024 vs. Dec 31, 2023) | Metric | Mar 31, 2024 | Dec 31, 2023 | Change (QoQ) (pp) | | :-------------------------------------- | :----------- | :----------- | :---------------- | | Estimated total risk-based capital ratio | 12.0% | 11.9% | +0.1 | | Estimated common equity tier 1 risk-based capital ratio | 9.8% | 9.6% | +0.2 | - Columbia remains above current "well-capitalized" regulatory minimums[13] - The total risk-based capital ratio at the parent company is now at its long-term target of 12%[13] - Management expects continued organic earnings generation to drive all capital ratios above target levels over time, increasing flexibility for capital return in the future[13] Additional Information Earnings Presentation and Conference Call Information Columbia will host its Q1 2024 earnings conference call on April 25, 2024, at 2:00 p.m. PT to discuss financial results and recent activities - Columbia will host its first quarter 2024 earnings conference call on April 25, 2024, at 2:00 p.m. PT (5:00 p.m. ET)[14] - Participants may register for the call or join the audiocast, with a replay accessible through Columbia's investor relations page[14][31] - The Q1 2024 Earnings Presentation, providing additional disclosure, will be available on the investor relations page[30] About Columbia Banking System, Inc. Columbia Banking System, Inc. (Nasdaq: COLB), headquartered in Tacoma, Washington, is the parent company of Umpqua Bank, a leading regional bank with over $50 billion in assets - Columbia (Nasdaq: COLB) is headquartered in Tacoma, Washington, and is the parent company of Umpqua Bank, an award-winning western U.S. regional bank based in Lake Oswego, Oregon[31] - Umpqua Bank is the largest bank headquartered in the Northwest and one of the largest banks headquartered in the West with over $50 billion of assets and locations in Arizona, California, Colorado, Idaho, Nevada, Oregon, Utah, and Washington[31] - The bank supports consumers and businesses through a full suite of services, including retail and commercial banking, Small Business Administration lending, institutional and corporate banking, equipment leasing, and comprehensive investment and wealth management expertise[31] Forward-Looking Statements This section contains forward-looking statements subject to various risks and uncertainties, including economic conditions, interest rates, and regulatory impacts, with actual results potentially differing materially - This press release includes forward-looking statements, which are necessarily subject to risk and uncertainty, and actual results could differ materially due to various risk factors[32] - Key risk factors include current and future economic and market conditions (e.g., declines in real estate prices, inflation, recession), changes in interest rates, changes in FDIC insurance scope and cost, and the ability to successfully implement efficiency initiatives and realize merger benefits[32] - Readers should not place undue reliance on forward-looking statements, and the company undertakes no obligation to update any such statements[32] Financial Statements & Supplementary Data Consolidated Statements of Operations Consolidated statements of operations show Q1 2024 net income of $124.08 million, a 33% increase sequentially, driven by reduced provision for credit losses and non-interest expense Consolidated Statements of Operations (Q1 2024 vs. Q4 2023 vs. Q1 2023) | Metric ($ in thousands) | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | % Change Seq. Quarter | Year over Year | | :---------------------------------- | :----------- | :----------- | :----------- | :-------------------- | :------------- | | Total interest income | $684,225 | $691,634 | $475,951 | (1)% | 44% | | Total interest expense | $260,863 | $238,011 | $101,253 | 10% | 158% | | Net interest income | $423,362 | $453,623 | $374,698 | (7)% | 13% | | Provision for credit losses | $17,136 | $54,909 | $105,539 | (69)% | (84)% | | Total non-interest income | $50,357 | $65,533 | $54,735 | (23)% | (8)% | | Total non-interest expense | $287,516 | $337,176 | $342,818 | (15)% | (16)% | | Income (loss) before provision for income taxes | $169,067 | $127,071 | ($18,924) | 33% | nm | | Provision (benefit) for income taxes | $44,987 | $33,540 | ($4,886) | 34% | nm | | Net income (loss) | $124,080 | $93,531 | ($14,038) | 33% | nm | | Earnings (loss) per common share – diluted | $0.59 | $0.45 | ($0.09) | 31% | nm | Consolidated Balance Sheets The consolidated balance sheet shows total assets stable at $52.2 billion, deposits at $41.7 billion, loans and leases at $37.6 billion, and shareholders' equity at $4.96 billion Consolidated Balance Sheets (as of Mar 31, 2024 vs. Dec 31, 2023 vs. Mar 31, 2023) | Metric ($ in thousands) | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | % Change Seq. Quarter | Year over Year | | :---------------------------------- | :----------- | :----------- | :----------- | :-------------------- | :------------- | | Total assets | $52,224,006 | $52,173,596 | $53,994,226 | —% | (3)% | | Loans and leases | $37,642,413 | $37,441,951 | $37,091,280 | 1% | 1% | | Total deposits | $41,706,160 | $41,607,020 | $41,586,347 | —% | —% | | Total liabilities | $47,266,761 | $47,178,562 | $49,109,503 | —% | (4)% | | Total shareholders' equity | $4,957,245 | $4,995,034 | $4,884,723 | (1)% | 1% | Financial Highlights (Detailed) This section details performance ratios, including efficiency, returns on assets and equity, and key balance sheet yields, highlighting profitability improvements and NIM contraction Performance Ratios (Q1 2024 vs. Q4 2023 vs. Q1 2023) | Metric | 1Q24 | 4Q23 | 1Q23 | % Change Seq. Quarter (pp) | Year over Year (pp) | | :---------------------------------------- | :------ | :------ | :------ | :------------------------- | :------------------ | | Efficiency ratio | 60.57% | 64.81% | 79.71% | (4.24) | (19.14) | | Return on average assets ("ROAA") | 0.96% | 0.72% | (0.14)% | 0.24 | 1.10 | | Return on average common equity | 10.01% | 7.90% | (1.70)% | 2.11 | 11.71 | | Net interest margin | 3.52% | 3.78% | 4.08% | (0.26) | (0.56) | | Cost of interest bearing deposits | 2.88% | 2.54% | 1.32% | 0.34 | 1.56 | | Non-performing assets to total assets | 0.28% | 0.22% | 0.14% | 0.06 | 0.14 | | Total risk-based capital ratio | 12.0% | 11.9% | 10.9% | 0.10 | 1.10 | | Common equity tier 1 risk-based capital ratio | 9.8% | 9.6% | 8.9% | 0.20 | 0.90 | Loan & Lease Portfolio Balances and Mix The loan and lease portfolio increased 1% to $37.6 billion, with commercial real estate and commercial term loans as largest segments, and construction & development showing significant growth Total Loans and Leases (as of Mar 31, 2024 vs. Dec 31, 2023 vs. Mar 31, 2023) | Loan Type ($ in thousands) | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | % Change Seq. Quarter | Year over Year | | :-------------------------------------- | :----------- | :----------- | :----------- | :-------------------- | :------------- | | Commercial real estate: Non-owner occupied term, net | $6,557,768 | $6,482,940 | $6,353,550 | 1% | 3% | | Commercial real estate: Owner occupied term, net | $5,231,676 | $5,195,605 | $5,156,848 | 1% | 1% | | Commercial real estate: Multifamily, net | $5,828,960 | $5,704,734 | $5,590,587 | 2% | 4% | | Commercial real estate: Construction & development, net | $1,728,652 | $1,747,302 | $1,467,561 | (1)% | 18% | | Commercial: Term, net | $5,544,450 | $5,536,765 | $5,906,774 | —% | (6)% | | Total loans and leases, net | $37,642,413 | $37,441,951 | $37,091,280 | 1% | 1% | Loan and Lease Mix (as of Mar 31, 2024) | Loan Type | Mar 31, 2024 Mix | | :-------------------------------------- | :--------------- | | Commercial real estate: Non-owner occupied term, net | 17% | | Commercial real estate: Owner occupied term, net | 14% | | Commercial real estate: Multifamily, net | 15% | | Commercial real estate: Construction & development, net | 5% | | Commercial: Term, net | 15% | | Residential: Mortgage, net | 16% | Deposit Portfolio Balances and Mix Total deposits remained stable at $41.7 billion, with a shift in mix as non-interest-bearing demand deposits decreased while interest-bearing accounts increased Total Deposits (as of Mar 31, 2024 vs. Dec 31, 2023 vs. Mar 31, 2023) | Deposit Type ($ in thousands) | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | % Change Seq. Quarter | Year over Year | | :---------------------------------- | :----------- | :----------- | :----------- | :-------------------- | :------------- | | Demand, non-interest bearing | $13,808,554 | $14,256,452 | $17,215,781 | (3)% | (20)% | | Demand, interest bearing | $8,095,211 | $8,044,432 | $5,900,462 | 1% | 37% | | Money market | $10,822,498 | $10,324,454 | $10,681,422 | 5% | 1% | | Savings | $2,640,060 | $2,754,113 | $3,469,112 | (4)% | (24)% | | Time | $6,339,837 | $6,227,569 | $4,319,570 | 2% | 47% | | Total | $41,706,160 | $41,607,020 | $41,586,347 | —% | —% | Deposit Mix (as of Mar 31, 2024 vs. Dec 31, 2023 vs. Mar 31, 2023) | Deposit Type | Mar 31, 2024 Mix | Dec 31, 2023 Mix | Mar 31, 2023 Mix | | :---------------------------------- | :--------------- | :--------------- | :--------------- | | Demand, non-interest bearing | 33% | 34% | 41% | | Demand, interest bearing | 20% | 19% | 14% | | Money market | 26% | 25% | 26% | | Savings | 6% | 7% | 9% | | Time | 15% | 15% | 10% | Credit Quality – Non-performing Assets (Detailed) Non-performing assets increased 26% sequentially to $143.8 million, driven by commercial real estate and commercial loans entering non-accrual status Non-performing Assets (as of Mar 31, 2024 vs. Dec 31, 2023 vs. Mar 31, 2023) | Metric ($ in thousands) | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | % Change Seq. Quarter | Year over Year | | :------------------------------------------ | :----------- | :----------- | :----------- | :-------------------- | :------------- | | Total non-performing loans and leases | $142,035 | $112,901 | $75,628 | 26% | 88% | | Other real estate owned | $1,762 | $1,036 | $409 | 70% | 331% | | Total non-performing assets | $143,797 | $113,937 | $76,037 | 26% | 89% | | Non-performing loans and leases to total loans and leases | 0.38% | 0.30% | 0.20% | 0.08 | 0.18 | | Non-performing assets to total assets | 0.28% | 0.22% | 0.14% | 0.06 | 0.14 | - Non-accrual and 90+ days past due loans include government guarantees of $43.0 million at March 31, 2024[39] Credit Quality – Allowance for Credit Losses (Detailed) Total Allowance for Credit Losses (ACL) decreased 6% to $437.2 million, with provision for credit losses down 67% to $17.5 million, while net charge-offs increased 52% to $44.0 million Allowance for Credit Losses (as of Mar 31, 2024 vs. Dec 31, 2023 vs. Mar 31, 2023) | Metric ($ in thousands) | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | % Change Seq. Quarter | Year over Year | | :------------------------------------------ | :----------- | :----------- | :----------- | :-------------------- | :------------- | | Allowance for credit losses on loans and leases (ACLLL) - Balance, end of period | $414,344 | $440,871 | $417,464 | (6)% | (1)% | | Provision for credit losses on loans and leases | $17,476 | $53,183 | $106,498 | (67)% | (84)% | | Total net charge-offs | ($44,003) | ($28,872) | ($16,661) | 52% | 164% | | Total Allowance for credit losses (ACL) | $437,212 | $464,079 | $436,493 | (6)% | —% | | Net charge-offs to average loans and leases (annualized) | 0.47% | 0.31% | 0.23% | 0.16 | 0.24 | | ACL to loans and leases | 1.16% | 1.24% | 1.18% | (0.08) | (0.02) | - For the quarter ended March 31, 2023, the provision for credit losses on loans and leases includes $88.4 million initial provision related to non-PCD loans acquired during the period[40] Consolidated Average Balance Sheets, Net Interest Income, and Yields/Rates This section details average balance sheet components, interest income, expense, and yields, showing a sequential decrease in net interest income and margin, and increased cost of interest-bearing liabilities Consolidated Average Balance Sheets, Net Interest Income, and Yields/Rates (Q1 2024 vs. Q4 2023 vs. Q1 2023) | Metric ($ in thousands) | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | Average Yields or Rates (Mar 31, 2024) | | :------------------------------------------ | :----------- | :----------- | :----------- | :------------------------------------- | | Total interest-earning assets | $48,280,787 | $47,838,229 | $37,055,705 | 5.69% | | Total interest-bearing liabilities | $32,318,653 | $31,226,600 | $22,548,264 | 3.25% | | Net Interest Income | $424,344 | $454,730 | $375,369 | N/A | | Net Interest Spread | N/A | N/A | N/A | 2.44% | | Net Interest Margin | N/A | N/A | N/A | 3.52% | | Yield on loans and leases | N/A | N/A | N/A | 6.13% | | Cost of interest-bearing deposits | N/A | N/A | N/A | 2.88% | - Net interest income decreased by $30.4 million sequentially, while net interest margin contracted by 29 basis points (calculated from table data)[42] - The cost of interest-bearing liabilities increased by 23 basis points sequentially (calculated from table data)[42] Residential Mortgage Banking Activity Residential mortgage banking revenue increased 10% to $4.6 million, driven by a positive change in MSR asset fair value, despite a large MSR hedge loss Residential Mortgage Banking Revenue (Q1 2024 vs. Q4 2023 vs. Q1 2023) | Metric ($ in thousands) | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | % Change Seq. Quarter | Year over Year | | :------------------------------------------ | :----------- | :----------- | :----------- | :-------------------- | :------------- | | Origination and sale | $2,920 | $2,686 | $3,587 | 9% | (19)% | | Servicing | $6,021 | $5,966 | $9,397 | 1% | (36)% | | Change in fair value of MSR asset: Changes due to valuation inputs or assumptions | $3,117 | ($6,251) | ($2,937) | nm | nm | | MSR hedge (loss) gain | ($4,271) | $5,026 | $2,650 | (185)% | (261)% | | Total Residential mortgage banking revenue | $4,634 | $4,212 | $7,816 | 10% | (41)% | | Closed loan volume for-sale | $86,903 | $87,033 | $131,726 | —% | (34)% | - The change in fair value of MSR asset due to valuation inputs or assumptions swung from a loss of $6.25 million in Q4 2023 to a gain of $3.12 million in Q1 2024[64] - MSR hedge activity resulted in a loss of $4.27 million in Q1 2024, compared to a gain of $5.03 million in Q4 2023[64] GAAP to Non-GAAP Reconciliation This section reconciles GAAP to non-GAAP financial measures, such as operating earnings and non-interest expense, to provide a clearer view of underlying performance by excluding non-recurring items - Non-GAAP financial measures are presented to provide investors with information useful in understanding financial performance, trends, and position, and are utilized for internal planning, forecasting, and peer company operating performance comparison[44] - Non-interest expense adjustments for Q1 2024 totaled $10.6 million, primarily including merger-related expense ($4.5 million), exit and disposal costs ($1.3 million), and FDIC special assessment ($4.8 million)[72] Operating Non-Interest Expense (Non-GAAP) | Metric ($ in thousands) | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | % Change Seq. Quarter | Year over Year | | :------------------------------------------ | :----------- | :----------- | :----------- | :-------------------- | :------------- | | Non-interest expense (GAAP) | $287,516 | $337,176 | $342,818 | (15)% | (16)% | | Less: Non-interest expense adjustments | ($10,598) | ($42,888) | ($117,189) | (75)% | (91)% | | Operating non-interest expense (non-GAAP) | $276,918 | $294,288 | $225,629 | (6)% | 23% | Operating Net Income (Non-GAAP) | Metric ($ in thousands) | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | % Change Seq. Quarter | Year over Year | | :------------------------------------------ | :----------- | :----------- | :----------- | :-------------------- | :------------- | | Net income (loss) (GAAP) | $124,080 | $93,531 | ($14,038) | 33% | nm | | Less: Non-interest income adjustments | $3,883 | ($12,732) | ($8,074) | nm | nm | | Add: Non-interest expense adjustments | $10,598 | $42,888 | $117,189 | (75)% | (91)% | | Tax effect of adjustments | ($3,620) | ($7,539) | ($23,565) | (52)% | (85)% | | Operating net income (non-GAAP) | $134,941 | $116,148 | $71,512 | 16% | 89% | Operating Efficiency Ratio, as adjusted (Non-GAAP) | Metric | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | % Change Seq. Quarter | Year over Year | | :------------------------------------------ | :----------- | :----------- | :----------- | :-------------------- | :------------- | | Efficiency ratio | 60.57% | 64.81% | 79.71% | (4.24) | (19.14) | | Operating efficiency ratio, as adjusted (non-GAAP) | 56.97% | 57.31% | 52.84% | (0.34) | 4.13 |