Columbia Banking System, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Columbia Banking System's fourth quarter and full year 2019 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session through both the telephone and the web. Instructions will be given at that time. If you are on the telephone and should require assistance during the conference, please press star zero. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Clint Stein, President and Chief Executive Officer of Columbia Banking System.

Thank you, Mike. Good morning, everyone. Thank you for joining us on today's call as we review our fourth quarter and full year 2019 results, which we released before the market opened this morning. The earnings release and the supplemental slide presentation are available at ColumbiaBank.com. Due to the hard work and dedication of our talented bankers, 2019 was our best year ever. We achieved record loan production while maintaining our disciplines that have produced industry-leading credit quality. All of these factors combined generated record annual earnings exceeding the prior year high set in 2018 by 12%. The tireless efforts of all of our team members who continually collaborate to do the right thing for our clients and the communities we serve are evident in these results. Our leadership transition went very smooth. Our longstanding approach to developing bench strength through ready now succession planning provided the blueprint for a seamless rotation of leadership assignments. Our recent announcements have resulted in some new names for you But these are all leaders with a long track record of delivering exceptional performance. Our current executive team, including the recent additions, have an average tenure with Columbia of roughly nine years. I want to take this opportunity to reinforce our commitment to driving long-term value for our shareholders, employees, and clients. The two new executive leadership additions were done in support of our commitment to the seamless integration of technology to drive efficiencies and increased client and employee satisfaction. David Moore Devine and Eric Eyde are both seasoned professionals who have been an integral part of Columbia's success over the past decade. I'm confident that their talent will support our future growth and enhance franchise value for many years to come. On the call with me today are Greg Sechrist, our Chief Financial Officer, who will provide details about our earnings performance, Chris Merrywell, our Chief Operating Officer, who will review our production activity and highlight the status of some of the initiatives we've been working on, and Andy McDonald, our Chief Credit Officer, who will provide some commentary on credit performance. Following our prepared remarks, we'll be happy to answer your questions. Let me remind you that we may make forward-looking statements during the call. For further information on forward-looking comments, please refer to our earnings release documents, our website, or our SEC filings. At this point, I'd like to turn the call over to Greg to review our financial performance.

Thank you, Clint. We achieved record earnings of $194.5 million and EPS of $2.68 in 2019, reflecting strong loan and deposit production, a temperate credit environment, and to focus on driving net interest income. Fourth quarter earnings of $46.1 million and DPS of 64 cents per diluted share was our best fourth quarter ever and amongst the strongest in our history. Despite the interest rate environment, net interest income was up nearly 2% in the quarter to $124.8 million. reflecting the continued benefit of loan growth and our proactive efforts to mitigate exposure to falling rates. Operating NIM was down three basis points from the linked quarter with key drivers being lower loan yields partially offset by lower funding costs. Total deposits ended the year at nearly $10.7 billion, down approximately $171 million from the prior quarter. We did have a planned outflow of public funds of approximately $300 million in the quarter As we have said previously, public funds are more often akin to wholesale funding and will be used as an alternative funding source when economically beneficial to do so. Non-interest income of $21.8 million was down from the prior quarter largely due to the $5.9 million gain on sale of owned real estate during the third quarter and was up $1.4 million compared to the fourth quarter of 2018. We have continued to make progress in generating non-interest income, especially in loan, card, and financial services revenues. Our expense run rate remains stable with fourth quarter non-interest expense of $87 million, essentially flat to the third quarter. Our core non-interest expense ratio was 2.53% for the quarter as compared to 2.69% in the prior year quarter. For the full year, this ratio was 2.59%, as compared to 2.68% for the prior year. The full year 2019 expense impact of our digital initiatives was $6.9 million, including $1 million in the fourth quarter. Overall, we have had success on negotiating favorable contract pricing and have been able to capitalize more costs than expected. Our effective tax rate for the full year was 19.5%, which is within our target range of 19 to 20%. In line with our comments in the last earnings call, we are expecting the day one impact of adopting CECL to be fairly muted. Additional details will be available when we file our 10-K. At this point, I'd like to turn the call over to Chris.