Columbia Banking System, Inc.

Welcome to the Columbia Banking System second quarter 2024 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like to introduce Jackie Bolin, Investor Relations Director, to begin the conference call. Please go ahead.

Thank you, Lisa, and good afternoon, everyone. Thank you for joining us as we review our second quarter results. The earnings released and corresponding presentation are available on our website at ColumbiaBankingSystem.com. During today's call, we will make forward-looking statements which are subject to risks and uncertainties and are intended to be covered by the safe harbor provisions of federal securities law. For a list of factors that may cause actual results to differ materially from expectations, please refer to the disclosures contained within our SEC filings. We will also reference non-GAAP financial measures, and I encourage you to review the non-GAAP reconciliations provided in our earnings materials. We'll now hand the call over to Columbia's President and CEO, Clint Stein.

Thank you, Jackie. Good afternoon, everyone. We made considerable progress over the past three months on the initiatives we discussed in April. We enacted changes to the way we evaluate and approve deposit pricing, which resulted in increased stabilization in the cost of customer deposits. We also achieved more expense reductions during the quarter than what we anticipated and communicated to you in April. When we spoke last quarter, I outlined the realization of $43 million in annualized net cost reductions from the operational effectiveness work that began during the first quarter. This work is the result of identifying opportunities for improvement after observing a year of the combined company's operations. These opportunities resulted in a lower headcount given the elimination of redundant and overlapping positions and have simplified our organizational structure. But our opportunities are not limited to just expense cuts. They include revenue-generating franchise reinvestment, and a cost-conscious culture enables us to make reinvestments that support our long-term growth and profitability outlook. Annualized expense reductions year-to-date from our operational effectiveness work equate to $64 million on a net basis and $76 million on a gross basis. We have roughly $6 million of remaining annualized expense reductions slated to be enacted in the third quarter which will get us to our initiative goal of $70 million in net savings and 82 million on a gross basis. These savings are in addition to the 143 million net and 188 million gross savings related to last year's merger. We have achieved $264 million in annualized savings over the past 18 months, with 45 million already reinvested into the future growth of our company. We have 12 million of the $76 million of cost savings achieved in the first half of 24 earmarked for franchise reinvestment that will occur over the next 18 months or so. We didn't execute on near-term expense initiatives at the detriment of the future growth and competitiveness of our company. At the end of the third quarter, our gross expense reductions will be $270 million merger to date with the previously mentioned $57 million either already reinvested or allocated for reinvestment, resulting in net reductions of $213 million, or 58% above our original commitment of $135 million at the announcement of the merger. These steps were not taken with a survivor's mindset. We executed this initiative and will continuously evaluate our expense base so we can thrive well into the future while delivering on our promise of being a high performer. Our headcount reductions were wrapped up during the second quarter. The remaining 6 million of planned expense savings will come from other operational sources during the third quarter. The savings I outlined are as of quarter end. They are not fully reflected in the second quarter's normalized operating run rate of roughly 270 million, which does not include the previously mentioned expected reinvestments in the coming quarters. While we have made substantial progress toward the annualized fourth quarter expense run rate we outlined in our March update, we are not adjusting that guide given these planned reinvestments. As we wind down the work to right-size our expense base, our ability to invest in our people, our franchise, and our suite of products and services remains fully intact. We believe these revenue-generating investments along with a lower expense base will continue to drive additional long-term shareholder value. The heavy lifting is behind us, and we're very optimistic for the future. The franchise we set out to create with the merger in 2021 is here. We're running it, and we're making it resilient to any operating environment. Our early success on near-term initiatives has not diminished our laser focus on regaining Columbia's placement as a top quartile bank as we drive toward long-term, consistent, repeatable performance. I'll now turn the call over to Ron.