Business Combinations

12 Months Ended

Dec. 31, 2019

Business Combination Disclosure [Text Block]

Business Combinations

Pacific Continental

On November 1, 2017, the Company completed its acquisition of Pacific Continental and its wholly-owned banking subsidiary Pacific Continental Bank. The Company acquired 100% of the equity interests of Pacific Continental. The primary reasons for the acquisition were to expand in the Eugene, Oregon market and improve branch network efficiencies in the Seattle and Portland markets.

The assets acquired and liabilities assumed have been accounted for under the acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their fair values as of the November 1, 2017 acquisition date. The application of the acquisition method of accounting resulted in the recognition of goodwill of $383.1 million and a CDI of $46.9 million. The goodwill represents the excess of the purchase price over the fair value of the net assets acquired. The goodwill is not deductible for income tax purposes.

The table below summarizes the amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed:



	November 1, 2017
	(in thousands)
Merger consideration				$	637,103
Identifiable net assets acquired, at fair value
Assets acquired
Cash and cash equivalents	$	81,190
Investment securities	449,291
FHLB stock	7,084
Loans	1,873,987
Interest receivable	7,827
Premises and equipment	27,343
OREO	10,279
CDI	46,875
Other assets	50,638
Total assets acquired				2,554,514
Liabilities assumed
Deposits	(2,118,982		)
FHLB advances	(101,127		)
Subordinated debentures	(35,678		)
Junior subordinated debentures	(14,434		)
Securities sold under agreements to repurchase	(1,617		)
Other liabilities	(28,653		)
Total liabilities assumed				(2,300,491		)
Total fair value of identifiable net assets				254,023
Goodwill				$	383,080

See Note 9, “Goodwill and Other Intangible Assets,” for further discussion of the accounting for goodwill and other intangible assets.

The operating results of the Company reported herein include the operating results produced by the acquired assets and assumed liabilities for the period November 1, 2017 to December 31, 2019. Disclosure of the amount of Pacific Continental’s revenue and net income (excluding integration costs) included in Columbia’s Consolidated Statements of Income is impracticable due to the integration of the operations and accounting for this acquisition.

For illustrative purposes only, the following table presents certain unaudited pro forma information for the year ended December 31, 2017. This unaudited, estimated pro forma financial information was calculated as if Pacific Continental had been acquired as of the beginning of the year prior to the date of acquisition. This unaudited pro forma information combines the historical results of Pacific Continental with the Company’s consolidated historical results and includes certain adjustments reflecting the estimated impact of certain fair value adjustments for the respective periods. The pro forma information is not indicative of what would have occurred had the acquisition occurred as of the beginning of the year prior to the acquisition. In particular, no adjustments have been made to eliminate the impact of other-than-temporary impairment losses and losses recognized on the sale of securities that may not have been necessary had the investment securities been recorded at fair value as of the beginning of the year prior to the date of acquisition. The unaudited pro forma information does not consider any changes to the provision for credit losses resulting from recording loan assets at fair value. Additionally, Columbia expects to achieve further operating cost savings and other business synergies, including revenue growth as a result of the acquisition, which are not reflected in the pro forma amounts that follow. As a result, actual amounts would have differed from the unaudited pro forma information presented.



	Unaudited Pro Forma for the
	Year Ended December 31,
	2017
	(in thousands, except per share amounts)
Total revenues (net interest income plus noninterest income)	$	571,944
Net income	$	149,859
EPS - basic	$	2.23
EPS - diluted	$	2.23

The following table shows the impact of the acquisition-related expenses related to the acquisition of Pacific Continental for the periods indicated to the various components of noninterest expense:



	Years ended December 31,
	2019		2018		2017
	(in thousands)
Noninterest Expense
Compensation and employee benefits	$	—	$	3,620	$	8,014
Occupancy	—		1,619		1,912
Data processing	—		963		1,555
Legal and professional fees	—		1,028		4,618
Advertising and promotion	—		537		467
Other	—		894		630
Total impact of acquisition-related costs to noninterest expense	$	—	$	8,661	$	17,196