Columbia Banking System, Inc. (NASDAQ:COLB) Q2 2022 Earnings Conference Call July 21, 2022 2:00 PM ET
Company Participants
Clint Stein – President & Chief Executive Officer
Aaron Deer – Chief Financial Officer
Chris Merrywell – Chief Operating Officer
Andy McDonald – Chief Credit Officer
Conference Call Participants
David Feaster – Raymond James
Matthew Clark – Piper Sandler
Operator
Ladies and gentlemen, thank you for standing by. Welcome to the Columbia Banking System’s Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we’ll conduct a question-and-answer session. Instruction will be given at that time. [Operator Instructions] 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. Please go ahead.
Clint Stein
Thank you Victor. Welcome and good morning everyone and thank you for joining us on today’s call as we review our second quarter results. The earnings release and accompanying investor presentation are available at columbiabank.com. Our associates continue to remain focused on delivering favorable outcomes for each of our stakeholders and their efforts are reflected in our outstanding results for the second quarter.
Net income of $58.8 million was the best quarter in our 29-year history. Our solid operating fundamentals were propelled by exceptional loan growth and underpinned by the strength of our stable core deposit base. We continue to see our investments in people and systems pay off in terms of production capabilities. Our bankers are working hard every day to deepen and expand relationships with our clients by providing products solutions and industry-specific expertise. These activities support our clients’ goals, which in turn supports the economic health of communities across our entire footprint. Preparation for our combination with Umpqua Holdings is progressing as teams from both companies eagerly await regulatory approval.
On the call with me today are Aaron Deer our Chief Financial Officer; Chris Merrywell our Chief Operating Officer; and Andy McDonald our Chief Credit Officer. Following our prepared remarks we’ll open the line for questions.
Before turning the call over to Aaron, I need to remind you that we may make forward-looking statements during the call. For further information on forward-looking comments please refer to either our earnings release or website or our SEC filings. Aaron?
Aaron Deer
Thank you Clint and good morning everyone. Pretax pre-provision income rose by $11.2 million on a linked quarter basis to $78.7 million. The increase was driven by a combination of rising interest income, higher non-interest income and lower operating expenses most notably with declines in merger-related costs and compensation and benefit costs including the impact of some onetime items I’ll discuss in a moment.
Total deposits ended the quarter at $18 billion, which was a decrease of $342 million for the quarter but up $2.6 billion from a year earlier with $1.7 billion coming from our Merchants acquisition. The linked quarter decrease was largely consistent with pre-pandemic seasonal trends. Our cost of deposits edged up one basis point to five basis points. Total loans rose by $563 million during the quarter to $11.3 billion. After factoring in PPP balances loans increased by $614 million or 23% annualized.
Growth was propelled by $734 million in new loan originations and a 2.5 point increase in our loan utilization rate. Two years after the launch of the Paycheck Protection Program, most of the $1.5 billion in loans we funded in communities throughout our footprint are now forgiven and paid off by the FCA.
As of June 30th only $32 million in PPP balances remain. Total investment securities decreased $458 million during the quarter to $7.3 billion, which was split 70% available for sale and 30% held-to-maturity. The quarterly decrease was driven by both the fair value mark on our AFS portfolio, as well as maturities, premium amortization and paydowns. No new purchases were made during the quarter. The expected yield in the current portfolio is 1.89%, up three basis points during the quarter.
Our net interest margin increased four basis points on a linked-quarter basis to 3.16% largely due to the shift in earning assets from Fed funds into higher-yielding loans. Excluding the four basis point differential of premium amortization on acquired loans and securities, and the two basis point differential in accelerated PPP fees between the two quarters, the margin increased 10 basis points sequentially.
New loans were brought on at an average tax-adjusted coupon rate of 3.93%, which is up from 3.59% in the first quarter. And the coupon rate on the overall portfolio excluding PPP increased from 3.84% to 4.07%.
More recent production is coming on at even higher rates and with mortgage loans lifting of forward rates, we should see those benefits more fully reflected in our third quarter results. Non-interest income increased linked quarter by $826,000 to $25 million.
Service charges — excuse me, service charges on deposit accounts increased by $1.1 million largely due to a $685,000 increase in sweep account fees, which are reported on a gross basis with a similar offsetting amount recorded to legal and professional expense.
Loan revenue increased by $688,000 mostly driven by an increase in our loan production and prepayment penalties, but partly offset by the cyclical decline in mortgage banking revenue.
Other non-interest income declined by $821,000 largely because of onetime gains we recorded in the first quarter. For the second quarter we still had $1 million in nonrecurring income including a BOLI benefit and a payment for participation in an Oregon disaster relief program.
Non-interest expense decreased by $9.7 million linked quarter to $95.4 million. Adjusting for merger-related expenses of $3.9 million in the second quarter and $7.1 million in the first quarter, non-interest expense decreased by $6.5 million to $91.5 million. The linked quarter decrease was due to several factors largely affecting the compensation and benefits line.
For one, the first quarter included roughly $2.1 million of seasonally elevated payroll taxes and benefit costs. Meanwhile, the second quarter benefited by about $1.4 million from benefit accrual and funding adjustments.
And finally, the second quarter also benefited from FAS 91 capitalized loan origination costs owing to the very strong loan production in the period and that reduced compensation expense by about $1 million compared to the first quarter and about $0.5 million compared to the average of recent periods.
Finally, occupancy and data processing costs also declined some of which stemmed from the completion of our Merchants Bank core conversion back in March. We anticipate our normalized expense run rate excluding merger cost to be in the mid-90s.
The provision for income taxes increased $565,000 on a linked-quarter basis to $16.2 million representing a 21.6% effective rate. We continue to expect our 2022 tax rate to be in the 20% to 22% range, but perhaps towards the higher end of that range given our higher profitability.
Lastly as I discussed last quarter the rise in interest rates resulted in a negative fair value mark on our investment portfolio reflected through accumulated other comprehensive income. While this mark does not affect our regulatory target ratios it does weigh on our tangible common equity ratio and tangible book value. Excluding AOCI however, both our TCE ratio and our tangible book value increased during the quarter.
And with that, I’ll turn the call over to Chris.
Chris Merrywell
Thanks, Aaron. Our forward momentum is accelerating as we exit the pandemic and in anticipation of our pending combination with Umpqua Holdings. In a very competitive market, Columbia’s bankers are continuing to take care of existing clients, while simultaneously finding and driving new business.
As mentioned earlier in the call, loan growth was outstanding. Ex PPP loan production of $734 million was another record, shattering the old record of $640 million set just two quarters ago. About 25% of the growth in the loan portfolio was due to increase in line utilization, primarily in the agricultural and finance sectors, with the remaining growth driven by record production predominantly in real estate, leasing, health care, agriculture and the construction sectors.
New production was sourced 51% from Washington, 24% from Oregon, 10% from California, 6% from Idaho, and the remaining 9% from outside of our footprint through our specialty, tribal, and national health care teams. Approximately $186 million of the new balances was from clients with commitments of greater than $10 million.
Notwithstanding the strong production during the quarter, our pipelines continue to expand and remain to our satisfaction. The quarterly production mix was 75% fixed, 22% floating, and 3% variable.
Term loans represented $525 million of total new production, while lines accounted for $209 million. The overall portfolio mix is now 55% fixed, 31% floating, and 14% variable. Over the past 12 months, we have seen a shift from C&I towards CRE loans, which now makes up 46.4% of the portfolio up from 42.3% one year ago.
The shift can be partly attributed to the payoff of $660 million of net PPP loans during the year. As a result of higher rates, we continue to see a decline in our mortgage warehouse business. During the quarter, with sold loans dropping from $57 million to $39 million, which compares to $101 million in the second quarter of 2021.
Overall, the composition of the loan portfolio did not change materially, even with the increase in line utilization. Deposits declined $342 million during the second quarter, which is normal due to the seasonal business activity. The mix remained consistent at 49% non-interest-bearing, and 51% interest-bearing.
The composition also remained consistent with 60% commercial and 40% retail. If seasonal patterns hold, deposit balances will pick up in the third quarter through the remainder of the year.
Earlier this month, we announced the expansion of our footprint into Utah, adding a highly experienced commercial lending team in the Salt Lake City market. In addition, we continue to invest in our retail network, with our newest financial hub opening next week in the vibrant Proctor District of Tacoma.
Financial hubs are full-service locations that are uniquely focused on helping our clients achieve their comprehensive financial goals, including investments, trust services and other financial considerations.
Both producers and clients across our footprint, see the value of the upcoming combination with Umpqua, and the increased capabilities that it will bring. Our bankers are doing a great job remaining outwardly focus, expanding our customer base, while generating high-quality loans and long-term deposit relationships during a time when many companies would be internally focused.
Now, I will turn the call over to Andy to review our credit performance.
Andy McDonald
Thanks, Chris. For the quarter, we added $2.1 million to our allowance. The additional reserve was primarily driven by loan growth during the quarter, and a less favorable economic forecast.
Last quarter, the unemployment rate was expected to end 2022 at 3.4% and remain at or below pre-pandemic levels throughout the forecast period. The current forecast assumes the unemployment rate will end 2022 at 3.7% and remain above pre-pandemic levels throughout the forecast period.
Last quarter the full year GDP growth expectations for 2022 was 3.3%. The current forecast assumes full year GDP growth expectations for 2022 of 2.5% and assumes GDP will remain below 2% throughout the forecast period. Offsetting loan growth and the less favorable economic forecast was a continuation in the trend of improving credit metrics and to a lesser extent net recoveries of about $886,000.
As I mentioned a moment ago, our credit trends continue to move in a positive direction, albeit at a more modest pace. Non-performing loans remained low at only 15 basis points of period-end loans and substandard loans declined $76 million during the quarter and now represent less than 2.5% of total loans. Special mentioned loans are less than 1% of total earnings. For the year problem loans those rated watch or worse have declined $127 million. The bank’s impaired asset ratio has also declined from 21.6% to 14.5%. Given these metrics, our allowance going forward will continue to be driven primarily by loan growth and the economic forecast.
In summary, while we are seeing credit quality metrics similar to that which we enjoyed pre-pandemic, we remain cognizant of the current global environment and instability in Europe rising interest rates, especially their impact on housing and inflationary pressure this year at home. So while we are optimistic for the future performance of the portfolio near term, we remain cautious as we look further down the road.
Okay. Back to you Clint.
Clint Stein
Thanks, Andy. This concludes our prepared comments. As a reminder, Andy, Chris and Aaron are with me to answer your questions. And now Victor, let’s open the line for questions.
Question-and-Answer Session
Operator
All right. [Operator Instructions] Our first question comes from the line of David Feaster from Raymond James. Your line is open.
David Feaster
Hey, good morning, everybody.
Clint Stein
Good morning, David.
David Feaster
Maybe just starting on deposits. Obviously, you guys have a phenomenal low-cost core deposit franchise. But I’m just curious maybe if you could walk through some of the underlying trends that you’re seeing, especially since quarter end. It sounds like in the market that we’re hearing, more conversations about exception pricing and those types of things and migration within books. Just curious whether there’s any interesting trends you’ve seen within your book and what drove the runoff? Is it more munis or anything like that? And then just any other trends worth highlighting and whether you’d expect more outflows potentially for the remainder of the year?
Clint Stein
So you’ve got Chris and Aaron fighting across the table to decide who gets to answer this first so I’m going to jump in and just steal their thunder. What we saw in the second quarter really was — started to feel a lot like our seasonal patterns that we’ve had pre-pandemic. And I think it was in Chris’ comments that he mentioned that those traditional patterns hold true in the third quarter and for the balance of the year that we should see some deposit growth come back in.
And I’d say that so far at this point in the third quarter we are seeing those historical seasonal patterns of deposit growth. And on an overall basis, we weren’t down materially in the second quarter. We move around $150 million, $200 million from day-to-day. So, sometimes it’s just a matter of that focal date of June 30 and if somebody laid a big deposit on us or system cash out. So I’ll step back now and let Chris and Aaron continue their argument over who’s going to fill in the details.
Chris Merrywell
Hey, Dave, this is Chris. I’ll provide a little color to the outflows. As we’ve always talked, we’ve talked about controlling our deposit costs through using Wealth Management CB Financial. And during the quarter of that number about $55 million was the net movement to CB Financial to take advantage of some higher rate opportunities. The exception pricing we still continue to utilize that.
It’s trending kind of as the normal maybe a little bit more with what’s going on in the market. But overall the base of our deposit funding is very consistent to where it was. We’ll continue to see what happens with the competition and things of that nature. But we’re really following the playbook that we’ve always had and it’s — as of today it’s continuing to bear out.
David Feaster
Okay. That’s helpful. And then maybe just — look it’s extremely impressive to see record originations in production. And if I heard correctly that you’re continuing to see expanding pipelines like that combination is really impressive. I’m just curious what do you think is allowing you to be so successful. I mean, is it the economic recovery? Is it some of your new hires? Is it people excited about the deal? I’m just curious as you step back and look at it, what do you think is allowing you to be so successful. And is this kind of continued pace of growth sustainable, especially as we look at higher rates and potential deceleration in originations, but you also got the prospects of slower payoffs and paydowns? Just any high-level thoughts.
Clint Stein
So I think it really starts with a conscious decision that we made in the second quarter of 2020. While a lot of our competitors shuttered their operations, scattered their teams and tried to run their banks from the basement of their vacation homes, we were here every day. And we continue to just serving the needs of our communities and taking care of our clients. And a lot of the business that we’ve won over the last couple of years, our prospects that we called on for in some cases 10-plus years and they just didn’t really like the experience or the lack of availability of their existing bank and/or their existing bank pulled out of certain markets.
And so I think that that momentum that we didn’t lose the momentum that a lot of I think end-market competitors lost. And so as they’ve been trying to regain some momentum we’ve just continued to accelerate. And I think that approach has also helped us to attract great talent with some of the hires that we’ve talked about and some — many that we haven’t.
We continue to attract a lot of great bankers across the footprint. And the announcement on our Utah team is just the most recent example of that type of activity. And so I think it’s not something where we just flip the switch. And we had a lot of momentum actually going into 2020. Coming out of 2019 we were starting off the first quarter it was shaping up to be a tremendous first quarter of 2020. And then of course, the pandemic hit and everything kind of came to a standstill.
So, I don’t know if that gives you everything you want or if Chris wants to add some additional context or not. But that’s really — I think it’s not something that has just started. It’s something that we’ve been very focused on for a few years now.
Chris Merrywell
Yes. David I’d add on the aspect of just backing up the — our bankers are out and about they’re very proactive and focused. And as you look towards the pending combination the integration management office is doing a fantastic job so that our bankers can focus on all the stuff that they do externally. And then that team continues to work internally on all of the stuff that happens on day one.
As far as when you look at how it kind of all came together specifically to production there’s certainly been some pent-up demand that’s came through. I think the second quarter you saw a little bit of some things that came through some taking advantage of the lower rates before things started to rise. That certainly helped with it as well. We were able to take advantage of those, get into some new deals, while retaining a lot of our old business as well.
I think your question about is it sustainable? That’s certainly one of the unknown questions. And we’ve talked before I hesitate to speculate if we’ll set record-after-record. But I’m very comfortable with what our teams are doing. And I think there’s going to be a natural summer pullback as well and we’ll see how it plays out for the rest of the year. But it truly was incredible.
David Feaster
Yes, that’s great. And maybe just touching on asset quality and giving Andy a little airtime. You guys always maintain a conservative approach to credit. And we’ve seen continued improvement in asset quality. But — and you guys talked about it there’s some real challenges in the economy.
I’m just curious at a high level your thoughts on the credit outlook from your all standpoint. And in the pulse of the clients as you look out are there any segments that you may be a bit more cautious on? Are there any segments where you’re maybe seeing clients pull back or that you’re avoiding? And then, on the other side, I mean what is your appetite for credit at this point? And have you guys begun tightening standards?
Andy McDonald
Well, first of all, our appetite remains consistent through all of the cycles. And I think that for our customers and for our prospects makes us, I think predictable and they like that. So we’re not in and out of segments and we don’t adjust our underwriting criteria to get more loans or get less and stuff like that. We try to remain consistent throughout the entire cycle. So, our risk appetite remains the same.
Overall, yes, credit is looking really good. I hate to say it, it’s probably as good as it’s going to get, but I guess I just said it. And so, really, the economy will be a big driver of how we move forward.
The segments that are under stress, I mean we continue to be concerned with hospitality a little bit, but I think we got our arms around that and most of that I think is pretty well taken care of. But it remains for certain kinds of — especially, if it’s business travel related that remains a challenge versus vacation.
Elderly care, you had the pandemic theoretically lower, but not in assisted living and nursing care facility, because it already takes a small outbreak and then, they can’t take in new people. There is still a reluctance for a lot of people to place, their mother or their father into those facilities.
And they’re designed in such a way that they need relatively high occupancy to cover the fixed cost of running the facility. So, elderly care is there. We don’t have a big bucket of elderly care, but it’s less than $100 million for us. But almost all of it is exhibiting some kind of stress.
I think on a broader case, I’m not going to tell you anything you don’t already know, but a lot of businesses are still struggling to find employees. And in the restaurant area, they’re open but they can’t run at full capacity, because they don’t have enough servers. And so that impacts their ability to generate revenue.
Grocery stores are closing delis, which happened to me the other day, because they don’t have enough people to staff the deli. So, a lot of businesses are really struggling, and inflation so far is running ahead of wages. So real nominal consumer spending hasn’t really increased, but I do and I think I have some concerns over continued wage inflation and will begin to exceed the commodity side of inflation if you will. So, that’s probably longer term the concern in the portfolio.
David Feaster
Got it. That’s helpful. Thanks guys.
Andy McDonald
Thanks, David.
Operator
Thank you. One moment for a next question. [Operator Instructions] Our next question is from the line of Matthew Clark from Piper Sandler. Your line is open.
Matthew Clark
Hey. Good morning.
Andy McDonald
Good morning, Matt.
Matthew Clark
Maybe just to close the loop on credit Andy, I don’t think you mentioned the office, but that seems to be another kind of longer-term concern for — we’ve heard property values in certain metro markets that I don’t think you really dabble in that much. Values there could be 25%. Are you seeing anything like that in any of your markets? I know — I’m sure a lot of what you have is suburban office, but any color on the office would be great.
Andy McDonald
Yes. Certainly, the downtown core of Seattle and Portland are the weakest office markets, but those buildings are way bigger than what we ever get involved in. But it does impact the region a bit. And you are correct. We’re primarily in the suburban and rural markets. Most of our office is actually walk-up two, three story, two by four construction. You’ve got the veterinary clinic, the dentists, maybe an architect and a law firm in it. So our office composition is not sort of what you would be reading about in the Wall Street Journal.
Matthew Clark
Got it. Okay.
Andy McDonald
Real estate values. I don’t know where the large buildings in Seattle are trading, because that’s not the market we play in. But I would say that, in general, cap rates remain extremely low, because there’s so much money looking for a home.
And so, while we aren’t seeing the same inflationary pressures in real estate values they are holding, but they’re just not increasing. So we’ll have to wait and see as rates continue to rise by the Fed. If cap rates rise, then you’ll see values. But right now there’s a lot of money looking for homes in just about every segment of the real estate market.
Matthew Clark
Okay, great. And then shifting gears to the margin. Aaron, you’re going to have the margin — the average margin in the month of June. And as a follow-up, what the spot rate was at the end of June and the weighted average rate on new loans going into 3Q?
Aaron Deer
So we did see margin improvement through the quarter. The new coupon on loans in June was 4.17% that compares obviously favorably to the average for the quarter. So we’re seeing good directional lift there. And I think our — you asked about the margin. The margin overall for June was — on an operating basis was 3.24%. That was up about, I think, from 3.09% in the March — month of March. So, again, good directional trends there.
But one of the things that I want to point out, because I think it’s an important point and we’ve talked about this in the past where there’s — with the inflection of margin trends we always said it was going to take a little bit of time before we really saw that pull through. And a big part of that stems from the floors that we have on our loans. And we’ve got some pretty good breakout on slide 10 of our investor deck that we kind of show this.
And if you look back to the March quarter we had about $1.7 billion of loans that were still subject to floors. And moving forward to June 30 that number droid to about $1.2 billion. And most of that would need just a 25 basis point change in the Fed funds to lift off floors.
And obviously with the next week’s anticipated FOMC meeting we’re going to get something well above that. So with that we will have over $3.5 billion of loans that will be adjustable with rate resets that should be coming in pretty short order. So we should start to see a much better impact from the rate hikes coming forward.
Matthew Clark
Got it, okay. And then I don’t know if you mentioned it during your prepared remarks any guidance for the upcoming quarter on a stand-alone basis from a non-interest expense perspective, assuming production flows capitalized deferred — FAS 91, I would assume those would increase, but any guide around the run rate?
Aaron Deer
Yeah. We’re still looking for something in the mid-90s.
Matthew Clark
Okay. And then maybe Clint, could you give us an update on, kind of, what you’re hearing as it relates to the approval process if anything? And I’m sure it’s frustrating, but just any color you might have and whether or not we might need to see the USB’s acquisition have to get approval first or not?
Clint Stein
Yeah. I mean, it’s a process. And we would like to have complete transparency into the time line for the approval process. But unfortunately that’s just not the way that it works. And we’ve been through this before with prior deals where the process has to run its course.
But we’re not wasting any time to the extent that we can continue to prepare ourselves for when we do receive approval and move quickly towards closing. There’s not anything that jumps out from my perspective that creates any type of an anomaly or makes the approval process more challenging or difficult.
I don’t know if that helps you or not. But it’s just — we’re just going through the normal process. I don’t know the answer specifically on if our deal is in line behind the US Bank deal. I think we announced what roughly 30 days or so after they did. So I know that the DOJ is very busy, but I don’t have visibility into everything in terms of what they’re actually working on at any given point in time. But I do know that our application is being worked on. And while it’s – the delay is a little bit frustrating, the real value that we feel that this combination creates for all of our stakeholders is a long-term decision. And so if it’s a matter of a few months here on the front end, it doesn’t change our excitement or expectation for the benefits of this combination to all of our stakeholders.
Matthew Clark
Okay. Great. Thank you.
Operator
Thank you. We’re moving for our next question. And our next question will come from line Jay [ph] Rulis from D.A. Davidson. Your line is open.
Unidentified Analyst
Thanks. Good morning. Just a couple of questions on maybe production. Chris could you tell us the pipeline as we sit today versus where you sat at the same point in the second quarter?
Chris Merrywell
It’s very similar to what was going into the second quarter. I won’t give an absolute figure on that. But yes, it’s very similar.
Unidentified Analyst
And Chris is there – this is pretty specific but thinking about the Utah expansion in those individuals. Is there any kind of non-compete there? Do you think that their book of business can hit beginning in the third quarter? Any timing there or could we assume we could see some positive impact from that group immediately?
Chris Merrywell
Yes. They’ve been on for about a month now, it’s a couple of weeks in total. And when you look at it there’s always – or typically there could be a non-solicit or anything of that nature. We’re not really – we don’t build these teams and expansions on what necessarily can come from their existing book. It’s really more about what’s the go forward, how active are they in the market? And how quickly can they seize on new opportunities.
The books they tend to be fairly — well especially in a rising rate environment, they tend to — it’s really hard to pull somebody when you go in and offer them a higher rate today than what they had where they’re currently at. So that will take a little bit more time. We’re really comfortable with these teams that they are the external sourcing types of bankers that, we typically attract and bring on board.
So, from that standpoint, the team that started with us earlier in January, they certainly hit the ground running into the second quarter, so 90-ish days. I do know there are some opportunities that we are working on currently. They are already in there. And so yes, I would expect that you start seeing something into the — maybe not in the third quarter here, but certainly moving into the fourth quarter.
Unidentified Analyst
Got it. Thank you. And Aaron I appreciate the kind of some of the touch points you gave on margin throughout the quarter. A specific question to sort of cash and equivalent balances as those were worked down. Was that pretty steady through the quarter? Was it early part or late? Anything on timing of how those balances moved?
Aaron Deer
No. I mean there was a little bit of variability around — you could tell like in April, when you had a lot of tax payments going out and things like that, there was some bigger variances. But no, I would say in terms of how the loan — if those funds were used for loan funding, it was a pretty steady flow through the quarter.
Unidentified Analyst
Okay. And maybe a last one, perhaps for Clint. Just I believe kind of organizational charts have been shared Umpqua and COLB. I guess, is the next sort of point of stress if you think about the combined employee base, would that be a closing or conversion, or is there anything more internal that as you work through, as you said you’re not sitting idly by you’re preparing? I’m just thinking more of the personnel that could be pressure points of when companies come together. Anything like between now and close or conversion that would also come up in that time line?
Clint Stein
Yeah, I think, just the length of time that we’re in right now, this period that we’re in waiting on regulatory approval that weighs on some folks. I mean part of bringing the companies together, we have in both organizations today, leaders and individuals that want to retire. And through a normal course of business when somebody retires, they can pick a date, you have a big party, they plan a trip and they leave town for a month. Well, we don’t know if that’s exactly when to have that party for them. And so, I’ve seen that. There’s a few individuals here in our corporate headquarters that are in that situation.
And so that creates, I guess a point of frustration for them. I think that we’re still running two separate companies and we’re planning for what we are when we come together. So, in essence it’s like you’ve got two jobs. You’re doing your job today at Columbia Bank or at Umpqua Bank, but then you’re also thinking towards the future. And so, I think that once we get to the close, some of that pressure gets released from the organization. There are situations where there’s one job for two people.
And to your earlier comment about org charts and things those have been communicated. And so that’s the other piece of where, depending on at what point in the process, if it’s at the close, if it’s 30 days post close, if it’s 90 days post conversion and those that are centered around the conversion. They still have some pretty good certainty around the timing of what that looks like. But those that are centered or based on the actual closing of the merger they don’t really know exactly when that date will be.
So I think that — I guess those are kind of the different scenarios that I think about. But all-in-all, I think across both organizations there’s still a tremendous amount of excitement, the opportunity that this creates for all of our stakeholders our clients. I’ve been doing a lot of client visits the last couple of months and some of them they’re surprised to find out that the merger hasn’t closed and they’re excited.
Get to have greater access to our bankers, greater availability of products and services. So, I don’t want to take your question and just focus on the pressure points of the organization. I think that the excitement still far outweighs, anything in terms of just the normal course of merger-type integration work.
Unidentified Analyst
Appreciate it, Clint. I wasn’t negatively pointed, just to kind of walk through the process. So that’s helpful and I appreciate the feedback. Thanks.
Operator
I’m not showing any further questions in the queue. I’d like to turn the call back over to Clint Stein for any closing remarks.
Clint Stein
Well thanks Victor and thank you for joining our call today. And don’t hesitate to reach out, if there’s any clarification that you’d like on any items that we discussed. Have a good afternoon.
Operator
This concludes today’s conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.
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