COLUMBIA BANKING SYSTEM, INC.COLB
COLUMBIA BANKING SYSTEM, INC. Income Taxes Disclosure
Income Taxes and Investment Tax Credits
The following table presents the components of income tax provision for the years ended December 31, 2025, 2024, and 2023:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Current expense: | |||||||||||||||||
| Federal | $ | 91 | $ | 115 | $ | 72 | |||||||||||
| State | 33 | 39 | 37 | ||||||||||||||
| Total current tax expense | $ | 124 | $ | 154 | $ | 109 | |||||||||||
| Deferred tax expense: | |||||||||||||||||
| Federal | $ | 45 | $ | 21 | $ | 7 | |||||||||||
| State | 9 | 10 | 6 | ||||||||||||||
| Total deferred tax expense | 54 | 31 | 13 | ||||||||||||||
| Total provision for income taxes | $ | 178 | $ | 185 | $ | 122 | |||||||||||
All pretax income from continuing operations for the periods presented was generated in domestic jurisdictions; the Company did not earn any foreign pretax income. As such, the Company had no foreign income tax expense from continuing operations.
Certain income tax disclosures included herein are reflective of the adoption of ASU 2023‑09 and are intended to align with the enhanced transparency requirements of the standard upon adoption. The following table presents a reconciliation of income taxes computed at the federal statutory rate to the actual effective rate for the years ended December 31, 2025, 2024, and 2023:
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| (in millions) | Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||||||||||
| US Federal Statutory Tax Rate | $ | 153 | 21.0 | % | $ | 151 | 21.0 | % | $ | 99 | 21.0 | % | |||||||||||||||||||||||
State and local income taxes, net of federal income tax effect (1) | 30 | 4.1 | % | 39 | 5.4 | % | 25 | 5.4 | % | ||||||||||||||||||||||||||
Tax credits | (31) | (4.2) | % | (20) | (2.7) | % | (16) | (3.5) | % | ||||||||||||||||||||||||||
Nontaxable or nondeductible items | |||||||||||||||||||||||||||||||||||
| Tax-exempt interest income | (12) | (1.6) | % | (9) | (1.2) | % | (10) | (2.2) | % | ||||||||||||||||||||||||||
| Non-deductible FDIC premiums | 7 | 1.0 | % | 7 | 1.0 | % | 8 | 1.7 | % | ||||||||||||||||||||||||||
Other | 6 | 0.8 | % | 1 | 0.1 | % | 4 | 0.8 | % | ||||||||||||||||||||||||||
Other adjustments: | |||||||||||||||||||||||||||||||||||
| Proportional amortization | 30 | 4.2 | % | 20 | 2.8 | % | 16 | 3.6 | % | ||||||||||||||||||||||||||
| Other | (5) | (0.9) | % | (4) | (0.7) | % | (4) | (0.8) | % | ||||||||||||||||||||||||||
| Effective income tax rate | $ | 178 | 24.4 | % | $ | 185 | 25.7 | % | $ | 122 | 26.0 | % | |||||||||||||||||||||||
(1) State taxes in Oregon and California contributed to the majority of the tax effect in this category.
The following table presents the cash paid for income taxes, net of refunds received, by jurisdiction for the years ended December 31, 2025, 2024, and 2023:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Federal | $ | 79 | $ | 70 | $ | 90 | |||||||||||
| State | |||||||||||||||||
| California | 22 | 15 | 18 | ||||||||||||||
| Oregon | 18 | 10 | 18 | ||||||||||||||
| Other | 4 | 6 | 13 | ||||||||||||||
| Total | $ | 123 | $ | 101 | $ | 139 | |||||||||||
The following table reflects the effects of temporary differences that give rise to the components of the net deferred tax asset, which is included in other assets on the Consolidated Balance Sheets, as of December 31, 2025 and 2024:
| (in millions) | 2025 | 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Net unrealized losses on investment securities | $ | 282 | $ | 317 | |||||||
| Acquired loans | 189 | 116 | |||||||||
| Allowance for credit losses | 125 | 111 | |||||||||
| Operating lease liabilities | 44 | 33 | |||||||||
| Accrued severance and deferred compensation | 43 | 36 | |||||||||
| Other | 56 | 48 | |||||||||
| Total gross deferred tax assets | 739 | 661 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Other intangible assets | 189 | 125 | |||||||||
| Operating lease right-of-use asset | 41 | 29 | |||||||||
| Deferred loan fees and costs | 36 | 34 | |||||||||
| Direct financing leases | 30 | 36 | |||||||||
| Premises and equipment | 29 | 19 | |||||||||
| Residential mortgage servicing rights | 28 | 29 | |||||||||
| Other | 33 | 30 | |||||||||
| Total gross deferred tax liabilities | 386 | 302 | |||||||||
| Net deferred tax assets | $ | 353 | $ | 359 | |||||||
As of December 31, 2025 and 2024, the Company's gross deferred tax assets included $5 million and $2 million, respectively, of NOL carryforwards expiring in tax years 2027-2034. The Company acquired a $94 million net deferred tax asset before purchase accounting adjustments in the acquisition of Pacific Premier, including $3 million of federal and state NOL. The acquisition triggered an “ownership change” as defined in Section 382 of the Internal Revenue Code and the Company is evaluating the effects. However, the Company believes it is more likely than not that it will be able to fully realize the benefit of its federal and state NOL and tax carryforwards. The Company has determined that no valuation allowance for the deferred tax assets is required as management believes it is more likely than not that future taxable income will be sufficient to realize the remaining gross deferred tax assets of $739 million and $661 million at December 31, 2025 and 2024, respectively.
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, as well as the majority of states. The Company is no longer subject to U.S. income tax examinations for years prior to 2022 and is no longer subject to state income tax examinations for years prior to 2021.
The Company periodically reviews its income tax positions based on tax laws and regulations and financial reporting considerations, and records adjustments as appropriate. This review takes into consideration the status of current taxing authorities' examinations of the Company's tax returns, recent positions taken by the taxing authorities on similar transactions, if any, and the overall tax environment.
The Company had no gross unrecognized tax benefits as of December 31, 2025 and 2024. Interest on unrecognized tax benefits is reported by the Company as a component of tax expense. There were no amounts related to interest and penalties recognized for the years ended December 31, 2025 and 2024.
Investment Tax Credits
The Company is involved in various entities that are considered to be variable interest entities, which are primarily related to investments promoting affordable housing and trust preferred securities. The Company is not required to consolidate variable interest entities in which it has concluded it does not have a controlling financial interest, and thus not the primary beneficiary. In such cases, the Company does not have both the power to direct the entities' most significant activities and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the variable interest entity. The maximum exposure to loss in the LIHTC is the amount of equity invested and credit extended by the Company. Refer to Note 14 – Junior and Other Subordinated Debentures for further discussion of junior subordinated debentures.
Affordable Housing Tax Credit Investments
The Company makes certain equity investments in various limited partnerships that sponsor affordable housing projects; the purpose of these investments is to achieve a satisfactory return on capital, to facilitate the sale of additional affordable housing product offerings, and to assist in achieving goals associated with the Community Reinvestment Act. The primary activities of the limited partnerships include the identification, development, and operation of multi-family housing that is leased to qualifying residential tenants.
The Company’s investments in these entities generate a return primarily through the realization of federal income tax credits and other tax benefits, such as tax deductions from operating losses of the investments, over specified time periods. These tax credits and deductions are recognized as a reduction to income tax expense on the Consolidated Statements of Income.
The Company records the investments in affordable housing partnerships as a component of other assets on the Consolidated Balance Sheets and uses the proportional amortization method to account for the investments. Amortization related to these investments is recorded as a component of the provision for income taxes on the Consolidated Statements of Income. The Company's unfunded capital commitments to these investments is included in other liabilities on the Consolidated Balance Sheets.
With its acquisition of Pacific Premier, the Company acquired $75 million of affordable housing partnership assets and $29 million of unfunded capital commitments related to these investments.
The following table presents the Company's tax credit investments, which consisted entirely of affordable housing tax credit investments and related unfunded capital commitments as of December 31, 2025 and 2024:
| (in millions) | December 31, 2025 | December 31, 2024 | |||||||||
| Other Assets: | |||||||||||
| $ | 344 | $ | 221 | ||||||||
| Other Liabilities: | |||||||||||
| Unfunded affordable housing tax credit commitments | $ | 140 | $ | 95 | |||||||
As of December 31, 2025, the Company’s unfunded affordable housing tax credit commitments were estimated to be due as follows:
| (in millions) | |||||
| Year | Amount | ||||
| 2026 | $ | 78 | |||
| 2027 | 32 | ||||
| 2028 | 16 | ||||
| 2029 | 2 | ||||
| 2030 | 1 | ||||
| Thereafter | 11 | ||||
| Total unfunded affordable housing tax credit commitments | $ | 140 | |||
The following table presents other information relating to the Company's affordable housing tax credit investments for the years ended December 31, 2025, 2024, and 2023:
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| $ | 30 | $ | 20 | $ | 17 | ||||||||||||
| $ | 39 | $ | 25 | $ | 21 | ||||||||||||
There was no impairment recognized for the years ended December 31, 2025, 2024, and 2023.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Mar 1, 2018 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.