Columbia Banking System (COLB) Q1 2025 & Merger earnings summary

Executive summary

• Announced an all-stock acquisition of Pacific Premier Bancorp valued at $2.0 billion, creating a $70 billion asset regional bank with top 10 deposit market share in Southern California and expanded presence in the Western U.S.; expected to close in H2 2025, subject to regulatory and shareholder approvals.

• Q1 2025 net income was $87 million (operating net income $140 million), with EPS of $0.41 (reported) and $0.67 (operating), reflecting a decline due to a $55 million legal settlement and $15 million in severance.

• The merger accelerates strategic expansion in Southern California by a decade, adds fee income lines, enhances product offerings, and brings three Pacific Premier directors to Columbia's board.

• Opened new branches in Colorado and Denver, supporting further geographic expansion and deposit growth.

• Leadership and board will integrate members from both organizations, with the combined entity operating under the Columbia Bank brand.

Financial highlights

• Net interest income for Q1 2025 was $425 million, down $12 million sequentially due to lower accretion income and asset yields.

• Non-interest income rose to $66 million, up $17 million quarter-over-quarter, driven by fair value gains and MSR hedging.

• Non-interest expense increased to $340 million, mainly due to a $55 million legal settlement and $15 million in severance; adjusted non-interest expense was $270 million.

• Provision for credit losses was $27 million, with allowance for credit losses at 1.17% of loans.

• Net charge-offs were $29.3 million (0.32% of average loans), down from $44 million year-over-year.

Outlook and guidance

• The Pacific Premier acquisition is projected to deliver 14% EPS accretion in 2026 and mid-teens in 2027, with tangible book value earnback in three years and $127 million in annual cost savings.

• Operating expenses (excluding CDI amortization) expected to be $1.0–$1.01 billion for 2025; tax rate to remain in the mid-25% range.

• No outside capital is required for the transaction; capital ratios expected to remain strong.

• Combined company targets top-quartile profitability, with anticipated 20% ROATCE and 1.4% ROAA in 2026, assuming full cost savings.

• Management expects customer deposit trends to drive net interest margin performance, with a focus on reducing wholesale funding.