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 a 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.

• Customer deposits grew by $440–$497 million in Q1, driven by successful deposit campaigns and new branch openings, including the first in Colorado.

• The acquisition accelerates strategic expansion in Southern California by a decade, adds complementary products, and enhances fee income streams.

• Integration risk is considered low due to similar cultures, credit philosophies, and significant M&A experience on both sides.

Financial highlights

• Net interest income for Q1 2025 was $425 million, down $12 million sequentially; net interest margin contracted by 4 bps to 3.60%.

• Non-interest income rose to $66.4 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; allowance for credit losses at 1.17% of total loans.

• Return on average assets was 0.68% (reported), return on tangible common equity was 15% (operating); efficiency ratio increased to 69.06% (reported) and 55.11% (operating, adjusted).

Outlook and guidance

• The Pacific Premier acquisition is projected to deliver 14–15% EPS accretion in 2026–2027, with tangible book value dilution of 7.6% and a three-year earnback period.

• Operating expense guidance for 2025 (excluding CDI amortization) remains $1.0–$1.01 billion; tax rate expected in the mid-25% range.

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

• Loan growth expected to be muted as transactional real estate portfolios run off; C&I and owner-occupied real estate portfolios targeted to grow at least double GDP.

• No outside capital is required for the transaction, preserving value for shareholders.