Columbia Banking System Q4 Earnings Call Highlights

Key Points

• Columbia completed integration of the Pacific Premier acquisition, expanding its Western footprint and achieving a top-10 deposit market share in Southern California, with a systems conversion planned this quarter and active cross-selling and de novo branch openings across multiple Western states.
• Q4 operating EPS was $0.82 and net interest margin rose to 4.06%, though that included an 11-basis-point one-time benefit; management expects NIM of 3.90–3.95% in Q1 with improvement above 4% later in 2026 as deal synergies continue to ramp.
• Capital actions accelerated: the dividend was raised to $0.37, 3.7 million shares were repurchased in Q4, and buybacks are planned at $150–200 million per quarter in 2026 with roughly $600 million still authorized; deposits dipped to $54.2 billion after intentional reductions in brokered/public balances but deposit campaigns added $1.3 billion in 2025.

Columbia Banking System NASDAQ: COLB executives told investors the company closed out 2025 with what management described as “consistent and repeatable” operating performance, driven in part by four months of operating results from the Pacific Premier Bank acquisition, balance sheet optimization, and disciplined expense control.

Pacific Premier integration and footprint expansion

CEO Clint Stein said the Pacific Premier acquisition, announced and closed in 2025, completed what he called Columbia’s “Western footprint,” strengthening the bank’s position in the Northwest and improving its competitive standing in other Western markets. Stein said the combined company now holds a top-10 deposit market share position in Southern California.

Management said the integration has progressed smoothly and that a systems conversion is expected to occur this quarter. Stein emphasized positive cultural integration, describing continued customer focus from Pacific Premier team members and “meticulous planning” around the conversion.

During the Q&A, executives said Pacific Premier bankers have been using the broader platform to expand relationships and pursue larger commercial clients. Tori, an executive on the call, provided several examples of customer wins and expanded relationships involving both credit and deposits. Chris added that training and cross-referral activity continued throughout the quarter and that the bank expects to launch another retail deposit campaign later this quarter.

Stein also said Columbia opened new de novo locations in Arizona, Colorado, California, and Oregon during 2025 and has planned “targeted” additional de novo activity in 2026, funded by resources set aside from a prior expense initiative and other efficiency opportunities.

Fourth-quarter earnings drivers: margin, fees, and expenses

Chief financial officer Ivan reported fourth-quarter EPS of $0.72 and operating EPS of $0.82, with operating results excluding merger expense and other items described in the company’s non-GAAP disclosures. On an operating basis, pre-provision net revenue rose 27% from the prior quarter and operating net income increased 19%, while full-year 2025 operating pre-provision net revenue and operating net income rose 22% and 31%, respectively, versus 2024.

Net interest margin was a key theme. Ivan said fourth-quarter net interest margin was 4.06%, up from 3.84% in the third quarter and 3.64% in the year-ago quarter, aided by improved funding performance and earning asset optimization. The bank’s reduction of wholesale funding by nearly $2 billion during the third quarter contributed to the fourth quarter’s full benefit.

However, Ivan noted that the fourth-quarter margin also included an 11-basis-point benefit from two items that will not repeat in 2026: $12 million in premium amortization tied to acquired time deposits and $5 million from an accelerated loan repayment. The premium amortization was fully completed by year-end.

Non-interest income was “very strong” in the quarter, totaling $90 million on a GAAP basis and $88 million on an operating basis. Ivan said the $16 million sequential increase in operating non-interest income reflected two additional months of Pacific Premier contribution ($13 million) and higher customer fee income ($3 million), with swap and syndication banking revenue reaching what he called a “high watermark.”

Operating non-interest expense was $373 million in the fourth quarter. Of the $66 million linked-quarter increase, $62 million was attributed to Pacific Premier, inclusive of cost savings. Ivan said the company achieved $63 million in annualized deal-related cost savings by year-end, about 50% of the targeted $127 million, though the savings were not fully run-rated in fourth-quarter results. Excluding core deposit intangible (CDI) amortization of $42 million, operating non-interest expense was $331 million, at the low end of the $330 million to $340 million range the company previously signaled.

Credit, loans, and deposit trends

Provision expense was $23 million in the fourth quarter. Ivan said credit metrics remained stable, with allowance for credit losses at 1.02% of loans at quarter-end and 1.32% when including the credit discount on acquired loans.

Gross loans and leases ended the year at $47.8 billion, down from $48.5 billion at September 30, as the company continued to let “below-market-rate transactional loan balances” decline and also saw declines in commercial real estate construction and development balances.

Chris said fourth-quarter new loan origination volume was $1.4 billion, up 23% from the year-ago quarter, and full-year 2025 origination volume was up 22% from 2024. He said commercial loans grew 6% on an annualized basis, offset by declines in transactional loans and construction and development. Columbia also sold $45 million of acquired loans that were risk-rated special mention as part of ongoing portfolio pruning.

On deposits, total deposits were $54.2 billion at December 31, down from $55.8 billion at September 30. Ivan said the company intentionally reduced brokered and select public deposits by more than $650 million, citing relatively more attractive rates from alternative funding sources, and also referenced seasonal customer outflows.

Chris said customer deposit balances declined due to typical year-end seasonal patterns such as company distributions and tax payments. Management expects modest additional contraction through the first quarter and into April, with net growth resuming in the spring as seasonal outflows end and business activity accelerates.

Columbia highlighted results from its deposit campaigns. Chris said a small business and retail deposit campaign running from September through mid-November added $473 million in low-cost deposits, and that three campaigns during 2025 generated $1.3 billion in new customer deposits.

Capital actions and 2026 outlook

Columbia increased its common dividend to $0.37 per share from $0.36 and repurchased 3.7 million shares at an average price of $27.07 in the fourth quarter. Ivan said CET1 and total risk-based capital ratios increased to 11.8% and 13.6%, respectively, as of December 31, and tangible book value rose to $19.11, up 3% sequentially and 11% year over year.

Looking ahead, management provided several operating expectations for early 2026 and beyond:

• Net interest margin: expected at 3.90% to 3.95% in the first quarter, reflecting the absence of fourth-quarter one-time margin benefits and higher wholesale balances added late in December due to seasonal deposit flows. Ivan said management expects margin to improve each quarter through 2026 and surpass 4% in the second or third quarter, continuing upward thereafter.
• Earning assets: Ivan guided to roughly $60.5 billion to $61.0 billion in the first quarter (versus about $61.3 billion exiting the fourth quarter), citing expectations for modestly lower cash balances and HFI loans roughly flat to modestly down.
• Loans: In response to a question on full-year trends, Ivan said the current outlook is “pretty flat” for total loans by year-end, with core relationship lending expected to offset transactional runoff.
• Expenses: Excluding CDI amortization, non-interest expense is expected in the $335 million to $345 million range in the first and second quarters, before declining modestly in the third quarter as Pacific Premier cost savings are fully realized by the end of the second quarter. CDI amortization is expected to average about $40 million per quarter.
• Share repurchases: Management expects buybacks to increase to $150 million to $200 million per quarter in 2026, with $600 million remaining authorized and more than $600 million of excess capital on the company’s most constrained measure.

Management also discussed deposit pricing and said it is actively managed based on competitive conditions, with an emphasis on executing a “rates down deposit playbook.” Ivan said the company has observed a beta over 50% since the second quarter and continues to view 50% as a reasonable through-the-cycle estimate for interest-bearing deposit beta.

On governance, Stein addressed a question about his added role as Chair and said it does not change strategic priorities. He said the board has been discussing the transition since the back half of 2024 and will remain focused on board size and refreshment, noting the addition of three directors from Pacific Premier and three director rotations in 2025.

About Columbia Banking System NASDAQ: COLB

Columbia Banking System, Inc is a bank holding company that operates through its principal subsidiary, Columbia State Bank. Headquartered in Tacoma, Washington, the company provides a full range of banking and financial services to commercial, small business and consumer customers. Its branch network is concentrated in the Pacific Northwest, with locations across Washington, Oregon and Idaho, where it aims to combine local decision-making with the resources of a larger institution.

The company's offerings include commercial real estate lending, construction and development financing, equipment and small business loans, and deposit products such as checking, savings and money market accounts.

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