Executive Summary

Q2 delivered broad-based operational improvement: GAAP EPS rose to $0.73 (operating $0.76), net interest margin expanded 15 bps to 3.75%, and operating efficiency improved to 51.79% as core fee income increased and operating expenses were flat versus Q1 on a like-for-like basis .
Balance sheet quality and capital strengthened: TBV/share increased 3% q/q to $18.47, CET1 rose to 10.8% and Total RBC to 13.0% while ACL/loans stayed at 1.17% and NCOs were stable at 0.31% annualized .
Seasonality drove deposit contraction (-$0.48B q/q) and higher wholesale funding (+$0.8B); management highlighted deposit pricing discipline (IB deposit cost flat at 2.52%) and noted Q3 could see a small NIM lift from a full-quarter benefit of higher bond yields, with NIM still most sensitive to deposit flows .
PPBI merger progressing: both shareholder votes cleared and close could be as early as Sept 1; teams are preparing balance sheet actions (e.g., net sale ~$500mm of PPBI bonds post-close) to optimize pro forma NIM and asset sensitivity—an evident stock catalyst alongside seasonal Q3 deposit growth and potential capital return flexibility post-integration .

What Went Well and What Went Wrong

What Went Well

Margin and earnings power improved: NIM expanded 15 bps to 3.75% on higher loan and securities yields with flat funding costs; GAAP EPS $0.73 and operating EPS $0.76, with operating PPNR up 14% q/q—“textbook” operating leverage per CFO .
Core fee momentum and expense discipline: Operating non-interest income rose $8mm q/q on cards, wealth and treasury, while operating non-interest expense held essentially flat q/q, driving an operating efficiency ratio of 51.79% .
Strategic execution: CEO cited focus on profitability and balance sheet optimization; commercial growth offset runoff in transactional portfolios and the bank opened 3 new branches while preparing to close PPBI—“laser focused on top-quartile performance” .

What Went Wrong

Deposits fell $0.48B q/q on seasonal tax payments, debt paydowns and migration to wealth products; borrowings rose $0.8B to fund securities purchases and deposit outflows .
Non-interest income (GAAP) dipped $2mm q/q from fair value/MSR hedge swings; provision increased modestly to $29mm as credit migration and economic assumptions evolved .
Competitive pricing persists in spots (some >4% offers), requiring ongoing tactical rate management; multifamily and other transactional portfolios continue to contract, tempering net loan growth despite stronger originations .

Financial Results

Metric	Q2 2024	Q1 2025	Q2 2025
Net Interest Income ($mm)	$427.449	$424.995	$446.446
Non-Interest Income ($mm)	$44.703	$66.377	$64.462
Revenue (GAAP) ($mm)	$472.152	$491.372	$510.908
Non-Interest Expense ($mm)	$279.244	$340.122	$277.995
PPNR ($mm)	$192.908	$151.250	$232.913
Operating PPNR ($mm)	$219.390	$211.833	$242.126
Diluted EPS ($)	$0.57	$0.41	$0.73
Operating Diluted EPS ($)	$0.67	$0.67	$0.76
Net Interest Margin (%)	3.56%	3.60%	3.75%
Efficiency Ratio (%)	59.02%	69.06%	54.29%
ROAA (%)	0.93%	0.68%	1.19%
ROATCE (%)	14.55%	9.45%	16.03%

Balance Sheet and Mix

Metric	Q2 2024	Q1 2025	Q2 2025
Total Assets ($B)	$52.0	$51.5	$51.9
Loans & Leases ($B)	$37.7	$37.6	$37.6
Deposits ($B)	$41.5	$42.2	$41.7
Avg NIB Deposits / Avg Total Deposits (%)	32.54%	31.75%	31.39%
Cost of Interest-Bearing Deposits (%)	2.97%	2.52%	2.52%
Book Value/Share ($)	$23.76	$24.93	$25.41
Tangible BV/Share ($)	$16.26	$17.86	$18.47

Credit & Capital KPIs

Metric	Q2 2024	Q1 2025	Q2 2025
Provision for Credit Losses ($mm)	$31.820	$27.403	$29.449
Net Charge-Offs (annualized, % of avg loans)	0.32%	0.32%	0.31%
NPAs / Assets (%)	0.30%	0.35%	0.35%
ACL / Loans & Leases (%)	1.16%	1.17%	1.17%
CET1 Ratio (%)	10.0%	10.6%	10.8%
Total RBC Ratio (%)	12.2%	12.9%	13.0%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Operating non-interest expense (ex CDI amort.)	FY 2025	$1.00–$1.01B (Q1 call)	Reiterated for 2025 (no Q2 change)	Maintained
Operating tax rate	FY 2025	Mid-25% (Q1 call)	Mid-25% (no update in Q2)	Maintained
NIM qualitative outlook	Q3 2025	—	Expect slight lift into Q3 from full-quarter investment yields; NIM still most sensitive to deposit flows	New qualitative color
PPBI closing timing	2H 2025	2H 2025 (announcement)	As soon as Sept 1, 2025 pending approvals	Pulled forward (earlier)
Dividend	Ongoing	$0.36 declared Feb 14, paid Mar 17 (Q1)	$0.36 declared May 16, paid Jun 16 (Q2)	Maintained run-rate

Earnings Call Themes & Trends

Topic	Q4 2024 (Q-2)	Q1 2025 (Q-1)	Q2 2025 (Current)	Trend
AI/Technology	Focus on tech stack; new business online banking; 2025 plans incl. real-time payments, analytics	Continued tech investment commentary	“83 platforms using AI”; dedicated teams for current AI use cases and fintech partnerships	Increasing scope and emphasis
Tariffs/Macro	—	Business Barometer: tariffs a top-3 concern; many plan to stockpile inventory	CEO: uncertainty around tariffs elongating pipelines; mixed customer appetite	Headwind monitored
Deposit pricing/flows	Deposit cost cut ~50 bps from June to Dec; NIM up 8 bps	Seasonal Q1 outflows and wholesale increases expected	IB deposit cost flat at 2.52%; seasonal declines in Q2; some competitive >4% offers	Costs stabilizing; seasonal pattern restored
PPBI integration	—	Deal announced; 30% cost saves from PPBI; 2H close targeted	Shareholders approved; close as soon as Sept 1; plan post-close bond sales/optimization	Accelerating to close
Balance sheet optimization	Identified optimization opportunities and transactional runoff plan	Continue to let transactional portfolios wind down	Reaffirmed: runoff or reprice over 2025–2028; avoid hard-coding losses	On track

Management Commentary

“Our second quarter results demonstrate our focus on profitability and balance sheet optimization… NIM benefited from loan repricing, controlled deposit pricing, and a rebound in securities yields… Continued expense discipline further supported our strong performance.” – Clint Stein, CEO .
“NIM increased 15 bps to 3.75%… higher investment securities yields provided over half the expansion; higher loan yields added ~5 bps; lower funding costs ~1 bp.” – Ron Farnsworth, CFO .
“We are not losing ground on AI… 83 different platforms and solutions that use a form of AI… one group running current solutions and another focused on fintech partnerships and longer-term opportunities.” – Clint Stein, CEO .
“We anticipate closing [the PPBI acquisition] as soon as September 1, 2025, pending regulatory approvals.” – Company press release .

Q&A Highlights

Loan growth and originations: Commercial production rose ~30% q/q and ~18% y/y; growth reflects banker productivity and market share gains, though sales, paydowns and prepayments mute net balance expansion .
Deposit pricing strategy: Teams proactively managing rates amid episodic >4% offers; CD specials around ~3.75% 7-month as maturities reprice; overall IB deposit cost remained at 2.52% .
Margin outlook: June NIM was ~3.79% (timing-adjusted); expect slight Q3 lift from full-quarter securities yields, with NIM primarily dependent on deposit flows; wholesale funding used short-term pre-close .
PPBI pro forma optimization: Added ~$600mm par of discounted bonds in April to reduce pro forma asset sensitivity; plan to net sell ~$500mm of PPBI bonds post-close to pay down wholesale funding .
Transactional portfolios: Intend to run off/reprice ~$6B of transactional assets over time rather than sell at a long earn-back; improves profitability mix even if balances stay muted .

Estimates Context

S&P Global consensus for Q2 2025 EPS and revenue was unavailable in our feed at the time of analysis; as a result, we benchmark results versus prior quarter and prior year and highlight directionally positive surprises (NIM expansion, operating leverage) and execution on fee growth and expense discipline [GetEstimates: Q2 2025 returned no data].

Key Takeaways for Investors

Operating leverage inflection: Margin expansion, core fee growth and flat operating expense produced a strong step-up in operating PPNR; watch for a modest NIM tailwind in Q3 from full-quarter securities yields, with deposit flows still the key swing factor .
Deposit discipline intact: IB deposit cost held at 2.52% amidst seasonality; pricing discipline and fewer exceptions remain a lever to protect NIM as rates evolve .
Credit stable and well-reserved: NCOs ~0.31%; ACL/loans 1.17%; NPAs 0.35%—levels consistent with through-cycle underwriting; FinPac losses trending lower .
Capital accretion supports flexibility: TBV/share rose to $18.47; CET1 10.8% and Total RBC 13.0% provide capacity for balance sheet optimization and, post-PPBI, potential capital return .
PPBI closing as early as Sept 1 is a visible catalyst: Expect cost synergies and fee verticals (custodial trust, HOA, escrow/1031) to enhance revenue mix; pro forma balance sheet actions should support NIM and sensitivity .
Near-term trading setup: Seasonal Q3 deposit growth plus incremental NIM lift could drive estimate revisions; watch regulatory progress for PPBI and any updated post-close capital return commentary .
Medium-term thesis: Continued remix away from transactional real estate and toward full-relationship C&I plus fee lines, with disciplined pricing and tech/AI-enabled productivity, aims at top-quartile profitability post-integration .

Additional details and sources: Q2 2025 press release and financial tables ; Q2 2025 earnings call transcript ; Q1 2025 press release and call ; Q4 2024 press release and call ; PPBI transaction announcements and approvals ; Dividend declaration ; Umpqua Business Barometer context .

COLUMBIA BANKING SYSTEM, INC. (COLB)·Q2 2025 Earnings Summary