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COLUMBIA BANKING SYSTEM, INC. (COLB)·Q3 2025 Earnings Summary

Executive Summary

  • Closed Pacific Premier acquisition on August 31; Q3 GAAP EPS was $0.40 while operating EPS was $0.85, driven by one month of combined company and core profitability despite merger-related costs .
  • Net interest margin expanded to 3.84% (+9 bps QoQ), with management guiding to an approximately 3.90% NIM in Q4 2025 and a temporary ~$12M NII tailwind from CD premium accretion .
  • Strong organic deposit growth (~$800M) reduced brokered funding; CET1 rose to 11.6% and Total RBC to 13.4%, above long-term targets .
  • Board authorized a $700M share repurchase through Nov 30, 2026; management expects capacity to execute the full authorization as capital generation continues .
  • CFO transition announced: Ron Farnsworth to step down on Dec 31; Ivan Seda appointed CFO, adding continuity to integration and cost-synergy execution .

What Went Well and What Went Wrong

What Went Well

  • Net interest margin and net interest income improved: NIM 3.84% (+9 bps QoQ); NII $505M (+$59M QoQ) on funding mix improvements and one month with Pacific Premier .
  • Operating profitability was robust: operating EPS $0.85 and operating PPNR $270M (+12% QoQ), reflecting core momentum and one month of acquired operations .
  • Organic deposit growth (~$800M) and brokered reduction ($1.9B down) supported lower funding costs and capital build; CET1 11.6%, TRBC 13.4% .
  • Quote: “Our third quarter performance reflects meaningful progress and growing momentum… [and] a $700 million share repurchase program” – Clint Stein, CEO .

What Went Wrong

  • GAAP efficiency ratio deteriorated to 67.29% (vs 54.29% in Q2) on $87M merger and restructuring expense; non-interest expense rose to $393M (+$115M QoQ) .
  • GAAP provision increased to $70M on day-1 acquisition provisioning and model recalibration; ACL/loans declined to 1.01% from 1.17% QoQ .
  • Reported GAAP EPS fell to $0.40 from $0.73 prior quarter due to acquisition-related items .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue (GAAP) ($USD Millions)$496 $511 $582
Net Interest Income ($USD Millions)$430 $446 $505
Non-Interest Income ($USD Millions)$66 $65 $77
Provision for Credit Losses ($USD Millions)$29 $30 $70
Non-Interest Expense ($USD Millions)$271 $278 $393
Diluted EPS ($USD)$0.70 $0.73 $0.40
Operating Diluted EPS ($USD)$0.69 $0.76 $0.85
Net Interest Margin (%)3.56% 3.75% 3.84%
Efficiency Ratio (%)54.56% 54.29% 67.29%
Operating Efficiency Ratio, Adjusted (%)53.89% 51.79% 52.32%

Balance sheet and per-share:

MetricQ3 2024Q2 2025Q3 2025
Total Assets ($USD Billions)$51.9B $51.9B $67.5B
Loans & Leases ($USD Billions)$37.5B $37.6B $48.5B
Deposits ($USD Billions)$41.5B $41.7B $55.8B
Book Value/Share ($USD)$25.17 $25.41 $26.04
Tangible Book Value/Share ($USD)$17.81 $18.47 $18.57

Key KPIs:

KPIQ3 2024Q2 2025Q3 2025
Net Charge-offs to Avg Loans (annualized)0.31% 0.31% 0.22%
Non-Performing Assets / Total Assets0.32% 0.35% 0.29%
ACL / Loans & Leases1.17% 1.17% 1.01%
CET1 Ratio (estimated)10.3% 10.8% 11.6%
Total Risk-Based Capital (estimated)12.5% 13.0% 13.4%
Cost of Interest-Bearing Deposits2.95% 2.52% 2.43%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest MarginQ4 2025N/A~3.90% with ~$12M NII uplift from CD premium accretion (temporary) New near-term NIM uplift
Net Interest Income (CD premium)Q4 2025N/A~$12M addition from CD premium amortization; not expected in 2026 New temporary tailwind
Operating Expenses (ex CDI)Next few quartersN/A~$330–$340M/quarter before dropping in H2 2026 New run-rate outlook
Core Deposit Intangible (CDI) AmortizationNext few quartersN/A~$40M/quarter New clarity
Cost SynergiesBy 6/30/2026$127M annualized $127M (unchanged), ~$48M realized by 9/30/2025 Maintained; tracking
TBV Dilution EarnbackPost-acquisition~3 years <1 year Improved
Share RepurchaseThrough 11/30/2026N/AUp to $700M authorization New authorization
Deposit Beta (declining cycle)Ongoing~55% (rising cycle historical) ~49–50% currently Updated beta assumption
Transactional Loan Remix2025–2027N/A~$8.08B portfolio to reprice/run off, largely over two years New disclosure
DividendRegular$0.36/quarter $0.36 declared Aug 15, paid Sep 15 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Balance sheet optimization, transactional runoff“Let transactional real estate portfolios wind down” (Q2) ; relationship-driven originations (Q1) Defined ~$8.08B transactional loans; plan to reprice/run off over ~2 years Intensifying, quantified
Deposit growth campaigns$425M new deposits (Q1 campaign) ; >$450M (Q2 campaign) ~ $800M organic deposit growth; campaigns brought ~$1.1B to date Sustained momentum
Net interest margin trajectoryNIM down to 3.60% (Q1) ; up to 3.75% (Q2) 3.84% in Q3; Q4 guide ~3.90% on CD premium Rising
Capital returnRegular dividend maintained (Q1/Q2) $700M buyback authorization; excess capital ~$550M above target Ramping returns
Acquisition & integrationAnnounced PPBI (Q1) ; anticipated close ~Sept (Q2) Closed Aug 31; systems conversion Q1 2026 Transition to integration
Credit qualityNCO 0.32% (Q1) ; 0.31% (Q2) NCO 0.22%; NPA 0.29% Improving
Leadership—CFO transition effective Dec 31, 2025 Change with continuity
Technology & AI—Emphasized AI-powered “Smart Leads”, payments, FX portal Enhancing capabilities

Management Commentary

  • Strategy and capital returns: “We remain focused on delivering consistent, repeatable performance… [and] authorized a $700 million share repurchase program.” – Clint Stein, CEO .
  • Integration and profitability: “Operating PP&R increased 12%… driven by one month of Pacific Premier and favorable balance sheet remix… Our NIM expanded nine bps to 3.84%.” – Ron Farnsworth, CFO .
  • Buyback stance: “The greatest investment we can make is in our own stock… we’re ~$550M above the target and expect strong profitability.” – Management Q&A .
  • Capital and earnback: TBV dilution was only 1.7% vs 7.6% expected; earnback now <1 year; CET1 11.6%, Total RBC 13.4% .
  • Balance sheet actions: Reduction in brokered deposits and term debt ($1.9B collectively) and proactive deposit rate reductions post Fed move .

Q&A Highlights

  • Share repurchase pacing and capacity: Authorization spans into late 2026; company could plausibly execute full $700M based on current excess capital and expected ROE generation .
  • NIM/NII outlook: Q4 NIM ~3.90% with ~$12M NII uplift from CD premium amortization; stability into Q1 with seasonal caveats .
  • Loan growth vs optimization: Target ~5% annual C&I growth capability while remixing ~$8B transactional loans; net asset growth may be muted but revenue should rise via higher-yield relationship loans and fees .
  • Deposits drivers: ~30% of Q3 organic deposit growth from new customers; de novo branches added ~$150M; ongoing campaigns effective .
  • Credit/ACL trajectory: Expect slow upward migration of ACL percentage as transactional portfolio runs off and new production builds; FinPac delinquencies normalized .

Estimates Context

  • S&P Global Wall Street consensus for Q3 2025 EPS and revenue was unavailable at the time of analysis; as a result, we cannot benchmark reported results versus consensus. Values retrieved from S&P Global.

Key Takeaways for Investors

  • NIM expansion and Q4 uplift: Structural funding remix plus temporary CD premium accretion should support near-term NIM/NII; watch how NIM trends post-premium in 2026 .
  • Capital returns: $700M buyback is a major catalyst; CET1 11.6% and Total RBC 13.4% provide capacity to return capital while funding growth .
  • Deposit franchise strength: Sustained organic deposit inflows reduce wholesale reliance and support margins; tactical rate actions post Fed cut are lowering deposit costs .
  • Revenue remix thesis: ~$8.08B transactional loans to reprice/run off, replaced by higher-rate relationship lending with fee income and deposits—driving revenue even if assets are flat .
  • Cost path and synergies: $127M cost synergies targeted by mid-2026; near-term operating expenses ~$330–$340M/quarter ex CDI with ~$40M CDI amortization .
  • Integration milestones: Systems conversion in Q1 2026; monitor conversion success, deposit retention, and synergy realization trajectory .
  • Leadership continuity: CFO transition to Ivan Seda effective Dec 31, 2025 should sustain financial discipline and integration momentum .