Columbia Banking System, Inc. Q4 FY2025 earnings call

• Strategic acquisition of Pacific Premier bolstered Western footprint and competitive position, especially in Southern California with top 10 deposit market share. • Successful systems conversion supported by experienced team and meticulous planning; strong cultural integration of Pacific Premier team. • De novo growth with new locations in Arizona, Colorado, California, and Oregon in 2025, with planned continued activity in 2026. • Fourth quarter operating results showed PPNR up 27% q/q, net interest margin expansion due to funding performance, earning asset optimization, premium amortization, and loan repayments. • Noninterest income strong in Q4, with $90M GAAP and $88M operating; noninterest expense $373M operating, with $62M related to Pacific Premier and $63M annualized deal-related cost savings achieved by year-end. • Provision expense $23M reflecting low portfolio runoff and credit model changes; credit metrics stable. • Balance sheet: Investment securities portfolio increased ~$100M in Q4; loans down to $47.8B, deposits contracted seasonally but expect net growth in spring; customer fee income increased driven by Pacific Premier and core fee businesses.

No distinct product segments detailed with absolute financial performance and revenue contribution % as the transcript focuses on overall company performance. However, key financial metrics include: Fourth quarter operating PPNR up 27% from prior quarter; net interest margin 4.06% for Q4, up from 3.84% Q3 and 3.64% 2024; noninterest income $90M GAAP and $88M operating in Q4; operating noninterest expense $331M in Q4 excluding CDI amortization; provision expense $23M; loan portfolio $47.8B as of Dec 31; deposits $54.2B as of Dec 31.

• Net interest margin expected to be in 3.9%-3.95% range in Q1 2026, then trend higher to surpass 4% in Q2 or Q3 2026. • Noninterest expense expected $335-$345M in Q1 and Q2, then decline modestly in Q3. • Share repurchase activity expected $150M-$200M per quarter in 2026. • Loan portfolio expected to be relatively flat, with commercial loan growth offsetting transactional portfolio contraction. • Net interest margin to trend higher each quarter in 2026 after Q1 bottoming out.

• Factors causing actual results to differ from expectations referenced in SEC filings. • Loan portfolio runoff and deposit flow fluctuations could impact financial performance. • Interest rate changes may affect net interest margin and funding costs. • Credit migration trends and economic forecast changes could impact provision expense and credit metrics.

Q: Can you talk more about PAC Premier's contributions and growth?

A: Clint Stein, Torran Nixon, and Christopher McGratty discuss PAC Premier's excitement, growth in customer relationships, including bringing in larger customers and expanding credit facilities.

Q: What does a modest step down in earning assets mean?

A: Ivan Seda explains earning assets expected to be in $60.5-$61B range in Q1 2026, with HFI loans flat to modestly down and cash balance decline.

Q: How much of loan runoff is intentional vs. normal?

A: Ivan Seda and Torran Nixon break down loan decline into transactional portfolio and CRE construction/development, with retention of some transactional loans and majority of CRE exiting to agencies.

Q: Thoughts on capital buyback and alternative uses of capital?

A: Clint Stein and Ivan Seda state buybacks still make sense as company is undervalued, with capital priorities including lending, dividend, business investments, and buybacks.

Q: Details on loan sales of $45M?

A: Christopher McGratty and Torran Nixon explain loans were PAC Premier adversely rated, sold at carrying value with ~$1M hit to goodwill.

Q: Appetite for additional loan sales?

A: Ivan Seda says will evaluate surgical opportunities for transactional portfolio.

Q: Deposit pricing and costs?

A: Ivan Seda and Christopher McGratty discuss deposit beta over 50%, active ongoing process of pricing optimization and regional pricing.

Q: Expense guide and tax rate?

A: Ivan Seda provides expense guide range and tax rate modeling.

Q: Loan to deposit ratio and criticized loans?

A: Ivan Seda says loan to deposit ratio comfortable into low 90s, criticized loans saw special mention down and substandard up, net net relatively flat.

Q: NIM outlook and strategic role of chair?

A: Ivan Seda discusses NIM outlook, Clint Stein states no change in strategic priorities with expanded chair role, focusing on board refreshment.