Regional banking company Columbia Banking System (NASDAQ:COLB) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 24.7% year on year to $619 million. Its non-GAAP profit of $0.85 per share was 23.2% above analysts’ consensus estimates.
Is now the time to buy COLB? Find out in our full research report (it’s free for active Edge members).
Columbia Banking System (COLB) Q3 CY2025 Highlights:
- Revenue: $619 million vs analyst estimates of $571 million (24.7% year-on-year growth, 8.4% beat)
- Adjusted EPS: $0.85 vs analyst estimates of $0.69 (23.2% beat)
- Market Capitalization: $7.78 billion
StockStory’s Take
Columbia Banking System’s third quarter results reflected the impact of its recently closed Pacific Premier acquisition, as well as continued execution on organic growth initiatives. Management cited the completion of this key deal as strengthening the company’s deposit base, expanding its presence across the Western U.S., and enabling higher loan origination volumes. CEO Clint Stein credited the quarter’s momentum to “balance sheet optimization and relationship-driven growth,” while also highlighting the benefits of new product referrals and business line integration stemming from the merger.
Looking ahead, Columbia Banking System’s priorities center on integrating Pacific Premier, pursuing further balance sheet optimization, and maintaining disciplined expense management. Management noted that the focus will be on remixing inherited transactional loans into higher-yielding, relationship-based assets, and leveraging the expanded footprint for organic growth. Stein stated, “Our robust profitability will support our plans to deliver meaningful capital returns to all of our shareholders,” while CFO Ivan Seda pointed to ongoing cost synergies and stable net interest margins as key to sustaining strong returns in the coming quarters.
Key Insights from Management’s Remarks
Management highlighted that the Pacific Premier acquisition, balance sheet remixing, and organic customer acquisition shaped both quarterly results and the company’s evolving strategy.
- Pacific Premier acquisition completed: The closing of this strategic deal expanded Columbia’s footprint to eight Western states, notably increasing its presence in Southern California and broadening its core deposit base. Management described Pacific Premier as the “missing piece” for creating a leading regional franchise.
- Accelerated balance sheet optimization: The company focused on remixing away from lower-yielding transactional loans, leveraging both loan sales and paydowns to shift towards higher-margin, relationship-based lending. Stein emphasized that this approach prioritizes profitability over simple balance sheet growth.
- Organic deposit and loan growth: Management reported nearly $800 million in organic deposit growth, with 30% from new customers and strong contributions from both commercial and retail segments. Loan originations rose 36% quarter-over-quarter, driven by commercial banking momentum and new de novo branches.
- Cost synergy realization: Columbia began capturing annualized cost savings from the merger, achieving $48 million of the targeted $127 million by quarter end. System conversions and further integration are expected to enhance efficiency in the next year.
- Share repurchase authorization: The board approved a $700 million share repurchase program, reflecting the company’s capital strength following the acquisition and ongoing internal capital generation. Management noted this is supported by regulatory capital ratios meaningfully above long-term targets.
Drivers of Future Performance
Columbia expects future performance to be driven by the integration of Pacific Premier, continued remixing of its loan portfolio, and steady organic growth within its expanded footprint.
- Loan portfolio remix: Management is prioritizing the gradual runoff or sale of $8 billion in inherited transactional loans, aiming to replace these with higher-yielding, relationship-focused commercial loans and associated deposit relationships. This shift is expected to improve profitability even if overall asset growth remains modest.
- Cost efficiency and integration synergies: Continued realization of merger-related cost savings is anticipated, with full run-rate benefits expected by late next year following system conversions. Seda indicated that operating expenses should trend lower as integration progresses, supporting sustainable returns.
- Capital allocation and return: The company plans to deploy excess capital towards share repurchases and maintain a disciplined approach to organic growth, while keeping regulatory capital well above target levels. Management cautioned that macroeconomic volatility and seasonal deposit flows remain key risks to monitor.
Catalysts in Upcoming Quarters
In the coming quarters, StockStory analysts will closely monitor (1) the pace and success of Pacific Premier integration, including cost savings and operational synergies; (2) evidence that the loan portfolio remix drives improved profitability despite limited balance sheet expansion; and (3) whether Columbia can sustain organic customer deposit and loan growth across its expanded regional footprint. Updates on share repurchases and regulatory capital strength will also be key indicators of execution.
Columbia Banking System currently trades at $26.03, in line with $26 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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