COLB shifts to execution after Pacific Premier deal, with cost saves, integration timing, and deposit discipline key to proving the merger's payoff.
Columbia Banking System COLB is moving from “deal close” to “deal proof.” The Pacific Premier acquisition expanded the franchise across eight western states and sharpened the company’s positioning in Southern California, but near-term results still carry integration-related noise.
For investors, the next phase is about execution. Progress on cost saves, system conversion timing, fee growth, and deposit discipline will matter most as the combined bank settles into a steadier earnings profile.
The Pacific Premier acquisition closed on Aug. 31, 2025 and is framed as a footprint-completing move for Columbia’s Western U.S. platform. The combined operation spans Washington, Oregon, Idaho, California, Nevada, Arizona, Colorado, and Utah, supported by roughly 350 branches.
Strategically, the transaction elevated market positioning in Southern California while broadening scale across the region. That scale supports a relationship-banking model that links commercial, small business, consumer, and wealth teams, with a deposit base described as granular and diversified across segments and products.
Management targeted $127 million in annualized cost savings from the Pacific Premier deal. By the end of 2025, $63 million of those saves had been realized.
That progress sets up a clear watch item for the next few quarters: how quickly the remaining savings flow through the income statement, and whether the exit run-rate aligns with management’s timing expectations as integration steps are completed.
Expenses are elevated because non-interest costs have been volatile around the transaction, including merger and restructuring charges and a period that included only one month of combined operations in the fourth quarter of 2025.
Management’s near-term expense guide, excluding core deposit intangible amortization, is $330-$340 million per quarter for the next several quarters. Separately, it guided to $335-$345 million for the first and second quarters of 2026, before a modest decline in the third quarter as cost saves are realized.
The key milestone is system conversion, planned for the first quarter of 2026, with a normalized expense run-rate by the third quarter of 2026 as savings fully materialize. Investors should monitor whether quarterly expense cadence and conversion execution track to those dates.
One immediate benefit of the combination is a broader set of fee-generating businesses. Pacific Premier adds platforms including Custodial Trust Services, homeowners association banking, escrow, and 1031 exchanges, extending Columbia’s non-interest income toolkit.
The bank has also cited tangible cross-sell activity. Since closing, it generated more than 1,200 cross-sell referrals, and de novo and campaign efforts produced meaningful deposit inflows through mid-October. Those datapoints matter because referral-driven expansion is designed to deepen relationships and gradually move the revenue mix toward more durable, core fee streams.
Management is focused on defending margin while integration continues. Net interest margin (NIM) improved from 3.64% in the fourth quarter of 2024 to 4.06% in the fourth quarter of 2025, as deposit costs declined and higher-cost wholesale funding was reduced.
The strategy is to protect core relationship deposits while winding down non-core, higher-cost sources. Management expects NIM to trend higher each quarter throughout 2026 and ultimately surpass 4% in the second or third quarter of 2026, supported by deposit repricing discipline and balance sheet optimization actions.
That said, deposit competition is a real constraint across key markets. Large banks and digital competitors continue to press pricing, and ongoing deposit rate pressure or attrition can influence funding costs and profitability even as optimization efforts progress.
The long-term setup rests on execution. Management expects NIM expansion through 2026, and external models point to multi-year earnings per share growth through 2026-2027 tied to synergy realization and balance sheet mix shifts.
The counterweight is near-term noise. Integration and amortization costs, one-time purchase accounting effects, and competitive deposit pricing pressure can cloud quarterly comparisons even if underlying momentum is improving.
COLB carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the past year, shares of Columbia Banking have gained 34.3% compared with the industry’s rise of 31.3%.
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