Financial Performance Highlights - The company's reported net income for the second quarter of 2025 was $152 million, with an operating net income of $160 million[42] - Pre-Provision Net Revenue (PPNR) for Q2 2025 was $233 million (reported) and $242 million (operating)[42] - The company's Return on Assets (ROA) was 1.19% (reported) and 1.25% (operating) for Q2 2025[42] - The Return on Tangible Common Equity was 16.03% (reported) and 16.85% (operating) for Q2 2025[42] - Net interest margin increased 15 basis points from the prior quarter to 3.75% for Q2 2025[88] Balance Sheet and Loan Portfolio - Total assets were $52 billion, loans were $38 billion, and deposits were $42 billion as of June 30, 2025[9] - Deposits were $42 billion as of June 30, 2025, with an average customer account balance of $36 thousand[46] - The total available-for-sale (AFS) securities portfolio had a book yield of 3.70% and an effective duration of 5.0 as of June 30, 2025[51] - Loans secured by office properties represented 8% of the total loan portfolio as of June 30, 2025[74] Acquisition of Pacific Premier Bancorp - The acquisition of Pacific Premier Bancorp is expected to close as early as September 1, 2025, creating a company with ~$70 billion in assets[31] - Pacific Premier stockholders will receive 0.9150 of a Columbia share for each Pacific Premier share in a 100% common stock transaction[31] - The acquisition is expected to be 14% accretive to 2026E EPS[31]

Executive Summary & Highlights Columbia Banking System achieved strong Q2 2025 profitability, improved net interest margin, and stable credit quality, while advancing strategic growth initiatives [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Clint Stein highlighted Q2 2025 results reflecting a focus on profitability and balance sheet optimization, driven by commercial loan growth, improved net interest margin, and expense discipline, alongside acquisition and branch expansion progress - The second quarter results demonstrate a focus on **profitability** and **balance sheet optimization**[1](index=1&type=chunk) - **Commercial loan growth** outpaced runoff in transactional portfolios, and **net interest margin** benefited from loan repricing, controlled deposit pricing, and a rebound in securities yields[1](index=1&type=chunk) - Continued **expense discipline** supported strong performance, even with reinvestment in the growing franchise and planning for the Pacific Premier acquisition[1](index=1&type=chunk) - **Customer deposits declined** due to normal seasonal activity and increased cash usage, but the 'Business Bank of Choice' strategy continues to attract new relationships[1](index=1&type=chunk) [Q2 2025 Highlights](index=2&type=section&id=2Q25%20Highlights) Q2 2025 saw a significant increase in net interest income and net interest margin, a decrease in non-interest expense due to non-recurring items, stable credit quality metrics, and strong capital ratios, alongside branch expansion and new deposit attraction - **Net interest income increased by $21 million** from the prior quarter, driven by higher interest income on loans and investment securities and relatively stable funding costs[3](index=3&type=chunk) - **Net interest margin (NIM) was 3.75%**, up **15 basis points** from the prior quarter, as asset yields increased and the cost of interest-bearing liabilities decreased by 2 basis points[3](index=3&type=chunk) - **Non-interest expense decreased by $62 million**, primarily due to a legal settlement and severance expense in the first quarter that did not repeat[3](index=3&type=chunk) - **Net charge-offs were 0.31%** of average loans and leases (annualized), compared to 0.32% in the prior quarter, indicating **stable credit quality**[3](index=3&type=chunk) - Estimated **total risk-based capital ratio was 13.0%** and estimated **common equity tier 1 risk-based capital ratio was 10.8%**[3](index=3&type=chunk) - A small business and retail campaign brought over **$450 million in new deposits** and generated new SBA lending relationships[3](index=3&type=chunk) - Opened **two new branches in Arizona** and **one in Eastern Oregon**, strengthening support for bankers and customers[3](index=3&type=chunk) [Q2 2025 Key Financial Data Summary](index=2&type=section&id=2Q25%20Key%20Financial%20Data%20Summary) Columbia Banking System reported strong financial performance in Q2 2025, with net income of $152 million and diluted EPS of $0.73, significantly up from the prior quarter, with key metrics like Return on Average Assets and Net Interest Margin also showing substantial improvement | Metric | 2Q25 | 1Q25 | 2Q24 | | :--------------------------------- | :----- | :----- | :----- | | Net income ($ thousands) | $152,423 | $86,609 | $120,144 | | Earnings per common share - diluted | $0.73 | $0.41 | $0.57 | | Operating earnings per common share - diluted | $0.76 | $0.67 | $0.67 | | Net interest income ($ thousands) | $446,446 | $424,995 | $427,449 | | Net interest margin | 3.75% | 3.60% | 3.56% | | Return on average assets | 1.19% | 0.68% | 0.93% | | Return on average common equity | 11.56% | 6.73% | 9.85% | | Efficiency ratio | 54.29% | 69.06% | 59.02% | | Total assets ($ billions) | $51.9 | $51.5 | $52.0 | | Loans and leases ($ billions) | $37.6 | $37.6 | $37.7 | | Deposits ($ billions) | $41.7 | $42.2 | $41.5 | | Book value per common share | $25.41 | $24.93 | $23.76 | | Tangible book value per common share | $18.47 | $17.86 | $16.26 | Organizational Update Columbia Banking System is progressing with the Pacific Premier acquisition and expanding its branch network to strengthen customer support and attract new relationships [Pacific Premier Acquisition](index=3&type=section&id=Pacific%20Premier%20Acquisition) Columbia Banking System is on track to acquire Pacific Premier Bancorp, Inc., with shareholder approval secured and an anticipated closing date as soon as September 1, 2025, pending regulatory approvals, while integration efforts are progressing smoothly - Shareholders of both Columbia Banking System and Pacific Premier Bancorp, Inc. **overwhelmingly approved the combination** at their respective special meetings on July 21, 2025[6](index=6&type=chunk) - The transaction is anticipated to **close as soon as September 1, 2025**, pending regulatory approvals and satisfaction of other customary closing conditions[6](index=6&type=chunk) - **Integration efforts are progressing as planned**, driven by comprehensive preparation of cross-company teams led by Columbia's Integration Management Office[6](index=6&type=chunk) [Branch Network Expansion](index=3&type=section&id=Branch%20Network%20Expansion) Columbia expanded its physical footprint by opening two new branches in Arizona (Phoenix and Mesa) and one in Eastern Oregon, aiming to strengthen support for existing customers and attract new relationships in both metropolitan and underserved rural communities - Columbia expanded its Arizona footprint with the opening of its **second branch in Phoenix** and its **first in Mesa**, bringing the total number of branches in the state to four[7](index=7&type=chunk) - A branch was also opened in **Eastern Oregon**, restoring essential banking services to a bank-less rural community[7](index=7&type=chunk) - The branch strategy encompasses thriving metropolitan areas and core community markets, supporting bankers and strengthening opportunities to bring new relationships[7](index=7&type=chunk) Financial Performance Analysis (Narrative) Q2 2025 financial performance was driven by increased net interest income and margin, a slight non-interest income decrease, and a significant non-interest expense reduction [Net Interest Income and Margin](index=3&type=section&id=Net%20Interest%20Income%20and%20Margin) Net interest income increased by $21 million quarter-over-quarter to $446 million, driven by higher interest income from loans and investment securities and stable funding costs, with net interest margin improving by 15 basis points to 3.75% due to increased asset yields and a slight decrease in interest-bearing liability costs - **Net interest income was $446 million** for Q2 2025, up **$21 million** from the prior quarter[8](index=8&type=chunk) - The increase reflects higher interest income earned on loans and investment securities and relatively stable funding costs[8](index=8&type=chunk) - **Net interest margin was 3.75%** for Q2 2025, up **15 basis points** from 3.60% in Q1 2025[9](index=9&type=chunk) - The yield on taxable investment securities increased to **4.22%** (from 3.72%), and the average yield on the loan portfolio increased by **8 basis points to 6.00%**[9](index=9&type=chunk) - The cost of interest-bearing deposits was unchanged at **2.52%**, and the cost of interest-bearing liabilities decreased **2 basis points to 2.78%**[9](index=9&type=chunk) [Non-Interest Income](index=3&type=section&id=Non-Interest%20Income) Non-interest income decreased by $2 million to $64 million in Q2 2025, primarily due to fair value adjustments and mortgage servicing rights hedging activity, but excluding these volatile items, non-interest income increased by $8 million, driven by higher card-based fees and growth in other core fee-generating businesses - **Non-interest income was $64 million** for Q2 2025, down **$2 million** from the prior quarter[10](index=10&type=chunk) - The decrease was driven by quarterly changes in fair value adjustments and mortgage servicing rights (MSR) hedging activity, resulting in a **net fair value loss of $1 million** in Q2 compared to a $9 million gain in Q1[10](index=10&type=chunk) - Excluding these items, non-interest income was up **$8 million**, primarily due to higher card-based fee income and growth in other core fee-generating businesses like swap-related income, financial services, trust revenue, and treasury management fees[10](index=10&type=chunk) [Non-Interest Expense](index=3&type=section&id=Non-Interest%20Expense) Non-interest expense significantly decreased by $62 million to $278 million in Q2 2025, primarily because a $55 million legal settlement accrual and $15 million severance expense from Q1 did not recur, with operating non-interest expense seeing a slight decrease of $1 million when excluding these and other non-recurring items - **Non-interest expense was $278 million** for Q2 2025, down **$62 million** from the prior quarter[11](index=11&type=chunk) - The decrease was primarily due to a **$55 million accrual related to a legal settlement** and **$15 million in severance expense** in the first quarter, which did not repeat[11](index=11&type=chunk) - Excluding the legal settlement, exit and disposal costs, and merger and restructuring expense, non-interest expense was **$269 million**, down **$1 million** from the prior quarter[11](index=11&type=chunk) Balance Sheet Analysis (Narrative) Total consolidated assets increased to $51.9 billion, with stable loans, decreased deposits, and increased borrowings, while available liquidity remained strong [Total Assets and Liquidity](index=3&type=section&id=Total%20Assets%20and%20Liquidity) Total consolidated assets increased to $51.9 billion as of June 30, 2025, from $51.5 billion in

Core Viewpoint - Columbia Banking System, Inc. reported strong second-quarter results for 2025, highlighting profitability, balance sheet optimization, and strategic growth initiatives, including the acquisition of Pacific Premier Bancorp, which is expected to close by September 1, 2025, pending regulatory approvals [2][7]. Financial Performance - Net interest income increased by $21 million to $446 million compared to the prior quarter, driven by higher interest income from loans and investment securities [3][9]. - The net interest margin rose to 3.75%, up 15 basis points from the previous quarter, benefiting from increased yields on investment securities and loans [3][10]. - Non-interest income decreased by $2 million to $64 million, but excluding fair value impacts, it increased by $8 million due to growth in core fee-generating businesses [3][11]. - Non-interest expense decreased significantly by $62 million to $278 million, primarily due to the absence of legal settlement and severance expenses from the previous quarter [3][12]. - Net income for the second quarter was $152 million, a substantial increase from $86.6 million in the prior quarter, resulting in earnings per share of $0.73, up from $0.41 [4][27]. Balance Sheet Highlights - Total assets increased to $51.9 billion from $51.5 billion in the prior quarter, with total deposits at $41.7 billion, down from $42.2 billion [6][13][16]. - Loans and leases remained stable at $37.6 billion, reflecting a 2% annualized growth in commercial loans, offset by a contraction in multifamily loans [6][14]. - The book value per common share rose to $25.41, and tangible book value per common share increased to $18.47 [6][19]. Credit Quality - The allowance for credit losses was $439 million, unchanged from the previous quarter, with net charge-offs at 0.31% of average loans and leases [17][18]. - Non-performing assets remained stable at 0.35% of total assets, indicating consistent credit quality [3][18]. Capital and Dividends - The estimated total risk-based capital ratio was 13.0%, and the common equity tier 1 risk-based capital ratio was 10.8%, both above regulatory minimums [5][20]. - A quarterly cash dividend of $0.36 per common share was declared and paid, maintaining consistent shareholder returns [5][6]. Strategic Initiatives - The company opened three new branches, expanding its footprint in Arizona and Eastern Oregon, enhancing service delivery in underserved areas [2][8]. - The acquisition of Pacific Premier Bancorp is progressing, with integration efforts underway to ensure a smooth transition post-approval [7].

Core Viewpoint - Columbia Banking System, Inc. has received all necessary shareholder approvals for its acquisition of Pacific Premier Bancorp, Inc., indicating strong support for the transaction and a positive outlook for market leadership and value creation [1][2]. Group 1: Acquisition Details - The acquisition is expected to enhance market leadership across the Western United States and create significant value for customers, communities, and shareholders [2]. - Both companies are preparing for a swift closing of the transaction following final regulatory approvals, which are anticipated to be completed later in 2025 [2][3]. Group 2: Company Profiles - Columbia Banking System, Inc. is headquartered in Tacoma, Washington, with over $50 billion in assets, and operates as Columbia Bank, providing a full suite of banking services across multiple states [4]. - Pacific Premier Bancorp, Inc. is based in California and has approximately $18 billion in total assets, focusing on serving small to middle-market businesses with a variety of banking products and services [5].

The market expects Columbia Banking (COLB) to deliver a year-over-year decline in earnings on higher revenues when it reports results for the quarter ended June 2025. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be releas ...

Group 1 - The article discusses a class action investigation by Monteverde & Associates PC regarding the proposed merger between Columbia Banking System, Inc. and Pacific Premier Bancorp, Inc. [1] - Under the merger agreement, Pacific Premier stockholders will receive 0.9150 shares of Columbia common stock for each share of Pacific Premier they own [1]. - The shareholder vote for the merger is scheduled for July 21, 2025 [1]. Group 2 - Monteverde & Associates PC is recognized as a Top 50 Firm in the 2024 ISS Securities Class Action Services Report and has recovered millions for shareholders [1]. - The firm operates from the Empire State Building in New York City and has a successful track record in class action securities litigation [2]. - The firm encourages shareholders with concerns to contact them for additional information free of charge [3].

Core Points - Columbia Banking System, Inc. will release its second quarter 2025 financial results on July 24, 2025, after market close [1] - A conference call for investors and analysts will take place at 2:00 p.m. PT (5:00 p.m. ET) on the same day, including a live Q&A session [1] - Columbia is the parent company of Umpqua Bank, which is the largest bank headquartered in the Northwest and has over $50 billion in assets [2] Company Overview - Columbia Banking System is headquartered in Tacoma, Washington, and operates Umpqua Bank, a regional bank in the western U.S. [2] - Umpqua Bank offers a full suite of services including retail and commercial banking, SBA lending, institutional and corporate banking, and equipment leasing [2] - The bank also provides investment and wealth management services through Columbia Wealth Advisors and Columbia Trust Company [2]

Core Viewpoint - Columbia Banking System, Inc. (NASDAQ: COLB) is initiated with a Strong Buy rating and a price target of $40, highlighting its position as a leading regional bank serving small and medium businesses, professionals, and individuals in the Pacific region [1] Group 1: Company Overview - Columbia Banking System, Inc. is recognized for providing comprehensive banking services tailored to small and medium enterprises, professionals, and individual clients [1] - The bank operates primarily in the Pacific region, indicating a focused geographical market strategy [1] Group 2: Research Methodology - Moretus Research employs a structured and repeatable framework to identify companies with sustainable business models and mispriced cash flow potential [1] - The research emphasizes rigorous fundamental analysis combined with a judgment-driven process, avoiding noise and overly complex forecasting [1] - Valuation methods are based on sector-relevant multiples that are tailored to each company's business model and capital structure, ensuring comparability and relevance [1] Group 3: Investment Philosophy - Moretus Research focuses on underappreciated companies experiencing structural changes or temporary dislocations, where careful analysis can yield asymmetric returns [1] - The research approach reflects a commitment to capital discipline and long-term compounding, aiming to elevate the standards of independent investment research [1]

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) The unaudited financial statements for the quarter ended March 31, 2025, show total assets of **$51.5 billion**, a slight decrease from year-end 2024, with net income of **$86.6 million** primarily impacted by a legal settlement expense, and a subsequent merger agreement announced [Condensed Consolidated Financial Statements](index=4&type=section&id=Condensed%20Consolidated%20Financial%20Statements) The company's total assets stood at **$51.5 billion** as of March 31, 2025, a slight decrease from **$51.6 billion** at the end of 2024, with Q1 2025 net income at **$86.6 million** ($0.41 per diluted share) down from **$124.1 million** ($0.59 per diluted share) in Q1 2024, primarily due to higher non-interest expenses including a significant legal settlement, and cash flow from operations at **$122.0 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total cash and cash equivalents | $2,072,706 | $1,878,255 | | Net loans and leases | $37,194,606 | $37,256,272 | | Total assets | $51,519,266 | $51,576,397 | | Total deposits | $42,217,694 | $41,720,732 | | Total liabilities | $46,281,457 | $46,458,173 | | Total shareholders' equity | $5,237,809 | $5,118,224 | Condensed Consolidated Income Statement Highlights (in thousands, except per share) | Account | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net interest income | $424,995 | $423,362 | | Provision for credit losses | $27,403 | $17,136 | | Total non-interest income | $66,377 | $50,357 | | Total non-interest expense | $340,122 | $287,516 | | Net income | $86,609 | $124,080 | | Diluted EPS | $0.41 | $0.59 | Condensed Consolidated Cash Flow Highlights (in thousands) | Account | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $122,012 | $185,508 | | Net cash provided by (used in) investing activities | $250,245 | $(77,675) | | Net cash used in financing activities | $(177,806) | $(69,250) | | Net increase in cash and cash equivalents | $194,451 | $38,583 | [Note 2 – Debt Securities](index=11&type=section&id=Note%202%20%E2%80%93%20Debt%20Securities) As of March 31, 2025, the company held **$8.23 billion** in available-for-sale (AFS) debt securities at fair value, with mortgage-backed securities comprising the largest portion at **$5.83 billion**, and the portfolio had gross unrealized losses of **$482.4 million** primarily due to interest rate changes, not credit quality deterioration, thus requiring no allowance for credit losses Available for Sale Debt Securities (in thousands) | Security Type | Amortized Cost | Fair Value | | :--- | :--- | :--- | | U.S. Treasury and agencies | $1,426,351 | $1,373,033 | | Obligations of states and political subdivisions | $1,051,171 | $1,020,842 | | Mortgage-backed securities and CMOs | $6,204,692 | $5,834,930 | | **Total AFS securities** | **$8,682,214** | **$8,228,805** | - The company's debt securities had total unrealized losses of **$482.4 million** as of March 31, 2025, which management attributes to changes in interest rates and market spreads, not the credit quality of the issuers[21](index=21&type=chunk)[22](index=22&type=chunk) [Note 4 – Allowance for Credit Losses (ACL)](index=14&type=section&id=Note%204%20%E2%80%93%20Allowance%20for%20Credit%20Losses) The total Allowance for Credit Losses (ACL) was **$438.9 million** at March 31, 2025, a slight decrease from **$440.8 million** at year-end 2024, reflecting updated economic forecasts and model recalibrations, while non-accrual loans increased to **$122.4 million** from **$96.5 million** in the prior quarter, and loan modifications totaled **$54.0 million** in Q1 2025 - The total ACL decreased by **$1.9 million** to **$438.9 million** at March 31, 2025. The change reflects credit migration, updated economic assumptions, and model recalibrations[30](index=30&type=chunk) ACL Activity for Three Months Ended March 31, 2025 (in thousands) | Component | Beginning Balance (Dec 31, 2024) | Provision for Credit Losses | Net Charge-offs | Ending Balance (Mar 31, 2025) | | :--- | :--- | :--- | :--- | :--- | | Allowance for loans and leases | $424,629 | $26,187 | $(29,321) | $421,495 | | Reserve for unfunded commitments | $16,168 | $1,216 | N/A | $17,384 | | **Total ACL** | **$440,797** | **$27,403** | **$(29,321)** | **$438,879** | - Non-accrual loans increased to **$122.4 million** as of March 31, 2025, compared to **$96.5 million** at December 31, 2024[37](index=37&type=chunk)[38](index=38&type=chunk) [Note 7 – Commitments and Contingencies](index=28&type=section&id=Note%207%20%E2%80%93%20Commitments%20and%20Contingencies) The company disclosed significant legal proceedings, including a **$55.0 million** settlement for a class action lawsuit related to a Ponzi scheme, is defending multiple lawsuits consolidated into an MDL related to the MOVEit data breach, and as of March 31, 2025, had **$10.0 billion** in commitments to extend credit, with real estate loans representing **75%** of total loans - A Notice of Settlement was filed on March 27, 2025, for a class action lawsuit, contemplating a settlement payment of **$55.0 million** by the Bank. An accrual for this amount was recorded[67](index=67&type=chunk)[71](index=71&type=chunk) - The company is defending seven lawsuits, now consolidated into a multi-district litigation (MDL), arising from the MOVEit data breach incident reported by a third-party vendor[70](index=70&type=chunk) - Real estate-related loans represent a significant concentration of credit risk, comprising approximately **75%** of the total loan and lease portfolio as of March 31, 2025[75](index=75&type=chunk) [Note 13 – Subsequent Event](index=42&type=section&id=Note%2013%20%E2%80%93%20Subsequent%20Event) On April 23, 2025, Columbia Banking System, Inc. entered into a definitive merger agreement to acquire Pacific Premier Bancorp, Inc. in an all-stock transaction, where Pacific Premier stockholders will receive **0.9150** of a share of Columbia common stock for each Pacific Premier share, subject to shareholder and regulatory approvals - Announced a definitive agreement to acquire Pacific Premier Bancorp, Inc. in an all-stock transaction on April 23, 2025[126](index=126&type=chunk) - The merger will create a combined company with approximately **$70 billion** in assets. The closing is expected in the second half of 2025, pending customary approvals[126](index=126&type=chunk) [Management's Discussion and Analysis (MD&A)](index=43&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights a decrease in quarterly earnings to **$0.41** per diluted share, heavily impacted by a **$55.0 million** legal settlement accrual, with net interest margin stable at **3.60%**, strong liquidity of **$19.0 billion**, capital ratios exceeding 'well-capitalized' minimums, and a normalizing credit environment with increased non-performing assets but a stable ACL at **1.17%** of total loans [Financial Performance](index=45&type=section&id=Financial%20Performance) For Q1 2025, diluted EPS was **$0.41**, a decrease from **$0.68** in Q4 2024 and **$0.59** in Q1 2024, primarily due to a **$55.0 million** legal settlement and **$14.6 million** in severance expenses, while net interest margin (tax-equivalent) was **3.60%**, non-interest income increased to **$66.4 million**, and non-interest expense rose to **$340.1 million** Quarterly Financial Performance Comparison | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Diluted EPS | $0.41 | $0.68 | $0.59 | | Net Interest Margin (tax-equiv.) | 3.60% | 3.64% | 3.52% | | Non-interest Income | $66.4M | $49.7M | $50.4M | | Non-interest Expense | $340.1M | $266.6M | $287.5M | - The primary driver for the decrease in earnings compared to prior periods was a **$55.0 million** accrual for a legal settlement and **$14.6 million** in severance expense[137](index=137&type=chunk) [Financial Condition](index=56&type=section&id=Financial%20Condition) As of March 31, 2025, total assets were **$51.5 billion**, with total loans and leases decreasing slightly to **$37.6 billion** and total deposits growing to **$42.2 billion**, improving the loan-to-deposit ratio to **89%**, while non-performing assets increased to **0.35%** of total assets, and the company maintained a strong capital position with a CET1 ratio of **10.6%** and robust liquidity of **$19.0 billion** - Total loans and leases decreased by **$64.8 million** to **$37.6 billion**, while total deposits increased by **$497.0 million** to **$42.2 billion** from the prior quarter-end[181](index=181&type=chunk)[209](index=209&type=chunk) - Non-performing assets rose to **$178.0 million**, or **0.35%** of total assets, up from **$169.6 million** (**0.33%**) at year-end 2024, reflecting a normalization of the credit environment[140](index=140&type=chunk)[201](index=201&type=chunk) - The company's CET1 capital ratio was **10.6%** and its total risk-based capital ratio was **12.9%**, both exceeding 'well-capitalized' regulatory minimums[146](index=146&type=chunk)[226](index=226&type=chunk) - Total available liquidity was **$19.0 billion**, including **$15.0 billion** in off-balance sheet funding sources from the FHLB and Federal Reserve Discount Window[146](index=146&type=chunk)[218](index=218&type=chunk) [Credit Quality and Allowance for Credit Losses](index=61&type=section&id=Credit%20Quality%20and%20Allowance%20for%20Credit%20Losses) Asset quality showed signs of normalization with non-performing assets increasing to **$178.0 million** (**0.35%** of total assets), while the Allowance for Credit Losses (ACL) remained stable at **$438.9 million**, or **1.17%** of total loans, and the provision for credit losses for the quarter was **$27.4 million**, with net charge-offs of **$29.3 million** largely from the commercial portfolio Asset Quality Ratios | Ratio | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Non-performing assets to total assets | 0.35% | 0.33% | | Non-performing loans to total loans | 0.47% | 0.44% | | ACL to total loans and leases | 1.17% | 1.17% | - The ACL decreased by **$1.9 million** to **$438.9 million**, with changes reflecting credit migration, updated economic forecasts, and model recalibrations[202](index=202&type=chunk) - Net charge-offs for Q1 2025 were **$29.3 million**, or **0.32%** of average loans, an increase from **$25.7 million** (**0.27%**) in Q4 2024[160](index=160&type=chunk) [Market Risk Disclosures](index=69&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's market risk profile has not materially changed, with interest rate simulation modeling showing limited exposure of Net Interest Income (NII) to rate changes (less than **1%** impact in plausible downward rate scenarios), and Economic Value of Equity (EVE) analysis indicating a liability-sensitive profile Net Interest Income Sensitivity (Year 1) | Rate Shock | Impact on NII (Mar 31, 2025) | | :--- | :--- | | Up 200 bps | (0.7)% | | Up 100 bps | (0.3)% | | Down 100 bps | 0.3% | | Down 200 bps | 1.0% | Economic Value of Equity (EVE) Sensitivity | Rate Shock | Impact on EVE (Mar 31, 2025) | | :--- | :--- | | Up 200 bps | (8.2)% | | Up 100 bps | (4.1)% | | Down 100 bps | 3.8% | | Down 200 bps | 6.5% | [Controls and Procedures](index=70&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures are effective as of March 31, 2025[235](index=235&type=chunk) - No material changes to internal control over financial reporting occurred during the first quarter of 2025[236](index=236&type=chunk) [Part II. Other Information](index=71&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Risk Factors](index=71&type=section&id=Item%201A.%20Risk%20Factors) The company introduced new risk factors related to its announced merger with Pacific Premier, including the possibility of non-completion due to regulatory or shareholder approval failures, potential adverse conditions imposed by regulators, challenges and costs of integration, loss of key personnel, business uncertainties during the pending merger, and the threat of shareholder litigation - The merger with Pacific Premier is subject to numerous conditions, including regulatory and shareholder approvals, which may not be fulfilled, potentially leading to the termination of the agreement[239](index=239&type=chunk)[240](index=240&type=chunk) - Regulatory approvals could be delayed or impose conditions that adversely affect the combined company's revenues or expected benefits from the merger[241](index=241&type=chunk)[242](index=242&type=chunk) - Integrating the two companies could be more difficult, costly, or time-consuming than expected, potentially leading to the loss of key employees, customer disruption, and failure to realize anticipated cost savings[245](index=245&type=chunk) [Share Repurchases](index=74&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the first quarter of 2025, the company repurchased **249,856** shares of its common stock at an average price of **$26.98** per share, solely to satisfy withholding tax obligations upon the vesting of restricted stock units, as the company does not currently have a publicly announced share repurchase authorization Common Stock Repurchases (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2025 | 24,206 | $27.01 | | Feb 2025 | 85,713 | $27.41 | | Mar 2025 | 139,937 | $26.71 | | **Total** | **249,856** | **$26.98** | - All shares repurchased during the quarter were to pay withholding taxes on vested restricted stock units and awards; the company does not have a current share repurchase plan[251](index=251&type=chunk)

Financial Data and Key Metrics Changes - The company reported first quarter EPS of $0.41 and operating EPS of $0.67, excluding a legal settlement of $55 million and other expenses [28][32] - The operating return on tangible equity was 15%, with operating pre-provision net revenue (PPNR) at $212 million [28][32] - Net interest margin (NIM) contracted by four basis points to 3.6% due to seasonal deposit flows [30][32] Business Line Data and Key Metrics Changes - Loan origination volume increased by 17% compared to Q1 2024, although total loan balances remained flat due to higher prepayment and payoff activity [9][10] - Noninterest income for the quarter was $66 million, with operating noninterest income at $56.9 million, up $2 million from the previous quarter [31][32] Market Data and Key Metrics Changes - The company achieved $440 million in net customer deposit growth during the first quarter, driven by small business and retail campaigns [9][30] - The overall allowance for credit losses was robust at 1.17% of total loans [30] Company Strategy and Development Direction - The acquisition of Pacific Premier Bancorp will create a $70 billion asset franchise and enhance the company's product offerings [12][16] - The company aims to optimize financial performance and drive long-term shareholder value, with a focus on relationship banking [7][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties and market volatility, emphasizing a conservative and disciplined approach to banking [23][24] - The acquisition is expected to accelerate organic growth opportunities and enhance capital generation capabilities [25][42] Other Important Information - The acquisition will not require additional capital, and the combined organization will operate under the unified brand of Columbia Bank [17][18] - The transaction is expected to result in approximately $127 million in pretax cost savings, with 75% of savings phased in during 2026 [35][39] Q&A Session Summary Question: What experience from the Umpqua deal can be applied to this deal? - Management highlighted their extensive M&A experience, noting that both organizations have completed multiple acquisitions, which provides confidence in handling surprises during integration [47][48] Question: Are there any expenses related to preparing for crossing the $100 billion threshold? - Management indicated that while there is a roadmap for preparing for the $100 billion mark, there will not be a significant ramp-up in expenses [56][58] Question: Where do you see the most opportunity to add value from Pacific Premier's core competencies? - Management expressed excitement about accelerating growth in Southern California and leveraging Pacific Premier's strengths in HOA banking and custodial trust services [68][72] Question: How comfortable is the company with underwriting credit in the current environment? - Management emphasized the strong credit performance of Pacific Premier and the alignment of credit cultures between the two companies, providing confidence in underwriting practices [87][90] Question: What are the financial targets on a pro forma basis? - Management acknowledged that while there may be variability in achieving targets due to market conditions, they remain optimistic about delivering top-tier performance [105][106] Question: Will the acquisition impact potential buybacks? - Management indicated that while capital actions are expected in 2025, the focus will be on closing the deal and assessing capital ratios before considering buybacks [108][110] Question: How long was the courting process for the transaction? - Management noted that discussions began in earnest at the start of the year, with a disciplined approach taken despite market volatility [121][126] Question: What is the methodology behind the credit mark for Pacific Premier? - Management explained that the credit mark was based on extensive due diligence and aligned with the conservative credit culture of both companies [130][132]