Core Insights - Columbia Banking System (COLB) is positioning itself for growth through its 2026 plan, focusing on margin, cost, capital, and fee income following the completion of the Pacific Premier deal in August [1] Current Position of Columbia Banking System - COLB's network now includes approximately 350 branches across eight Western states, with total deposits of $55.8 billion, loans and leases of $48.5 billion, and total assets of $67.5 billion as of September 30, 2025 [2] Margin and Interest Income - COLB's net interest margin (NIM) improved to 3.84% in Q3 2025 from 3.56% a year earlier, with expectations of NIM reaching approximately 3.90% in Q4 2025 and Q1 2026 [3] - A shift in deposit mix towards core customers and proactive repricing is expected to stabilize core net interest income (NII) into early 2026 [4] Fee Income Growth - Fee income from treasury management, commercial cards, and wealth/financial services has grown, with these services nearing 30% of non-interest income as of September 30, 2025 [5] - New platforms from the Pacific Premier acquisition are anticipated to enhance fee income through deeper customer relationships [5] Cost Management - Management aims for $127 million in annualized cost savings from the merger, with $48 million already realized by September 30, 2025 [6] - Operating expenses are projected to be between $330 million and $340 million per quarter for several quarters, with a full system conversion planned for Q1 2026 [6] Capital Position - Columbia Banking System's capital ratios improved, with a Common Equity Tier 1 (CET1) ratio of 11.6% and a total risk-based ratio of 13.4% as of Q3 2025 [7] - The board has authorized up to $700 million in share repurchases through November [7] Future Outlook for 2026 - Management anticipates a high-teens operating Return on Tangible Common Equity (ROTCE) framework for 2026, with earnings per share expected to cluster in the low $3s [10] - Execution will depend on successful integration and a shift in loan focus towards relationship-based lending [11] Integration and Cost Dynamics - Integration and restructuring costs may lead to volatility in near-term expenses until synergies are fully realized [12] - The company's office exposure was 8% of loans as of September 30, 2025, with non-performing assets increasing to nearly $200 million [12] Competitive Landscape - Competitive pricing pressures from larger banks and digital competitors could impact COLB's deposit costs, although management is actively working to defend core funding [13]

Financial Data and Key Metrics Changes - The company reported net income of $23.8 million or $1.46 per diluted share for Q3 2025, compared to $19.6 million or $1.22 per diluted share for Q3 2024, reflecting a strong performance [8] - Net income for the first nine months of 2025 totaled $65.9 million or $4.06 per diluted share, up from $60 million or $3.72 per diluted share in the prior year [8] - The return on average assets was 1.5% and return on average equity was 14.7% for Q3 2025, with a 20% quarter-over-quarter earnings per share growth [7][8] Business Line Data and Key Metrics Changes - Annualized deposit growth was 9% for Q3 2025, with a compounded annual growth rate of 11.8% over the last six year-end periods [5] - Loan growth contracted an annualized 7% in Q3 2025, attributed to anticipated paydowns, but commitments to make loans totaled $307 million, an all-time high [5][6] - Mortgage banking income grew by 12% during the first nine months of 2025 compared to the same period in 2024 [6] Market Data and Key Metrics Changes - Average loans totaled $4.6 billion in Q3 2025, an increase of $201 million or over 4% from Q3 2024 [9] - Average deposits increased to $4.83 billion in Q3 2025, up $489 million or over 11% from the prior year [11] - The loan-to-deposit ratio improved to 96% from 102% a year earlier, indicating better liquidity management [4] Company Strategy and Development Direction - The company is focused on maintaining a strong and stable net interest margin, which stood at 3.5% despite a decline in the SOFR rate [3][4] - The planned acquisition of Eastern Michigan Financial Corporation is expected to positively impact various financial metrics, including earnings accretion and tangible book value [7] - The company aims to manage its balance sheet to minimize the impact of changing interest rate environments on its net interest margin [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating challenges faced by financial institutions, highlighting strong asset quality and a robust pipeline for loan growth [22] - The company anticipates loan growth in the range of 5% to 7% annualized for Q4 2025, with expectations for continued strong performance in non-interest income [21][41] - Management noted that the effective tax rate for Q3 2025 was 13%, with projections for a similar rate in the future, depending on the acquisition of transferable energy tax credits [19][51] Other Important Information - The company recorded a provision expense of $0.2 million for Q3 2025, reflecting strong credit quality and net recoveries [16] - Non-interest expenses increased by $2.4 million in Q3 2025, primarily due to higher salary and benefit costs [18] - The total risk-based capital ratio was 14.3% as of September 30, 2025, indicating a well-capitalized position [20] Q&A Session Summary Question: Inquiry about credit quality and normalized charge-off ratio - Management noted a conservative approach to charge-offs and typically budgets between 5% and 10% in net charge-offs [26][27] Question: Discussion on net interest margin and future expectations - Management indicated that the acquisition will benefit the net interest margin, despite potential headwinds from rate cuts [28][30] Question: Clarification on loan paydowns and growth guidance - Management explained that paydowns recognized in Q3 were anticipated, and they expect continued mid-single-digit loan growth [39][41] Question: Inquiry about expense expectations and acquisition costs - Management confirmed that the guidance for Q4 includes about $1 million in acquisition costs, with no income statement impact from Eastern until the merger is finalized [44][70] Question: Discussion on fee income growth and expectations - Management highlighted strong growth in the commercial card program, attributing it to increased volume and customer engagement [71]

Financial Data and Key Metrics Changes - First Commonwealth reported core earnings per share of $0.32 for Q1 2025, with a return on assets of 1.14%, down from 1.23% in Q4 2024 due to rising expenses and falling fee income [6][10] - Loans grew at an annualized rate of 4.4%, totaling $99 million, with commercial loans accounting for $63 million or 64% of the increase [6][7] - Net interest margin (NIM) increased by eight basis points to 3.62%, while deposit costs fell to 1.99% [7][8] - The efficiency ratio rose to 59.08%, up from 56.07% in the previous quarter, with total expenses increasing by $2.1 million to $71.1 million [10][21] Business Line Data and Key Metrics Changes - Equipment finance and indirect auto lending contributed significantly to loan growth, with strong application volume continuing into April [6][7] - Fee income decreased by $1.5 million in Q1 2025, attributed to a $3.5 million hit from the Durbin Amendment and a decline in SBA gain on sale income [10][20] - The company anticipates fee income to improve in Q2 2025, projecting $23 million to $24 million, with a seasonal decline expected in Q4 [20] Market Data and Key Metrics Changes - The company noted that consumer financial health remains stable, comprising about 68% to 70% of U.S. GDP and 40% of its lending business [9] - The impact of tariffs and inflation on clients has been monitored, with many businesses adapting their supply chains effectively [12][13] Company Strategy and Development Direction - The company is focused on improving liquidity, with a loan-to-deposit ratio decreasing from 97% to 92% over the past two years [8] - The acquisition of Centre Bank is expected to enhance efficiency and margin, with the integration of new talent seen as a strategic fit for growth [11][128] - The company aims to increase fee income as a percentage of overall revenue, leveraging its regional model and local relationships [137] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about loan growth despite potential headwinds from tariffs, with strong pipelines in various markets [14][9] - The company is cautious about the economic environment, particularly regarding inflation and its potential impact on consumers and businesses [10][12] - Future NIM guidance anticipates expansion due to macro swaps and potential Fed rate cuts, with expectations of reaching the high 370s by year-end [18][42] Other Important Information - The Board of Directors approved a dividend increase of $0.01 per share, maintaining a dividend yield of approximately 3.54% [12] - The company has $6.7 million remaining under its buyback program, with no buyback activity in Q1 2025 due to the timing of the Centre Bank acquisition [22][49] Q&A Session Summary Question: Loan growth guidance and equipment finance portfolio momentum - Management noted healthy application volume in equipment finance and attributed growth to increased demand amid tariff anticipation [26][27] Question: Borrower sentiment and commercial real estate activity - Management indicated improved activity in commercial real estate and a strong pipeline, with a focus on growing the commercial and industrial book [28][29] Question: Deposit growth and rates - Management acknowledged that deposit growth was driven by savings, with a strategy to maintain liquidity despite lower rates [34][35] Question: NIM guidance and deposit costs - Management clarified that NIM guidance assumes stable deposit costs, with potential for upside if deposit rates can be lowered further [41][42] Question: SBA gain on sale outlook - Management expects SBA gain on sale income to improve as the year progresses, with a healthy pipeline of deals [75][78] Question: Center Bank acquisition impact - Management expressed excitement about the talent acquired from Centre Bank and its potential to enhance growth in the Cincinnati market [128][129]