Columbia Banking System (COLB, Financial) and Pacific Premier Bancorp (PPBI) have announced a definitive agreement for Columbia to acquire Pacific Premier in an all-stock transaction. This merger will create a banking entity with approximately $70 billion in assets, positioning it as a leader in the Western U.S. banking markets.
Under the agreement's terms, Pacific Premier shareholders are set to receive 0.9150 of a Columbia common share for each share they own in Pacific Premier. The total value of the transaction stands at around $2 billion, equating to approximately $20.83 per Pacific Premier share, based on Columbia's closing price of $22.77 as of April 22, 2025. Upon finalization, Pacific Premier stockholders will hold about 30% of Columbia’s common stock.
The merger has been unanimously approved by the Boards of Directors from both companies. In terms of governance, three Pacific Premier directors, including Steve Gardner and two others to be decided, will join Columbia's board post-merger.
This strategic move, as expressed by Columbia's CEO Clint Stein, is intended to solidify Columbia's standing in the Western banking sector, especially in Southern California. The merger aims to enhance service offerings and elevate performance for stakeholders and communities alike. Additionally, Umpqua Bank, a subsidiary under Columbia’s brand, plans to rebrand as Columbia Bank later this year to streamline its brand presence.
The completion of this transaction is subject to customary conditions, including regulatory approvals and shareholder consent from both companies. The deal is expected to close in the latter half of 2025.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 11 analysts, the average target price for Columbia Banking System Inc (COLB, Financial) is $30.55 with a high estimate of $35.00 and a low estimate of $26.00. The average target implies an upside of 29.87% from the current price of $23.52. More detailed estimate data can be found on the Columbia Banking System Inc (COLB) Forecast page.
Based on the consensus recommendation from 12 brokerage firms, Columbia Banking System Inc's (COLB, Financial) average brokerage recommendation is currently 2.6, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Key Business Developments
Release Date: January 23, 2025
- EPS: Reported fourth quarter EPS of $0.68 and operating EPS of $0.71.
- Operating Return on Average Tangible Equity: 16%.
- Operating Pre-Provision Net Revenue (PPNR): $229 million.
- Net Income Increase: 29% increase on an operating basis compared to Q4 2023.
- Net Interest Margin (NIM): Increased eight basis points to 3.64% for the quarter.
- Loan Growth: Total loans increased by $178 million, with commercial loans up $228 million or 9% annualized.
- Deposits: Total deposits increased by $200 million.
- Borrowings: Declined by $550 million.
- Provision for Credit Loss: $28 million for the quarter.
- Noninterest Income: $50 million for the quarter.
- Operating Expenses: $263 million for the quarter.
- Risk-Based Capital Ratios: CET1 at 10.5% and total risk-based capital at 12.6%.
- Tangible Common Equity (TCE) Ratio: 7.2% at quarter end.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Columbia Banking System Inc (COLB, Financial) reported a 29% increase in net income on an operating basis in the fourth quarter compared to the same period in 2023.
- The company achieved an 8% increase in pre-provision net revenue, showcasing effective financial management.
- Columbia Banking System Inc (COLB) has optimized its expense base, reducing core expenses by 8% from the previous year.
- The bank's net interest margin improved by 12 basis points since its low point in the first quarter, reflecting proactive pricing actions.
- The company plans to open five new branches in 2025, indicating growth and reinvestment in its franchise.
Negative Points
- Net interest margin decreased by 14 basis points compared to the same quarter last year, indicating some pressure on interest income.
- The company expects a seasonal decline in customer deposits in the first quarter of 2025, which may increase reliance on wholesale funding.
- Operating expenses are projected to increase due to inflationary pressures and reinvestment plans, with a range of $1 billion to $1.01 billion for 2025.
- The allowance for credit losses remains a concern, with a provision of $28 million for the quarter.
- The company faces challenges in maintaining deposit costs, with ongoing efforts required to manage and reduce these costs effectively.
