Raymond James has revised its forecast for Pacific Premier Bancorp (PPBI), adjusting the firm's price target from $28 to $25. Despite the lower target, the financial services company maintains an Outperform rating for the stock.
The adjustment comes in light of Pacific Premier's recent announcement of its sale to Columbia Banking System (COLB, Financial). This strategic move is being viewed as highly beneficial for Pacific Premier's shareholders, with the potential to realize significant gains much quicker than if the company had remained independent. According to Raymond James, the transaction is poised to deliver considerable immediate value that otherwise could have taken years to materialize.
Overall, Raymond James remains optimistic about the deal, considering it a positive development that enhances the risk-reward outlook for Pacific Premier shares. The firm believes that this merger represents a strategic opportunity that aligns well with long-term investor interests.
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 $29.82 with a high estimate of $35.00 and a low estimate of $26.00. The average target implies an upside of 26.78% 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.
COLB Key Business Developments
Release Date: April 23, 2025
- Net Customer Deposit Growth: $440 million for the quarter.
- Loan Origination Volume Increase: Up 17% from the first quarter of 2024.
- First Quarter EPS: $0.41 per share.
- Operating EPS: $0.67 per share.
- Operating Return on Tangible Equity: 15%.
- Operating PPNR: $212 million.
- Net Interest Margin: 3.60%, a contraction of 4 basis points.
- Provision for Credit Loss: $27 million for the quarter.
- Allowance for Credit Losses: 1.17% of total loans, or 1.32% including the remaining credit discount.
- Non-Interest Income: $66 million for the quarter.
- Operating Non-Interest Income: $56.9 million for Q1.
- Total GAAP Expense: $340 million for the quarter.
- Operating Expenses: $270 million.
- Expected Operating Expense Range for 2025: $1 billion to $1.01 billion.
- Tax Rate Expectation: Mid 25% range for the remainder of 2025.
- EPS Accretion from Pacific Premier Acquisition: 14% in 2026 and 15% in 2027.
- Tangible Book Value Dilution: 7.6% with a three-year earn-back period.
- Capital Ratios at Quarter End: CET1 at 10.6% and Total Capital at 12.8%.
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 solid first quarter with $440 million in net customer deposit growth, driven by successful retail and small business deposit campaigns.
- Loan origination volume increased by 17% compared to the first quarter of 2024, indicating strong momentum in new business acquisition.
- The acquisition of Pacific Premier Bancorp is expected to accelerate Columbia's strategic goals in Southern California by a decade, enhancing its market presence significantly.
- The transaction is projected to result in double-digit EPS accretion and a short earn-back period, indicating strong financial benefits.
- Columbia's disciplined cost culture and strategic reinvestment in its franchise, including the opening of a new retail branch in Colorado, support long-term growth.
Negative Points
- Net interest margin contracted by 4 basis points to 3.60% in the first quarter, reflecting challenges in maintaining profitability amid customer cash usage.
- Total loan balances remained relatively flat due to higher prepayment and payoff activity, which muted period-end totals.
- Non-recurring items, including a $55 million legal settlement and $15 million in severance expenses, impacted first-quarter expenses.
- The acquisition of Pacific Premier Bancorp involves a significant $146 million in one-time after-tax deal-related costs.
- The transaction will result in a 7.6% tangible book value dilution with a three-year earn-back period, indicating a temporary impact on shareholder value.
