Columbia Banking System's Q2 2025 Earnings Report Highlights Accelerated Pacific Premier Integration and 15% Operating Return on Equity Amid Deepening Tech Investments

Columbia Banking System reported Q2 2025 operating results up 14% YoY, driven by a focus on profitability, balance sheet optimization, and technology investments. The bank plans to accelerate the integration of Pacific Premier Bancorp and aims for a 15% operating return on equity. CEO Clint E. Stein emphasized the importance of these efforts in improving the company's performance.

Columbia Banking System, Inc. (CBC) reported robust financial results for the second quarter of 2025, with operating income up 14% year-over-year (YoY), driven by a strategic focus on profitability, balance sheet optimization, and technology investments. The bank's net interest margin (NIM) increased by 15 basis points to 3.75%, while non-interest income decreased by $2 million, primarily due to changes in fair value adjustments and mortgage servicing rights hedging activity. Despite these fluctuations, non-interest income excluding these items increased by $8 million, driven by higher core fee-generating businesses such as commercial credit cards and wealth management services. Non-interest expense decreased by $62 million, primarily due to a legal settlement and severance expense in the first quarter that did not repeat in the second quarter.

The bank's CEO, Clint Stein, emphasized the importance of these efforts in improving the company's performance. "Our second quarter results demonstrate our focus on profitability and balance sheet optimization," said Stein. "Commercial loan growth outpaced runoff in transactional portfolios while the net interest margin benefited from loan repricing, controlled deposit pricing, and a rebound in securities yields. Continued expense discipline further supported our strong performance, even as we continue to reinvest in our growing franchise—opening three new branches and planning for the closing of our Pacific Premier acquisition."

CBC also reported a significant increase in net interest income, which was $446 million for the second quarter of 2025, up $21 million from the prior quarter. The bank's net interest margin benefited from an increase in the yield on taxable investment securities to 4.22% for the second quarter of 2025, up from 3.72% for the first quarter of 2025. The average yield on the loan portfolio increased by 8 basis points between periods to 6.00% for the second quarter of 2025, due primarily to higher yields on commercial and construction loans and a $2 million interest recovery related to a nonperforming loan that repaid in full. The cost of interest-bearing deposits was unchanged between periods at 2.52% for the second quarter of 2025, while the cost of interest-bearing liabilities decreased 2 basis points from the prior quarter to 2.78% for the second quarter of 2025.

The bank's total consolidated assets were $51.9 billion as of June 30, 2025, up from $51.5 billion as of March 31, 2025. Cash and cash equivalents were $1.9 billion as of June 30, 2025, down from $2.1 billion as of March 31, 2025. Including secured off-balance sheet lines of credit, total available liquidity was $18.6 billion as of June 30, 2025, representing 36% of total assets, 44% of total deposits, and 132% of uninsured deposits. Available-for-sale securities, which are held on balance sheet at fair value, were $8.7 billion as of June 30, 2025, an increase of $424 million relative to March 31, 2025, as purchases and an increase in the fair value of the portfolio offset paydowns.

CBC continues to plan for its acquisition of Pacific Premier Bancorp, Inc. (PPB), which was announced on April 23, 2025. The shareholders of both companies overwhelmingly approved the combination at their respective special meetings, which were held July 21, 2025. The bank aims to accelerate the integration of PPB and achieve a 15% operating return on equity.

References:
[1] https://www.prnewswire.com/news-releases/columbia-banking-system-inc-reports-second-quarter-2025-results-302513196.html