Columbia Banking’s 2026 Playbook After the Pacific Premier Buyout

Columbia Banking System (Nasdaq: COLB) is heading into 2026 with a bigger footprint, a clearer integration timeline, and a more “balanced” earnings engine after closing its acquisition of Pacific Premier Bancorp. The deal, which was announced in April 2025 and completed at the end of August 2025, is designed to reshape Columbia’s scale in the Western United States—especially in California—while giving management new levers to defend profitability if interest rates drift lower.

But size alone doesn’t guarantee success. In 2026, investors will likely judge Columbia on a practical checklist: margin stability, cost takeout delivery, capital return, and fee income durability. This rewritten report breaks down what management is trying to accomplish, why the Pacific Premier platform matters, and the risks that could still surprise the market.

1) Where Columbia Banking Stands After the Pacific Premier Integration

A larger Western network with deeper California coverage

After the transaction closed on August 31, 2025, Columbia’s branch network expanded to roughly 350 branches across eight Western states, creating what the company views as a more complete West Coast franchise and stronger statewide coverage in California.

The balance sheet snapshot investors reference

As of September 30, 2025, Columbia reported approximately $55.8 billion in deposits, $48.5 billion in loans and leases, and $67.5 billion in total assets. Those headline figures matter because 2026 expectations—earnings power, capital flexibility, and liquidity posture—often start with this baseline.

Management has emphasized that deposits are more relationship-driven and skew toward categories like non-interest and money market balances. In a world where deposit competition can flare up quickly, a “stickier” deposit base is a strategic advantage—if Columbia can keep customers satisfied during system conversions and branch consolidations.

2) Margin Strategy: Defending Net Interest Margin as Rates Ease

Why NIM is central to the 2026 story

For regional banks, net interest margin (NIM) is often the swing factor that turns a “good” year into a “great” year—or the other way around. Columbia’s NIM improved to 3.84% in 3Q25 from 3.56% a year earlier, supported by lower deposit costs and reduced wholesale funding reliance.

Management’s near-term NIM expectations

Columbia indicated it expects NIM to be around 3.90% in 4Q25 and 1Q26. There is also a temporary boost tied to deposit-premium amortization in 4Q25—estimated at about $12 million in net interest income (roughly 8 basis points to NIM). Investors typically “normalize” for one-time lifts, but they still help short-term reported results.

The practical levers: funding mix, repricing discipline, and less wholesale dependence

Columbia’s 2026 margin plan isn’t built on guessing where rates go. It’s built on operational choices: shifting funding toward core deposits, proactively repricing, and continuing to reduce higher-cost wholesale sources. In simple terms, the bank is trying to keep its “funding engine” efficient enough that modest rate pressure doesn’t drain earnings power early in 2026.

3) Fee Income: Building a More Durable, Less Rate-Sensitive Revenue Mix

Why fee income matters more after a major merger

One of the biggest strategic reasons banks pursue acquisitions is to diversify how they earn money. If a bank can increase non-interest income, it becomes less dependent on interest-rate conditions. Columbia’s playbook calls for broader fee engines—especially through treasury management, commercial card, and wealth/financial services and trust lines.

What’s growing inside non-interest income

Columbia reported that treasury management, commercial card, and wealth/financial services and trust were growing year to date, with card plus financial services and trust nearing 30% of non-interest income as of September 30, 2025. The exact mix is important because recurring service fees can be “steadier” than transaction-heavy revenue that fluctuates with economic sentiment.

Pacific Premier platforms that expand cross-sell potential

Pacific Premier brings specialty capabilities that Columbia believes can deepen relationships. Examples highlighted include custodial trust services, HOA banking, escrow services, and 1031 exchanges. These offerings can function like “relationship glue”—services that keep commercial customers engaged because switching banks becomes more complicated.

Columbia also cited more than 1,200 cross-sell referrals since the deal closed. That is an early activity indicator: it doesn’t automatically translate into revenue, but it suggests teams are actively trying to connect customers to additional services rather than letting the two organizations operate in parallel.

4) Cost Takeout: The “Do You Deliver?” Test in 2026

The synergy target and what’s already been captured

Cost savings are often the most measurable part of a merger story. Columbia’s target is about $127 million in annualized cost saves, with around $48 million already realized by September 30, 2025. The remaining runway is one reason 2026 is seen as the year when merger math must become visible in quarterly results.

Expense guidance and why “conversion timing” matters

Management expects operating expenses (excluding certain items referenced in the source) to run around $330–$340 million per quarter for several quarters. A key milestone is the full system conversion planned for 1Q26, with a more “normalized” expense run rate expected by 3Q26 as synergies mature.

Translation: Early 2026 may still look messy in reported expenses, but the market will likely demand steady progress. If integration milestones slip, the stock narrative can shift quickly from “synergies coming” to “synergies delayed.”

5) Capital Strength: Offense (Buybacks) and Defense (Buffers)

Key capital ratios and what they imply

Columbia reported a CET1 ratio of 11.6% and total risk-based capital of 13.4% as of 3Q25, which the company described as above longer-term targets. Stronger capital gives management flexibility to support growth, absorb losses, and return money to shareholders.

Share repurchases and dividend growth

The board authorized up to $700 million in share repurchases through November 30, 2026, and raised the quarterly dividend by 3% to $0.37 per share. Buybacks can improve per-share metrics when executed at reasonable valuations, but investors also watch whether buybacks compete with balance-sheet safety if credit conditions worsen.

Tangible book impact and earn-back

The deal’s tangible book dilution was cited as about 1.7%, with an earn-back period reduced to less than a year. In merger analysis, a short earn-back can strengthen investor confidence because it suggests the acquisition’s financial drag is quickly recovered through earnings and synergies.

6) What “Success” Looks Like in 2026

Profitability framework and Street expectations

Management reiterated a framework targeting high-teens operating ROTCE (return on tangible common equity), assuming a steady environment. Meanwhile, Street earnings estimates cluster in the low $3 range for 2026, with another step potentially expected into 2027 as integration benefits fully flow through.

The loan mix shift investors will track

Another pillar is portfolio “remix.” Columbia has signaled a move away from more transactional multi-family exposure toward relationship-based C&I (commercial & industrial) and owner-occupied CRE—categories often viewed as stronger relationship builders because they can bring operating accounts, treasury services, and other fee opportunities. Management noted that pipelines improved in 3Q25, but overall loan growth could remain muted near term as runoff offsets origination activity.

7) Risks and Watch Items: What Could Go Wrong

Integration costs and timeline risk

Even with a defined conversion schedule, integration and restructuring can keep near-term expenses volatile until savings clearly offset the costs. If system conversion or branch consolidation triggers customer friction, deposit retention could become a more visible headline risk.

Credit trends, charge-offs, and specific exposures

The source notes higher small-ticket leasing losses at FinPac contributed to higher charge-offs in 3Q25. The bank’s office exposure was about 8% of loans as of September 30, 2025, and non-performing assets rose to nearly $200 million in 3Q25 from about $168 million a year earlier. Credit is rarely “one headline”—it’s a steady drumbeat of small changes that can alter investor confidence quarter by quarter.

Deposit competition in a crowded West Coast market

Large banks, aggressive digital competitors, and pricing-focused regional peers can pressure deposit costs. Columbia’s strategy is to “defend” core funding and reduce wholesale dependency, but if competitors get more promotional, the bank may have to choose between protecting margin and protecting balances.

8) The Deal Context: Why This Acquisition Was “Transformational”

When the transaction was announced in April 2025, reports described it as an all-stock deal valued around $2 billion, creating a combined company with roughly $70 billion in assets and meaningful deposit scale across the Western U.S. Deal terms included an exchange ratio and an ownership outcome where Pacific Premier shareholders would own around 30% of the combined entity once completed.

Columbia positioned the acquisition as a way to accelerate its Southern California expansion significantly and strengthen its competitive posture across the region—an ambition also reflected in the company’s own closing communications.

9) Peer Context: How Investors Benchmark COLB in 2026

Why peer comparisons matter

For investors, “good” performance is rarely judged in isolation. It’s judged against peers facing similar rate conditions, credit cycles, and deposit battles. Two peers often referenced for contextual read-through in Western markets include East West Bancorp (EWBC) and Western Alliance Bancorporation (WAL).

Peer benchmarking helps answer practical questions: Are Columbia’s margin trends competitive? Is cost takeout happening faster or slower than peers’ integration stories? Are fee income lines growing at a similar pace?

10) Investor Takeaways: The 2026 Checklist

What to watch each quarter

As 2026 unfolds, here are the items most likely to shape sentiment:

• NIM and core net interest income: Does NIM remain near expectations as rates drift and balance sheet reprices?
• System conversion execution in 1Q26: Does the timeline hold, and does customer disruption stay contained?
• Synergy capture pace: Progress from $48M realized toward the $127M annualized target.
• Fee income growth: Are treasury, card, and trust scaling—especially with Pacific Premier specialty services?
• Credit discipline: Trends in NPAs, charge-offs (including FinPac), and office exposure performance.
• Capital return: Buyback execution under the $700M authorization and dividend sustainability.

A helpful external reference link

For readers who want the company’s official wording on the closing and brand unification, Columbia’s press release provides additional detail: Columbia Banking System completes acquisition of Pacific Premier and unifies Columbia brand.

FAQs

1) When did Columbia Banking complete the Pacific Premier acquisition?

The deal was completed at the end of August 2025 (noted as Aug. 31, 2025, with public confirmation in early September 2025).

2) How large is Columbia Banking after the merger?

As of Sept. 30, 2025, Columbia reported about $67.5 billion in total assets, $55.8 billion in deposits, and $48.5 billion in loans and leases.

3) What is Columbia’s plan for net interest margin (NIM) heading into 2026?

Management expects NIM to be roughly 3.90% in 4Q25 and 1Q26, supported by funding mix improvements and deposit repricing discipline (with a temporary amortization-related lift in 4Q25).

4) What cost savings is Columbia targeting from the merger?

The company targets around $127 million in annualized cost saves, with $48 million realized by Sept. 30, 2025. System conversion is planned for 1Q26, with normalized expenses expected by 3Q26 as synergies mature.

5) How is Columbia using capital in 2026?

Columbia reported CET1 of 11.6% at 3Q25, authorized up to $700 million in share repurchases through Nov. 30, 2026, and raised its quarterly dividend to $0.37 per share.

6) What are the key risks investors should watch?

Key watch items include integration execution and costs, credit trends (including FinPac-related losses and office exposure), rising non-performing assets, and deposit pricing competition from large and digital banks.

Conclusion

Columbia Banking’s post-merger plan for 2026 is straightforward in concept but demanding in execution: hold the margin, finish the conversion, capture synergies, expand durable fee income, and return capital without letting credit or deposit competition undermine the story. The Pacific Premier acquisition provides real tools—new platforms, broader scale, and a bigger customer base—but the market will reward Columbia only if those tools translate into consistent, repeatable quarterly performance.

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