Columbia Banking System and Pacific Premier Bancorp are merging — Here’s what it means for investors and depositors

How will the Columbia-Pacific Premier merger transform West Coast regional banking?

Columbia Banking System, Inc., the parent company of Umpqua Bank, has entered into a definitive all-stock merger agreement to acquire Pacific Premier Bancorp, Inc., the holding company of Pacific Premier Bank. The transaction, valued at approximately $2.0 billion, will create a dominant regional financial institution with nearly $70 billion in combined assets and a significantly expanded presence across California, Oregon, and Washington.

Under the terms of the merger, Pacific Premier Bancorp, Inc. shareholders will receive 0.9150 shares of Columbia Banking System, Inc. common stock for each share they hold. The deal values each share of Pacific Premier at $20.83, based on Columbia’s pre-announcement closing price of $22.77. Following the expected completion in the second half of 2025, Pacific Premier shareholders will hold around 30% of the combined company, and three of its directors will join Columbia’s board, including Chairman and CEO Steve Gardner.

Why is this merger a strategic fit for Columbia Banking System?

The merger strengthens Columbia’s competitive position in key growth markets, particularly in Southern California. The deal accelerates Columbia’s geographic expansion by nearly a decade, positioning it among the top 10 deposit holders in California with approximately $21 billion in statewide deposits. In total, the combined entity will have $57 billion in deposits across its Western U.S. footprint.

Clint Stein, CEO of Columbia Banking System, Inc., described the merger as a “natural and strategic” combination that enhances scale, credit discipline, and product depth. Steve Gardner of Pacific Premier Bancorp, Inc. highlighted the alignment in culture and business model, calling the merger a culmination of two decades of value creation and client-focused banking.

What do Q1 2025 earnings reveal about the financial health of both banks?

Columbia Banking System, Inc. reported Q1 2025 net income of $86.6 million, or $0.41 per diluted share, down from $143.3 million in Q4 2024 due to legal and severance expenses. On an adjusted basis, operating earnings stood at $0.67 per share. The bank’s net interest margin narrowed slightly to 3.60%, while deposits rose $497 million to $42.2 billion. Columbia’s tangible book value per share improved to $17.86, with a common equity tier 1 capital ratio of 10.6%.

Pacific Premier Bancorp, Inc. reported Q1 2025 net income of $36.0 million, or $0.37 per share, up from $33.9 million sequentially. The company’s return on average assets was 0.80%, and its net interest margin increased four basis points to 3.06%. Deposit growth remained healthy, with non-maturity balances increasing by $247 million and non-interest-bearing deposits making up nearly one-third of total deposits. Asset quality remained strong, with delinquency and non-performing asset ratios among the lowest in the sector.

How are investors reacting to the Columbia-Pacific Premier merger?

Investor sentiment has been cautiously optimistic. Columbia Banking System, Inc. stock closed 2.4% higher following the earnings and merger announcement, though it saw a minor aftermarket decline of 3.06% as investors digested the integration timeline and earnings dilution potential. Analysts continue to view the transaction as EPS-accretive in the medium term.

Pacific Premier Bancorp, Inc. shares rose 5.5% to close at $21.24 — trading above the $20.83 deal price — suggesting that markets expect potential upside, either from renegotiated terms or competing offers. However, concerns have been raised by shareholder firms regarding fiduciary value delivery, especially as Pacific Premier’s stock previously traded above $30 over the past year.

What are institutional investors doing amid this merger?

Institutional backing remains robust for both banks. Columbia Banking System, Inc. is 94.9% institutionally owned, with recent filings showing steady accumulation. Pacific Premier Bancorp, Inc. has institutional ownership exceeding 95.6%, though the merger has triggered scrutiny from governance-focused investors and litigation monitors evaluating deal fairness.

Despite these headwinds, the institutional community appears supportive, particularly given the absence of an external capital requirement and the expected improvement in combined profitability.

What long-term financial benefits and synergies are expected?

Columbia expects the transaction to generate approximately $900 million in value creation through $88 million in after-tax cost synergies. These savings are projected to result in mid-teen EPS accretion, with tangible book value dilution recovered in under three years using a crossover method. The pro forma entity is targeting a return on average tangible common equity of 20% and return on average assets of 1.4% by 2026 — placing it firmly in the top quartile of regional peers.

Brand unification is also on the roadmap. Columbia Banking System, Inc. plans to rebrand all Umpqua Bank branches under the Columbia Bank name later this year. This transition is expected to streamline operations, reduce marketing costs, and reinforce a unified identity across retail, commercial, and wealth services.

Should investors buy, hold, or sell these banking stocks now?

Columbia Banking System, Inc. (NASDAQ: COLB)

Buy – Forward-looking EPS accretion, strong capital buffers, and expanding geographic reach position the stock favourably.

Hold – Investors concerned about integration execution may prefer to wait for synergy visibility in H1 2026.

Sell – Short-term traders may take profits as the stock hovers near recent highs post-announcement.

Pacific Premier Bancorp, Inc. (NASDAQ: PPBI)

Buy – With shares trading above the implied merger value, speculation on renegotiation or competing bids remains plausible.

Hold – Shareholders awaiting value realisation through conversion or dividend continuity may retain positions.

Sell – Risk-averse holders could opt to lock in recent gains amid legal scrutiny and regulatory uncertainties.