ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
See the discussion of forward-looking statements and risk factors in Part I Item 1 and Item 1A of this Annual Report on Form 10-K.
The following discussion and analysis of our financial condition and results of operations constitutes management's review of the factors that affected our financial and operating performance for the years ended December 31, 2025 and 2024. This discussion should be read in conjunction with the consolidated financial statements and notes thereto contained elsewhere in this Annual Report on Form 10-K. For a discussion of the year ended December 31, 2023, including a comparison to the year ended December 31, 2024, see Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, on Registrant's Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission on February 25, 2025.
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EXECUTIVE OVERVIEW
Acquisition of Pacific Premier
• On August 31, 2025, the Company completed its all-stock acquisition of Pacific Premier, the parent company of Pacific Premier Bank. Pursuant to the terms of the acquisition agreement, Pacific Premier stockholders received 0.9150 of a share of Columbia common stock for each share of Pacific Premier common stock they held. Systems conversion and branch consolidations are on track to be completed during the first quarter of 2026, supported by comprehensive cross-company teams led by Columbia's Integration Management Office. The acquisition rounds out our western footprint and strengthens our presence as a leading financial institution in the western United States. It also expands our product and service offerings, enabling us to deliver more comprehensive, needs-based financial solutions to both existing and prospective customers. For additional information regarding this acquisition, see Note 2 – Business Combinations and Note 9 – Goodwill and Other Intangible Assets in Item 8 of this Annual Report on Form 10-K.
Financial Performance
• Earnings per diluted common share were $2.30 for the year ended December 31, 2025, compared to $2.55 for the year ended December 31, 2024. The decrease was driven by an increase in weighted-average diluted common shares outstanding as common shares were issued in connection with the Pacific Premier acquisition. The impact was partially offset by an increase in net income.
• Net income was $550 million for the year ended December 31, 2025, compared to $534 million for the year ended December 31, 2024. The increase was driven by higher net interest income and non-interest income, partially offset by an increase in non-interest expense due to higher expenses related to the acquisition. In addition, provision for credit losses increased, primarily due to the initial provision for credit losses attributed to the acquired non-PCD loans and unfunded commitments.
• Net interest income was $2.0 billion for the year ended December 31, 2025, as compared to $1.7 billion for the year ended December 31, 2024. The increase was driven by a larger average balance sheet and the impact of four months as a combined company due to the Pacific Premier acquisition, as well as a decrease in interest expense due to lower interest rates and a favorable shift in our funding mix.
• Net interest margin, on a tax equivalent basis, was 3.83% for the year ended December 31, 2025, compared to 3.57% for the year ended December 31, 2024. The increase was due to a reduction in the cost of interest-bearing liabilities, partially offset by lower average yields on interest-earning assets. Net interest margin also benefited from a favorable shift in our funding mix, reflecting a higher contribution from lower-cost customer deposits and a lower contribution from higher-cost wholesale funding sources, like brokered deposits and term debt.
• Non-interest income was $298 million for the year ended December 31, 2025, compared to $211 million for the year ended December 31, 2024. The increase was driven by four months of combined operations following the Pacific Premier acquisition, as well as fair value adjustments. The impact of fair value adjustments and hedges resulted in a net fair value gain of $16 million related mainly to loans held for investment at fair value, gain on investment securities, and MSR hedging activity in 2025, compared to a net fair value loss of $13 million in 2024.
• Non-interest expense was $1.4 billion for the year ended December 31, 2025, compared to $1.1 billion for the year ended December 31, 2024. The increase was primarily driven by a $124 million increase in merger and restructuring expense to $148 million, primarily related to the Pacific Premier acquisition, four months of combined operations, higher salaries and employee benefits, increased occupancy costs, and a $55 million accrual for a legal settlement. The increase was partially offset by the partial recognition of cost savings related to the Pacific Premier acquisition later in 2025.
• Total loans and leases were $47.8 billion as of December 31, 2025, an increase of $10.1 billion, or 27%, compared to December 31, 2024. The increase in total loans and leases was driven by $11.4 billion in loans acquired through the Pacific Premier acquisition, partially offset by runoff in commercial development and below-market-rate transactional loans, as well as the transfer of $295 million in residential real estate loans to held-for-sale.
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• Total deposits were $54.2 billion as of December 31, 2025, an increase of $12.5 billion, or 30%, from December 31, 2024. The increase was primarily driven by the Pacific Premier acquisition, which contributed $14.5 billion of deposits, and organic increases from recent small business and retail deposit campaigns, partially offset by a reduction in brokered deposits.
• Total consolidated assets were $66.8 billion as of December 31, 2025, compared to $51.6 billion as of December 31, 2024. The increase was primarily driven by the acquisition of Pacific Premier, which contributed $11.4 billion in loans, $2.8 billion in investment securities, and $874 million in cash.
Credit Quality
• Non-performing assets were $200 million, or 0.30% of total assets, as of December 31, 2025, compared to $170 million, or 0.33% of total assets, as of December 31, 2024. Non-performing loans were $198 million, or 0.41% of total loans and leases, as of December 31, 2025, compared to $167 million, or 0.44% of total loans and leases, as of December 31, 2024. As of December 31, 2025, non-performing loans included $79 million in government guarantees. The increases in non-performing assets and loans primarily reflect assets acquired through the Pacific Premier acquisition.
• The ACL was $485 million, or 1.02% of loans and leases, as of December 31, 2025, an increase of $44 million, as compared to $441 million, or 1.17% of loans and leases, as of December 31, 2024. The change reflects loan growth from the Pacific Premier acquisition, updated economic forecasts incorporated into credit models, and includes $5 million related to PCD loans booked at closing, which did not impact earnings.
• Provision for credit losses was $150 million for the year ended December 31, 2025, compared to a provision for credit losses of $106 million in the prior year. The increase in the provision includes an initial provision of $70 million for acquired non-PCD loans and unfunded commitments, and changes in economic forecasts used in the ACL methodology. As a percentage of average outstanding loans and leases, the provision for credit losses for the year ended December 31, 2025 was 0.36%, as compared to 0.28% for the prior year.
Liquidity
• Total cash and cash equivalents were $2.4 billion as of December 31, 2025, an increase of $502 million from December 31, 2024. The increase was primarily driven by the acquisition of Pacific Premier, which contributed $874 million in cash. The Company manages its cash position as part of management's strategy to maintain a high-quality liquid asset position to support balance sheet flexibility, fund growth in lending and investment portfolios, and deleverage the balance sheet by decreasing debt and non-relationship deposit liabilities as economic conditions permit.
• Including secured off-balance sheet lines of credit, total available liquidity was $27.9 billion as of December 31, 2025, representing 42% of total assets, 51% of total deposits, and 141% of uninsured deposits.
Capital
• The Company's total risk-based capital ratio was 13.6% and its CET1 risk-based capital ratio was 11.8% as of December 31, 2025, as compared to 12.8% and 10.5%, respectively, as of December 31, 2024. In November 2025, the Company increased its quarterly dividend to $0.37 per common share, compared to $0.36 per common share previously.
• The Company paid cash dividends of $1.45 per common share during the year ended December 31, 2025, as compared to $1.44 in 2024.
• The Company repurchased 3.7 million common shares for a total of $100 million during the year ended December 31, 2025, under the new repurchase program, approved by Columbia's Board in October 2025, which authorizes the Company to repurchase up to $700 million of common stock through November 30, 2026. The timing and amount of common share repurchases will be at the discretion of senior management and subject to various factors, including, without limitation, Columbia’s capital position and financial performance, market conditions, and regulatory considerations. Our capital deployment strategy remains focused on supporting organic growth, maintaining strong regulatory ratios, and returning capital to shareholders through dividends and share repurchases.
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CRITICAL ACCOUNTING ESTIMATES
In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates.
The consolidated financial statements are prepared in conformity with GAAP and follow general practices within the financial services industry, in which the Company operates. This preparation requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, actual results could differ from the estimates, assumptions, and judgments reflected in the financial statements. Certain estimates inherently have a greater reliance on the use of assumptions and judgments and, as such, have a greater possibility of producing results that could be materially different than originally reported.
Management believes the ACL and business combination estimates are important to the portrayal of the Company's financial condition and results of operations and requires difficult, subjective, or complex judgments and, therefore, management considers them to be critical accounting estimates.
Allowance for Credit Losses
The ACL represents management's best estimate of lifetime credit losses for loans and leases and unfunded commitments. The ACL was $485 million at December 31, 2025 and $441 million at December 31, 2024.
Under CECL, Management has flexibility in selecting the methodology for estimating expected credit losses, which must be calculated over the asset’s contractual term, and adjusted for prepayments, utilizing quantitative and qualitative factors. Management uses complex models to forecast future economic conditions based on specific macroeconomic variables for each loan and lease portfolio .
The adequacy of the ACL is monitored regularly, considering factors such as: CECL model outputs; loan portfolio quality and risk ratings; economic conditions; loan concentrations and growth rates; past-due and non-performing trends; specific loss estimates for significant problem loans; historical charge-off and recovery experience. As of December 31, 2025, the Bank used Moody's Analytics' November 2025 consensus forecast to estimate the ACL.
To assess sensitivity, the Bank applied the Moody's Analytics' November 2025 S2 scenario, which predicts a 75% probability of better economic performance and a 25% probability of worse performance. For additional information related to the economic scenario, see Note 6 – Allowance for Credit Losses in Item 8 of this Annual Report on Form 10-K.
This scenario would result in a quantitative lifetime loss estimate approximately 1.4 times our modeled period-end ACL, an increase of approximately $147 million, without qualitative adjustments. This analysis pertains solely to the modeled credit loss estimate and does not encompass the overall period-end ACL, which incorporates qualitative adjustments.
The determination of the ACL considers both quantitative and qualitative factors. This sensitivity analysis does not necessarily reflect the nature and extent of future changes in the ACL or what the ACL would be under these economic circumstances. Instead, it highlights the impact of adverse macroeconomic changes on modeled loss estimates. The hypothetical determination does not incorporate management judgment or other qualitative factors that could be applied in the actual estimation of the ACL and does not imply any expected future deterioration in loss rates.
Since economic conditions and forecasts can change, and future events are inherently difficult to predict, the estimated credit losses on loans, and therefore the appropriateness of the ACL, could change significantly. It is challenging to estimate how changes in any single economic factor or input might affect the overall allowance, as many factors and inputs are considered. These changes may not occur at the same rate or be consistent across all product types. Additionally, improvements in one factor may offset deterioration in others.
For additional information related to the Company's ACL, see Note 1 – Summary of Significant Accounting Policies in Item 8 of this Annual Report on Form 10-K.
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Business Combinations
The Company accounts for business combinations using the acquisition method of accounting. Under this accounting method, the acquired company’s assets and liabilities are recorded at fair value at the date of the acquisition, except as provided for by the applicable accounting guidance, and the results of operations of the acquired company are combined with the acquiree’s results from the date of the acquisition forward. The difference between the purchase price and the fair value of the net assets acquired (including identifiable intangible assets) is recorded as goodwill. Management uses significant estimates and assumptions to value such items, including projected cash flows, repayment rates, default rates and losses assuming default, discount rates, and realizable collateral values. The ACL for PCD loans is recognized within acquisition accounting. The ACL for non-PCD assets is recognized as provision for credit losses in the same reporting period as the acquisition. Fair value adjustments are amortized or accreted into the statement of operations over the estimated life of the acquired assets or assumed liabilities. The purchase date valuations and any subsequent adjustments determine the amount of goodwill recognized in connection with the acquisition. The use of different assumptions could produce significantly different valuation results, which could have material positive or effects on our results of operations.
The determination of fair values is based on valuations using management’s assumptions of future growth rates, future attrition, discount rates, multiples of earnings or other relevant factors. In addition, the Company engages third-party specialists to assist in the development of fair values. Preliminary estimates of fair values may be adjusted for a period of time subsequent to the effective time of the acquisition if new information is obtained about facts and circumstances that existed as of the effective time of the acquisition that, if known, would have affected the measurement of the amounts recognized as of that date. Adjustments recorded during this period are recognized in the current reporting period. Management uses various valuation methodologies to estimate the fair value of these assets and liabilities and often involves a significant degree of judgment, particularly when liquid markets do not exist for the particular item being valued. Examples of such items include loans, deposits, identifiable intangible assets, and certain other assets and liabilities.
Changes in these factors, as well as downturns in economic or business conditions, could have a significant adverse impact on the carrying value of assets, including goodwill and liabilities, which could result in impairment losses affecting our financial statements as a whole and our banking subsidiary in which the goodwill is recorded.
RECENT ACCOUNTING PRONOUNCEMENTS
Information regarding Recent Accounting Pronouncements is included in Note 1 of the Notes to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K .
RESULTS OF OPERATIONS
Columbia's financial results for any periods ended prior to August 31, 2025, the acquisition date for Pacific Premier, reflect Columbia's results only on a standalone basis. Accordingly, Columbia's reported financial results for the first eight months of 2025 reflect only Columbia's financial results through the closing of the acquisition. In addition, Columbia’s financial results for any periods ended prior to February 28, 2023, the closing date of the Company’s merger with UHC, reflect UHC’s results only on a standalone basis. Accordingly, Columbia’s reported financial results for the first two months of 2023 reflect only UHC’s financial results through the closing of the Company’s merger with UHC. As a result of these factors, Columbia's financial results for the years ended December 31, 2025 and December 31, 2023, may not be directly comparable to prior or future reported periods.
Comparison of current year to prior year
For the year ended December 31, 2025, the Company had net income of $550 million, compared to net income of $534 million for the same period in the prior year. The increase in net income was mainly attributable to increases in net interest income and non-interest income, partially offset by increases in non-interest expense and provision for credit losses. Net interest income increased $285 million primarily due to a larger average balance sheet for the year compared to the prior year, primarily due to the Pacific Premier acquisition and lower rates on interest-bearing liabilities, partially offset by lower average yields on interest-earning assets. Non-interest income increased $87 million, reflecting four months of combined operations following the acquisition. Non-interest expense increased $319 million primarily due to increases in merger and restructuring expenses, salaries and employee benefits, and occupancy and equipment, net, each of which was associated with the Pacific Premier acquisition, as well as a $55 million accrual for a legal settlement. The increase of $44 million in provision for credit losses was driven by the $70 million provision for credit losses attributed to the acquired non-PCD loans and unfunded commitments and includes $5 million related to Pacific PCD loans booked at acquisition and updated economic forecasts incorporated into credit models.
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On August 31, 2025, Columbia completed its acquisition of Pacific Premier. Systems conversion and branch consolidations are on track to be completed during the first quarter of 2026. The Company expects to realize all related cost savings by June 30, 2026 and expects to stay within the original expected merger-related expense amount of $185 million for this acquisition.
The following table presents the return on average assets (GAAP), average common shareholders' equity (GAAP), and average tangible common shareholders' equity (non-GAAP) for the years ended December 31, 2025, 2024, and 2023. For each period presented, the table includes the calculated ratios based on reported net income. To the extent return on average common shareholders' equity is used to compare our performance with other financial institutions that do not have merger and acquisition-related intangible assets, we believe it is beneficial to also consider the return on average tangible common shareholders' equity. This measure is useful for evaluating the performance of a business as it calculates the return available to common shareholders without the impact of intangible assets and their related amortization. Return on average tangible common shareholders' equity is also used as part of our incentive compensation program for our executive officers. The return on average tangible common shareholders' equity is calculated by dividing net income by average shareholders' common equity less average goodwill and other intangible assets, net (excluding MSR). The return on average tangible common shareholders' equity is considered a non-GAAP financial measure and should be viewed in conjunction with the return on average common shareholders' equity.
Return on Average Assets, Common Shareholders' Equity and Tangible Common Shareholders' Equity
For the years ended December 31, 2025, 2024, and 2023:
(in millions)
Return on average assets
Return on average common shareholders' equity
Return on average tangible common shareholders' equity
Calculation of average common tangible shareholders' equity:
Average common shareholders' equity
Less: average goodwill and other intangible assets, net
Average tangible common shareholders' equity
Additionally, management believes tangible common equity and the tangible common equity ratio are meaningful measures of capital adequacy. Columbia believes the exclusion of certain intangible assets in the computation of tangible common equity and the tangible common equity ratio provides a meaningful base for period-to-period and company-to-company comparisons, which management believes will assist investors in analyzing the operating results and capital of the Company. Tangible common equity is calculated as total shareholders' equity less goodwill and other intangible assets, net (excluding MSR). In addition, tangible assets are total assets less goodwill and other intangible assets, net (excluding MSR). The tangible common equity ratio is calculated as tangible common shareholders' equity divided by tangible assets. Tangible common equity and the tangible common equity ratio are considered non-GAAP financial measures and should be viewed in conjunction with total shareholders' equity and the total shareholders' equity ratio.
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The following table provides a reconciliation of ending shareholders' equity (GAAP) to ending tangible common equity (non-GAAP), and ending assets (GAAP) to ending tangible assets (non-GAAP) as of December 31, 2025 and 2024:
(millions)
December 31, 2025
December 31, 2024
Total shareholders' equity
Less: Goodwill
Less: Other intangible assets, net
Tangible common shareholders' equity
Total assets
Less: Goodwill
Less: Other intangible assets, net
Tangible assets
Total shareholders' equity to total assets ratio
Tangible common equity to tangible assets ratio
Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not reviewed or audited. Although we believe these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP.
NET INTEREST INCOME
Net interest income for 2025 was $2.0 billion, an increase of $285 million, or 17%, compared to 2024. The increase was driven by a $161 million increase in interest income, largely reflective of the impact of four months as a combined company in the current period, as well as a $124 million decrease in interest expense mainly due to lower interest rates driven by the 75 basis point reduction in the federal funds rate in 2025, as well as a favorable shift in Columbia's funding mix during the year.
The net interest margin (net interest income as a percentage of average interest-earning assets) on a fully tax equivalent basis was 3.83% for 2025, as compared to 3.57% for 2024, an increase of 26 basis points. The increase for the year ended December 31, 2025 compared to the prior year was due to a reduction in the cost of interest-bearing liabilities, partially offset by lower yields on average loans and leases and cash. A favorable balance sheet mix shift to lower-cost customer deposits from higher-cost wholesale funding sources between periods contributed positively to net interest margin.
The average yields on loans and leases for 2025 and 2024 were 5.95% and 6.15%, respectively, a decrease of 20 basis points, primarily attributable to the lower interest rate environment during most of 2025, partially offset by the increase in average loans and leases related to the Pacific Premier acquisition as these balances were recorded at fair value as of August 31, 2025. The cost of interest-bearing liabilities was 2.61% for the year ended December 31, 2025, compared to 3.21% for the year ended December 31, 2024. The 60-basis point decrease was due primarily to reductions in the federal funds rate as compared to the prior period and a favorable shift in Columbia's funding mix. Our net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, as well as changes in the yields earned on interest-earning assets and rates paid on deposits and borrowed funds.
The Federal Reserve lowered the target for the federal funds rate by 0.25% in September, October, and December 2025, respectively, resulting in a decrease of 0.75% as compared to December 31, 2024. The 2025 reductions to the targeted federal funds rate followed decreases of 1.00% in the last quarter of 2024. Columbia's balance sheet remained in a slightly liability-sensitive position as of December 31, 2025. We expect customer deposit balance trends to be a driver of net interest margin performance, as we continue to target a lower funding contribution from wholesale sources, like brokered deposits and FHLB advances.
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The following table presents condensed average balance sheet information, together with interest income and yields on average interest-earning assets, and interest expense and rates paid on average interest-bearing liabilities for the years ended December 31, 2025, 2024, and 2023:
(in millions)
Average Balance
Interest Income or Expense
Average Yields or Rates
Average Balance
Interest Income or Expense
Average Yields or Rates
Average Balance
Interest Income or Expense
Average Yields or Rates
INTEREST-EARNING ASSETS:
Loans held for sale
Loans and leases (1)
Taxable securities
Non-taxable securities (2)
Temporary investments and interest-bearing cash
Total interest-earning assets (1)(2)
Goodwill and other intangible assets
Other assets
Total assets
INTEREST-BEARING LIABILITIES:
Interest-bearing demand deposits
Money market deposits
Savings deposits
Time deposits
Total interest-bearing deposits
Repurchase agreements and federal funds purchased
Borrowings
Junior and other subordinated debentures
Total interest-bearing liabilities
Non-interest-bearing deposits
Other liabilities
Total liabilities
Common equity
Total liabilities and shareholders' equity
NET INTEREST INCOME (2)
NET INTEREST SPREAD (2)
NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN
(1) Non-accrual loans and leases are included in the average balance.
(2) Tax-exempt income was adjusted to a tax equivalent basis at a 21% tax rate. The amount of such adjustment was an addition to recorded income of approximately $6 million, $4 million, and $4 million for the years ended December 31, 2025, 2024, and 2023, respectively.
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The following table sets forth a summary of the changes in tax equivalent net interest income due to changes in average asset and liability balances (volume) and changes in average rates (rate) for 2025 compared to 2024, as well as between 2024 and 2023. Changes in tax equivalent interest income and expense, which are not attributable specifically to either volume or rate, are allocated proportionately between both variances.
2025 compared to 2024
2024 compared to 2023
Increase (decrease) in interest income and expense due to changes in
Increase (decrease) in interest income and expense due to changes in
(in millions)
Volume
Rate
Total
Volume
Rate
Total
Interest-earning assets:
Loans held for sale
Loans and leases
Taxable securities
Non-taxable securities (1)
Temporary investments and interest-bearing cash
Total interest-earning assets (1)
Interest-bearing liabilities:
Interest-bearing demand deposits
Money market
Savings
Time deposits
Repurchase agreements
Borrowings
Junior subordinated debentures
Total interest-bearing liabilities
Net increase (decrease) in net interest income (1)
(1) Tax-exempt income was adjusted to a tax equivalent basis at a 21% tax rate.
PROVISION FOR CREDIT LOSSES
The Company had a $150 million provision for credit losses for 2025, as compared to a $106 million provision for credit losses for 2024. The increase was driven by the $70 million provision for credit losses attributed to the acquired non-PCD loans and unfunded commitments. The increase was offset by loan portfolio runoff, credit migration trends, charge-off activity, and changes in the economic forecasts used in credit models. As a percentage of average outstanding loans and leases, the provision for credit losses recorded for 2025 was 0.36%, as compared to 0.28% for the prior period.
Net charge-offs were $111 million for 2025, or 0.27% of average loans and leases, compared to net charge-offs of $129 million, or 0.34% of average loans and leases, for 2024. Net charge-offs in the FinPac portfolio were $61 million for the year ended December 31, 2025, as compared to $88 million for the year ended December 31, 2024. Net charge-offs for the Bank were $50 million and $41 million for the years ended December 31, 2025 and 2024, respectively.
Typically, loans in non-accrual status will not have an ACL as they will be written down to their net realizable value or charged off. However, the net realizable value for homogeneous leases and equipment finance agreements are determined by the loss given default calculated by the CECL model, and therefore, homogeneous leases and equipment finance agreements on non-accrual will have an ACL amount until they become 181 days past due, at which time they are charged off. The non-accrual leases and equipment finance agreements of $19 million as of December 31, 2025 have a related ACL of $17 million, with the remaining loans written down to the estimated fair value of the collateral, less estimated costs to sell, and are expected to be resolved with no additional material loss, absent further decline in market prices.
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NON-INTEREST INCOME
The following table presents the key components of non-interest income and the related dollar and percentage change for the years ended December 31, 2025 and 2024:
2025 compared to 2024
(in millions)
Change Amount
Change Percent
Service charges on deposits
Card-based fees
Financial services and trust revenue
Residential mortgage banking revenue, net
Gain on investment securities, net
Gain (loss) on loan and lease sales, net
Gain (loss) on certain loans held for investment, at fair value
Bank owned life insurance income
Other income
Total non-interest income
Service charges on deposits and financial services and trust revenue increased in 2025 compared to 2024. The increases reflect four months of combined operations following the acquisition of Pacific Premier, which contributed to higher transaction volumes and an expanded client base. In addition, the Pacific Premier acquisition significantly expanded the Company's wealth management platform with the addition of Pacific Premier's custodial trust business, which contributed to the 75% increase in financial services and trust revenue in 2025 compared to 2024.
Residential mortgage banking revenue increased in 2025 compared to 2024. The variance was due to a favorable shift in the hedged change in fair value of the MSR asset due to valuation inputs or assumptions, which drove a $7 million increase in residential mortgage banking revenue between periods. While there was an increase in the origination and sale of mortgages during 2025 when compared to 2024, it was partially offset by a decrease in servicing revenue, due to a decline in the balance of the residential serviced loan portfolio.
Gain (loss) on certain loans held for investment, at fair value, for 2025, compared to 2024, increased due to interest rate fluctuations between periods that resulted in a gain of $11 million in the current year, as compar ed to a loss of $10 million in the prior year.
Other income in 2025 compared to 2024 increased primarily due to a favorable change related to swap customer fee revenue and related income, resulting in a favorable change of $12 million combined.
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NON-INTEREST EXPENSE
The following table presents the key elements of non-interest expense and the related dollar and percentage change for the years ended December 31, 2025 and 2024:
2025 compared to 2024
(in millions)
Change Amount
Change Percent
Salaries and employee benefits
Occupancy and equipment, net
Communications
Marketing
Services
Deposit costs
FDIC assessments
Intangible amortization
Merger and restructuring expense
Legal settlement
Other expenses
Total non-interest expense
Salaries and employee benefits increased in 2025 compared to 2024 primarily due to the acquisition of Pacific Premier and the associates that joined Columbia as a result. The year‑over‑year increase is consistent with our expectations and reflects the four-month impact of our larger associate base.
Occupancy and equipment, net increased in 2025 compared to 2024 primarily due to an increase in branch locations and software costs related to the acquisition of Pacific Premier. We remain on track to complete the systems conversion and branch consolidations related to the acquisition during the first quarter of 2026, and we expect to realize all related cost savings by June 2026.
Deposit costs increased in 2025 compared to 2024 primarily due to the acquisition of Pacific Premier, which expanded the Company's HOA banking business. Our HOA banking business contributes relatively low-cost deposits to our funding base and provides other business-generating opportunities. HOA deposit costs primarily reflect pricing arrangements with third-party entities that manage HOA accounts. These costs are variable and tied to account activity and transaction volume. This upward trend is expected to continue in 2026, as 2025 reflects only four months with the expanded business. HOA-related costs are expected to be $10 million per quarter.
FDIC assessments decreased in 2025 compared to 2024, primarily due to a $6 million reversal of prior FDIC special assessment expense accrual during the current period, compared to $6 million in additional FDIC special assessment expense accrual in 2024. The reversal reflects updated expectations of lower future payments under the FDIC’s special deposit insurance assessment. Excluding these special‑assessment impacts, deposit insurance expense remained relatively consistent between periods.
Merger and restructuring expense increased in 2025 compared to 2024, primarily due to costs associated with the acquisition of Pacific Premier. These expenses include severance and retention payments, professional service fees, systems conversion and integration activities, contract termination costs, facility consolidation, and other one‑time charges necessary to combine operations and align the merged organization. Refer to Note 2 – Business Combinations for the breakout of acquisition expenses.
Legal settlement increased in 2025 compared to 2024, due to the $55 million class action settlement finalized and funded in 2025.
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INCOME TAXES
Our consolidated effective tax rate for 2025 was 24.4%, compared to 25.7% for 2024. The 2025 effective tax rate differed from the federal statutory rate of 21% principally because of state taxes, net tax-exempt income on investment securities, non-deductible FDIC assessments, and tax credits and benefits arising from low-income housing investments. Refer to Note 25 – Income Taxes and Investment Tax Credits in Item 8 of this Annual Report on Form 10-K for more information about the Company's taxes.
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FINANCIAL CONDITION
CASH AND CASH EQUIVALENTS
Cash and cash equivalents were $2.4 billion as of December 31, 2025, compared to $1.9 billion as of December 31, 2024. The increase was driven by the interest-bearing cash acquired through the Pacific Premier acquisition. The Company manages its cash position within the broader liquidity framework designed to maintain a high‑quality liquid asset base, support balance sheet flexibility, fund growth across lending and investment activities, and reduce debt and other non‑deposit liabilities when market conditions are favorable.
INVESTMENT SECURITIES
The composition of our investment securities portfolio reflects management's investment strategy to maintain an appropriate level of liquidity while generating a relatively stable source of interest income. The investment securities portfolio serves as a vehicle for investing available funds, provides a source of liquidity (by pledging collateral or through repurchase agreements) and supplies collateral for certain public funds deposits.
Equity and other securities consist primarily of investments in fixed income mutual funds to support our CRA initiatives and securities invested in rabbi trusts for the benefit of certain current or former executives and employees, as required by the underlying agreements. Equity and other securities were $113 million at December 31, 2025, compared to $78 million as of December 31, 2024. The increase is primarily driven by a $31 million increase in non-trading equity, of which $17 million resulted from equity investments acquired in the Pacific Premier acquisition, and by a $4 million increase in rabbi trust assets.
Investment debt securities available for sale were $11.1 billion as of December 31, 2025, compared to $8.3 billion as of December 31, 2024. The increase was primarily attributable to $2.8 billion in securities acquired in the Pacific Premier acquisition, purchases of $2.4 billion in securities, and an increase of $319 million in fair value due to lower rates during the period. These increases were partially offset by $2.8 billion in proceeds, which included $1.8 billion of securities acquired as part of the Pacific Premier acquisition.
The following tables present the par value, amortized cost, and fair values of debt securities as available for sale and held to maturity investment debt securities portfolio by major type as of the dates presented:
December 31, 2025
December 31, 2024
(in millions)
Current Par
Amortized Cost
Fair Value
% of Portfolio
Current Par
Amortized Cost
Fair Value
% of Portfolio
Available for sale:
U.S. Treasury and agencies
Obligations of states and political subdivisions
Mortgage-backed securities and collateralized mortgage obligations
Total available for sale securities
Held to maturity:
Corporate and other securities
Total held to maturity securities
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The following table presents information regarding the amortized cost, fair value, average yield, and maturity structure of the debt securities portfolio as of December 31, 2025:
(in millions)
Amortized Cost
Fair Value
Average Yield (1)
Available for sale:
U.S. treasury and agencies
One year or less
One to five years
Five to ten years
Total U.S. treasury and agencies
Obligations of states and political subdivisions
One year or less
One to five years
Five to ten years
Over ten years
Total obligations of states and political subdivisions
Other Securities
Mortgage-backed securities and collateralized mortgage obligations
Total available for sale securities
Held to maturity:
Corporate and other securities
Five to ten years
Over ten years
Total corporate and other securities
Total debt securities
(1) The weighted average yields represent a projected yield to maturity given current cash flow projections for MBS/CMOs and is a yield to worst for callable securities. For adjustable MBS, the projected book yield represents the yield to maturity based on current index levels. Yields are calculated on an amortized cost basis and are stated on a federal tax equivalent basis of 21%.
The mortgage-related securities in the table above include both pooled mortgage-backed issues and high-quality collateralized mortgage obligation structures, with an average duration of 5.2 years. These securities generally provide a yield spread to U.S. Treasury or agency securities; however, the cash flows arising from them can be volatile due to refinance activity on the underlying mortgage loans.
We evaluate our investment securities on an ongoing basis for potential impairment. This review considers current market conditions, fair value in relationship to cost, the magnitude and duration of unrealized losses, changes in issuer credit ratings or credit trends, and other relevant factors. We also assess whether we intend to sell a security or if it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis, which may be maturity.
As December 31, 2025, the available for sale investment portfolio had gross unrealized losses of $380 million, including $327 million of unrealized losses on mortgage-backed securities and collateralized mortgage obligations. The unrealized losses were primarily attributable to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities, rather than deterioration in credit quality. In the opinion of management, no ACL was considered necessary on these debt securities as of December 31, 2025.
RESTRICTED EQUITY SECURITIES
Restricted equity securities were $159 million and $150 million as of December 31, 2025 and 2024, respectively, the majority of which represents the Bank's investment in the FHLB. The increase reflects purchases of FHLB stock made to support higher levels of FHLB borrowing activity during the period. FHLB stock is carried at par and does not have a readily determinable fair value. Ownership of FHLB stock is restricted to the FHLB and member institutions, and shares may only be purchased or redeemed at par. As of December 31, 2025, the Bank's minimum required investment in FHLB stock was $154 million.
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LOANS AND LEASES
Total loans and leases outstanding as of December 31, 2025 were $47.8 billion, an increase of $10.1 billion compared to December 31, 2024. The increase was driven by $11.4 billion in loans acquired through the Pacific Premier acquisition, partially offset by runoff in commercial development and below-market-rate transactional loans, and the transfer of $295 million in residential mortgage loans held for sale. The loan to deposit ratio was 88% at December 31, 2025, compared to 90% at December 31, 2024.
The following table presents the concentration distribution of our loan and lease portfolio by major type as of December 31, 2025 and 2024:
December 31, 2025
December 31, 2024
(in millions)
Amount
Amount
Commercial real estate
Non-owner occupied term
Owner occupied term
Multifamily
Construction & development
Residential development
Commercial
Term
Lines of credit & other
Leases & equipment finance
Residential
Mortgage
Home equity loans & lines
Consumer & other
Total, net of deferred fees and costs
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The following table presents the maturity distribution of our loan and lease portfolios and the rate sensitivity of these loans to changes in interest rates as of December 31, 2025:
By Maturity
Loans Over One Year by Rate Sensitivity
(in millions)
One Year or Less
One Through Five Years
Five Through 15 Years
Over 15 Years
Total
Fixed Rate
Floating/Adjustable Rate
Commercial real estate
Non-owner occupied term
Owner occupied term
Multifamily
Construction & development
Residential development
Commercial
Term
Lines of credit & other
Leases & equipment finance
Residential
Mortgage
Home equity loans & lines
Consumer & other
Total loans and leases
Loan Origination/Risk Management
The Bank has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.
The Bank maintains an independent loan review department that reviews and validates the credit risk program on a periodic basis. Results of these reviews are presented to management and the appropriate committees of our board of directors. The loan review process evaluates that the risk identification and assessment decisions made by lenders and credit personnel are in line with our policies and procedures.
Commercial Real Estate and Commercial Loans
CRE and commercial loans are the largest classifications within earning assets, representing 43% and 20%, respectively, of average earning assets for the year ended December 31, 2025, as compared to 41% and 20%, respectively, for the year ended December 31, 2024. Delinquency and non-accrual loan movements during the period reflect an anticipated move toward a normalized credit environment following a phase of exceptional high credit quality. As of December 31, 2025, non-accrual loans in the CRE and commercial portfolios include $38 million in government guarantees, which offsets our credit exposure in those portfolios.
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Commercial Real Estate Loans
The CRE portfolio includes loans to developers and institutional sponsors supporting income-producing or for-sale CRE properties. We mitigate our risk on these loans by requiring collateral values that exceed the loan amount and underwriting the loan with projected cash flow in excess of the debt service requirement. CRE loans are underwritten after evaluating and understanding the borrower's ability to operate profitably and are viewed primarily as cash flow loans and secondarily as loans secured by real estate. CRE lending typically involves higher loan principal amounts and the repayment of these loans is generally largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. CRE loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the CRE portfolio are diverse in terms of type and geographic location. This diversity helps reduce the exposure to adverse economic events that affect any single market or industry.
Management monitors and evaluates CRE loans based on debt service coverage, collateral, and risk grade criteria. As a general rule, we avoid financing single-purpose projects unless other underwriting factors are present to help mitigate risk. Third-party experts are also utilized to provide insight and guidance about economic conditions and trends affecting market areas we serve. In addition, management tracks the level of owner-occupied CRE loans versus non-owner occupied loans. Owner-occupied real estate loans are based on cash flows from ongoing operations and the borrower must generally occupy more than 50% of rentable space or pay more than 50% of rents. At December 31, 2025, approximately 26% of the outstanding principal balance of our CRE loan portfolio, secured by owner-occupied properties.
As of December 31, 2025, the CRE loan portfolio was $27.9 billion, an increase of $8.3 billion compared to December 31, 2024, driven primarily by loans acquired through the Pacific Premier acquisition, partially offset by a reduction in transactional balances. CRE concentrations are managed with a goal of optimizing relationship-driven commercial loans, as well as geographic and business diversity, primarily in our footprint.
The following table provides detail on CRE loans by property type:
December 31, 2025
December 31, 2024
(in millions)
Outstanding
Non-accrual (1)
% of Non-accrual to Total CRE
Outstanding
Non-accrual (1)
% of Non-accrual to Total CRE
CRE loans by property type:
Multifamily
Office
Industrial
Retail
Special Purpose
Hotel/Motel
Other
Total CRE loans
(1) CRE non-accrual loans are inclusive of government guarantees of $21 million and $16 million as of December 31, 2025 and 2024, respectively.
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The following table provides detail on the geographic distribution of our CRE portfolio as of the periods indicated:
December 31, 2025
December 31, 2024
(in millions)
Amount
% of Total
Amount
% of Total
Southern California
Puget Sound
Portland Metro
Oregon Other
Northern California (excluding the Bay Area)
Bay Area
Washington Other
Other
Total CRE loans
Loans secured by multifamily properties, including construction, represented 24% and 19% of the total loan portfolio at December 31, 2025 and 2024, respectively. These assets continue to perform well due to demand for rental properties in our geographical footprint. Although management believes such concentrations have no more than the normal risk of collectability, a substantial decline in the economy in general, material increases in interest rates, changes in tax and rent control policies, tightening credit or refinancing markets, or a decline in real estate values in the Bank's primary geographic footprint in particular, could have an adverse impact on the repayment of these loans.
Loans secured by office properties, which are predominantly located in suburban markets, represented approximately 8% of our total loan portfolio at both December 31, 2025 and 2024, and were comprised of 53% non-owner occupied, 45% owner occupied, and 2% construction loans at December 31, 2025, compared to 57% non-owner occupied, 40% owner occupied, and 3% construction loans at December 31, 2024.
The following table provides detail on the geographic distribution of our CRE portfolio secured by office properties:
December 31, 2025
December 31, 2024
(in millions)
Amount
% of total
Amount
% of total
Southern California
Puget Sound
Oregon Other
Portland Metro
Northern California (excluding the Bay Area)
Bay Area
Washington Other
Other
Total CRE loans
Commercial Loans and Leases
Commercial loans are made to commercial customers for use in normal business operations to finance working capital needs, equipment purchases, or other projects. The Bank focuses on borrowers doing business within our geographic markets. Commercial loans are generally underwritten individually and secured with the assets of the company and/or the personal guarantee of the business owners. Underwriting standards are designed to promote relationship banking rather than transactional banking. Once it is determined that the borrower’s management possesses sound ethics and solid business acumen, current and projected cash flows are examined to determine the ability of the borrower to repay their obligations as agreed.
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Commercial loans and leases are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans and leases are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers. As of December 31, 2025, commercial loans held in our loan portfolio were $12.0 billion, an increase of $2.0 billion compared to December 31, 2024, driven primarily by loans acquired through the Pacific Premier acquisition and an organic increase in commercial lines of credit.
Lease and equipment financing products are designed to address the diverse financing needs of small to large companies, primarily for the acquisition of equipment. The leases and equipment finance portfolio represented 13% and 17% of the commercial portfolio and 3% and 4% of the total loan portfolio as of December 31, 2025, and 2024, respectively. Net charge-offs in the FinPac lease portfolio were $61 million for the year ended December 31, 2025, as compared to $88 million for the year ended December 31, 2024. Net charge-offs were down approximately $1 million in the remaining commercial portfolio as compared to the prior year.
The following table provides detail on commercial loans by industry type:
December 31, 2025
December 31, 2024
(in millions)
Outstanding
Non-accrual (1)
% of Non-accrual to Total Commercial
Outstanding
Non-accrual (1)
% of Non-accrual to Total Commercial
Agriculture
Contractors
Dentist
Finance/Insurance
Gaming
Healthcare
Manufacturing
Professional
Public Admin
Rental and Leasing
Retail
Support Services
Transportation/Warehousing
Wholesale
Other
Total commercial portfolio
(1) Commercial non-accrual loans and leases are inclusive of government guarantees of $17 million and $25 million as of December 31, 2025 and 2024, respectively.
Residential Real Estate Loans
Residential real estate loans represent mortgage loans and lines of credit to consumers for the purchase or refinance of a residence. The properties securing our residential mortgage and home equity portfolios are primarily located within our geographic footprint. We originate first-lien residential home mortgages considered to be of prime quality. We generally hold variable-rate loans in our portfolio and sell conforming fixed-rate loans to third parties for which representations are made that the loans meet certain underwriting and collateral documentation standards.
The Bank underwrites all residential mortgage applications centrally, with a focus on higher quality borrowers. We do not originate residential mortgages that allow negative amortization or allow the borrower multiple payment options. Residential mortgages are originated based on a completed full appraisal during the credit underwriting process. The values are updated in compliance with applicable regulations to facilitate our portfolio management, as well as our workout and loss mitigation functions.
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As of December 31, 2025, residential real estate loans held in our loan portfolio were $7.8 billion, a decrease of $192 million as compared to December 31, 2024. The decrease was primarily attributable to the transfer of $295 million of residential mortgage loans to the held-for-sale portfolio, partially offset by expanding mortgage lines of credit and a small balance addition through the acquisition of Pacific Premier.
Consumer Loans
Consumer loans, including secured and unsecured personal loans, home equity and personal lines of credit, and motor vehicle loans, decreased $2 million to $178 million as of December 31, 2025, as compared to December 31, 2024. The decrease was due to normal business activity. Consumer loans are originated utilizing a credit scoring analysis to supplement the underwriting process. To monitor and manage consumer loan risk, policies and procedures are developed and modified, as needed, jointly by line and staff personnel. This activity, coupled with relatively small loan amounts that are spread across many individual borrowers, minimizes risk. Additionally, trend and outlook reports are reviewed by management on a regular basis.
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ASSET QUALITY AND NON-PERFORMING ASSETS
The Bank manages asset quality and controls credit risk through diversification of the loan and lease portfolio and the application of policies designed to promote sound underwriting and loan and lease monitoring practices. The Bank's Credit Quality Administration department monitors asset quality, establishing credit policies and procedures, and enforcing the consistent application of these policies and procedures across the Bank. Reviews of non-performing, past due, and larger credits are conducted to identify potential charges to the ACL and to assess the adequacy of the allowance. These reviews consider such factors as the financial strength of borrowers, collateral value, historical loss experience, portfolio growth, prevailing economic conditions, and other factors.
The following table summarizes our non-performing assets as of December 31, 2025 and 2024:
(in millions)
December 31, 2025
December 31, 2024
Non-performing assets: (1)
Loans and leases on non-accrual status
Commercial real estate
Commercial
Total loans and leases on non-accrual status
Loans and leases past due 90 days or more and accruing (2)
Commercial real estate
Commercial
Residential (2)
Total loans and leases past due 90 days or more and accruing (2)
Total non-performing loans and leases (1), (2)
Other real estate owned
Total non-performing assets (1), (2)
ACLLL
Reserve for unfunded commitments
ACL
Asset quality ratios:
Non-performing assets to total assets (1), (2)
Non-performing loans and leases to total loans and leases (1), (2)
Non-accrual loans and leases to total loans and leases (2)
ACLLL to total loans and leases
ACL to total loans and leases
ACL to non-accrual loans and leases
ACL to total non-performing loans and leases
(1) Non-accrual and 90+ days past due loans include government guarantees of $38 million and $41 million, respectively, as of December 31, 2025. As of December 31, 2024, non-accrual and 90+ days past due loans include government guarantees of $42 million and $32 million, respectively.
(2) Excludes certain mortgage loans guaranteed by GNMA, which the Bank has the unilateral right to repurchase but has not done so, totaling $3 million as of December 31, 2025 and $2 million at December 31, 2024.
As of December 31, 2025, there were approximately $193 million of loans and leases, or 0.40% of total loans and leases, modified due to borrowers experiencing financial difficulties, as compared to $110 million or 0.29% as of December 31, 2024. The modified loan and lease population is 85% current as of December 31, 2025, as compared to 84% in the prior year, reflecting the Bank's ongoing support for borrower's and disciplined risk management.
A decline in economic conditions and other factors could adversely impact individual borrowers or the loan portfolio in general. Accordingly, there can be no assurance that loans will not become 90 days or more past due, placed on non-accrual status, restructured, or transferred to other real estate owned in the future. As of December 31, 2025, there was an increase in non-performing loans as compared to December 31, 2024, which reflects balances added through the Pacific Premier acquisition and is overall representative of a more normalized credit environment.
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ALLOWANCE FOR CREDIT LOSSES
The ACL represents management's best estimate of lifetime credit losses for loans and leases and unfunded commitments. The ACL totaled $485 million as of December 31, 2025, an increase of $44 million from the $441 million as of December 31, 2024. The increase in the ACL during 2025 compared to 2024 reflects the addition of the Pacific Premier loan portfolio, which contributed to a $10.1 billion increase in total loans and leases held for investment. The ACL reflects $70 million provision for credit losses attributed to the acquired non-PCD loans and unfunded commitments and includes $5 million related to Pacific Premier PCD loans booked at acquisition closing and updated economic forecasts incorporated into credit models.
The following table shows the activity in the ACL for the years ended December 31, 2025 and 2024:
(in millions)
Allowance for credit losses on loans and leases
Balance, beginning of period
Initial ACL recorded for PCD loans acquired during the period
Provision for credit losses on loans and leases
Charge-offs:
Commercial real estate
Commercial
Residential
Consumer & other
Total loans charged-off
Recoveries:
Commercial real estate
Commercial
Residential
Consumer & other
Total recoveries
Net charge-offs:
Commercial real estate
Commercial
Residential
Consumer & other
Total net charge-offs
Balance, end of period
Reserve for unfunded commitments
Balance, beginning of period
Provision (recapture) for credit losses on unfunded commitments
Balance, end of period
Total allowance for credit losses
As a percentage of average loans and leases (annualized):
Net charge-offs
Commercial real estate
Commercial
Residential
Consumer & other
Provision for credit losses
Recoveries as a percentage of charge-offs
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The following table shows the change in the ACL from December 31, 2025 to December 31, 2024:
(in millions)
December 31, 2024
Initial ACL on PCD loans acquired during the period
2025 Net Charge-Offs
Reserve (Release) Build
December 31, 2025
% of Loans and Leases Outstanding
Commercial real estate
Commercial
Residential
Consumer & other
Total allowance for credit losses
% of loans and leases outstanding
To calculate the ACL, the CECL models use a forecast of future economic conditions and are dependent upon specific macroeconomic variables that are relevant to each of the Bank's loan and lease portfolios, as well as qualitative factors to address uncertainty not measured within the quantitative analysis. In estimating the December 31, 2025 ACL, the Bank used Moody's Analytics' November 2025 consensus economic forecast to project the variables used in the models and used upward qualitative overlays, mainly in the commercial portfolio, to align with the S2 scenario and to account for the transportation segment of the lease portfolio. The 2025 forecast is projecting higher unemployment rates with GDP growth and average federal funds rates trending lower. Refer to Note 6 – Allowance for Credit Losses in Item 8 of this Annual Report on Form 10-K for further information. Refer to Note 1 – Summary of Significant Accounting Policies in Item 8 of this Annual Report on Form 10-K for a description of the ACL methodology.
The models for calculating the ACL are sensitive to changes to economic variables, which could result in volatility as these assumptions change over time. We believe that the ACL as of December 31, 2025 is sufficient to absorb losses inherent in the loan and lease portfolio and in credit commitments outstanding as of that date based on the information available. If the economic conditions decline, the Bank may need additional provisions for credit losses in future periods.
The following table sets forth the allocation of the ACLLL and percent of loans and leases in each category to total loans and leases, net of deferred fees, as of December 31 for each of the last two years:
December 31, 2025
December 31, 2024
(in millions)
Amount
Amount
Commercial real estate
Commercial
Residential
Consumer & other
Allowance for credit losses on loans and leases
RESIDENTIAL MORTGAGE SERVICING RIGHTS
The following table presents the key elements of our residential mortgage servicing rights asset as of December 31, 2025, 2024, and 2023:
(in millions)
Balance, beginning of period
Additions for new MSR capitalized
Sale of MSR assets
Changes in fair value:
Changes due to collection/realization of expected cash flows over time
Changes due to valuation inputs or assumptions (1)
Balance, end of period
(1) The changes in valuation inputs and assumptions principally reflect changes in discount rates and prepayment speeds, which are primarily affected by changes in interest rates.
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Information related to our serviced loan portfolio as of December 31, 2025 and 2024 were as follows:
(in millions)
December 31, 2025
December 31, 2024
Balance of loans serviced for others
MSR as a percentage of serviced loans
Residential MSR are adjusted to fair value quarterly with the change recorded in residential mortgage banking revenue on the Consolidated Statements of Income. The value of servicing rights can fluctuate based on changes in interest rates and other factors. Generally, as interest rates decline and borrowers are able to take advantage of a refinance incentive, prepayments increase, and the total value of existing servicing rights declines as expectations of future servicing fee collections decline. Historically, the fair value of our residential MSR will increase as market rates for mortgage loans rise and decrease if market rates fall.
Due to changes to inputs in the valuation model including changes in discount rates and prepayment speeds, the fair value of the MSR asset decreased by $4 million for the year ended December 31, 2025, as compared to an increase of $5 million for the year ended December 31, 2024. The fair value of the MSR asset decreased by $12 million in 2025 and 2024, due to the passage of time, including the impact of regularly scheduled repayments, paydowns, and payoffs.
GOODWILL AND OTHER INTANGIBLE ASSETS
The Company had goodwill of $1.5 billion as of December 31, 2025, an increase of $453 million compared to the same period in 2024. In 2025, the Company recorded $453 million in goodwill related to its acquisition of Pacific Premier. Goodwill is recorded in connection with business combinations and represents the excess of the purchase price over the estimated fair value of the net assets acquired. Goodwill is reviewed for potential impairment annually, on October 31st, or more frequently if events or circumstances indicate a potential impairment. For the years ended December 31, 2025 and 2024, there were no goodwill impairment losses recognized.
As of December 31, 2025, we had other intangible assets of $712 million, as compared to $484 million as of December 31, 2024. As part of a business combination, the fair value of identifiable intangible assets such as core deposits, which includes all deposits except certificates of deposit, was recognized at the acquisition date. Intangible assets with definite useful lives are amortized to their estimated residual values over their respective estimated useful lives. The core deposit intangible assets recorded are amortized on an accelerated basis over a period of 10 years using the sum-of-the-years-digits method. Refer to Note 9 – Goodwill and Other Intangible Assets , for forecasted amortization expense for intangible assets as of December 31, 2025. Intangible assets are evaluated for impairment if events and circumstances indicate a possible impairment. No impairment losses have been recognized in the periods presented.
DEPOSITS
Total deposits were $54.2 billion as of December 31, 2025, an increase of $12.5 billion, or 30%, compared to December 31, 2024. The increase was primarily driven by the acquisition of Pacific Premier, as well as organic growth in customer deposits. The increase was partially offset by a decrease in brokered deposits, reflecting a strategic shift to utilize additional FHLB advances due to their more favorable interest rates as compared to brokered deposits, aligning with the Company's broader funding strategy.
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The following table presents the deposit balances by major category as of December 31, 2025 and 2024:
December 31, 2025
December 31, 2024
(in millions)
Amount
Amount
By Type:
Non-interest-bearing demand
Interest-bearing demand
Money market
Savings
Time, $250,000 or less
Time, greater than $250,000
Total deposits
Total deposits (insured/uninsured):
Insured deposits
Uninsured deposits (1)
Total deposits
(1) Represents estimated uninsured deposits as calculated based on the methodologies and assumptions used for the Bank's Call Report, which is prepared on an unconsolidated bank basis.
The following table presents total deposits by the categories shown below as of December 31, 2025 and 2024:
(in millions)
December 31, 2025
December 31, 2024
Customer deposits
Public deposits and administrative deposits
Brokered
Total deposits
The following table presents the time deposits in excess of the FDIC insurance limit, which is currently $250,000, by time remaining until maturity as of December 31, 2025:
(in millions)
Amount
Three months or less
Over three months through six months
Over six months through twelve months
Over twelve months
Uninsured deposits, greater than $250,000
The Company's total core deposits, which are deposits less time deposits greater than $250,000 and all brokered deposits, were $50.2 billion as of December 31, 2025, compared to $37.5 billion as of December 31, 2024. The Company's total brokered deposits were $2.4 billion or 4% of total deposits as of December 31, 2025, compared to $3.0 billion or 7% of total deposits as of December 31, 2024.
BORROWINGS
As of December 31, 2025, the Bank had outstanding securities sold under agreements to repurchase of $207 million, a decrease of $30 million from December 31, 2024. As of December 31, 2025 and 2024, the Bank had no outstanding federal funds purchased balances. As of December 31, 2025, the Bank had outstanding borrowings consisting of FHLB advances of $3.2 billion, an increase of $100 million as compared to December 31, 2024. This increase primarily reflected general liquidity management activities, including a strategic shift toward additional FHLB advances due to their more favorable interest rates relative to brokered deposits. The FHLB advances have fixed rates ranging from 3.85% to 4.06% and mature in 2026. FHLB advances are secured by loans secured by real estate.
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JUNIOR AND OTHER SUBORDINATED DEBENTURES
We had junior and other subordinated debentures with carrying values of $435 million and $439 million as of December 31, 2025 and 2024, respectively. The decrease in carrying value reflects normal amortization of issuance costs and discounts under the effective interest method, as well as the payoff of a $10 million subordinated debenture that matured in December 2025. The decrease was partially offset by a reduction in credit spreads, which lowered discount rates and increased fair values, as well as higher implied forward rates that boosted projected interest cash flows. These positive factors were partially offset by changes in the swap spot curve, which had a modest negative impact on fair value. As of December 31, 2025, substantially all of the junior subordinated debentures had interest rates that are adjustable on a quarterly basis, determined by a spread over three-month term SOFR.
LIQUIDITY AND SOURCES OF FUNDS
The principal objective of our liquidity management program is to maintain the Bank's ability to meet the day-to-day cash flow requirements of our customers, whether for withdrawals or credit facility draws to meet their cash needs. The Bank's liquidity strategy focuses on maintaining sufficient on-balance sheet liquidity to support balance sheet flexibility, fund growth in lending and investment portfolios, and deleverage non-deposit liabilities as economic conditions permit. As a result, the Company believes that it has adequate cash and access to borrowings to effectively manage through the current economic conditions and meet ongoing working capital and other needs. The Company continuously evaluates and maintains diverse liquidity sources to support future loan growth and manage borrowing sources.
The Bank regularly conducts liquidity stress testing to assess its ability to withstand adverse market conditions and unexpected funding needs. These stress tests evaluate the impact of various scenarios, including rapid deposit outflows, changes in collateral requirements for public deposits, and limited access to wholesale funding markets. Management uses the results to inform contingency planning, ensuring that sufficient liquidity is maintained to meet obligations under both normal and stressed conditions. The Bank’s diversified funding sources and substantial available liquidity provide resilience against potential disruptions. The Company also maintains a liquidity buffer and identified contingent sources to meet obligations independent of bank dividends under adverse scenarios.
We monitor sources and uses of funds daily to maintain an acceptable liquidity position. Public deposits, which represented 5% and 7% of total deposits at December 31, 2025 and 2024, respectively, require collateralization in excess of FDIC insurance, with requirements varying by state and institution. The amount of collateral required varies by state and may also vary by institution within each state, depending on the individual state's risk assessment of depository institutions. Changes in the pledging requirements for uninsured public deposits may require pledging additional collateral to secure these deposits, drawing on other sources of funds to finance the purchase of assets that would be available to be pledged to satisfy a pledging requirement, or could lead to the withdrawal of certain public deposits from the Bank.
The Banks’s diversified deposit base provides a sizable source of relatively stable and low-cost funding, while reducing the Bank’s reliance on wholesale markets. Total core deposits were $50.2 billion as of December 31, 2025, compared with $37.5 billion as of December 31, 2024. The Bank also has liquidity from excess bond collateral of $4.7 billion, further supporting liquidity. In addition to core deposits and the repayments and maturities of loans and investment securities, the Bank can access liquidity by selling securities under agreements to repurchase, issuing brokered certificates of deposit, or utilizing off-balance sheet funding sources.
The Bank maintains a substantial level of total available liquidity in the form of off-balance sheet funding sources from uncommitted lines of credit, advances from the FHLB, and the Federal Reserve Bank’s Discount Window. Availability of the uncommitted lines of credit is subject to federal funds balances available for loan and continued borrower eligibility. These lines are intended to support short-term liquidity needs, and the agreements may restrict consecutive day usage.
The following table presents total off-balance sheet liquidity as of the date presented:
December 31, 2025
(in millions)
Gross Availability
Utilization
Net Availability
FHLB lines
Federal Reserve Discount Window
Uncommitted lines of credit
Total off-balance sheet liquidity
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The following table presents total available liquidity as of the date presented:
(in millions)
December 31, 2025
Total off-balance sheet liquidity
Cash and cash equivalents, less reserve requirements
Excess bond collateral
Total available liquidity
The Company is a separate entity from the Bank and must provide for its own liquidity. Substantially all of the Company's revenues are derived from dividends declared and paid by the Bank, which are subject to statutory and regulatory limitations and require FDIC and Oregon Division of Financial Regulation approval for quarterly dividends from the Bank to the Company. In 2025, there were $495 million of dividends paid by the Bank to the Company.
Looking ahead, management expects the Bank's and the Company's liquidity positions to remain satisfactory during 2026, deposit balances may fluctuate due to pricing pressure or customers' behavior in the current economic environment. To support liquidity, the Bank may adjust deposit pricing, which could increase interest expense, or utilize more costly borrowings and other funding sources. The Bank will continue to monitor liquidity closely, conduct regular stress testing, and maintain contingency plans to address potential risks, including regulatory changes and market volatility.
Commitments and Other Contractual Obligation s - The Company participates in many different contractual arrangements which may or may not be recorded on its balance sheet, under which the Company has an obligation to pay certain amounts, provide credit or liquidity enhancements, or provide market risk support. Our material contractual obligations are primarily for time deposits and borrowings. As of December 31, 2025, time deposits totaled $6.6 billion, of which $6.5 billion mature in one year or less. Total FHLB advances as of December 31, 2025 were $3.2 billion, all of which mature within one year. These arrangements also include off-balance sheet commitments to extend credit, letters of credit and various forms of guarantees. As of December 31, 2025, our loan commitments were $11.9 billion and letter of credit commitments were $427 million. A portion of the commitments will eventually result in funded loans and increase our profitability through net interest income when drawn and unused commitment fees prior to being drawn. Refer to Note 16 – Commitments and Contingencies and Related-Party Transactions in Item 8 of this Annual Report on Form 10-K for further information. Financing commitments, letters of credit and deferred purchase commitments are presented at contractual amounts and do not necessarily reflect future cash outflows as many are expected to expire unused or partially used.
CONCENTRATIONS OF CREDIT RISK
Information regarding Concentrations of Credit Risk is included in Notes 3, 5, and 16 of the Notes to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K .
CAPITAL RESOURCES
Shareholders' equity as of December 31, 2025 was $7.8 billion, an increase of $2.7 billion from December 31, 2024. The increase in shareholders' equity during the year ended December 31, 2025 was driven by $2.4 billion related to the fair value of common shares issued in connection with the acquisition of Pacific Premier, net income of $550 million, and other comprehensive income of $229 million, partially offset by cash dividends paid and common shares repurchased of $339 million and $100 million, respectively, during the period.
The Federal Reserve Board has guidelines in place for risk-based capital requirements applicable to U.S. banks and bank/financial holding companies. These risk-based capital guidelines take into consideration risk factors, as defined by regulation, associated with various categories of assets, both on and off-balance sheet. Refer to the discussion of the capital adequacy requirements in Supervision and Regulatio n in Item 1 of this Annual Report on Form 10-K.
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Under the Basel III guidelines, capital strength is measured in three tiers, which are used in conjunction with risk-adjusted assets to determine the risk-based capital ratios. The guidelines require an 8% total risk-based capital ratio, of which 6% must be Tier 1 capital and 4.5% must be CET1. Our CET1 capital primarily includes shareholders' equity less certain deductions for goodwill and other intangibles, net of taxes, net unrealized gains (losses) on AFS securities, net of tax, net unrealized gains (losses) related to fair value of liabilities, net of tax, and certain deferred tax assets that arise from tax loss and credit carry-forwards, and totaled $6.1 billion as of December 31, 2025. Tier 1 capital is primarily comprised of CET1 capital, less certain additional deductions applied during the phase-in period, and totaled $6.1 billion as of December 31, 2025. Tier 2 capital components include all, or a portion of, the ACL in excess of Tier 1 statutory limits and combined trust preferred security debt issuances. The total of Tier 1 capital plus Tier 2 capital components is referred to as Total Risk-Based Capital and was $7.0 billion as of December 31, 2025.
A minimum leverage ratio is required in addition to the risk-based capital standards and is defined as period-end shareholders' equity, less accumulated other comprehensive income, goodwill, and deposit-based intangibles, divided by average assets as adjusted for goodwill and other intangible assets. Although a minimum leverage ratio of 4% is required for the highest-rated financial holding companies that are not undertaking significant expansion programs, the Federal Reserve may require a financial holding company to maintain a leverage ratio greater than 4% if it is experiencing or anticipating significant growth or is operating with less than well-diversified risks in the opinion of the Federal Reserve. The Federal Reserve uses the leverage and risk-based capital ratios to assess capital adequacy of banks and financial holding companies.
The following table sets forth the Company's and the Bank's capital ratios as of December 31, 2025 and 2024:
Company
Bank
CET1 risk-based capital ratio
Tier 1 risk-based capital ratio
Total risk-based capital ratio
Leverage ratio
Basel III also requires all banking organizations to maintain a 2.50% capital conservation buffer above the minimum risk-based capital requirements to avoid certain limitations on capital distributions, stock repurchases, and discretionary bonus payments to executive officers. The capital conservation buffer is exclusively comprised of CET1 capital, and it applies to each of the three risk-based capital ratios but not to the leverage ratio. The CET1, Tier 1, and total capital ratio minimums inclusive of the capital conservation buffer were 7.00%, 8.50%, and 10.50%, respectively. As of December 31, 2025, the Company and Bank were in compliance with the capital conservation buffer requirements.
The most recent notification from the FDIC categorized the Bank as "well-capitalized" under the regulatory framework for prompt corrective action and management is not aware of any conditions or events since that notification that would change the Bank's regulatory capital category. As of December 31, 2025, all four of the capital ratios of the Bank exceeded the minimum ratios required by federal regulation. Management monitors these ratios on a regular basis to ensure that the Bank remains within regulatory guidelines.
The Company's dividend policy considers earnings, regulatory capital levels, the overall payout ratio, and expected asset growth to determine the amount of dividends declared, if any, on a quarterly basis. There is no assurance that future cash dividends on shares of common stock will be declared or increased. We cannot predict the extent of the economic decline that could result in inadequate earnings, regulatory restrictions and limitations, changes to our capital requirements, or a decision to increase capital by retention of earnings, that may result in the inability to pay dividends at previous levels, or at all.
During 2025, Columbia declared a cash dividend of $0.36 per share of common stock for the first three quarters and a cash dividend of $0.37 per share of common stock for the fourth quarter. These dividends were made pursuant to our existing dividend policy and in consideration of, among other things, earnings, regulatory capital levels, the overall payout ratio, and expected asset growth.
The payment of future cash dividends is at the discretion of our Board and subject to a number of factors, including results of operations, general business conditions, growth, financial condition, and other factors deemed relevant by the Board. Further, our ability to pay future cash dividends is subject to certain regulatory requirements and restrictions discussed in the Supervision and Regulation section in Item 1 of this Annual Report on Form 10-K.
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The following table presents cash dividends declared and dividend payout ratios (dividends declared per common share divided by basic earnings per common share) for the years ended December 31, 2025, 2024, and 2023:
Dividend declared per common share (1)
Dividend payout ratio
(1) Periods prior to February 28, 2023 were restated in 2023 as a result of the adjustment to common shares outstanding based on the exchange ratio from the Company's merger with UHC of 0.5958.
As of December 31, 2025, the Company has authorization from its Board to repurchase of up to $700 million of shares of common stock. Authorization for such share repurchase program will expire on November 30, 2026. As of December 31, 2025, $600 million remained available to repurchase shares under this program. The Company repurchased 3.7 million common shares under the current repurchase plan as of December 31, 2025, but did not repurchase any shares during 2024. The timing and amount of future repurchases will depend upon the market price for our common stock, securities laws restricting repurchases, asset growth, earnings, our capital plan, and bank or bank holding company regulatory approvals. In addition, our stock plans provide that award holders may pay for the exercise price and tax withholdings in part or entirely by tendering previously held shares.
The Company is committed to managing capital to maintain strong protection for depositors and creditors and to expand capital return to its shareholders. The Company also manages its capital to exceed regulatory capital requirements for banking organizations. The regulatory capital requirements effective for the Company follow Basel III, with the Company being subject to calculating its capital adequacy as a percentage of risk-weighted assets under the standardized approach. All regulatory ratios exceeded regulatory "well-capitalized" requirements.
Management will continue to monitor capital adequacy in light of evolving regulatory requirements, economic conditions, and growth objectives. Potential risks include economic downturns, changes in regulatory capital standards, and shifts in asset growth or earnings that could impact the ability to pay dividends or repurchase shares. The Company’s capital planning process is designed to ensure sufficient capital is maintained to support operations, absorb losses, and meet regulatory expectations.
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