Columbia Banking System, Inc (COLB) Q2 2025 Earnings Call Transcript

Columbia Banking System, Inc (NASDAQ: COLB) Q2 2025 Earnings Call dated Jul. 24, 2025

Corporate Participants:

Jacquelynne Bohlen — Head, Investor Relations

Clint E. Stein — President and Chief Executive Officer

Ron Farnsworth — Chief Financial Officer

Christopher M. Merrywell — President, Consumer Banking

Torran Nixon — President of Commercial Banking

Analysts:

David P. Feaster — Analyst

Matthew T. Clark — Analyst

Jeffrey Allen Rulis — Analyst

Christopher McGratty — Analyst

Presentation:

Operator

Hello, and welcome to Columbia Banking System Second Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session [Operator Instructions]

I would now like to turn the conference over to Jacque Bohlen, Investor Relations Director to begin the call. You may begin.

Jacquelynne Bohlen — Head, Investor Relations

Thank you, Tawanda. Good afternoon, everyone. Thank you for joining us as we review our second quarter results. The earnings release and corresponding presentation are available on our website at columbiabankingsystem.com

During today’s call we will make forward-looking statements, which are subject to risks and uncertainties and are intended to be covered by the safe harbor provisions of federal securities law. For a list of factors that may cause actual results to differ materially from expectations, please refer to the disclosures contained within our SEC filings. We will also reference non-GAAP financial measures and I encourage you to review the non-GAAP reconciliations provided in our earnings materials.

I will now hand the call over to Columbia’s President and CEO, Clint Stein.

Clint E. Stein — President and Chief Executive Officer

Thank you, Jacque. Good afternoon, everyone. Our second quarter operating results are up 14% from the year ago quarter. Our improved performance is a product of our focus on profitability, balance sheet optimization and the impact of our operational efficiency initiative we executed during the first half of 2024.

The results of the initiative and ensuing organizational focus on stable recurring performance is evident in our results over the past six quarters. Specific to the current quarter, our net interest margin expanded, we had a meaningful increase in our core fee income, continued our disciplined approach to expenses and our credit metrics remain healthy.

Our loan portfolio was up slightly at quarter end and I’m pleased with its ongoing remix. Commercial loan growth offset intentional runoff in transactional real estate loans. Collaboration across teams and departments, the cornerstone of our Business Bank of Choice strategy, enabled us to win business and attract new relationships. We continue to prioritize profitability and credit quality over growth for growth’s sake.

Deposit balances declined during the second quarter due to anticipated seasonal activity such as tax payments and owner distributions. Customers also continue to use their own cash to make investments in their businesses or pay down debt. While this serves as a headwind to both loan and deposit growth, it speaks to the quality of our customers. Columbia has always been a through the cycle lender to top business operators within their industries.

Macroeconomic uncertainty around tariffs is causing companies to pivot in a manner best suited for their business. For some, this creates opportunities for growth and market share gain. For others, it drives a conservative outlook that has the limited need to borrow and has elongated our pipelines. Our disciplined approach and deep relationships continue to serve us well.

Columbia is positioned to not only navigate the current environment but to capitalize on strategic opportunities, including our upcoming acquisition of Pacific Premier. Integration planning remains on track as both companies hosted their individual special shareholders meeting earlier this week and we received overwhelming approval for the transaction.

Since the announcement in April, I have said many times that Pacific Premier is the most seasoned counterparty we have ever worked with. Pac Premier’s prior M&A experience contributes to the continued excitement we see from their employees who will join our team. They’re raring to go, impatiently waiting to become part of Columbia. The M&A experience of Steve, Eddie and the entire Pac Premier organization has us well positioned for a smooth and timely closing, which we believe could come as early as September 1st. Although integrating Pacific Premier is our highest priority, its impact on our overall current operations is minimal.

Approximately 100, or roughly 2%, of Columbia’s 4,700 associates are focused on integration activities. The remaining 98% are running and growing our company. We continue to plan for the future by strategically expanding and adjusting our footprint. Investment and improvement in our tech stack remains a priority as we are constantly anticipating our needs one, three, five and in some cases 10 years into the future.

For instance, we are not losing ground on AI. Today, we have 83 different platforms and solutions that use a form of AI that ranges from basic to powerful. We have one group focused on running our current AI solutions and implementation of successful use cases that can improve operational effectiveness and employee efficiency, and another group that focuses on fintech partnerships and longer term emerging opportunities. For example, we are evaluating the legislative changes and proposals surrounding stablecoin. We are studying and monitoring developments so we’re ready to make informed decisions when it’s time to act.

We continue to enhance our embedded banking capabilities to make banking easier for our customers and attract new business. Our embedded banking capabilities will get supercharged by Pacific Premier’s existing solutions. What Pac Premier brings to the tech stack is so impressive that we recently announced internally that the Pac Premier Chief Information Officer will remain as the CIO of Columbia. Tom and I have already had strategic technology discussions that span well beyond our anticipated systems conversion in early ’26.

Over the past year, we have discussed the reinvestment of a portion of the 2024 expense initiative reductions into growing our density in Southern California. Considering the market density Pac Premier provides us, we are shifting this investment to the Intermountain states, specifically Utah and Colorado as we look to build a meaningful presence organically in these markets.

We often say, people are Columbia’s greatest asset. We continue to put action behind this statement with investment in our people as we develop the next generation of leadership of our company. We have an expanded internship program and added to our robust in house educational offerings. We are sending a record number of people to banking school this year and we expanded our executive leadership talent with the addition of Judi Giem, who joined Columbia in June as our CHRO.

Judi brings over 20 years of comprehensive human resource leadership experience for publicly traded companies. She’s also overseen the workforce and cultural integration of multiple newly combined companies. In eight short weeks, Judi has already advanced our human capital management activities and we’re thrilled to have her on the team.

And as previously announced, we are unifying our brand under the Columbia name. Effective July 1st, Umpqua Bank changed its legal name to Columbia Bank and we will begin doing business publicly under the Columbia Bank name and brand beginning September 1st. Our simplified family of brands ensures clarity as we deepen our presence throughout the West.

It’s a busy and exciting time at Columbia and I want to thank our associates for their hard work and contribution to another period of solid performance with our second quarter results. I’m as enthusiastic as I have ever been in my 20 years with Columbia, about our future as we continue to serve our customers and communities in support of generating long-term shareholder value.

I’ll now turn the call over to Ron.

Ron Farnsworth — Chief Financial Officer

Okay. Thank you, Clint. We reported second quarter EPS of $0.73 and operating EPS of $0.76. Operating excludes merger and restructuring expense along with other fair value and hedging items detailed in our non-GAAP disclosures, which I encourage you to review.

Our operating return on average tangible equity was 16.85%, while operating PPNR increased 14% from the first quarter to $242 million. The main drivers for earnings and operating PPNR growth this quarter were rising earning asset yields and lower cost of interesting liabilities, both driving a 15 basis point improvement in our NIM along with improving core fee non-interest income and flat operating non-interest expense, the textbook definition of operating leverage.

On the balance sheet, we increased available for sale investments by 5% to reduce our pro forma asset sensitivity and use wholesale borrowings to fund this along with seasonal customer deposit outflows.

Our tangible book value per share increased by 3%, while regulatory capital ratios continue to build with our Tier 1 common at 10.8% and total risk-based capital ratio at 13%. Capital ratios will continue to build allowing for additional forms of allocation and shareholder return next year.

I mentioned earlier, our NIM increased 15 basis points to 3.75% this quarter. A little over half of that came from higher investment securities yields, which can fluctuate a bit due to varying CPRA speeds.

We also got a 1 basis point benefit from an interest recovery, but more fundamentally we saw higher loan yields added about 5 basis points to the NIM and lower funding costs added about 1 basis point, so good underlying trends.

Our provision for credit loss was $29 million for the quarter and our overall allowance for credit losses remains robust at 1.17% of total loans. In non-interest income with $64.5 million for the quarter. On Page 22 of our earnings release, we detail the non-operating fair value changes excluding those items our operating non-interest income of $65.1 million for Q2 was up $8 million or 14% reflecting strong core fee income growth.

Also noted on Page 22, total GAAP expense for the quarter was $278 million, while operating expenses were relatively flat with Q1 at $269 million. Annual lists and compensation and incentives were offset by lower services, marketing and other expense along with lower intangible amortization.

Now I’ll hand the call to Chris.

Christopher M. Merrywell — President, Consumer Banking

Thanks, Ron. As Clint noted, seasonal tax payments in April contributed to customer balance contraction during the second quarter quarter, which followed strong customer balance growth in March. Customers also put their deposits to work by paying down debt and moving funds into our wealth management products. In aggregate, these trends reduced our commercial and consumer balances during the second quarter, but we saw modest growth in our small business deposits.

Our recent campaign, which ran through mid July, brought over $450 million in new core deposits to the bank, offsetting other balance declines. The campaign was also successful in generating new SBA relationships.

Loan growth was centered in commercial portfolios during the quarter, as owner occupied CRE and commercial line balance increases offset multifamily and residential loan contraction. Our teams remain focused on relationship driven activity, which includes core income, core fee income generation. As Ron noted, operating non-interest income was up $8 million from the prior quarter due to higher card based fee income, swap related income, financial services and trust revenue along with our other core banking income sources.

We continue to target a higher contribution from core fee income to overall revenue and we see revenue synergy opportunities through the Pacific Premier acquisition. Not only will Pacific Premier’s custodial trust business complement our existing wealth management platform, but their expertise in HOA banking, Escrow and 1031 Exchange businesses also offer additional revenue generating opportunities. We also expect to see deeper customer relationships as we introduce Pacific Premier branches to the CB way, which proactively offers need-based solutions to our customers.

We enhanced our customer and community support with the recent opening of three branches. We added a second location in Phoenix and our first in Mesa to go along with our Scottsdale, Arizona office bringing the branch count to four, as we effectively serve this attractive and growing market in the state. We also opened a branch in Eastern Oregon, restoring essential banking services to a bankless rural community. Our De Novo branch strategy supports bankers already serving customers in our markets and strengthens opportunities to bring new relationships to Columbia.

I will now hand the call back to Clint.

Clint E. Stein — President and Chief Executive Officer

Thanks, Chris. We remain laser focused on optimizing our financial performance and enhancing long-term tangible book value. We also expect to return excess capital to our shareholders. Our CET1 and total capital ratios were 10.8% and 13% at quarter end, both well above our long-term targets. We expect our acquisition of Pacific Premier to meaningfully enhance our capital generation capabilities, which already exceed what is required to support prudent growth and our regular dividend. In the near future, as we integrate Pacific Premier, we will have additional flexibility to return excess capital.

This concludes our prepared remarks. Chris, Tory, Ron, Frank and I are happy to take your questions now. Tawanda, please open the call for Q&A.

Questions and Answers:

Operator

Thank you [Operator Instructions] Our first question comes from the line of David Feaster with Raymond James. Your line is open.

David P. Feaster

Hey. Good afternoon everybody.

Clint E. Stein

Hey, David.

David P. Feaster

I wanted to start on kind of the growth side and the loan side. You touched on, you can see it in the deck. You got a double digit increase in originations. I was hoping you could touch on what’s driving that? Is that client demand increasing maybe just given a bit more certainty or less fears around the tariffs? Or is it more a function of just increasing productivity of your bankers and market share gains? Just kind of curious your thoughts on that client sentiment and just how do you think about, originations ultimately maybe being able to outpace strategic runoff and the payoffs and pay downs in the remainder of the year?

Clint E. Stein

As usual, David, I think in every quarter you probably get this comment from you pack a lot into a single question. But I’ll start off and then maybe see if Tory and Chris have anything to add. I think it’s a combination. If you look at the roll forward that we have in the earnings deck, it really kind of tells the story and we’ve seen this over the years from time to time, depending on the macroeconomic environment where, bottom line growth maybe is hard to come by because of what’s going on in our established book with businesses selling and or the strength of their balance sheet, and using their own cash as opposed to borrowing.

So when I look at the activities and the excitement that our bankers have, we had the opportunity to have breakfast with a handful of leaders in one of our markets yesterday and they’re still just very excited about the opportunities that they’re seeing. So I think it is in those newer markets that they’re doing the right things and they’re putting totals on the books, and then that helps kind of the current of the runoff in the legacy portfolio, either through amortizations or just pay down some prepayment, but broadly it’s utilization of cash when we see that activity. We’re not really experiencing what we’d call leakage through the back door with customers going elsewhere. That’s my two cents. I’ll step back and see if Tory has anything to add.

Torran Nixon

Okay. Yeah, thanks. This is Tory. I would echo all of Clint’s comments. Actually really quite excited and happy with the activity level. Certainly in the commercial, with the commercial RMs, we had production for the quarter which is roughly, 30% higher than Q1 and about 18% higher than Q2 last year. So the activity level is really strong and really good.

Coming from de novo markets, coming from our legacy markets, a lot of, lot of good momentum on the C&I front, I think, in particular with everything that’s going on in the economy, we were just subject to some payoffs or company sales, just things a little more abnormality than usual. But the pipeline’s strong, the activities are good and feel great about the banker’s ability to deepen relationships and bring new relationships into the company.

David P. Feaster

Okay, that’s great. And then, maybe just I’m curious with the deal close approaching, encouraged by your commentary about potentially even closing it by September 1st, it’s much swifter timeline for approval and closing than the last deal. A testament to the improving regulatory backdrop, I guess. Just, I’m just kind of curious. Has your thoughts on the optimization of Pacific Premier’s balance sheet changed at all or is there anything that maybe you execute ahead of the close? Just kind of given the increased certainty and visibility into close.

Clint E. Stein

There’s several different threads we could pull on that. If it’s specific to the Pac Premier balance sheet, we would want to take advantage of getting the day one fair value marks. Otherwise, you hard code a loss in there. We have done a little bit in terms of just, Ron did some pre purchase of some securities that we think that better fit the portfolio and so we’ve done that. And then we’ll sell some of the securities that are in the Pac Premier book.

In terms of other things like specific to loans and things of that nature. We’ve looked at a lot of different scenarios and we’re very active in looking at what those scenarios are. Broadly we have zero credit concerns. So that’s something that gives us pause given that these things will reset to a market rate with purchase accounting. But nonetheless, we’re still challenging ourselves to look at multiple scenarios. I don’t know Ron, you have anything to add?

Ron Farnsworth

I think you hit the nail on the head.

David P. Feaster

Okay, that’s helpful. And then maybe last one for me, I mean Chris touched on a focus on increasing fee revenue contributions. You guys have done a great job building out some fee income lines. Pac Premier also brings a couple unique business lines. I’m curious, maybe some of the initiatives on the fee income side that you’ve got and then just is there anything as sitting here as a $70 billion asset bank like that you need or other lines or anything that you might need to be more competitive in that, as just being a much larger financial institution.

Is there anything that needs to be built out?

Torran Nixon

Okay. David, it’s Tory. So let me start with initiatives first. I think there are quite a few and we purposefully have been working the fee side of the house for quite some time. I mean several years and there’s tremendous momentum kind of quarter after quarter after quarter. And it’s very deliberate starting with full relationship banking, making sure that if we’re going to lend money to somebody, we have their deposits and we have as much of their fee income business as we can get.

And, we’ve got a few initiatives where we’ve looked at, first of all we talked about just four in previous calls, but we have a, a predictive analytics program that provides kind of a next best offer based on customers activity in their accounts and we feed those to the treasury management folks and the RMs throughout the company, kind of like a 50% closure rate on that. So it’s working extraordinarily well.

We do, we have full relationship review process that we do throughout the company. We do something called working capital assessments. We where we get together and kind of whiteboard with our commercial customers on how they use their cash in their entire working capital cycle to look for opportunities to provide kind of a needs based solution. So it’s very deliberate in the approach and it’s producing a lot of really strong results. And I’ll just give you a couple of numbers that I think we look at. Chris and I look at all the time.

On the treasury management side kind of year-over-year we’re up 6%. In commercial card year-over-year we’re up 14%, in merchant services, we’re up 10%. In international banking, we’re up 50%. On the trust side, we’re up 12%. So we’ve got some really nice momentum spread throughout the company. And, it’s something that personally I’m very, proud of the team’s results and looking forward to continuing to do it quarter-after-quarter.

So Chris, anything else you want to add to that?

Christopher M. Merrywell

Yeah. Thanks, Tory. David, I’d add in there. You think about the initiatives that we’ve been running now for, year and a half or so, that focus on small business, that goes to where Tory was talking about corporate card and merchant and things of that nature. And our private bank healthcare teams have done a pretty good job of when they’re winning business, utilizing those capabilities to bring in that corporate card and that merchant as well. And those are some pretty significant opportunities.

Torran Nixon

Just one more add on to that would be last part of your question on Pacific Premier. Obviously, I think we have a great product set and I don’t think there’s anything we’re missing from a product standpoint. And we’re super excited about the Pacific Premier becoming a part of the Columbia family. Great opportunity on the fee side there as well with commercial card in particular, treasury management, our leasing business, kind of some great, great stuff ahead of us.

David P. Feaster

That’s awesome. Thanks everybody.

Operator

Thank you. Please stand-by for our next question. Our next question comes from the line of Matthew Clark with Piper Sandler. Your line is open.

Matthew T. Clark

Hey. Good afternoon, everyone. Thanks for the question. Just a quick one on accretion. I know you guys, it looks like you pulled it out of the deck and I know most of that accretion is real. It’s not credit mark related that disappears. So but for the sake of modeling, would you be able to provide us that number? And I know there was a recovery on the loan within the loan yield, $2 million I think you called out. But just trying to drill down on the interest income a little.

Ron Farnsworth

Yeah, Matt. Yeah, obviously we view the, the income as core driven by rate, not credit. The credit mark was 3 bps consistent with Q1. But back to from a modeling standpoint I would utilize, the yields you see for the quarter along with Slide 24 it is in our deck. It’s got some great data there just from a repricing standpoint around loans and deposits. And then the bond portfolio is pretty static. We’ve got a good slide on the bond portfolio but you can see the yield there from a modeling standpoint. And the key there is duration.

Matthew T. Clark

Okay. And then just the securities growth you had in the quarter, the borrowings, the increase in borrowings and some brokered. I mean how much of that is related to the PPBI deal and how should we think about those balances going forward?

Ron Farnsworth

Yeah, no, we did back in late April we added $600 million of par but it was about $500 million of books. So deeply discounted bonds, low coupon type stuff with duration and the goal with that was to reduce the pro forma asset sensitivity of the combined company post close. We utilize wholesale funds for that and we’ll pay those off as Clint mentioned. Right. Post-close once we sell off a portion of their portfolio.

Matthew T. Clark

Okay. And then just any updated thoughts on deposit, the deposit growth outlook, Legacy Columbia x PPBI and, any thoughts on your updated thoughts on your pricing strategy? I mean looks like you’ve held rates fairly stable since April and whether or not you might get ahead of the fed or kind of wait for the fed to cut.

Christopher M. Merrywell

Yeah. Thanks, Matt. This is Chris. Yeah, we kind of, we’ve slowed the repricing on that aspect. I think the teams did a fabulous job of working through this, working through the decreased cycle, but they had actually started much in front of that. And so there was, I think that that has given us this time period of things have been pretty stable. We see some competitors that will periodically go out there and offer up in excess of 4% for certain things. We see a few case-by-case offers, exception offers that are made but we’re feeling pretty good about our ability to compete with those where we fall in the stack ranking of kind of the lowest to highest rates.

And but we’re always looking at the portfolios we’re always looking at the tranches that are in there and if we can make a minor tweak of 1 basis point or 2, we certainly will. So it’s a very active process that we go through both from the competitive market and then just looking into what our flows are on the backside as well.

CD pricing has been pretty much solid and the same since for six plus months and not seeing a lot of activity. We’re still renewing at a rate that we’re satisfied with and those rates continue to come down. That’s going to slow out in the future, as you would expect. And then more importantly, and I’ll let Tory talk about this as well, is it’s the new business, it’s the people going out and winning accounts, winning the new relationships and getting those added. The total, it is offset a little bit somewhat as we saw in the first six months of this year and it built in the second quarter with taking advantage of some of our wealth management activities as well.

So, Tory.

Torran Nixon

Yeah, not a lot to add. I mean, I think the second quarter was kind of seasonal, what we would expect. We were a couple lumpy deposit outflows at the end of the quarter. Big distributions by companies or company sales dollars came in and then went to trust or some other place and starting to see a normal resurgence a little bit in Q3. So it feels, it feels very normal. And as I said earlier, I think with this real strong concept of full relationship banking, I mean all the bankers throughout the company know that it’s about loans, deposits and core fee income.

Matthew T. Clark

Okay. And then last one for me maybe for Clint, just your appetite for cleaning up the capital stack and from, legacy Umpqua. What, just speak to the opportunity there and your appetite if you could. Thanks.

Clint E. Stein

Yeah. Well, Matt, you’ve known me for a long time and, I like as clean of a capital stack as possible. And, we’ve done some analysis and we look at what the capital stack of our pier banks looks like. And, in addition to the excess capital generation that we expect that we’ve, that we’ve had really over the last 2.5 years and we expect that to accelerate with Pac Premier. And so I think that gives us a lot of flexibility as we move forward to clean some things up and optimize that capital stack.

Matthew T. Clark

Okay. Thanks again.

Clint E. Stein

Thanks, Matt.

Operator

Please stand by for our next question. Our next question comes from the line of Jeff Rulis with D.A. Davison. Your line is open.

Jeffrey Allen Rulis

Thanks. Good afternoon.

Clint E. Stein

Hi, Jeff.

Jeffrey Allen Rulis

Wanted to check-in on Slide 28 again the, the $6 billion of transactional assets. You have kind of a timeline or maturity schedule on that or kind of a forecast on how long that would take to kind of purge from the balance sheet.

Clint E. Stein

Yeah, it depends on a couple of factors. So one, if the fed were to lower rates, probably what we’re on 150 basis points or so, that would certainly give us the opportunity to accelerate those as a lot of those would enter into kind of a refi window and we just wouldn’t be competitive and they would run off to someplace else. Otherwise, as we think about kind of the repricing, we had some repricing this quarter. We have some more that as we go through the rest of the balance of ’25. ’26 it really starts to pick up from a repricing standpoint ’27, ’28.

So that’s really kind of the timeline. I’ve said this before to various investors that we’ve been talking about this for nearly a year and a half and I wish there was an easy fix. The easy fix isn’t the one that creates the most shareholder value. The easy fix would be just to rip the band aid and sell them. But the earn back on that would be about 10 years and so when we’re looking at a two to three year kind of workout and wind down of these portfolios that makes the most economic sense.

Jeffrey Allen Rulis

Got you. Yeah, I understood that, tough to the sales could accelerate but just trying to get a sense on a net growth I guess through the end of ’26 is a reasonable window. Would you say that, a quarter of that balance if just straight maturities could exit or, just trying to put a number on it, because it’s against growth that you talked a lot about the origination activity and positive about that, but the net effect of that is how much you’re really going to grow in ’26.

Clint E. Stein

Yeah, what I’d point you back to is that right now these portfolios are an earnings headwind for us. So we can improve and increase profitability through the repricing and or runoff in those as we affect this remix. So I know that a lot of models are just based on a growth projection, but that doesn’t take into account the kind of the earnings headwind that we’re replacing this with as well as what we’re replacing it with are new C&I names and full relationships that have fee income capabilities and all the things that Tory previously discussed.

So I think that you could see growth remain muted, you could even see us contract the balance sheet a little bit, but we’d end up with a more profitable institution and that’s really what I was trying to drive home in my prepared remarks when I said, we’re going to stick to our discipline and not grow just for the sake of growth.

Jeffrey Allen Rulis

Got you. Thanks. Clint, on the — maybe on the margin just circling back Ron, sounds like the securities yield bump pretty considerable this quarter with the timing of those purchases ie., could there be a tail of benefit that stretches into Q3 on that? I’m trying to get into where you think on margin from a carry forward basis.

Ron Farnsworth

Yeah, I mean those were done late in April and granted when we close with PPBI, we’ll have the ability to restructure that portfolio as well. So there should be all else being equal bit of a lift into Q3 just from a full margin, full quarter margin standpoint of the investment yields. But keep in mind, we put them on with wholesale funds.

So, the net margin of that just trade in and of itself was not intended to approximate our margin for this, month or two or a couple month period of time prior to close. So we will expand that back out post close with reducing the wholesale funds we put them on with. So another long winded way of saying, I think the second quarter bond yields are closer to the norm than the first quarter. The first quarter was artificially low.

Jeffrey Allen Rulis

Ron, what was the margin for the month of June?

Ron Farnsworth

Month of June margin would have been 379 adjusted for timing differences throughout the quarter.

Jeffrey Allen Rulis

Got it. And then last one just on the expense base, can we look at, $278 reported if we x the acquisition expenses is $270 of a firm number to kind of grow off of or flatline. Any comment on expense levels from here pre PPBI?

Clint E. Stein

Yeah. Jeff, this is Clint. I’ll say a couple of things and then turn it over to Ron. Part of what we talked about was that we were going to invest in increasing our density in Southern California. And so we overshot our 2024 expense initiative to create some expense offsets to enable us to do that. With Pac Premier and what that brings to us, we no longer need to do that, but it creates an opportunity to then go to phase two of our long-term organic growth strategy, which was to make those investments in the intermountain states and specifically Utah and Colorado, and Arizona. And so we’re actively in that process. But it’s delayed the actual spend and hitting our run rate.

So I think if you go with the $270 and cast that forward it’s going to be a little bit light because it’s not going to include that level of investment. I’ll step back and let Ron clean up anything that I mentioned.

Ron Farnsworth

No, I think you’re spot on because we talked earlier in the year about a range for ’25 of $1 billion to $1.01 billion of expense x CDI amortization. And here the last couple quarters, we’ve come in below that $975 this quarter on that measure and it goes right to what Clint just talked about.

Jeffrey Allen Rulis

Okay. Thank you.

Ron Farnsworth

Yep, thanks.

Operator

[Operator Instructions] Our next question comes from the line of Chris McGratty with KBW. Your line is open.

Christopher McGratty

Great. Thanks for the question. Clint and Ron, I want to make sure I get the balance sheet size right. That’s kind of where my head’s spinning. If I think about the two earning asset bases, it’s 48 and 16 to get to 64. I’m trying to get a sense of kind of pro forma. Is there anything, it seems like you, you upped it about 400, 500 with the purchases. But is that just you’re going to sell a piece of that PPBI $3.5 billion loans?

Clint E. Stein

I’m just trying to get to kind of an opening day earning asset base to go from. Yeah, yeah. I’d say at close we’ll net sell half a billion dollars of PPBI bonds where the marks are hard coded to pay down the wholesale funding that we put on as part of this trade in late April.

Christopher McGratty

Okay. So my math on kind of mid-60s earning assets would seem reasonable.

Clint E. Stein

Yes.

Christopher McGratty

Okay, perfect. Thank you for that. And then in terms of the margin, again, just clarification. The — has your combined margins of the two companies structurally changed? You announced a merger. Obviously your bond yields were up, notably. But is the structural combined margin of these two companies materially different than 90 days ago?

Ron Farnsworth

I say, well, our margins increased compared to 90 days ago. And again, when you look back at the — when you look to the combined effects of the deal, I just default back to the materials. We also included here in the appendix of the earnings presentation around the deal math. So that’s really more a function of where are those NIMs at today compared to what was in the consensus which was the basis for the math.

Christopher M. Merrywell

Okay. But the message is you’re feeling better about your margin. I can make the assumption on PPBI. Okay, thanks. Appreciate it.

Operator

Thank you. Ladies and gentlemen, I am showing no further questions in the queue. I would now like to turn the call back over to Jacque for closing remarks.

Jacquelynne Bohlen

Thank you, Tawanda. Thank you for joining this afternoon’s call. Please contact me if you have any questions or would like to schedule a follow up discussion with members of management. Have a good rest of the day.

Operator

[Operator Closing Remarks]