Columbia Banking System (NASDAQ:COLB) is making a bold move in a tough environment. The $2 billion all-stock acquisition of Pacific Premier Bancorp isn't just another regional bank dealit's a statement. Despite the sting of $867 million in writedowns tied to Pacific Premier's long-duration securities (a hangover from pre-Fed hike optimism), Columbia is betting that strong capital, cheap valuation, and operational upside are worth the hit. The purchase price? Slightly under tangible book valueabout 25% below the 2024 M&A average. But to Columbia, that's not a red flagit's an opportunity.

• Warning! GuruFocus has detected 4 Warning Signs with COLB.

Dig a little deeper, and it's clear why Columbia pulled the trigger. Pacific Premier's Common Equity Tier 1 capital ratio stands at a staggering 17%more than double the regulatory minimum. CEO Steven Gardner has been quietly building a war chest while others watched portfolios bleed. Columbia plans to tap into that buffer through purchase accounting, revaluing assets to market and resetting expectations. Among the underappreciated gems: Pacific Premier's sticky low-cost deposit base, including trust and escrow accounts, plus a long-duration securities portfolio that, while battered, could become an earnings tailwind if rates fall. Columbia also expects to strip out 30% of Pacific Premier's non-interest expensesroughly $127 million in annual pre-tax savings.

More importantly, this could mark the turning point for regional bank M&A. Columbia's last dealUmpquadragged for 18 months amid regulatory gridlock. This time, the tone has shifted. Approvals are speeding up. Politics are cooling down. And if Columbia can make this workabsorbing losses, extracting synergies, and resetting the clockexpect other regionals to follow suit. Deals may be getting smaller and cheaper, but they're also getting smarter.