The $121.5m deal comes after Columbia Banking purchased West Coast Bancorp in 2013.
Columbia Banking signed a definitive agreement earlier this year to buy Intermountain Community Bancorp. Following the acquisition, the combined company has around $8.2bn in assets and more than 150 branches across Washington, Oregon and Idaho.
As part of the transaction, Panhandle State Bank is merged with and into Columbia State Bank.
Intermountain chairman Ford Elsaesser is appointed to serve Columbia’s board and the board of Columbia State Bank.
Columbia president and CEO Melanie Dressel said: "This acquisition marks our entry into the Idaho market and furthers our long stated objective of being the leading Pacific Northwest regional community bank.
"The complementary aspects of the companies’ businesses, including customer focus, business orientation and compatibility of values and operating styles, make the merger a natural fit."
Keefe, Bruyette & Woods and Sandler O’Neill + Partners have provided financial advisory services to Columbia and Intermountain on the transaction.
