Key Takeaways COLB offers a 5.1% dividend yield and a $700M buyback plan, backed by strong capital levels.The Pacific Premier deal is set to deliver $127M in annual cost savings, $48M realized so far.COLB trades at 9.55X forward earnings, below peers and sector averages, despite improving fundamentals.Columbia Banking (COLB) has leaned into dividend income and share buybacks while it integrates Pacific Premier. The balance sheet and margin profile give management room to reward shareholders, with execution ...

Core Viewpoint - Columbia Banking System (COLB) is focusing on relationship deposits, funding mix shifts, and fee growth to protect its net interest margin (NIM) as the interest rate cycle changes [1] Group 1: NIM and Financial Performance - Columbia Banking's NIM improved to 3.84% in 3Q25 from 3.56% a year ago, with expectations of NIM being "just north of" 3.90% in 4Q25 and 1Q26 [2] - The bank's deposits are granular and diversified, with a focus on full-relationship funding and proactive repricing, targeting deposit betas around 50% for rate cuts to support NIM expansion [3][9] - Columbia Banking is expected to manage down $8 billion of inherited transactional loans over approximately eight quarters starting from 3Q25, reallocating towards relationship commercial and industrial (C&I) and owner-occupied commercial real estate (CRE) [5] Group 2: Strategic Initiatives and Synergies - The merger with Pacific Premier has increased cross-selling opportunities, generating over 1,200 referrals since closing, which has contributed to deposit inflows [4][9] - Management's near-term focus includes cost normalization after systems work in 1Q26 and achieving full synergy capture by 3Q26 [1] Group 3: Market Position and Competitors - Columbia Banking currently holds a Zacks Rank 3 (Hold), indicating a balanced outlook, with key points to monitor including the 1Q26 system conversion and quarterly NIM outcomes [6] - Key peers include East West Bancorp (Zacks Rank 2) and Zions Bancorporation (Zacks Rank 2), both of which are experiencing varying impacts on their NIM due to market conditions [7][8]

Core Insights - Columbia Banking System (COLB) is shifting from transactional loans to full relationship banking following the Pacific Premier acquisition, focusing on granular deposits and fee platforms to enhance earnings durability [1][9] Loan Strategy - Management plans to reduce $8 billion in inherited transactional loans, primarily multifamily, over eight quarters starting in Q3 2025, reallocating capital to relationship-driven commercial and industrial (C&I) and owner-occupied commercial real estate (CRE) [2][9] - As of September 30, 2025, C&I and owner-occupied CRE loans represented approximately 21% and 15% of total loans, respectively, with a focus on lending that enhances leverage and returns [4] Financial Performance - The net interest margin (NIM) improved to 3.84% in Q3 2025 from 3.56% a year earlier, driven by increased customer deposits and reduced reliance on higher-cost wholesale funding [3][9] - NIM is projected to reach 3.90% in Q4 2025 and Q1 2026, supported by lower funding costs from relationship deposits [6] Revenue Growth - Fee income from treasury management and commercial card services has expanded, with non-interest income from these services making up nearly 30% as of September 30, 2025 [7] - Management anticipates a high-teens operating return on tangible common equity (ROTCE) and earnings in the low $3s for 2026, aligning with synergy realization and the loan mix shift [7][10] Relationship Development - Columbia Banking has seen improvements in C&I production and pipelines, indicating the effectiveness of its new strategy, with over 1,200 cross-sell referrals generated since the Pacific Premier deal [5] - The acquisition is expected to enhance the breadth of products offered, supporting deeper customer relationships and increasing wallet share [4]

Core Insights - Columbia Banking System (COLB) is positioning itself for growth through its 2026 plan, focusing on margin, cost, capital, and fee income following the completion of the Pacific Premier deal in August [1] Current Position of Columbia Banking System - COLB's network now includes approximately 350 branches across eight Western states, with total deposits of $55.8 billion, loans and leases of $48.5 billion, and total assets of $67.5 billion as of September 30, 2025 [2] Margin and Interest Income - COLB's net interest margin (NIM) improved to 3.84% in Q3 2025 from 3.56% a year earlier, with expectations of NIM reaching approximately 3.90% in Q4 2025 and Q1 2026 [3] - A shift in deposit mix towards core customers and proactive repricing is expected to stabilize core net interest income (NII) into early 2026 [4] Fee Income Growth - Fee income from treasury management, commercial cards, and wealth/financial services has grown, with these services nearing 30% of non-interest income as of September 30, 2025 [5] - New platforms from the Pacific Premier acquisition are anticipated to enhance fee income through deeper customer relationships [5] Cost Management - Management aims for $127 million in annualized cost savings from the merger, with $48 million already realized by September 30, 2025 [6] - Operating expenses are projected to be between $330 million and $340 million per quarter for several quarters, with a full system conversion planned for Q1 2026 [6] Capital Position - Columbia Banking System's capital ratios improved, with a Common Equity Tier 1 (CET1) ratio of 11.6% and a total risk-based ratio of 13.4% as of Q3 2025 [7] - The board has authorized up to $700 million in share repurchases through November [7] Future Outlook for 2026 - Management anticipates a high-teens operating Return on Tangible Common Equity (ROTCE) framework for 2026, with earnings per share expected to cluster in the low $3s [10] - Execution will depend on successful integration and a shift in loan focus towards relationship-based lending [11] Integration and Cost Dynamics - Integration and restructuring costs may lead to volatility in near-term expenses until synergies are fully realized [12] - The company's office exposure was 8% of loans as of September 30, 2025, with non-performing assets increasing to nearly $200 million [12] Competitive Landscape - Competitive pricing pressures from larger banks and digital competitors could impact COLB's deposit costs, although management is actively working to defend core funding [13]

Core Insights - U.S. markets are experiencing a notable upswing, driven by expectations of further interest rate cuts by the Federal Reserve, positive global economic growth outlooks, and improving investor sentiment [1] Group 1: Investment Opportunities - Investors are advised to focus on fundamentally solid banks that offer robust dividend yields, specifically U.S. Bancorp (USB), KeyCorp (KEY), and Columbia Banking System (COLB) [2] - These banks have been identified using the Zacks Stocks Screener, with USB having a Zacks Rank 2 (Buy) and KEY and COLB both holding a Zacks Rank 3 (Hold) [3] Group 2: U.S. Bancorp (USB) - U.S. Bancorp has shown strong growth in total loans and deposits, supported by stabilizing funding costs and strategic acquisitions [7][8] - The company is focusing on artificial intelligence and digital infrastructure to enhance profitability, with a current dividend yield of 4.3% [8][10] - USB's long-term debt is $62.5 billion, with $15.4 billion in short-term borrowings and cash and due from banks totaling $66.6 billion as of September 30, 2025 [9] Group 3: KeyCorp (KEY) - KeyCorp is positioned to benefit from solid loan and deposit balances, with expectations of a 22% increase in net interest income (NII) and a 2% rise in period-end loans by 2025 [13] - The company maintains a decent liquidity position with total debt of $16.5 billion and cash and short-term investments of $15.3 billion as of September 30, 2025 [15] - KeyCorp has a dividend yield of 4.5% and has increased its dividend payout twice in the last five years [15] Group 4: Columbia Banking System (COLB) - Columbia Banking focuses on relationship banking and has expanded its footprint through strategic acquisitions, including the recent acquisition of Pacific Premier [18] - The company expects a net interest margin (NIM) of just over 3.90% in Q4 2025, with strong capital generation supporting growth [19] - COLB has a dividend yield of 5.1% and has increased its dividend payout three times in the last five years [20]

Core Insights - Columbia Banking System, Inc. (COLB) has announced a quarterly dividend of 37 cents per share, reflecting a 2.8% increase from the previous payout [1][10] - The company has a current dividend yield of 5.59%, significantly higher than the industry average of 3.27% [2] - Over the past five years, COLB has increased its dividend three times, maintaining a five-year annualized dividend growth rate of 7.05% and a payout ratio of 48% [2][4] Dividend and Capital Distribution - The upcoming dividend will be paid on December 15, 2025, to shareholders of record as of November 28, 2025 [1] - Columbia Banking has authorized a new share repurchase plan of up to $700 million, effective through November 30, 2026 [5][10] - As of September 30, 2025, the company reported total cash and cash equivalents of $2.3 billion and short-term debt of $2.9 billion, with no long-term debt [5][10] Price Performance - Over the past six months, shares of Columbia Banking have increased by 3.4%, outperforming the industry growth of 2.3% [7]

Core Points - Columbia Banking System, Inc. announced a quarterly cash dividend of $0.37 per common share, marking a 3% increase from the previous dividend declaration [1][2] - The dividend is scheduled to be paid on December 15, 2025, to shareholders of record as of November 28, 2025 [1] - The company also revealed a $700 million share repurchase program, indicating a strong commitment to returning capital to shareholders [2] Company Overview - Columbia Banking System, Inc. is headquartered in Tacoma, Washington, and is the parent company of Columbia Bank, which is the largest bank in the Northwest and one of the largest in the West [2] - Columbia Bank offers a comprehensive range of services, including retail and commercial banking, SBA lending, corporate banking, and wealth management [2] - The company emphasizes its commitment to delivering superior, personalized service while combining the resources of a national bank [2]

Core Viewpoint - HoldCo Asset Management, LP has expressed its intention to remain a long-term shareholder of Columbia Banking System, Inc. following recent concessions made by the Board and management, indicating a focus on monitoring the company's actions and capital allocation decisions [2]. Group 1: Company Overview - HoldCo Asset Management, LP is a Florida-based investment firm managing approximately $2.6 billion in regulatory assets under management [1][3]. - The firm was founded by Vik Ghei and Misha Zaitzeff [3]. Group 2: Shareholder Intentions - HoldCo disclosed ownership of common stock in Columbia Banking System, Inc., indicating an economic interest in the price of these securities [1]. - The firm does not intend to pursue a proxy contest at the 2026 Annual Meeting due to recent concessions from the Board and management [2]. - However, HoldCo has stated that it will take necessary actions to protect shareholder rights and drive value if the Board's actions are inconsistent with their expectations [2].

Earnings Performance - Earnings per diluted common share decreased to $0.40 for Q3 2025 from $0.73 in Q2 2025, primarily due to higher non-interest expenses related to the Pacific Premier acquisition [163]. - Net income for the three months ended September 30, 2025, was $96 million, a decrease from $152 million for the prior quarter, primarily due to a $115 million increase in non-interest expense [180]. - For the nine months ended September 30, 2025, net income was $335 million, down from $390 million in the same period last year, attributed to increased non-interest expenses and provisions for credit losses [181]. Interest Income and Margin - Net interest margin improved to 3.84% for Q3 2025, up from 3.75% in Q2 2025, driven by a favorable shift to lower-cost funding sources [163]. - Net interest income for the three months ended September 30, 2025, was $505 million, an increase of $59 million compared to the prior quarter [187]. - The net interest margin for the three months ended September 30, 2025, was 3.84%, up from 3.75% in the previous quarter [188]. Loan and Deposit Growth - Total loans and leases rose to $48.5 billion as of September 30, 2025, an increase of $10.8 billion since December 31, 2024, mainly from the Pacific Premier acquisition [167]. - Total deposits reached $55.8 billion as of September 30, 2025, up $14.1 billion from December 31, 2024, driven by the addition of Pacific Premier deposits [167]. - Core deposits reached $51.5 billion as of September 30, 2025, compared to $37.5 billion at December 31, 2024, reflecting a significant increase in stable funding sources [261]. Non-Interest Income and Expenses - Non-interest income increased to $77 million in Q3 2025, compared to $65 million in Q2 2025, attributed to fair value adjustments and MSR hedging activity [163]. - Non-interest expense for the nine months ended September 30, 2025, was $1.0 billion, an increase from $838 million in the same period of 2024, largely due to merger-related costs [167]. - Total non-interest expense for the nine months ended September 30, 2025, rose by 21% to $1,011 million from $838 million in the prior year, largely due to the acquisition-related costs [207]. Credit Quality and Allowance for Credit Losses - The allowance for credit losses (ACL) was $492 million as of September 30, 2025, reflecting an increase of $51 million from December 31, 2024, due to loan growth from the acquisition [167]. - Provision for credit losses was $70 million for Q3 2025, compared to $30 million in Q2 2025, reflecting initial provisions for acquired loans [168]. - Net charge-offs for the nine months ended September 30, 2025, were $81 million, a decrease of 22% from $104 million in the prior year, with a net charge-off rate of 0.28% compared to 0.37% [200]. Capital and Liquidity - Total available liquidity was $26.7 billion, representing 40% of total assets and 130% of estimated uninsured deposits as of September 30, 2025 [174]. - Shareholders' equity increased to $7.8 billion as of September 30, 2025, up $2.7 billion from December 31, 2024, driven by the fair value of common shares issued and net income of $335 million [268]. - The Company recorded $270 million in dividends paid by the Bank during the nine months ended September 30, 2025, reflecting ongoing capital returns to shareholders [264]. Acquisition Impact - The acquisition of Pacific Premier was completed on August 31, 2025, enhancing the company's footprint and service offerings in the western United States [162]. - The increase in non-interest income was attributed to one month of combined operations following the acquisition of Pacific Premier [203]. - Goodwill increased to $1.5 billion as of September 30, 2025, from $1.0 billion at December 31, 2024, primarily due to the $452 million goodwill recorded from the acquisition of Pacific Premier [251]. Risk Management and Regulatory Compliance - Columbia's total risk-based capital ratio was 13.4% and CET1 capital ratio was 11.6% as of September 30, 2025, up from 12.8% and 10.5% respectively as of December 31, 2024 [174]. - The total capital to risk-weighted assets ratio for Columbia was 13.45% as of September 30, 2025, exceeding the regulatory minimum of 8.00% [272]. - The Bank's credit quality administration department is responsible for monitoring asset quality and enforcing credit policies across the institution [241].

Core Insights - Columbia Banking (COLB) reported quarterly earnings of $0.85 per share, exceeding the Zacks Consensus Estimate of $0.66 per share, and showing an increase from $0.69 per share a year ago, resulting in an earnings surprise of +28.79% [1][2] - The company achieved revenues of $582 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.07% and up from $496.38 million year-over-year [2] - Columbia Banking has consistently surpassed consensus EPS estimates over the last four quarters, achieving this four times [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.79 on revenues of $721.3 million, and for the current fiscal year, it is $2.85 on revenues of $2.31 billion [7] - The estimate revisions trend for Columbia Banking was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Zacks Industry Rank for Banks - West is currently in the top 8% of over 250 Zacks industries, suggesting a favorable outlook for the sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]