Core Insights - Columbia Banking (COLB) has expanded its presence to eight Western states with approximately 350 branches, utilizing a relationship-first model that integrates commercial, small business, consumer, and wealth teams. The company's shares have outperformed the industry over the past six months, supported by four consecutive earnings beats [1] Non-Interest Income and Capital Strength - COLB's non-interest income is diversifying, with treasury, card, and trust services playing a more significant role, while strong capital positions enable an aggressive share buyback plan [2] - The acquisition of Pacific Premier has enhanced COLB's Western footprint, leading to increased cross-selling opportunities in treasury, card, and trust services. In 2025, these services accounted for nearly 34% of non-interest income, indicating a shift towards more stable fee income streams [3][4] Margin Improvement - COLB's net interest margin (NIM) improved from 3.64% in Q4 2024 to 4.06% in Q4 2025, as deposit costs decreased and reliance on wholesale funding was reduced. Management aims to maintain a NIM above 4% by mid-2026 [5][8] - As of December 31, 2025, total deposits reached $54.2 billion, with a focus on non-interest-bearing and money market accounts, which is expected to support NIM expansion even as policy rates decline [6] Loan Portfolio Strategy - The company is strategically reducing approximately $8 billion in inherited transactional credits, primarily in multifamily loans, over eight quarters starting Q3 2025, shifting focus towards relationship-driven commercial and industrial lending and owner-occupied commercial real estate [9][10] Cost Savings and Operating Leverage - The Pacific Premier acquisition is projected to yield $127 million in annualized cost savings, with $63 million already realized by the end of 2025. Full cost savings are expected by the end of Q2 2026 [11] - Operating expenses are projected to be between $335 million and $345 million in the first half of 2026, with a gradual decline anticipated in the latter half, setting the stage for long-term earnings growth [12] Capital Deployment and Share Repurchase - As of December 31, 2025, COLB's CET1 ratio was 11.8% and total risk-based capital ratio was 13.6%, allowing for increased share repurchases and higher dividend payouts. The board has authorized up to $700 million in repurchases through late 2026, with plans to repurchase $150-$200 million quarterly [13][14] Competitive Landscape - COLB's office exposure is 8% of loans, with potential repricing challenges over multiple years. Non-performing assets have increased slightly, but reserves and discounts provide a buffer [15] - COLB currently holds a Zacks Rank 3 (Hold), indicating a balanced risk-reward profile amid improving momentum trends. Competitors in the region include East West Bancorp and Western Alliance, which also hold a Zacks Rank 3 [16][17]

Core Insights - Columbia Banking (COLB) aims to reaccelerate revenues and reshape its balance sheet following the acquisition of Pacific Premier, with a focus on building sustainable top-line drivers through margin actions and fee income platforms into 2026 [1] Revenue Performance - In Q3 2025, Columbia Banking's total revenue increased by 17% year-over-year to $582 million, with both net interest income (NII) and non-interest income rising by 17% [2] - The integration of Pacific Premier contributed to early benefits, and net interest margin (NIM) expanded due to growth in customer deposits and reduced reliance on higher-cost brokered deposits and term debt [2] Margin and Income Expectations - Management anticipates a NIM of approximately 3.90% in Q4 2025, supported by around $12 million in deposit premium amortization, with a similar margin expected in Q1 2026 despite a slight decrease in average earning assets [3] - Excluding one-time items, NII is projected to remain stable in early 2026 [3] Fee Income Growth - Year-to-date in 2025, treasury management and commercial card fees have increased compared to the previous year, with notable growth in financial services, trust, and international banking revenues, which now constitute a significant portion of COLB's non-interest income [4] - The acquisition of Pacific Premier has introduced additional fee income sources, including Custodial Trust Services and homeowners association banking, leading to over 1,200 cross-sell referrals and significant deposit inflows [5] Sales Estimates - The Zacks Consensus Estimate forecasts a substantial increase in sales from $2.28 billion in 2025 to $2.76 billion in 2026, driven by the integration of Pacific Premier and a strategic shift towards relationship-driven commercial and industrial banking linked to deposits and fees [6] - Production and pipelines improved in Q3 2025, enhancing the revenue mix as cost synergies are expected to materialize through 2026 [6] Earnings Projections - The Zacks Consensus Estimate for COLB's earnings is projected at $2.91 for 2025 and $3.07 for 2026, reflecting year-over-year growth of 7.4% for 2025 and 5.6% for 2026 [11] Competitive Positioning - Columbia Banking's peers, East West Bancorp (EWBC) and Western Alliance Bancorporation (WAL), are expected to see sales growth of 11.7% and 4.5% for 2025 and 9.3% and 9.2% for 2026, respectively [13][14]