COLUMBIA BANKING SYSTEM, INC. REPORTS THIRD QUARTER 2026 RESULTS

Columbia Banking System reported Q3 2026 net income of $220 million, up 6% quarter over quarter and 129% year over year, with diluted EPS of $0.78 and net interest margin rising 18 bps sequentially to 4.11%. The board authorized a new $1.2 billion share repurchase program after the company completed its prior plan, buying back 23.3 million shares at an average $29.88. Deposits grew to $52.7 billion and borrowings fell to $3.3 billion; credit indicators were mixed, as non-performing assets declined to $255 million while year-over-year net charge-offs increased.

Analysis

The key signal is better underlying spread momentum, but not as strong as the headline NIM change implies: adjusting for the disclosed one-off loan repayment and prior-quarter reversals, sequential NIM expansion is roughly 12 bp rather than 18 bp. That still supports earnings power, though the marginal deposit-cost improvement was only 1 bp and September deposit pricing was flat—an early warning that further funding relief may be limited. Loan runoff and competitive pricing also constrain conversion of spread gains into asset growth.

Earnings quality is mixed. Operating EPS rose sequentially but remains below the year-ago quarter, while nine-month operating EPS was flat year over year. Sequentially lower nonperforming assets are constructive, yet year-over-year NPLs and nine-month net charge-offs increased; watch commercial credit migration rather than relying on the headline NCO ratio. AOCI deterioration reduced tangible book value, and CET1 edged lower even as total risk-based capital rose. The new repurchase authority is supportive only if executed at attractive prices and within regulatory capital constraints; authorization is not a commitment.

Near term, the conference call and management’s forward NIM, loan-growth, and buyback commentary are the catalysts. Over 1–3 months, evidence that customer deposits can replace wholesale funding without repricing higher matters more than another quarter of balance-sheet cleanup. Over 6–18 months, franchise growth in Utah and relationship lending could help, but sustained CRE runoff or credit deterioration would outweigh modest operating efficiencies. Contrarian point: the cleanest bullish read is improving funding mix, while the consensus risk is extrapolating peak NIM and buybacks despite flat month-end deposit pricing, shrinking loans, and weaker tangible book.

Key Decisions for Investors

• Do not chase the earnings headline before the call. For a modest relative-value expression, consider long COLB versus short KRE only if COLB holds its post-call relative strength; this hedges broad regional-bank exposure while retaining the company-specific NIM and capital-return thesis. No valuation or current-price data were supplied, so do not set an entry price or target from this release alone.
• Treat repurchases as a catalyst to verify, not an earnings estimate: track actual quarterly shares retired, average repurchase price, and CET1. A buyback that is delayed or accompanied by further CET1 erosion weakens the support for the long thesis.
• Falsification/watch items: underlying NIM slips below roughly 4.0%, interest-bearing deposit costs turn higher, loan balances keep contracting without relationship-commercial growth offsetting runoff, or commercial net charge-offs/nonaccruals worsen. Any of these would favor reducing COLB exposure rather than adding on a lower share price.
• For the next quarter, prioritize detailed credit migration and CRE delinquency disclosures over the quarter-to-quarter NPA decline; the year-over-year deterioration in nonperformers and charge-offs means current credit stability is not yet a clean all-clear.