Columbia Banking System, Inc. (COLB) Earnings & Analysis

Latest quarter

Columbia reported Q2 FY2026 revenue of $898.0 million, up from $735.0 million a year earlier, while diluted earnings per share were $0.73 in both periods. For the separate quarter ended September 30, the consensus figures show adjusted EPS of $0.82 against an estimate of $0.77 and revenue of $695.0 million against $688.0 million.

Columbia’s filing attributed its sequential increase in second-quarter earnings to lower non-interest expense and higher non-interest income, partly offset by lower net interest income and higher income tax provision. The filing said acquisition-related cost savings and lower merger and restructuring expense reduced non-interest expense, while customer fees contributed to non-interest income.

Columbia reported an operating margin of 31.6%, compared with 28.7% a year earlier, and free cash flow of $288.0 million, compared with $85.0 million. The filing said non-performing assets increased from year-end, primarily reflecting adverse performance in one agricultural relationship; it also reported a provision for credit losses for the quarter.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

On Columbia’s latest available call, covering Q1 2026, CEO Clint Stein said commercial lending production had offset a decline in below-market-rate transactional loans. He said customer deposits grew despite seasonal pressure, reducing reliance on wholesale funding. Stein added: “We do not need to produce net balance sheet growth to achieve our EPS and ROTCE objectives.”

Asked about margins, CFO Ivan Seda said the bank was replacing lower-coupon transactional loans with relationship lending at higher rates. He expected continued balance-sheet optimization to support net interest income and margin growth, with commercial loan growth offsetting contraction in the transactional portfolio. Seda also said seasonal deposit outflows had increased average reliance on wholesale funding during the quarter.

On deposit competition, COO Christopher Merrywell said he and colleagues reviewed pricing exceptions with bankers and monitored competitors’ rates. He said Columbia was looking for opportunities to reduce deposit pricing and had a process for handling volumes if interest rates fell.

Stein said Columbia completed the Pacific Premier systems conversion during the quarter. He also described using AI to automate conversion work and handle routine customer-service questions. Seda said some planned investments had shifted into later quarters, including hiring bankers and expanding into additional markets, while earlier realization of acquisition synergies had helped expenses come in below plan.

Asked about credit, Chief Credit Officer Frank Namdar said an increase in nonaccruals and charge-offs was centered on one agricultural customer in the hop industry. Namdar said: “The nonaccrual and the charge-off are interrelated.” He also attributed an increase in delinquencies to one commercial real estate loan being paid off.

Commercial banking president Torran Nixon said Columbia was retaining loans as they repriced from fixed to floating rates and gaining deposit and operating accounts from those customers. Nixon said he did not have a precise retention figure available.

Guidance

On the Q1 call, Seda forecast noninterest expense excluding CDI amortization of $335.0 million to $345.0 million for Q2 FY2026. Columbia’s outlook put the same measure at $330.0 million to $335.0 million for each of Q3 and Q4 FY2026 as it executed the remaining acquisition synergies.