Columbia Banking System Q1 Earnings Call Highlights

Key Points

• Pacific Premier conversion completed: Columbia finished the systems conversion and has captured $102 million of a $127 million synergy target, lowering the expense run-rate and helping operating pre-provision net revenue and operating net income rise ~45%–50% year-over-year.
• Margin and loan-mix outlook: NIM was 3.96% and management expects it to cross 4% in Q2 and rise further in H2 as C&I and owner‑occupied CRE production (originations up 38% YoY) offsets runoff in below‑market transactional balances; the balance sheet is roughly neutral to rates with >$6 billion repricing in 12 months.
• Aggressive capital return: Columbia returned $200 million in the quarter (6.5M shares repurchased) and plans buybacks of $150–200 million per quarter under the current authorization, with roughly $400 million remaining and about $500 million of excess capital despite CET1 of 11.5%.

Columbia Banking System NASDAQ: COLB reported first-quarter 2026 results that management said reflected continued execution against its priorities of “delivering consistent, repeatable results, optimizing our balance sheet, and returning excess capital to shareholders,” according to Chair, President and CEO Clint Stein.

Stein said the company completed the Pacific Premier systems conversion during the quarter and consolidated nine branches, putting Columbia “on track for full realization of all acquisition-related cost savings by the end of this quarter.” He also pointed to a shift in the balance sheet, with solid commercial and industrial (C&I) production offsetting declines in below-market “transactional” loan balances, and improving the funding mix as customer deposits expanded despite typical first-quarter seasonality.

Quarterly results and margin outlook

Chief Financial Officer Ivan D. described GAAP earnings per share of $0.66 and operating EPS of $0.72. On an operating basis, he said first-quarter pre-provision net revenue and operating net income increased 45% and 50%, respectively, compared to the first quarter of 2025, driven by the addition of Pacific Premier, progress on balance sheet optimization, and disciplined expense management.

Net interest margin (NIM) was 3.96% in the quarter. Ivan said the quarter’s NIM was “right at the top end of the range” previously outlined, and he emphasized that the sequential decline from 4.06% in the fourth quarter included one-time benefits in Q4 (deposit premium amortization and an accelerated loan repayment). On that basis, he said NIM was “roughly flat quarter over quarter.” Year-over-year, he said NIM expanded 36 basis points, reflecting the balance sheet optimization strategy.

Looking ahead, Ivan said the first quarter should be the “low water mark” for 2026 and that Columbia expects NIM to rise modestly in the second quarter, “crossing over 4% at some point in the quarter,” and then “move upwards north of 4% into the second half of the year.” He also said the balance sheet remains neutrally positioned to rates and noted more than $6 billion in fixed and adjustable loans set to reprice over the next 12 months.

Average earning assets were $60.8 billion, which Ivan said came in at the midpoint of the range previously provided. He said management reduced cash as planned and used excess balances to reduce wholesale funding sources, which declined $560 million from Dec. 31. While wholesale funding declined on an end-of-period basis, he said average wholesale funding was higher due to seasonal deposit flows.

Loans, deposits, and business pipelines

Head of banking Tory said new loan origination volume totaled $1.2 billion, up 38% from the year-ago quarter. He said commercial loans, including owner-occupied commercial real estate, increased 6% on an annualized basis, supporting a continued mix shift toward “higher return relationship-based lending” while transactional balances declined.

Despite stronger production, total loans declined slightly to $47.7 billion from $47.8 billion at year-end, which management attributed primarily to runoff in the transactional portfolio. Both Ivan and Tory reiterated expectations for relatively stable net loan balances in 2026 as commercial growth offsets continued contraction in transactional loans.

In Q&A, Tory told RBC Capital Markets’ Jon Arfstrom that originations were broad-based rather than concentrated in one area, with activity across the Pacific Northwest, Southern California, and de novo markets. He also said the company’s outbound efforts to win new relationships have been a key driver.

On deposits, Tory said customer balances increased $110 million as of March 31, as new business and quarter-end inflows offset seasonal pressure. He said small business and retail deposit campaigns generated nearly $450 million in new balances through mid-April, and that the HOA business acquired from Pacific Premier provided a seasonal benefit, with balances increasing nearly $160 million since year-end.

Total deposits declined to $53.5 billion from $54.2 billion, which management tied to a $760 million reduction in brokered deposit balances. Ivan and Chris also discussed deposit pricing discipline, with Ivan noting that the cost of interest-bearing deposits declined sequentially even without changes in the federal funds rate.

Management also described typical seasonal patterns in deposits, with CFO Ivan telling JPMorgan’s Anthony Elian that Columbia generally sees a low point in mid-to-late April tied to tax season, followed by a rebound through May and June.

Non-interest income, expenses, and Pacific Premier synergies

Non-interest income was $83 million on a GAAP basis and $81 million on an operating basis, within management’s guided $80 million to $85 million range. Ivan said the sequential decline was driven by lower swap, syndication, and international banking revenues after a strong fourth quarter, but that operating non-interest income rose 44% year-over-year due to Pacific Premier and growth in fee income streams.

On expenses, operating non-interest expense was $369 million. Excluding $41 million of intangible amortization, Ivan said the $328 million run rate was below guidance due to earlier cost savings following the January systems conversion and some planned investments shifting into the second quarter. As of March 31, he said the company achieved $102 million of a targeted $127 million in synergies, though not fully run-rated in first-quarter results.

For the second quarter, Ivan guided to non-interest expense (excluding core deposit intangible amortization) of $335 million to $345 million, with a decline expected in the third quarter as the company realizes all cost savings related to the transaction by June 30. In response to KBW’s Christopher McGratty, Ivan said expenses could step down into a range of roughly $330 million to $335 million in the second half as remaining synergies flow through.

Stein also highlighted Columbia’s use of artificial intelligence to improve efficiency, saying AI automated historically manual tasks during the core conversion and helped speed up technology work. He added that an AI-powered virtual assistant shifted support volume such that the ratio of human calls to AI chats moved from “two to one in favor of humans to three to one in favor of AI agents,” as routine questions were handled by the virtual assistant.

Credit trends and capital return

Provision expense was $28 million. Ivan said the provision reflected loan portfolio runoff, credit migration trends, and changes in the economic forecast used in credit models. He said the agricultural industry drove a modest increase in net charge-offs and non-performing assets, while overall credit metrics remained stable.

Addressing D.A. Davidson’s Jeff Rulis, Frank said the increase in charge-offs and non-accruals was “really centered in one customer relationship” tied to pressures in agriculture, citing high input costs and tight margins. He said the specific issue was “not systemic” and was tied to the hop industry, which he described as experiencing a “generational shift in demand.”

On delinquencies, Frank told Piper Sandler’s Matthew Clark that the uptick in 31-to-89-day past due loans was tied to “one commercial real estate loan” in the process of being paid off. He added that classified balances were “pretty flat” quarter over quarter and said special mention balances improved due to resolutions and payoffs.

Columbia ended the quarter with an allowance for credit losses of 1% of total loans, or 1.28% including credit discounts on acquired loans. Ivan said management felt “very comfortable” with reserve levels.

Capital return was a major theme. Stein said the company increased the pace of buybacks and returned $200 million to shareholders in the quarter. Ivan said Columbia repurchased 6.5 million common shares and expects repurchases to remain in a $150 million to $200 million range per quarter through the current authorization. He said approximately $400 million remained under the authorization, and that the company had roughly $500 million of excess capital.

Regulatory capital ratios declined modestly as dividends and buybacks outpaced capital generation, with CET1 at 11.5% and total risk-based capital at 13.3%, according to Ivan. Tangible book value per share declined slightly to $19.03 from $19.11, which Ivan attributed to a higher accumulated other comprehensive loss on the securities portfolio due to interest rate changes.

Management also discussed potential regulatory capital changes. Ivan said the company was evaluating proposed rulemaking and that an initial “back-of-the-napkin analysis” suggested potential benefit “up to the ballpark of 100 basis points of CET1,” while Stein said the company’s capital priorities remained focused on buybacks. Chris added that the company has historically targeted a tangible common equity ratio “in the neighborhood of 8%,” and viewed roughly 12% total risk-based capital as a key constraint for capital deployment.

About Columbia Banking System NASDAQ: COLB

Columbia Banking System, Inc is a bank holding company that operates through its principal subsidiary, Columbia State Bank. Headquartered in Tacoma, Washington, the company provides a full range of banking and financial services to commercial, small business and consumer customers. Its branch network is concentrated in the Pacific Northwest, with locations across Washington, Oregon and Idaho, where it aims to combine local decision-making with the resources of a larger institution.

The company's offerings include commercial real estate lending, construction and development financing, equipment and small business loans, and deposit products such as checking, savings and money market accounts.

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