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    COLB
    Earnings call· Mar 2026(Q1 FY26)

    COLUMBIA BANKING SYSTEM Q1 FY26 earnings call COLB

    Apr 23, 2026 Source

    Executive summary

    Columbia Banking System Q1 FY26 — Strong Balance Sheet Optimization and Capital Return

    Columbia Banking System delivered solid Q1 FY26 results, driven by effective balance sheet optimization, disciplined expense management, and strong relationship-based lending. The company successfully completed the Pac Premier systems conversion with no customer disruption, positioning it for full realization of cost savings. Management remains committed to returning excess capital to shareholders through an accelerated buyback program, while strategically growing core deposits and loans.

    Highlights

    5

    • Operating EPS of $0.72, up 50% compared to Q1 FY25.

    • Net interest margin expanded by 36 basis points year-over-year, with Q1 FY26 NIM at 3.96%.

    • Increased pace of share buybacks, returning $200 million to shareholders in Q1 FY26.

    • New loan origination volume of $1.2 billion, up 38% from Q1 FY25.

    • Customer deposit balances increased by $110 million in Q1 FY26, offsetting seasonal pressure.

    Concerns

    2

    • Modest increase in net charge-offs and nonperforming assets due to a single relationship in the hop agricultural industry.

    • Tangible book value declined slightly to $19.03 from $19.11 due to higher AOCI loss on securities portfolio.

    Guidance & targets

    11
    CategoryTargetConfidence
    Balance Sheet Size
    relatively stable
    medium materiality
    Medium
    Net Interest Margin
    modest growth, crossing 4%
    high materiality
    High
    Noninterest Revenue
    $80M-$85M
    medium materiality
    High
    Noninterest Expense (ex-CDI)
    $335M-$345M
    high materiality
    High
    Noninterest Expense (ex-CDI)
    decline below $335M-$345M
    high materiality
    High
    CDI Amortization
    around $40M
    low materiality
    High
    Share Repurchases
    $150M-$200M per quarter
    high materiality
    High
    Net Interest Income
    approximately $605M
    high materiality
    High
    Loan Balances
    roughly flat
    medium materiality
    High
    Total Operating Expense (FY)
    within $1.5B
    high materiality
    High
    Effective Tax Rate
    25%
    medium materiality
    High

    Operational metrics

    26
    Operating Earnings Per Share
    $0.72up 50% vs Q1 FY25
    Q1 FY26

    Excludes merger expense and other items detailed in non-GAAP disclosure.

    Pre-Provision Net Revenue (Operating)
    up 45%vs Q1 FY25
    Q1 FY26

    Due to Pacific Premier addition, balance sheet optimization, and disciplined expense management.

    Operating Net Income
    up 50%vs Q1 FY25
    Q1 FY26

    Due to Pacific Premier addition, balance sheet optimization, and disciplined expense management.

    Average Earning Assets
    $60.8Bmodest contraction vs prior quarter
    Q1 FY26

    Midpoint of previously outlined range.

    Wholesale Funding Reduction
    $560Mfrom Dec 31
    Q1 FY26

    Utilized excess cash to reduce wholesale funding sources.

    Average Wholesale Funding Increase
    7%vs Q4 FY25
    Q1 FY26

    Due to typical seasonal customer deposit flows.

    Noninterest Income (Operating)
    $81Mup $25M or 44% vs Q1 FY25
    Q1 FY26

    Impact of Pacific Premier and strong growth in fee income streams. Down sequentially due to lower swap syndication and international banking revenues.

    Noninterest Expense (Operating, ex-CDI)
    $328Mbelow guided range
    Q1 FY26

    Excluding intangible amortization of $41M. Due to earlier realization of cost savings and planned investments shifting to Q2.

    Intangible Amortization (CDI)
    $41M
    Q1 FY26

    Excluded from operating noninterest expense.

    Synergies Achieved
    $102M
    as of Mar 31

    Savings not fully run-rated in Q1 results.

    Excess Capital
    $500M
    Q1 FY26

    Above well-capitalized regulatory minimums and long-term target ratios.

    Repurchase Authorization Remaining
    $400M
    Q1 FY26

    Part of current repurchase authorization.

    Return on Average Assets (ROAA)
    1.3%
    Q1 FY26
    New Loan Origination Volume
    $1.2Bup 38% vs Q1 FY25
    Q1 FY26

    Commercial space originations were about $1B.

    Commercial Loan Portfolio Growth (annualized)
    6%
    Q1 FY26

    Inclusive of owner-occupied commercial real estate.

    Customer Deposit Balances Increase
    $110Mvs Dec 31
    Q1 FY26

    Offset seasonal pressure; includes $450M from current campaign and $160M from HOA business.

    Broker Deposit Balances Reduction
    $760Mvs Dec 31
    Q1 FY26

    Due to customer balance growth and cash deployment.

    Combined Commercial Pipeline
    $3.3Bup ~$600M vs end of year; up 50% vs year ago
    end of Mar

    Strong activity across the organization.

    Transactional Loan Portfolio Run Down (past 2 quarters)
    $0.5B
    last 2 quarters

    Being replaced by core relationship lending.

    Transactional Loan Portfolio Run Down (Q1 FY26)
    $230M
    Q1 FY26

    Loans coming off mid-low 4% range, replaced by 6% handle core relationship lending.

    Transactional Loan Portfolio (expected runoff)
    $1B-$1.25B
    next 12 months

    Loans priced in mid-4% range, maturing or repricing.

    CET1 Benefit from Regulatory Changes
    up to 100 bps
    future

    Preliminary analysis of NPR (MSR treatment) shows meaningful capital benefit, providing optionality.

    Cost of Interest-Bearing Deposits
    2.04%down 16 bps vs Q4 FY25 (2.20%)
    Q1 FY26

    Excluding Q4 one-time tail event items.

    AI Agent Chat to Human Call Ratio
    3:1from 2:1 (human:AI)
    Q1 FY26

    Many routine administrative questions now handled by virtual assistant.

    Tangible Book Value Per Share
    $19.03down from $19.11 vs Dec 31
    Q1 FY26

    Reflecting higher AOCI loss on securities portfolio.

    Total Risk-Based Capital Ratio
    13.3%down 30 bps vs prior quarter
    Q1 FY26

    Industry KPIs

    13
    MetricValueDetails
    Loans$47.7BUSD
    Deposits$53.5BUSD
    Rotce ROE15%%
    Cet1 ratio11.5%%
    Capital returns$200MUSD
    Fee income lines—
    Allowance reserves1%%
    Net interest income$605MUSD
    Net interest margin3.96%%
    Net charge offs nplsModest increase
    Total operating expenses$369MUSD
    Provision for credit losses$28MUSD
    Efficiency ratio operating leverage—

    Product announcements

    2
    ProductTypeDetails
    AI for Systems Conversionmilestone
    AI-powered Virtual Assistantlaunch

    Risks & headwinds

    3
    Single customer relationship in agricultural industryQ1 FY26

    Modest increase in net charge-offs and nonperforming assets

    Mitigation: Viewed as isolated incident, not systemic; well-underwritten ag portfolio; related to hop industry with generational shift in demand.

    Higher accumulated other comprehensive loss (AOCI) on securities portfolioQ1 FY26

    Tangible book value declined slightly to $19.03 from $19.11

    Mitigation: Impact of interest rate changes between periods.

    Macroeconomic headlines driving outsized stock price reactionsOngoing

    Unquantified

    Mitigation: Columbia's fundamentals warrant differentiation; demonstrated ability to withstand industry stress.

    What to watch in Q2 FY26

    5

    Net Interest Margin Trajectory

    Q2 FY26 and H2 FY26
    Current3.96%
    Targetcrossing 4% and stepping up

    Why it matters

    NIM expansion is a key driver of NII growth and profitability for the bank.

    As I outlined in our last call, I anticipate our net interest margin to grow modestly in Q2, crossing over 4% at some point⏳ in the quarter.

    Q&A highlights

    7

    Inquiring about the $1.2 billion in Q1 loan originations, its drivers, and if it's better than typical.

    Tory Nixon explained that the $1.2 billion in new loan originations (up 38% YoY) is significantly better than typical Q1 performance, driven by a company-wide outbound effort to bring in new relationships. Growth is spread across historical Pacific Northwest markets, Southern California, and de novo markets, reflecting bankers' efforts to tell Columbia's story.

    “I mean, there's been a lot of progress made in the company in an outbound effort to just deploy our resources to bring new relationships into the bank. I think we've been very successful. We watch pipelines all the time. It's not coming from one particular part of the company. It's spread throughout the organization.”

    asked by Jon Arfstrom · answered by Torran Nixon

    2 min read6 chapters

    Detailed Narrative

    01

    Balance Sheet Optimization

    Columbia continued its balance sheet optimization strategy, reducing reliance on wholesale funding by $560 million and utilizing excess cash. This involved a remix of the loan portfolio from below-market rate transactional loans to higher-yielding relationship-based commercial loans, contributing to NIM expansion and NII growth. Management expects the balance sheet size to remain relatively stable through FY26, with core loan growth offsetting transactional portfolio contraction.

    02

    Pacific Premier Integration Success

    The company successfully completed the Pac Premier systems conversion and consolidated 9 branches in Q1 FY26, remaining on track for full realization of $127 million in acquisition-related cost savings by the end of Q2 FY26. Management highlighted the seamless execution and overwhelmingly positive client feedback, with high retention of both associates and customers, leading to strong momentum in Southern California.

    03

    AI for Efficiency and Customer Support

    Columbia is leveraging AI to drive efficiency, automating traditionally manual tasks in the systems conversion process, accelerating developer productivity, and enhancing software security. An AI-powered virtual assistant now handles routine customer support, shifting the human-to-AI chat ratio from 2:1 to 1:3, improving efficiency without additional resources and demonstrating a commitment to technological advancement.

    04

    Credit Quality and Ag Exposure

    Credit fundamentals remain sound, with the office portfolio performing well and CRE exposure from acquired portfolios declining. A modest uptick in net charge-offs and nonperforming assets was attributed to a single relationship in the hop agricultural industry, which management views as an isolated incident rather than systemic. The allowance for credit losses stands at 1% of total loans, or 1.28% including credit discounts on acquired loans.

    05

    Capital Management and Shareholder Returns

    The company increased its pace of share buybacks, repurchasing $200 million in Q1 FY26, underscoring its commitment to returning excess capital. With approximately $500 million in excess capital and $400 million remaining in the current repurchase authorization, buybacks are expected to continue at $150 million to $200 million per quarter. Preliminary analysis suggests a potential 100 basis point CET1 benefit from proposed regulatory changes.

    06

    Strategic Hiring and Market Expansion

    Columbia is actively recruiting commercial bankers across its footprint, including de novo markets like Scottsdale, Denver, and Utah, and legacy markets in the Pacific Northwest and Southern California. The focus is on expanding wealth management, private banking, and healthcare-focused teams, leveraging the company's strong market position and positive culture to attract top talent and drive relationship-based growth.

    AI-generated summary of the company’s earnings call. Not investment advice.