Columbia Q3 2026 Earnings: Wider Margin Lifts Net Interest Income

Columbia Banking System (Nasdaq: COLB) reported Q3 2026 revenue of $695 million, up 19% from $582 million a year earlier, while diluted EPS rose 95% to $0.78 from $0.40. Net income reached $220 million, and the central operating change was an 18-basis-point sequential increase in net interest margin to 4.11% as higher asset yields and a more favorable funding mix lifted net interest income.

Core Earnings Data

Year-over-year reported results benefited from a 22% increase in net interest income, a lower provision for credit losses and a sharp reduction in merger and restructuring expenses. Non-interest expense declined 6% despite higher salaries, occupancy costs and other expenses because merger and restructuring expense fell to $2 million from $87 million.

Sequentially, revenue increased 3% as net interest income rose by $26 million, more than offsetting an $8 million decline in non-interest income. The latter reflected a larger net fair-value loss and the absence of $3 million in death-benefit proceeds recorded in the second quarter.

Operating results are company-defined non-GAAP measures that exclude specified fair-value, merger, restructuring and other adjustments.

Loan and Deposit Performance

Loans and leases ended the quarter at $46.92 billion, down 1% from June 2026 and 3% from a year earlier. Columbia attributed the sequential decline to expected runoff in below-market-rate transactional loans, lower commercial real estate balances, elevated payoffs and competitive pricing. Construction and development loans increased 7% sequentially, while commercial term loans rose 1% and commercial lines of credit and other loans increased 7%.

Deposits increased 1% sequentially to $52.74 billion, although they remained 5% below the prior-year level. Core deposits rose 2% from June to $50.64 billion, aided by a customer campaign that brought more than $700 million of new deposits into the bank.

The deposit mix also moved away from more expensive funding. Brokered deposits fell to $622 million from $978 million, wholesale public deposits declined to $773 million from $928 million, and borrowings dropped 22% to $3.30 billion. Time deposits decreased 13% sequentially, while non-interest-bearing deposits increased 2% to $17.51 billion.

GAAP Earnings Improved Faster Than Operating EPS

The increase in reported earnings was amplified by unusually high expenses and credit costs in the prior-year quarter. Q3 2025 included $87 million of merger and restructuring expense and $70 million of acquisition-related provision expense, compared with $2 million of merger expense and $33 million of total provision expense in Q3 2026.

The underlying comparison was more restrained. Non-GAAP operating revenue rose 22% to $702 million, but operating non-interest expense increased 19% to $365 million. Operating net income consequently increased 12% to $229 million. Weighted average diluted shares were 17% higher, causing operating diluted EPS to decline 4% to $0.82 despite the increase in operating net income.

Profitability, Credit and Capital

Margin and Efficiency

Net interest margin expanded to 4.11% from 3.93% in the second quarter. The yield on loans increased 13 basis points to 5.90%, while the yield on taxable securities rose 30 basis points to 4.27%. At the same time, the cost of total funding declined four basis points to 1.51% as customer deposits replaced wholesale funding and borrowings.

The margin included a three-basis-point benefit from accelerated repayment of two acquired loans. By comparison, interest income reversals reduced the second-quarter margin by three basis points, meaning part of the sequential improvement came from items that may not recur.

The GAAP efficiency ratio improved to 53.08% from 55.15% sequentially and 67.29% a year earlier. The adjusted operating efficiency ratio was 51.34%, compared with 52.92% in Q2 2026 and 52.32% in Q3 2025.

Credit Quality

Credit indicators improved modestly from the second quarter but were weaker than a year earlier. Net charge-offs were 0.24% of average loans on an annualized basis, compared with 0.25% sequentially and 0.22% in Q3 2025. Non-performing assets declined to $255 million from $273 million in June, reducing the ratio to total assets to 0.39% from 0.42%; the ratio was 0.29% a year earlier.

The allowance for credit losses increased to $480 million, or 1.02% of loans and leases, from $475 million and 1.01% in the prior quarter. Provision expense increased sequentially to $33 million from $27 million.

Capital and Book Value

Available liquidity was $26.0 billion at quarter-end, equal to 40% of assets, 49% of deposits and 121% of uninsured deposits. Columbia’s estimated total risk-based capital ratio increased to 13.8% from 13.5%, while its estimated common equity tier 1 ratio declined to 11.5% from 11.7%. Both remained above the applicable well-capitalized regulatory minimums.

Book value per share fell 4% sequentially to $25.62, while tangible book value per share declined 6% to $18.10. Accumulated other comprehensive loss widened to $708 million from $310 million, mainly because the after-tax unrealized loss on available-for-sale securities increased to $663 million from $275 million. The company also repurchased $199 million of stock during the quarter and completed its previous authorization before approving a new program of up to $1.2 billion with no expiration date.

Management Commentary

Chairman, CEO and President Clint Stein emphasized relationship-driven growth, disciplined loan and deposit pricing, and active balance sheet management. Management connected the margin improvement to customer deposit growth and lower reliance on wholesale funding, while acknowledging that transactional loan payoffs and competitive pricing continued to constrain overall loan growth.

Columbia Bank President Chris Merrywell said commercial customer engagement remained healthy. Management’s focus is on increasing the share of relationship-based commercial loans rather than offsetting all runoff in transactional and lower-rate portfolios.

Recent Insider Transactions

The supplied six-month insider report showed 47,130 shares acquired across 13 transactions and 3,872 shares sold in one transaction, resulting in net acquisitions of 43,258 shares. Several recent filings were zero-price stock awards, so the aggregate acquisition figure should not be treated as exclusively open-market buying.

The transaction data alone do not establish the insider’s view of Columbia’s outlook.

Risks Investors Should Watch

• Continued loan contraction: Total loans declined both sequentially and year over year. Further runoff, commercial real estate payoffs or competitive pricing could limit growth in interest-earning assets.
• Mixed credit trends: Non-performing assets and net charge-offs improved sequentially but remained above prior-year levels, while provision expense increased from the second quarter.
• Deposit growth durability: The quarter benefited from a deposit campaign and seasonal customer balances. Maintaining lower-cost customer funding remains important after total deposits declined 5% year over year.
• Securities valuation and capital allocation: Higher unrealized securities losses reduced tangible book value. Additional rate-driven valuation changes or substantial repurchases under the new authorization could continue to affect equity and per-share book value.

Summary

Columbia’s Q3 2026 results reflected a wider net interest margin, lower funding costs and sharply reduced merger-related expenses, producing substantial GAAP earnings growth. The underlying picture was more measured because operating EPS declined as the share count increased, while total loans continued to contract. The main items to monitor are the durability of deposit-led funding improvements, the pace of relationship-based loan growth, credit trends and the effect of securities valuations and capital returns on tangible book value.