3Q26
Filed Oct 22, 2026Columbia Banking System reported third-quarter 2026 net income of $220 million and operating net income of $229 million as net interest income and net interest margin increased sequentially, while loans declined and credit provision expense increased.
GAAP net income increased 6% sequentially and 129% year over year, supported by 4% sequential net interest income growth, an 18-basis-point increase in net interest margin, lower non-interest expense, deposit growth and reduced borrowings. Offsets included a $33 million provision for credit losses, lower non-interest income, declining loans and a decline in book value from higher accumulated other comprehensive loss.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net interest income, 3Q26GAAP | $615M | 4% | 22% |
| Net interest margin, 3Q26other | 4.11% | 0.18 | 0.27 |
| Provision for credit losses, 3Q26GAAP | $33M | 22% | (53)% |
| Non-interest income, 3Q26GAAP | $80M | (9)% | 4% |
| Operating non-interest income, 3Q26non-GAAP | $87M | (4)% | 21% |
| Non-interest expense, 3Q26GAAP | $370M | (1)% | (6)% |
| Operating non-interest expense, 3Q26non-GAAP | $365M | —% | 19% |
| Revenue, 3Q26GAAP | $695M | 3% | 19% |
| Operating revenue, 3Q26non-GAAP | $702M | 3% | 22% |
| Income before provision for income taxes, 3Q26GAAP | $292M | 6% | 145% |
| Provision for income taxes, 3Q26GAAP | $72M | 7% | 213% |
| Net income, 3Q26GAAP | $220M | 6% | 129% |
| Operating net income, 3Q26non-GAAP | $229M | 6% | 12% |
| Earnings per common share - diluted, 3Q26GAAP | $0.78 | 7% | 95% |
| Operating earnings per common share - diluted, 3Q26non-GAAP | $0.82 | 8% | (4)% |
| Pre-provision net revenue, 3Q26non-GAAP | $325M | 8% | 72% |
| Operating pre-provision net revenue, 3Q26non-GAAP | $337M | 7% | 25% |
| Return on average assets, 3Q26GAAP | 1.34% | 0.07 | 0.67 |
| Return on average common equity, 3Q26GAAP | 11.78% | 0.79 | 5.59 |
| Operating return on average assets, 3Q26non-GAAP | 1.40% | 0.07 | (0.02) |
| Efficiency ratio, 3Q26GAAP | 53.08% | (2.07) | (14.21) |
| Operating efficiency ratio, as adjusted, 3Q26non-GAAP | 51.34% | (1.58) | (0.98) |
| Total assets, September 30, 2026GAAP | $65.14B | – | (3)% |
| Loans and leases, September 30, 2026GAAP | $46.91B | (1)% | (3)% |
| Total deposits, September 30, 2026GAAP | $52.74B | 1% | (5)% |
| Cash and cash equivalents, September 30, 2026GAAP | $1.7B | – | – |
| Borrowings, September 30, 2026GAAP | $3.3B | (22)% | 43% |
| Total available liquidity, September 30, 2026other | $26B | – | – |
| Allowance for credit losses, September 30, 2026GAAP | $480M | 1% | (2)% |
| Net charge-offs to average loans and leases (annualized), 3Q26other | 0.24% | (0.01) | 0.02 |
| Non-performing assets, September 30, 2026other | $255M | (7)% | 28% |
| Non-performing assets to total assets, September 30, 2026other | 0.39% | (0.03) | 0.10 |
| Book value per common share, September 30, 2026GAAP | $25.62 | (4)% | (2)% |
| Tangible book value per common share, September 30, 2026non-GAAP | $18.10 | (6)% | (3)% |
| Estimated total risk-based capital ratio, September 30, 2026other | 13.8% | 0.30 | 0.40 |
| Estimated common equity tier 1 risk-based capital ratio, September 30, 2026other | 11.5% | (0.20) | (0.10) |
Capital returns
- Declared a quarterly cash dividend of $0.37 per common share on August 14, 2026, which was paid September 14, 2026.
- Repurchased $199 million of common stock during the third quarter, completing the previously announced repurchase plan.
- Repurchased 6.5 million common shares during the third quarter at an average price of $30.65, representing 2.3% of outstanding common shares.
- Completed the prior repurchase plan by buying back 23.3 million common shares at an average price of $29.88 between November 2025 and September 30, 2026, representing 7.8% of outstanding common shares as of September 30, 2025.
- Board authorized the repurchase of up to $1.2 billion of common stock under a new repurchase plan with no expiration date.
What drove it
- Net interest income increased by $26 million from the prior quarter due to higher income on loans and investment securities and lower funding costs.
- Net interest margin increased due to higher yields on loans and leases, a continued shift toward higher-yielding relationship loans, repricing trends, customer deposits replacing higher-cost wholesale funding sources, and higher taxable-security yields.
- Third-quarter net interest income included $5 million of interest income from accelerated repayment of two acquired loans; interest income reversals reduced second-quarter net interest income by $4 million.
- Customer deposit growth and other sources of cash enabled the reduction in borrowings.
- The second customer deposit campaign of 2026 brought over $700 million in new deposits to the bank.
- Non-interest expense decreased due to lower merger expense.
- Construction & development balances expanded, while commercial loans, inclusive of owner-occupied commercial real estate, increased by 3% on an annualized basis relative to June 30, 2026.
Concerns
- Gross loans and leases were $46.9 billion as of September 30, 2026, compared to $47.2 billion as of June 30, 2026, reflecting runoff in below-market-rate transactional loans and lower commercial real estate balances.
- Elevated payoffs and competitive pricing pressures muted loan growth.
- Non-interest income declined by $8 million sequentially; excluding fair value and hedges, it declined by $4 million, primarily because $3 million of second-quarter death benefit proceeds did not recur.
- Provision for credit losses increased to $33 million from $27 million in the prior quarter.
- Accumulated other comprehensive loss was $(708) million as of September 30, 2026, compared to $(310) million at the prior quarter-end, driven primarily by an increase in the tax-effected net unrealized loss on available-for-sale securities to $663 million from $275 million.
- Book value per common share declined to $25.62 from $26.70, and tangible book value per common share declined to $18.10 from $19.22.
What to watch
- Whether customer deposit growth continues to support reductions in higher-cost wholesale funding and borrowings.
- Loan growth trends as transactional-loan runoff, commercial real estate balances, elevated payoffs and competitive pricing pressures continue.
- The durability of net interest margin after the $5 million of income from accelerated acquired-loan repayments.
- Credit migration trends, charge-off activity and provision expense.
- The planned approximately $240 million redemption of junior subordinated debentures during the fourth quarter of 2026 and early 2027.
- Execution and timing of the new repurchase authorization of up to $1.2 billion.
Balance sheet and cash flow
- Total consolidated assets were $65.1 billion as of September 30, 2026, compared to $65.4 billion as of June 30, 2026.
- Cash and cash equivalents were $1.7 billion as of September 30, 2026, compared to $1.8 billion as of June 30, 2026.
- Total available liquidity, including secured off-balance sheet lines of credit, was $26.0 billion as of September 30, 2026, representing 40% of total assets, 49% of total deposits, and 121% of uninsured deposits.
- Available-for-sale securities were $10.9 billion as of September 30, 2026, compared to $11.1 billion as of June 30, 2026; purchases of investment securities were $639 million.
- Total deposits were $52.7 billion as of September 30, 2026, compared to $52.1 billion as of June 30, 2026.
- Borrowings were reduced to $3.3 billion as of September 30, 2026, compared to $4.3 billion as of June 30, 2026.
- Columbia Bank issued $250 million in aggregate principal amount of subordinated notes due in 2036. The notes bear interest at a fixed annual rate of 6.721% for the first five years, after which they reset to the Five-Year U.S. Treasury Rate plus 195 basis points.
- The Company intends to use a portion of the subordinated-notes proceeds to redeem approximately $240 million in aggregate principal amount of junior subordinated debentures, with redemptions expected during the fourth quarter of 2026 and early 2027.
Analysis
Columbia produced stronger third-quarter profitability as GAAP net income rose to $220 million from $208 million in the prior quarter and $96 million a year earlier. Diluted GAAP earnings per common share were $0.78, compared with $0.73 in 2Q26 and $0.40 in 3Q25. Operating net income was $229 million and operating diluted earnings per common share were $0.82. GAAP revenue was $695 million, up 3% sequentially and 19% year over year, while operating revenue was $702 million, up 3% sequentially and 22% year over year.
The main earnings driver was net interest income of $615 million, up $26 million sequentially and 22% year over year. Net interest margin expanded to 4.11% from 3.93% in 2Q26 and 3.84% in 3Q25. Management attributed the expansion to higher loan and securities yields, loan mix moving toward higher-yielding relationship loans, and a funding-mix shift as customer deposits replaced wholesale funding. Third-quarter net interest income also benefited from $5 million of interest income related to accelerated repayment of two acquired loans. The cost of interest-bearing deposits declined to 1.95% from 1.96%, while the cost of interest-bearing liabilities declined to 2.20% from 2.21%.
Expenses and credit trends were constructive but warrant monitoring. Non-interest expense declined to $370 million from $375 million, primarily due to lower merger expense, and the GAAP efficiency ratio improved to 53.08% from 55.15%. The provision for credit losses increased to $33 million from $27 million. Net charge-offs improved modestly to 0.24% of average loans and leases from 0.25%, while non-performing assets declined to $255 million, or 0.39% of total assets, from $273 million, or 0.42%. The allowance for credit losses increased to $480 million from $475 million and represented 1.02% of loans and leases.
Balance-sheet optimization continued through deposit growth and reduced borrowings. Total deposits increased to $52.7 billion from $52.1 billion, while borrowings declined to $3.3 billion from $4.3 billion. Loans and leases declined to $46.9 billion from $47.2 billion as expected runoff in below-market-rate transactional loans and lower commercial real estate balances outweighed growth in construction and development and commercial loans. Capital return was substantial, with $199 million of third-quarter repurchases completing the prior plan, followed by authorization of a new program of up to $1.2 billion. The principal capital offset was a decline in book value per common share to $25.62 from $26.70, reflecting a higher accumulated other comprehensive loss of $(708) million. No forward financial guidance was provided.
Management, verbatim
Our third quarter performance demonstrates the benefits of consistent execution and active balance sheet management.
Clint Stein, Chairman, CEO & President
Commercial loan growth remained healthy, supported by strong customer engagement across our markets. While transactional loan payoffs moderated overall growth, we continued to grow in the ways we intend, increasing the proportion of relationship-based commercial loans within our portfolio.
Chris Merrywell, President of Columbia Bank
Deposit growth during the third quarter benefited from seasonal customer balance growth and new customer acquisition.
Chris Merrywell, President of Columbia Bank
Not in the filing
stated, not guessed- Forward revenue guidance
- Forward gross margin guidance
- Forward operating expense guidance
- Forward tax-rate guidance
- Forward earnings-per-share guidance
- Gross margin
- Operating cash flow
- Free cash flow
- Cash-flow statement
- Reportable business-segment revenue
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.