Columbia Banking System: 2Q26: NIM Rebound to 4%+ in 3Q Appears Too Optimistic While We See Minimal NII Growth in 2027; N

Research evidence excerpt

Columbia Banking System: 2Q26: NIM Rebound to 4%+ in 3Q Appears Too Optimistic While We See Minimal NII Growth in 2027; N

median of high single digits). Given

Style Exposure

this, post the quarter our 2027e/2028e EPS estimates drift modestly lower tied to a

lower NIM outlook. While we continue to appreciate Columbia’s desire to expand its

footprint into faster-growing markets including Southern California, the challenge we

have is that it will likely take an extended period of time before the company sees any

benefits from adding faster-growing markets in terms of being able to deliver above-

peer balance sheet growth. On profitability, while we expect Columbia to continue

generating mid- to high-teens ROTCE and our estimates through 2027e reflect this,

combined with COLB shares trading at ~1.5x 2027e TBV (~30% premium to peers),

the implied cost of equity is ~10%, which is in the ballpark of our coverage universe.

Note that the stock also trades at ~10x 2027e EPS which is in line with our coverage.

Consequently, post the quarter we maintain our Neutral rating.

• Outlook: (1) 3Q26 NIM: Up and beyond 4% (quarterly average); (2) Deposit

growth: Expected to rebound in 3Q and 4Q; (3) 2H26 Expenses (ex-CDI):

$330-335mm per quarter; (4) 3Q26 Buyback: $150-200mm.

• Nuggets from the call: (1) Deposit costs likely reached a trough, as aggressive

competitor pricing above 4% for CDs and money markets creates potential

upward pressure; (2) Fee income growth remains broad-based beyond treasury

management and cards, with commercial card spend surpassing $100mm in

June and wealth management carrying record 2Q26 momentum that continued

into July; (3) 4Q26 expenses are expected to remain near the 3Q26 $330-

335mm run rate, while additional process optimization opportunities remain