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Columbia Banking's Earnings Drivers: NIM, Fees, and Loan Mix in 2026
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Key Takeaways
Columbia Banking exits 2025 with key levers, NIM growth, stronger fees, and loan mix shift.
COLB targets higher NIM through 2026 via lower funding costs and deposit repricing strategy.
Columbia Banking reshapes loan book, reducing $8B transactional loans for higher-yield core lending.
Columbia Banking System (COLB - Free Report) is coming out of 2025 with three clear earnings levers: defending margin, broadening fee income, and reshaping the loan book toward relationship-driven growth. The Pacific Premier transaction also gives the franchise a larger Western platform to work from.
The near-term picture can still look choppy as integration items flow through results. But the underlying setup points to steadier earnings power if management executes on funding, mix, and cost actions through 2026.
COLB’s Western Footprint After Pacific Premier
Columbia Bank is a Western U.S. regional bank headquartered in Tacoma, WA, operating across Washington, Oregon, Idaho, California, Nevada, Arizona, Colorado and Utah. The company serves commercial and consumer customers through traditional and digital channels, supported by approximately 350 branches. The Pacific Premier acquisition, which closed Aug. 31, 2025, completed the company’s Western footprint and elevated its market position in Southern California. Management has targeted $127 million of annualized cost savings from the transaction.
Columbia Banking’s Deposit Mix and Funding Strategy
The deposit base is a core differentiator. As of Dec. 31, 2025, enterprise-wide deposits totaled $54.2 billion and included non-interest-bearing, demand, money market, savings and time balances, with the composition skewed toward non-interest and money market categories.
Management has emphasized protecting core relationship deposits while continuing to wind down higher-cost, non-core funding sources. That approach has included reducing higher-cost wholesale funding and intentionally scaling down brokered and select public deposits, even when that choice pressures reported deposit totals in the near term.
COLB’s NIM Path and What Could Keep It Stable
Net interest margin (NIM) improved to 4.06% in fourth-quarter 2025 from 3.64% in the prior-year quarter, driven primarily by lower funding costs as deposit costs declined and higher-cost wholesale funding was reduced. Management expects NIM to trend higher each quarter throughout 2026 as customer deposit balances rebound and balance sheet optimization actions continue to improve profitability, with deposit betas for rate cuts targeted around half alongside proactive repricing. The intended outcome is a margin profile that can stay resilient even if rates drift down.
Columbia Banking’s Fee Mix Becoming More Durable
Non-interest income is also becoming a more meaningful part of the story. In 2025, total revenues were $2.32 billion, including $298 million of non-interest income that reflected service charges on deposits, card-based fees, financial services and trust revenues, residential mortgage banking, bank-owned life insurance income, and other items.
Within that mix, treasury management and commercial card fees improved versus the prior year, while financial services and trust and international banking revenues expanded notably. As of Dec. 31, 2025, card fees plus financial services and trust plus international banking represented nearly 34% of total non-interest income, supporting a more durable fee profile tied to client activity.
Pacific Premier also added fee platforms, including custodial trust services, homeowners association banking, escrow and 1031 exchanges. Since closing, the company generated more than 1,200 cross-sell referrals, and early efforts produced meaningful deposit inflows through mid-October, reinforcing the relationship-banking strategy.
COLB’s Loan Portfolio Remix Away From Transactional Loans
On the balance sheet, the next phase centers on reducing lower-value transactional exposure and leaning into relationship-driven lending tied to deposits and fees. Columbia Banking is managing down about $8 billion of inherited transactional loans, mostly multifamily, with most expected to run off or reprice over eight quarters that started in the third quarter of 2025. The bank does not plan to rebuild this portfolio.
Instead, the strategic shift is toward commercial and industrial lending and owner-occupied commercial real estate. As of Dec. 31, 2025, commercial and industrial loans and owner-occupied commercial real estate represented 22% and 15% of loans and leases, respectively.
Management anticipates runoff of $1 billion to $1.5 billion in transactional loans, replaced by higher-yield core lending, while overall loan growth stays muted as runoff offsets new originations through roughly 2027.
What the Next Earnings Print May Emphasize for COLB
The company’s outlook provides a practical checklist for the next earnings print. For the first quarter of 2026, management expects net interest margin in a 3.90%-3.95% range, with average earning assets a touch lower range. It also expects net interest income of about $600 million in the first quarter of 2026, excluding a certain fourth-quarter item.
On expenses, operating expenses excluding core deposit intangible amortization are expected to be $335-$345 million in the first and second quarters of 2026, before declining modestly in the third quarter as cost savings build and normalization is targeted by the third quarter of 2026.
Over the past year, shares of Columbia Banking have gained 34.3%, outperforming the industry’s rally of 31.3%.
Price Performance
Image Source: Zacks Investment Research
Columbia Banking’s Peers to Watch
East West Bancorp (EWBC - Free Report) is a key peer with a Zacks Rank #3 at present. EWBC’s NIM will likely be under pressure in the near-term because of interest rate cuts, while decent loan demand, lower deposit beta and funding costs, alongside balance sheet hedging, will offer support.
Zions Bancorporation (ZION - Free Report) is a close peer with a Zacks Rank #3. ZION has been witnessing a rise in NIM for the last several quarters as funding costs declined. In the near-term, the company’s NIM is likely to be positively impacted, driven by stabilizing deposit costs and asset yield repricing.
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Columbia Banking's Earnings Drivers: NIM, Fees, and Loan Mix in 2026
Key Takeaways
Columbia Banking System (COLB - Free Report) is coming out of 2025 with three clear earnings levers: defending margin, broadening fee income, and reshaping the loan book toward relationship-driven growth. The Pacific Premier transaction also gives the franchise a larger Western platform to work from.
The near-term picture can still look choppy as integration items flow through results. But the underlying setup points to steadier earnings power if management executes on funding, mix, and cost actions through 2026.
COLB’s Western Footprint After Pacific Premier
Columbia Bank is a Western U.S. regional bank headquartered in Tacoma, WA, operating across Washington, Oregon, Idaho, California, Nevada, Arizona, Colorado and Utah. The company serves commercial and consumer customers through traditional and digital channels, supported by approximately 350 branches. The Pacific Premier acquisition, which closed Aug. 31, 2025, completed the company’s Western footprint and elevated its market position in Southern California. Management has targeted $127 million of annualized cost savings from the transaction.
Columbia Banking’s Deposit Mix and Funding Strategy
The deposit base is a core differentiator. As of Dec. 31, 2025, enterprise-wide deposits totaled $54.2 billion and included non-interest-bearing, demand, money market, savings and time balances, with the composition skewed toward non-interest and money market categories.
Management has emphasized protecting core relationship deposits while continuing to wind down higher-cost, non-core funding sources. That approach has included reducing higher-cost wholesale funding and intentionally scaling down brokered and select public deposits, even when that choice pressures reported deposit totals in the near term.
COLB’s NIM Path and What Could Keep It Stable
Net interest margin (NIM) improved to 4.06% in fourth-quarter 2025 from 3.64% in the prior-year quarter, driven primarily by lower funding costs as deposit costs declined and higher-cost wholesale funding was reduced. Management expects NIM to trend higher each quarter throughout 2026 as customer deposit balances rebound and balance sheet optimization actions continue to improve profitability, with deposit betas for rate cuts targeted around half alongside proactive repricing. The intended outcome is a margin profile that can stay resilient even if rates drift down.
Columbia Banking’s Fee Mix Becoming More Durable
Non-interest income is also becoming a more meaningful part of the story. In 2025, total revenues were $2.32 billion, including $298 million of non-interest income that reflected service charges on deposits, card-based fees, financial services and trust revenues, residential mortgage banking, bank-owned life insurance income, and other items.
Within that mix, treasury management and commercial card fees improved versus the prior year, while financial services and trust and international banking revenues expanded notably. As of Dec. 31, 2025, card fees plus financial services and trust plus international banking represented nearly 34% of total non-interest income, supporting a more durable fee profile tied to client activity.
Pacific Premier also added fee platforms, including custodial trust services, homeowners association banking, escrow and 1031 exchanges. Since closing, the company generated more than 1,200 cross-sell referrals, and early efforts produced meaningful deposit inflows through mid-October, reinforcing the relationship-banking strategy.
COLB’s Loan Portfolio Remix Away From Transactional Loans
On the balance sheet, the next phase centers on reducing lower-value transactional exposure and leaning into relationship-driven lending tied to deposits and fees. Columbia Banking is managing down about $8 billion of inherited transactional loans, mostly multifamily, with most expected to run off or reprice over eight quarters that started in the third quarter of 2025. The bank does not plan to rebuild this portfolio.
Instead, the strategic shift is toward commercial and industrial lending and owner-occupied commercial real estate. As of Dec. 31, 2025, commercial and industrial loans and owner-occupied commercial real estate represented 22% and 15% of loans and leases, respectively.
Management anticipates runoff of $1 billion to $1.5 billion in transactional loans, replaced by higher-yield core lending, while overall loan growth stays muted as runoff offsets new originations through roughly 2027.
What the Next Earnings Print May Emphasize for COLB
The company’s outlook provides a practical checklist for the next earnings print. For the first quarter of 2026, management expects net interest margin in a 3.90%-3.95% range, with average earning assets a touch lower range. It also expects net interest income of about $600 million in the first quarter of 2026, excluding a certain fourth-quarter item.
On expenses, operating expenses excluding core deposit intangible amortization are expected to be $335-$345 million in the first and second quarters of 2026, before declining modestly in the third quarter as cost savings build and normalization is targeted by the third quarter of 2026.
With COLB stock at a Zacks Rank #3 (Hold), the path to sustained NIM above 4% runs through disciplined funding, continued portfolio remix and full synergy capture amid muted loan growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Over the past year, shares of Columbia Banking have gained 34.3%, outperforming the industry’s rally of 31.3%.
Price Performance
Image Source: Zacks Investment Research
Columbia Banking’s Peers to Watch
East West Bancorp (EWBC - Free Report) is a key peer with a Zacks Rank #3 at present. EWBC’s NIM will likely be under pressure in the near-term because of interest rate cuts, while decent loan demand, lower deposit beta and funding costs, alongside balance sheet hedging, will offer support.
Zions Bancorporation (ZION - Free Report) is a close peer with a Zacks Rank #3. ZION has been witnessing a rise in NIM for the last several quarters as funding costs declined. In the near-term, the company’s NIM is likely to be positively impacted, driven by stabilizing deposit costs and asset yield repricing.