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Columbia Banking Outlook: NIM, Fees and Loan Mix in 2026
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Key Takeaways
Columbia Banking expects NIM above 4% in Q2 and Q3'26 as funding costs decline.
COLB is reducing transactional loans and shifting toward core commercial lending and fee growth.
Non-interest income rose 25.8% in Q1'26, while credit costs and expenses remain key risks.
Columbia Banking System, Inc. (COLB - Free Report) enters 2026 with a clearer earnings framework after the Pacific Premier deal broadened its Western footprint and operating base.
The near-term debate is straightforward. Margin and fee mix are set to improve, but elevated integration-related costs and rising credit pressure can keep quarterly results choppy.
Columbia Banking’s Margin Path and Rate Levers
COLB’s margin progress has been meaningful. Net interest margin (NIM) improved from 3.64% in fourth-quarter 2024 to 4.06% in fourth-quarter 2025, supported by lower deposit costs and reduced higher-cost wholesale funding. In first-quarter 2026, the margin was 3.96%, up 36 basis points year over year.
Management expects NIM to continue rising through 2026, topping 4% again in Q2 and Q3 as customer deposit balances recover and rate-sensitive funding costs decline. The company is also using proactive loan and deposit repricing, with deposit betas for rate cuts targeted around 50%, to protect profitability as interest rates ease.
A diversified $53.5 billion deposit base remains central to the strategy, with strength in non-interest-bearing and money market accounts. Management continues prioritizing core relationship deposits while reducing higher-cost and non-core funding sources, including brokered and wholesale deposits. In Q1 2026, total deposits declined 1% sequentially mainly due to intentional brokered deposit runoff, partly offset by growth in customer deposits.
Columbia Banking’s Portfolio Remix to Core Lending
COLB is reshaping its balance sheet away from transactional exposure. The bank is managing down about $8 billion of inherited transactional loans, mostly multifamily, with most expected to run off or reprice over eight quarters that began in the third quarter of 2025. The company does not plan to rebuild that portfolio.
Instead, it is pivoting toward relationship-driven commercial and industrial lending and owner-occupied commercial real estate tied to deposits and fees. As of March 31, 2026, commercial and industrial loans represented 23% of the loan and lease portfolio, while owner-occupied commercial real estate accounted for 15%.
Management cited roughly $230 million of additional transactional loan paydowns in the first quarter, with reinvestment into core lending. Overall loan growth is expected to remain muted as runoff offsets new originations through roughly 2027, including anticipated runoff of $1 billion to $1.5 billion in transactional loans replaced by higher-yield core lending.
COLB Fee Lines That Can Offset Spread Volatility
Fee growth is a second pillar of the 2026 narrative. In 2025, treasury management and commercial card fees grew versus the prior year, while financial services and trust and international banking revenues expanded notably. That momentum continued into the first quarter of 2026.
The Pacific Premier acquisition broadens the platform with additional fee capabilities, including Custodial Trust Services, homeowners association banking, escrow, and 1031 exchanges. Since the close, the company has generated more than 1,200 cross-sell referrals, supported by intentional referral activity across business lines.
Results already reflect a stronger contribution from non-interest income. In first-quarter 2026, non-interest income rose 25.8% year over year to $83 million, even as management noted first-quarter seasonality can weigh on certain customer-driven categories like swap, syndication, and international banking versus the immediately preceding quarter.
Columbia Banking’s Near-Term Risks to Watch
Expenses remain the most visible swing factor. Non-interest expenses have been volatile over the past four quarters, including a rise in first-quarter 2026 driven by higher costs across several categories on a larger operating base. Management expects operating expenses, excluding core deposit intangible amortization, to run $330–$340 million per quarter for the next several quarters, and guided to $335–$345 million for second-quarter 2026.
Credit is another watch item. While headline metrics are described as manageable, small-ticket leasing through FinPac has shown higher loss content, and office loans were 7% of total loans as of March 31, 2026. Non-performing assets increased to $264 million in the first quarter, up from $178 million a year earlier, alongside a higher provision for credit losses.
Over the past year, shares of Columbia Banking have gained 27.2%, outperforming the industry’s rally of 20.2%.
Price Performance
Image Source: Zacks Investment Research
Columbia Banking’s Estimates Signal Growth
The Zacks Consensus Estimate for COLB’s 2026 sales is pegged at $2.78 billion, indicating year-over-year growth of 20.6%. For 2027, the consensus mark for sales is projected at $2.86 billion, suggesting further growth of 3.2%.
Sales Estimates
Image Source: Zacks Investment Research
This expected improvement supports COLB’s earnings outlook as margin expansion, lower funding costs, fee growth and portfolio remix efforts are likely to aid performance. However, elevated expenses, integration costs and credit normalization remain key factors that could temper the pace of upside.
Columbia Banking’s Peers to Watch
East West Bancorp (EWBC - Free Report) is a key peer with a Zacks Rank #3 at present. East West Bancorp’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.Zions Bancorporation 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 Outlook: NIM, Fees and Loan Mix in 2026
Key Takeaways
Columbia Banking System, Inc. (COLB - Free Report) enters 2026 with a clearer earnings framework after the Pacific Premier deal broadened its Western footprint and operating base.
The near-term debate is straightforward. Margin and fee mix are set to improve, but elevated integration-related costs and rising credit pressure can keep quarterly results choppy.
Columbia Banking’s Margin Path and Rate Levers
COLB’s margin progress has been meaningful. Net interest margin (NIM) improved from 3.64% in fourth-quarter 2024 to 4.06% in fourth-quarter 2025, supported by lower deposit costs and reduced higher-cost wholesale funding. In first-quarter 2026, the margin was 3.96%, up 36 basis points year over year.
Management expects NIM to continue rising through 2026, topping 4% again in Q2 and Q3 as customer deposit balances recover and rate-sensitive funding costs decline. The company is also using proactive loan and deposit repricing, with deposit betas for rate cuts targeted around 50%, to protect profitability as interest rates ease.
A diversified $53.5 billion deposit base remains central to the strategy, with strength in non-interest-bearing and money market accounts. Management continues prioritizing core relationship deposits while reducing higher-cost and non-core funding sources, including brokered and wholesale deposits. In Q1 2026, total deposits declined 1% sequentially mainly due to intentional brokered deposit runoff, partly offset by growth in customer deposits.
Columbia Banking’s Portfolio Remix to Core Lending
COLB is reshaping its balance sheet away from transactional exposure. The bank is managing down about $8 billion of inherited transactional loans, mostly multifamily, with most expected to run off or reprice over eight quarters that began in the third quarter of 2025. The company does not plan to rebuild that portfolio.
Instead, it is pivoting toward relationship-driven commercial and industrial lending and owner-occupied commercial real estate tied to deposits and fees. As of March 31, 2026, commercial and industrial loans represented 23% of the loan and lease portfolio, while owner-occupied commercial real estate accounted for 15%.
Management cited roughly $230 million of additional transactional loan paydowns in the first quarter, with reinvestment into core lending. Overall loan growth is expected to remain muted as runoff offsets new originations through roughly 2027, including anticipated runoff of $1 billion to $1.5 billion in transactional loans replaced by higher-yield core lending.
COLB Fee Lines That Can Offset Spread Volatility
Fee growth is a second pillar of the 2026 narrative. In 2025, treasury management and commercial card fees grew versus the prior year, while financial services and trust and international banking revenues expanded notably. That momentum continued into the first quarter of 2026.
The Pacific Premier acquisition broadens the platform with additional fee capabilities, including Custodial Trust Services, homeowners association banking, escrow, and 1031 exchanges. Since the close, the company has generated more than 1,200 cross-sell referrals, supported by intentional referral activity across business lines.
Results already reflect a stronger contribution from non-interest income. In first-quarter 2026, non-interest income rose 25.8% year over year to $83 million, even as management noted first-quarter seasonality can weigh on certain customer-driven categories like swap, syndication, and international banking versus the immediately preceding quarter.
Columbia Banking’s Near-Term Risks to Watch
Expenses remain the most visible swing factor. Non-interest expenses have been volatile over the past four quarters, including a rise in first-quarter 2026 driven by higher costs across several categories on a larger operating base. Management expects operating expenses, excluding core deposit intangible amortization, to run $330–$340 million per quarter for the next several quarters, and guided to $335–$345 million for second-quarter 2026.
Credit is another watch item. While headline metrics are described as manageable, small-ticket leasing through FinPac has shown higher loss content, and office loans were 7% of total loans as of March 31, 2026. Non-performing assets increased to $264 million in the first quarter, up from $178 million a year earlier, alongside a higher provision for credit losses.
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 27.2%, outperforming the industry’s rally of 20.2%.
Price Performance
Image Source: Zacks Investment Research
Columbia Banking’s Estimates Signal Growth
The Zacks Consensus Estimate for COLB’s 2026 sales is pegged at $2.78 billion, indicating year-over-year growth of 20.6%. For 2027, the consensus mark for sales is projected at $2.86 billion, suggesting further growth of 3.2%.
Sales Estimates
Image Source: Zacks Investment Research
This expected improvement supports COLB’s earnings outlook as margin expansion, lower funding costs, fee growth and portfolio remix efforts are likely to aid performance. However, elevated expenses, integration costs and credit normalization remain key factors that could temper the pace of upside.
Columbia Banking’s Peers to Watch
East West Bancorp (EWBC - Free Report) is a key peer with a Zacks Rank #3 at present. East West Bancorp’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. Zions Bancorporation 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.