Columbia Banking System (COLB) displayed improving profitability metrics and ongoing capital-return discipline at the Barclays 24th Annual Global Financial Services Conference on Tuesday, Sept. 15, as executives detailed a year of integration maturity following its Pacific Premier Bancorp acquisition.
Net interest margin rose 20 basis points over the past year and is expected to reach and likely exceed a sustainable 4% level in the third quarter, CEO Clint Stein said. Return on average assets improved roughly 10 basis points from the second quarter a year earlier, while non-interest revenue rose to about 55 basis points of average assets, up from 45 basis points in the prior-year second quarter.
Capital return has been a standout theme. Columbia has repurchased $500 million worth of stock so far under its $700 million authorization, with roughly $100 million bought back in the fourth quarter last year and $200 million each in the first and second quarters. CFO Ivan Seda indicated the pace should hold in the third quarter. Total capital returned to shareholders exceeded $1 billion over the trailing year when dividends are included. Risk-based capital remains around 13.5%.
On the balance sheet, legacy transactional loans from the Pacific Premier deal are running off at a rate of just over $1 billion annually. About $7 billion—roughly 15% of the portfolio—remains in that runoff bucket, carrying a 4.14% coupon. Wholesale funding reliance has fallen more than 20% over the past year.
Stein characterized the current lending and deposit environment as unusually competitive, describing peer pricing on the loan side as "borderline irrational" as institutions push to grow balance sheets with aggressive terms and looser structures. Columbia's approach has been selective on the deposit side, using targeted pricing on certificates of deposit and money-market products while leaning on Federal Home Loan Bank advances when needed rather than overpaying for retail deposits.
In Q3, Seda expected deposit pricing to be roughly flat or slightly higher, citing the need to give bankers room to compete without undermining margins. "We're not making irrational pricing decisions that are going to be a drag on that net interest margin," he said.
The bank is also realizing efficiency gains from technology. AI-assisted responses now handle seven out of ten call-center interactions, allowing Columbia to add 30% more customers from the Pacific Premier acquisition without increasing call-center headcount.
Agricultural credit quality drew attention, with non-performing agricultural loans at about 3.8%. Of that figure, 1.8 percentage points were attributable to one previously disclosed problem deal. Overall portfolio health was assessed positively by InvestingPro data, which scored Columbia's financial health at 2.87 out of five—rated "GOOD."
Looking ahead, Stein signaled the bank is not actively pursuing M&A. He estimated a target below $3 billion would not meaningfully move the needle, while a deal above $10 billion would likely be too large for current interests.
Shares closed at $30.11, up 0.23%, with a trailing twelve-month P/E of 11.96 and a dividend yield of 4.92%. Revenue grew 34% year over year, driven in part by Pacific Premier integration, while return on equity came in at 11%.
