Columbia Banking Q2 Earnings Top Estimates on Higher NII & Fee Income

Net income (GAAP) was $208 million compared with $152 million in the year-ago quarter.

COLB’s NII & Fee Income Rise

Total revenues came in at $677 million, up 32.5% year over year. The metric, however, missed the Zacks Consensus Estimate of $688.4 million.

COLB’s NII was $589 million, up 32.1% from the second quarter of 2025. The increase reflected the larger balance sheet following the Pacific Premier acquisition.

The net interest margin expanded 18 basis points year over year to 3.93%. Funding costs were lower than the year-ago quarter, with the cost of interest-bearing deposits declining 56 basis points to 1.96% from 2.52%. The cost of total deposits fell to 1.32% from 1.73%.

Non-interest income was $88 million, up 35.4% from the year-ago level. Service charges on deposits increased 15% to $23 million, while card-based fees rose 21% to $17 million. Financial services and trust revenues increased to $15 million from $6 million. Other income was $19 million, up 58%.

COLB’s Expenses Increase

Columbia Banking’s non-interest expenses were $375 million, up 34.9% from the second quarter of 2025. The year-over-year increase reflected higher costs across several categories on a larger operating base.

Salaries and employee benefits were $196 million, up 26.5% from $155 million. Occupancy and equipment expenses increased 38.3% to $65 million, while intangible amortization rose 46.2% to $38 million. Merger and restructuring expenses were $9 million compared with $8 million in the year-ago quarter.

Management noted that all organizational changes and cost-related synergies associated with the Pacific Premier acquisition were essentially complete as of June 30, 2026, including the achievement of its previously disclosed cost-savings target.

COLB’s Loans & Deposits Decline Sequentially

As of June 30, 2026, loans and leases were $47.2 billion, down 1% sequentially. The decline reflected continued expected runoff in below-market-rate transactional loans and lower non-owner-occupied commercial real estate balances because of elevated payoffs and competitive pricing pressure.

Commercial loans, including owner-occupied commercial real estate, increased at an annualized rate of 5% from the prior quarter, partly offsetting contraction in other portfolios.

Total deposits declined 3% sequentially to $52.1 billion. The decrease reflected intentional reductions in brokered deposits and wholesale public deposits.

Columbia Banking’s Credit Quality: Mixed Bag

COLB’s provision for credit losses was $27 million, down 10% from $30 million in the year-ago quarter.

Net charge-offs were 0.25% of average loans and leases (annualized), down from 0.31% a year earlier. The allowance for credit losses was $475 million, up 8.2% from $439 million. However, the allowance for credit losses-to-loans and leases ratio declined to 1.01% from 1.17%.

Non-performing assets totaled $273 million, up 51.7% from $180 million, and the non-performing assets-to-total assets ratio increased to 0.42% from 0.35% in the second quarter of 2025.

Columbia Banking’s Capital Ratios Improve

As of June 30, 2026, the estimated total risk-based capital ratio was 13.4%, up from 13% in the second quarter of 2025. The estimated common equity Tier 1 risk-based capital ratio was 11.6%, up from 10.8% in the prior-year quarter.

Book value per common share increased 5.1% year over year to $26.70. Tangible book value per common share rose 4.1% to $19.22.

COLB’s Share Repurchases Update

In the reported quarter, Columbia Banking repurchased 6.6 million common shares at an average price of $29.93, returning $199 million to shareholders. The company had $202 million remaining under its existing share repurchase authorization as of June 30, 2026.

Our Viewpoint on COLB

Columbia Banking’s larger balance sheet following the Pacific Premier acquisition supported solid year-over-year growth in NII and fee income. Lower deposit costs and active management of funding rates aided the net interest margin. The completion of acquisition-related organizational changes and cost synergies should support operating efficiency.

However, the continued runoff of below-market-rate transactional loans, competitive pressure in commercial real estate and intentional reductions in higher-cost deposits are likely to constrain near-term balance-sheet growth. Rising non-performing assets and elevated operating expenses remain concerning.

At present, COLB carries a Zacks Rank 4 (Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

First Horizon Corporation FHN posted second-quarter 2026 earnings per share of 54 cents, surpassing the Zacks Consensus Estimate of 52 cents. This compares favorably with earnings of 45 cents in the year-ago quarter.

FHN’s results benefited from higher net interest income and non-interest income, along with a lower provision for credit losses. Higher loan and deposit balances also provided support. However, rising expenses and weaker capital ratios were headwinds. 

F.N.B. Corporation FNB reported second-quarter 2026 earnings of 42 cents per share, which matched the Zacks Consensus Estimate. The bottom line jumped 16.7% year over year.

FNB’s results primarily benefited from higher NII, a rise in non-interest income and lower provisions. Higher average loans and deposits were other positives. However, higher non-interest expenses hurt the results to some extent.

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