Columbia Banking Restores Net Interest Margin After a Dip

The Tip Desk · October 27, 2026 · 3 min read

Net interest margin reached 4.11% in the third quarter as net interest income rose $26 million to $615 million and the board authorized a new $1.2 billion buyback.

Columbia Banking System (COLB), the Tacoma-based regional holding company, lifted net interest margin 18 basis points to 4.11% in the third quarter of 2026, reversing a 3-basis-point compression in the second quarter.

Net interest income was $615 million, up $26 million from $589 million in the second quarter after a $5 million sequential decline in that prior period. The company said the increase reflected higher income on loans and investment securities and lower funding costs, including $5 million of interest from the accelerated repayment of two acquired loans. Second-quarter results had included $4 million of interest-income reversals that did not recur.

The margin move, the company said, came from higher yields on loans and leases as the mix shifted toward higher-yielding relationship loans, from higher taxable-securities yields after a second-quarter prepayment-speed hit did not repeat, and from a funding-mix shift as customer deposits replaced wholesale sources. The accelerated loan repayments added 3 basis points to the third-quarter margin; reversals had subtracted 3 basis points in the second quarter.

The cost of interest-bearing deposits was 1.95%, down 1 basis point, on active rate management and a lower mix of brokered and wholesale public deposits. The cost of interest-bearing liabilities was 2.20%.

Gross loans and leases were $46.9 billion at September 30, down from $47.2 billion at June 30, as below-market transactional loans ran off and commercial real estate balances fell on elevated payoffs and competitive pricing. Construction and development expanded, and commercial loans including owner-occupied CRE increased 3% on an annualized basis versus June 30. President Chris Merrywell said commercial loan growth remained healthy and that the share of relationship-based commercial loans was rising.

Total deposits were $52.7 billion, up from $52.1 billion. A second 2026 customer deposit campaign that began in June and ended in mid-August brought over $700 million of new deposits. Brokered deposits fell to $622 million from $978 million and wholesale public deposits to $773 million from $928 million. Borrowings dropped to $3.3 billion from $4.3 billion.

Non-interest income was $80 million, down $8 million. Excluding fair-value and hedge items, it was $87 million, down $4 million, largely because $3 million of second-quarter death-benefit proceeds on a single policy did not recur. Non-interest expense was $370 million, down $5 million on lower merger expense. The efficiency ratio was 53.08%.

The provision for credit losses was $33 million, versus $27 million. Net charge-offs were 0.24% of average loans and leases, annualized, compared with 0.25%. FinPac net charge-offs were $11 million; excluding FinPac they were $17 million. Non-performing assets were $255 million, or 0.39% of total assets, versus $273 million, or 0.42%, at June 30. The allowance for credit losses was $480 million, or 1.02% of loans and leases.

Columbia completed its prior repurchase plan in the quarter, buying $199 million of common stock. Between November 2025 and September 30 it repurchased 23.3 million shares at an average $29.88, or 7.8% of shares outstanding at September 30, 2025. The board authorized a new $1.2 billion repurchase program with no expiration date. Columbia Bank issued $250 million of subordinated notes due 2036 at 6.721% for the first five years; the company intends to use a portion of proceeds to redeem about $240 million of junior subordinated debentures in the fourth quarter of 2026 and early 2027.

Estimated total risk-based capital was 13.8% and common equity tier 1 was 11.5%. Book value per common share was $25.62. The company declared a $0.37 quarterly cash dividend. Chairman, CEO and President Clint Stein said the company returned over $1 billion to shareholders through dividends and buybacks over the past year.