Columbia Banking System (COLB)
We aren’t fans of Columbia Banking System. Its decelerating revenue growth and even worse EPS performance give us little confidence it can beat the market.― StockStory Analyst Team
1. News
2. Summary
Why We Think Columbia Banking System Will Underperform
Created through the merger of two Pacific Northwest banking institutions with deep regional roots, Columbia Banking System (NASDAQ:COLB) operates Umpqua Bank, providing commercial, consumer, and wealth management services across eight western states.
- Loan losses and capital returns have eroded its tangible book value per share this cycle as its tangible book value per share declined by 1.2% annually over the last five years
- Incremental sales over the last five years were less profitable as its 6.5% annual earnings per share growth lagged its revenue gains
- The good news is that its projected net interest income growth of 34% for the next 12 months is above its five-year trend, pointing to accelerating demand
Columbia Banking System doesn’t satisfy our quality benchmarks. We’d rather invest in businesses with stronger moats.
Why There Are Better Opportunities Than Columbia Banking System
At $28.17 per share, Columbia Banking System trades at 1.1x forward P/B. This multiple is lower than most banking companies, but for good reason.
Our advice is to pay up for elite businesses whose advantages are tailwinds to earnings growth. Don’t get sucked into lower-quality businesses just because they seem like bargains. These mediocre businesses often never achieve a higher multiple as hoped, a phenomenon known as a “value trap”.
3. Columbia Banking System (COLB) Research Report: Q3 CY2025 Update
Regional banking company Columbia Banking System (NASDAQ:COLB) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 24.7% year on year to $619 million. Its non-GAAP profit of $0.85 per share was 23.2% above analysts’ consensus estimates.
Columbia Banking System (COLB) Q3 CY2025 Highlights:
- Net Interest Income: $505 million vs analyst estimates of $511.9 million (17.4% year-on-year growth, 1.4% miss)
- Net Interest Margin: 3.8% vs analyst estimates of 3.8% (in line)
- Revenue: $619 million vs analyst estimates of $571 million (24.7% year-on-year growth, 8.4% beat)
- Efficiency Ratio: 67.3% vs analyst estimates of 56.8% (1,049 basis point miss)
- Adjusted EPS: $0.85 vs analyst estimates of $0.69 (23.2% beat)
- Tangible Book Value per Share: $18.57 vs analyst estimates of $17.91 (4.3% year-on-year growth, 3.7% beat)
- Market Capitalization: $7.88 billion
Company Overview
Created through the merger of two Pacific Northwest banking institutions with deep regional roots, Columbia Banking System (NASDAQ:COLB) operates Umpqua Bank, providing commercial, consumer, and wealth management services across eight western states.
Columbia Banking System delivers financial services through its primary subsidiary, Umpqua Bank, which maintains branches throughout Oregon, Washington, California, Idaho, Nevada, Arizona, Colorado, and Utah. The bank offers a comprehensive suite of products tailored to different customer segments, from large corporations to small businesses and individual consumers.
For commercial clients, Umpqua provides specialized lending solutions including lines of credit, equipment financing, commercial real estate loans, and international trade services. A business owner might use Umpqua's equipment leasing program to finance new manufacturing equipment while simultaneously managing cash flow through the bank's treasury management services. The bank has developed particular expertise in multifamily property lending, which represents a significant portion of its loan portfolio.
On the consumer side, Umpqua offers traditional banking products like checking and savings accounts, certificates of deposit, and residential mortgages. The bank also provides wealth management services through Columbia Wealth Advisors and Columbia Trust Company, helping clients with financial planning, investments, and estate planning.
Columbia Banking System generates revenue primarily through interest income on loans and investments, as well as fees from various banking services. The company emphasizes relationship banking, using both traditional branch locations and digital channels to serve customers. Its business model focuses on maintaining diversification across loan types, customer segments, and geographic regions to manage risk while pursuing growth opportunities throughout its western U.S. footprint.
4. Regional Banks
Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.
Columbia Banking System competes with large national banks that hold top market positions in its regions, as well as other regional banks operating in the western United States such as First Republic Bank (NYSE: FRC), Western Alliance Bancorporation (NYSE: WAL), and Zions Bancorporation (NASDAQ: ZION).
5. Sales Growth
Two primary revenue streams drive bank earnings. While net interest income, which is earned by charging higher rates on loans than paid on deposits, forms the foundation, fee-based services across banking, credit, wealth management, and trading operations provide additional income. Over the last five years, Columbia Banking System grew its revenue at an excellent 11.1% compounded annual growth rate. Its growth beat the average banking company and shows its offerings resonate with customers, a helpful starting point for our analysis.
Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Columbia Banking System’s annualized revenue growth of 7.7% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. 
Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.
This quarter, Columbia Banking System reported robust year-on-year revenue growth of 24.7%, and its $619 million of revenue topped Wall Street estimates by 8.4%.
Net interest income made up 83% of the company’s total revenue during the last five years, meaning Columbia Banking System barely relies on non-interest income to drive its overall growth.
Our experience and research show the market cares primarily about a bank’s net interest income growth as non-interest income is considered a lower-quality and non-recurring revenue source.
6. Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Columbia Banking System’s EPS grew at a solid 6.5% compounded annual growth rate over the last five years. However, this performance was lower than its 11.1% annualized revenue growth, telling us the company became less profitable on a per-share basis as it expanded.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Columbia Banking System, its two-year annual EPS growth of 2.8% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.
In Q3, Columbia Banking System reported adjusted EPS of $0.85, up from $0.69 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Columbia Banking System’s full-year EPS of $2.99 to grow 2.1%.
7. Tangible Book Value Per Share (TBVPS)
Banks operate as balance sheet businesses, with profits generated through borrowing and lending activities. Valuations reflect this reality, emphasizing balance sheet strength and long-term book value compounding ability.
When analyzing banks, tangible book value per share (TBVPS) takes precedence over many other metrics. This measure isolates genuine per-share value by removing intangible assets of debatable liquidation worth. Other (and more commonly known) per-share metrics like EPS can sometimes be murky due to M&A or accounting rules allowing for loan losses to be spread out.
Columbia Banking System’s TBVPS declined at a 1.2% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 14.3% annually over the last two years from $14.22 to $18.57 per share.
Over the next 12 months, Consensus estimates call for Columbia Banking System’s TBVPS to grow by 6.8% to $19.83, mediocre growth rate.
8. Balance Sheet Assessment
Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.
Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.
This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.
New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.
Over the last two years, Columbia Banking System has averaged a Tier 1 capital ratio of 10.4%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.
9. Return on Equity
Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.
Over the last five years, Columbia Banking System has averaged an ROE of 11.6%, impressive for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This shows Columbia Banking System has a strong competitive moat.
10. Key Takeaways from Columbia Banking System’s Q3 Results
It was good to see Columbia Banking System beat analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. On the other hand, its net interest income slightly missed. Zooming out, we think this quarter featured some important positives. The stock remained flat at $26.02 immediately after reporting.
11. Is Now The Time To Buy Columbia Banking System?
Updated: December 3, 2025 at 11:41 PM EST
Are you wondering whether to buy Columbia Banking System or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.
Columbia Banking System’s business quality ultimately falls short of our standards. Although its revenue growth was decent over the last five years and is expected to accelerate over the next 12 months, its TBVPS has declined over the last five years. And while the company’s estimated net interest income growth for the next 12 months is great, the downside is its projected EPS for the next year is lacking.
Columbia Banking System’s P/B ratio based on the next 12 months is 1.1x. This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're pretty confident there are superior stocks to buy right now.
Wall Street analysts have a consensus one-year price target of $29.46 on the company (compared to the current share price of $28.17).