COLUMBIA BANKING SYSTEM, INC. (COLB): what the price assumes

In the published model solve dated 2026-Q2, anchored at $30.80, COLUMBIA BANKING SYSTEM, INC. (COLB) is priced for 12.0% return on equity. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/COLB

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Solve inputs: computed at a 10.9% cost of equity with 4% terminal growth over a 10-year stage, on common book equity (FY2026).

How unusual the bet is: within-range

Valuation X-Ray

The price is supported by earnings-power and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Earnings, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.0%); the inversion above states its own rate.

Per-Model Detail (n=6)

Solvency

Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).

Bullet Takeaways

• Columbia bought its scale rather than building it, assuming $14.5 billion of Pacific Premier deposits and booking $453 million of goodwill, so the question that matters is whether that funding base earns its keep.
• The lending book is concentrated where a western commercial bank's book always is, with the annual report stating that CRE and commercial loans are the largest classifications within earning assets, spread across customers in eight states from Washington to Arizona.
• Profitability is the line to watch, because the bank has been earning about 7% on its equity on a trailing basis while the price pays roughly 1.2 times book value for it.

Bull Case

Start with the reason to walk away. This is a commercial lender across the western states, and the annual report does not soften what that means: CRE and commercial loans are the largest classifications within earning assets, with borrowers and depositors alike concentrated in one region. The filing spells the footprint out, noting that Substantially all of our loan and deposit customers are businesses and individuals in Arizona, California, Colorado, Idaho, Nevada, Oregon, Utah, and Washington. One bad regional cycle touches the loan book and the deposit base at the same time. That is the fear, and it is a reasonable one.

The credit data does not show that cycle arriving. Non-performing loans stood at 0.41% of total loans and leases at the end of 2025. They rose in the first quarter of 2026, and the filing traces the increase to a single agricultural industry relationship, adding that it is not indicative of broader portfolio deterioration. Of the non-performing balance at March 31, 2026, $88 million carried a government guarantee, which is a different kind of exposure from an office tower with a vacancy problem. About 26% of the commercial real estate portfolio is owner-occupied, where repayment comes out of the borrower's own operations rather than a tenant's rent check.

What the bull case actually owns is the funding side. Deposits are the raw material of bank profitability, and Columbia's are getting cheaper: the 10-Q reports that The average cost of interest-bearing deposits declined by 4 basis points to 2.04%, helped by a shrinking share of higher-cost brokered money. The book is lent out at a measured pace, with The loan-to-deposit ratio was 89% and 88% as of March 31, 2026 and December 31, 2025, respectively. A bank that funds itself at two cents on the dollar and lends out under ninety cents of every dollar of deposits has room to work with, whatever happens to the yield curve.

Pacific Premier is what changed the size of the company. The acquisition brought $16.6 billion of assets, of which $11.4 billion was loans and leases, against $14.5 billion of deposits assumed and $1.9 billion of net assets acquired, leaving $453 million of goodwill. Scale in banking is not a vanity metric: the same compliance department, the same treasury function and the same core system now serve a much larger balance sheet. First-quarter 2026 net income came to $192 million, and trailing earnings run at $655 million, or $2.55 a share.

Capital comes back to owners rather than sitting on the balance sheet. About 80.7% of the latest fiscal year's earnings went out as dividends and buybacks, and the regulatory position underpinning that is unremarkable in the good sense: a common equity tier 1 ratio of 11.6% and a total risk-based capital ratio of 13.4% at March 31, 2026. A bank that pays out four fifths of what it earns is telling you it does not need the capital to grow into what it already owns.

Bear Case

The methods used to triangulate this bank disagree, and the disagreement is not about earnings. It is about the book. Value Columbia the way lenders are usually valued, off stated book value and the return earned on it, and the price sits about 29% above where those asset-value methods land. Run it against trailing earnings or against what comparable banks fetch, and those methods land above today's price. When the conservative read and the generous read split like that, the conservative one is usually asking the better question. Here the question is how much of the book is real.

Book value per share is $26.23. Tangible book value per share is $18.86. The difference is goodwill and other intangibles carried in from acquisitions, and Pacific Premier alone contributed $453 million of goodwill plus $355 million of other intangible assets. Goodwill cannot be lent out, does not absorb a credit loss, and earns no spread. The bank-specific model in this framework prices off the tangible figure rather than the stated one, marks it down because the returns being earned fall short of what equity capital costs, and applies a further haircut for the credit allowance the bank carries, which covers just under one percent of loans. It lands a long way under the price.

That gap is the bear's arithmetic. At roughly 1.2 times book, the price is paying for a return on equity beyond the 11.7% level that marks the top tier of banks holding it across four decades, and the requirement does not resolve into a finite path at all. What the bank has actually earned recently is about 7% on a trailing basis. That distance from its own record is the whole bear case in one line: if the return does not arrive, the premium over book has nothing holding it up, and the ground floor is book value itself. In fairness, the price-to-book multiple sits in the lower half of its peer group, so the market is not treating Columbia as the class of the field.

The first quarter of 2026 showed how the return can slip. Net income fell to $192 million from $215 million in the prior quarter, driven by a $33 million decline in net interest income on lower average interest-earning asset balances. The common equity tier 1 ratio eased to 11.6% from 11.8%. Neither is alarming on its own; both point the same direction, which is that the acquired scale has to be worked rather than merely owned.

Then there is the retained-earnings problem. Paying out about 80.7% of earnings leaves under a fifth to compound inside the bank, so book value grows slowly from the inside. Growth of any size therefore has to be bought, and every deal adds more of the intangible book the asset-value methods refuse to credit. Meanwhile the collateral behind the largest loan category is the kind that reprices fast: the 10-K warns that CRE valuations can be materially affected over relatively short periods of time by changes in business climate. Peer banks are visibly pulling in that exposure. First Commonwealth (FCF) disclosed that it cut the internal segment limit on its office portfolio from 65% to 50%, against actual concentration of 32.4% as of December 31, 2025. Columbia's office collateral sits inside a loan category the filing already flags as its largest.

Valuation

Price-to-book is the lens for a lender, because what a bank owns is the spread it earns on the capital it holds. At $31.17, roughly 1.2 times book value, the market is paying for a return on equity beyond the 11.7% level that marks the elite tier of banks sustaining it across four decades. That requirement does not resolve into a finite path, which is worth saying plainly: it is a bound, not a solved number. The bank has recently been earning about 7% on a trailing basis.

The methods split cleanly along one seam. Only the asset-value methods, which read a bank off its stated book and the return on it, put the price above where they land, by about 29%. The earnings-power methods, the peer-multiple methods and the dividend-based methods all land above today's price, which is why this reads as a value-supported name rather than a growth bet. The contested input is not the earnings. It is whether a book carrying acquisition goodwill deserves to be valued like a book that does not.

What has to be true is easy to state. Book value per share is $26.23, the price is $31.17, and the buyer is paying a premium to stated book for a bank whose trailing return on equity is about 7%. Push that return into the low double digits and the premium is ordinary for the sector. Leave it where it is, and the premium is a bet on the acquired franchise delivering earnings the combined bank has not yet posted. Against its peer group, the price-to-book multiple sits in the lower half, so this is not the most demanding version of that bet on offer.

For a deposit-funded balance sheet the solvency question is capital and payout rather than coverage or net debt. The common equity tier 1 ratio was 11.6% at March 31, 2026, against a total risk-based capital ratio of 13.4%, both down slightly from year-end. The share count is far larger than it was four years ago, and the 10-Q is explicit that this followed the issuance of shares in connection with the Pacific Premier acquisition rather than a cash-raising dilution. About 80.7% of the latest fiscal year's earnings left as dividends and buybacks, which leaves under a fifth to compound internally. Book value at this bank grows mostly by purchase, and that is precisely the input the asset-value methods discount.

Catalysts

Second-quarter 2026 results landed on July 23, 2026, with diluted earnings of $0.76 a share against a consensus estimate of $0.73 for the quarter. The beat is small in absolute terms, but it lands on the specific question the stock turns on, which is whether the enlarged balance sheet converts into earnings at a better rate than the first quarter managed.

Sell-side reaction was quick and modest in size. RBC Capital lifted its target to $35 from $34 and Stephens to $36 from $35 in the days after the print, and Bank of America began coverage at Buy in mid-July. Those levels sit above today's price, which is consistent with the earnings-based methods here landing above it too; the street is reading Columbia off its earnings rather than off the composition of its book, and that choice explains most of the distance between the two views.

On capital return, the board declared a quarterly dividend of $0.37 per common share, with an ex-dividend date of May 29, 2026. That sits alongside the payout capacity already visible in the last full fiscal year, when about 80.7% of earnings went back out as dividends and buybacks. The two numbers worth tracking into the next print are the cost of interest-bearing deposits, last reported at 2.04% and falling, and the non-performing loan trend after the agricultural relationship that drove the first-quarter increase.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• EBC (Eastern Bankshares, Inc.)
• FY2025 10-K: …similar services. Some of our non-bank competitors are not subject to the same extensive regulations we are and, therefore, may have greater flexibility or lower costs in competing for business. Our ability to compete successfully depends on a number of additional factors, including attractive yields, reputation and…
• FY2025 10-K: …they become payable. The credit risk associated with these commitments is evaluated in a manner similar to the reserving method for loans receivable previously described. The reserve for unfunded lending commitments is included in other liabilities in the Consolidated Balance Sheets. Our reserve for unfunded lending…
• DCOM (DIME COMMUNITY BANCSHARES, INC.)
• FY2025 10-K: …intense. Our profitability depends on the continued ability to successfully compete. We compete with commercial banks, savings banks, credit unions, insurance companies, and brokerage and investment banking firms. Many of our competitors have substantially greater resources and lending limits than us and may offer…
• FY2025 10-K: ​ ​ 2,615 Total loans, net of fair value hedge basis point adjustments ​ ​ 10,758,208 ​ ​ 10,871,943 Allowance for credit losses ​ ( 97,372 ) ​ ( 88,751 ) Loans held for investment, net ​ $ 10,660,836 ​ $ 10,783,192 (1) Business loans include C&I loans, owner-occupied commercial real estate loans and PPP loans. (2)…
• FBNC (FIRST BANCORP)
• FY2025 10-K: Columbia and Charleston. Our primary loan markets were previously presented in the Loan Concentrations section above. The following table presents the counties with the largest share of our deposit base as of December 31, 2025 and 2024. No other market area (as defined by county) comprises more than 5% of our deposit…
• FY2025 10-K: …non-bank competitors are not subject to the same regulatory oversight or capital requirements, which can provide them a competitive advantage in some instances, such as operational flexibility and lower cost structures. We encounter strong pricing competition in providing our services, particularly in making loans…
• INDB (Independent Bank Corp.)
• FY2025 10-K: Company assumes, or participates in, a portion of the credit risk associated with the interest rate swap position with the commercial borrower for a fee received from the other bank. 117 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The following tables reflect the Company's customer…
• FY2025 10-K: …co-operative banks, credit unions, internet banks, as well as other non-bank institutions that offer financial alternatives such as brokerage firms and insurance companies. Competitive factors considered in attracting and retaining deposits include deposit and investment products and their respective rates of return,…
• FBK (FB FINANCIAL CORPORATION)
• FY2025 10-K: …rate risk modeling assumptions; and • quarterly risk presentations by senior management Cybersecurity For information on the Company's information security and related risks, refer to "Item 1C. Cybersecurity" and "Item A. Risk factors: Technology and operational risks." 13 Competition We conduct our core banking…
• FY2025 10-K: …and regional banks that currently have the largest market share positions and with community banks primarily focused only on a particular geographic area or business niche. We believe we are well positioned to grow our market penetration among our target clients of small to medium sized businesses as well as large…
• UBSI (UNITED BANKSHARES INC/WV)
• FY2025 10-K: …of 2.00% for 2027. The unemployment rate forecast remained consistent in the fourth quarter with a projection of 4.40% for 2026 as of mid-September 2025 and as of mid-December with a projection of 4.20% for 2027. Ø Greater risk of loss in the office portfolio due to continued hybrid and remote work that may be…
• FY2025 10-K: …of collateral securing several commercial relationships which reduced the balance outstanding for the relationships as well as the loss potential requiring individually assessed reserves. There were collateral weaknesses identified in several relationships which necessitated additional individually assessed reserves…
• FCF (FIRST COMMONWEALTH FINANCIAL CORP /PA/)
• FY2025 10-K: …or junior lien position. The junior lien position for the majority of these loans provides a higher risk of loss than other residential real estate loans. The primary macroeconomic drivers for estimating credit losses for this category include forecasts of national unemployment and residential property values.…
• FY2025 10-K: …risks related to the office portfolio, the segment limit for the office portfolio was decreased from 65% to 50%, with the actual segment concentration at 32.4% as of December 31, 2025. The following table summarizes commercial real estate loans by the location of the properties by which they are collateralized as of…
• NBTB (NBT BANCORP INC)
• FY2025 10-K: …allowance for loan losses. Management expects that the CECL model may create more volatility in the level of our allowance for credit losses from quarter to quarter as changes in the level of allowance for credit losses will be dependent upon, among other things, macroeconomic forecasts and conditions, loan portfolio…
• FY2025 10-K: …31, 2025 and 2024, respectively, or used to collateralize other borrowings, such as repurchase agreements. The Company also has the ability to issue brokered time deposits and to borrow against established borrowing facilities with other banks (federal funds), which could provide additional liquidity of $2.53 billion…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.