Columbia Banking System NIM Compresses as Asset Balances Dip
Net interest margin fell 10 bps to 3.96% in the first quarter as the bank navigated lower interest-earning asset balances.
Net interest income for Columbia Banking System (COLB), a regional commercial bank, decreased by $33 million sequentially to $594 million in the first quarter of 2026. The decline was driven by lower average interest-earning asset balances and the non-recurrence of $17 million in premium amortization on acquired time deposits and an accelerated loan repayment.
Net interest margin compressed 10 bps quarter-over-quarter to 3.96%. This contraction primarily reflected the absence of an 11-basis point benefit previously derived from premium amortization and the aforementioned loan repayment.
Deposit costs trended lower as the bank adjusted to a shifting rate environment. The cost of interest-bearing deposits decreased 4 bps sequentially to 2.04%. This move followed active management of deposit rates in response to federal funds rate reductions and a shift in the funding mix. Total deposits fell to $53.5 billion from $54.2 billion at year-end 2025, largely due to an intentional reduction in brokered deposits, which dropped to $1.6 billion from $2.4 billion.
Loan growth remained muted overall, with gross loans and leases dipping slightly to $47.7 billion from $47.8 billion. Commercial loans provided a bright spot, increasing by 6% on an annualized basis.
Credit quality metrics weakened during the quarter. Net charge-offs rose to 0.30% of average loans and leases on an annualized basis, up from 0.25% in the fourth quarter of 2025, a move driven by a specific agricultural industry relationship. The non-performing assets to total assets ratio increased to 0.40% from 0.30%. Consequently, the provision for credit losses rose to $28 million from $23 million in the prior quarter.
Non-interest income fell by $7 million sequentially to $83 million, weighed down by lower revenue from swaps, syndications, and international banking. These losses were partially offset by a $18 million sequential decrease in non-interest expense, which fell to $394 million. The expense relief stemmed from lower merger costs and the realization of cost savings following the Pacific Premier acquisition.
Capital levels shifted as the bank accelerated shareholder returns. The estimated common equity tier 1 (CET1) risk-based capital ratio declined 30 bps to 11.5%. During the quarter, Columbia repurchased $200 million of common stock, totaling 6.5 million shares, doubling the $100 million repurchased in the previous quarter.