How Columbia Banking Intends to Defend NIM as Rates Ease in 2026

Columbia Banking System COLB is leaning into relationship deposits, funding mix shifts and fee growth to protect the net interest margin (NIM) as the rate cycle turns. The Pacific Premier combination adds scale and new fee platforms, while capital stays strong for flexibility. 

Management’s near-term focus is clear, with cost normalization scheduled after systems work in 1Q26 and full synergy capture by 3Q26.

Why Supporting NIM Expansion Matters for COLB Now

Columbia Banking’s NIM improved to 3.84% in 3Q25 from 3.56% a year ago as deposit costs eased and expensive wholesale funding declined. Management expects NIM “just north of” 3.90% in 4Q25 and a similar level in 1Q26, even with slightly lower earning assets, positioning the franchise to defend spread income as rates drift down. Excluding certain one-time 4Q items, NII is expected to be relatively stable on a sequential basis in 1Q26. 

The approach, aided by synergy realization and balance sheet remix, aligns with external models that show multi-year earnings growth through 2027. 

Columbia Banking System, Inc. Price and Consensus

 

Columbia Banking System, Inc. price-consensus-chart | Columbia Banking System, Inc. Quote

Columbia Banking’s deposits are granular and diversified by segment and product, with customer composition skewed toward non-interest and money market categories. Management is prioritizing full-relationship funding and proactive repricing, targeting deposit betas around half for cuts, which will likely support NIM expansion as the easing cycle progresses.

Further, the cross-sell motion increased post-Pacific Premier merger, generating more than 1,200 referrals since closing. This helped COLB drive deposit inflows into mid-October. 

Columbia Banking is expected to manage down $8 billion of inherited transactional loans, mostly multifamily, over roughly eight quarters beginning 3Q25. The bank plans to reallocate toward relationship C&I and owner-occupied CRE tied to deposits and fees, targeting better economics and operating leverage as cost synergies build through 2026. C&I and owner-occupied CRE represented 21% and 15% of loans as of Sept. 30, 2025.

What COLB’s Zacks Rank Signals

Columbia Banking, at present, carries a Zacks Rank #3 (Hold), indicating a balanced one-to-three-month view. We must watch for the 1Q26 system conversion, the cadence of synergy capture toward the 3Q26 expense target and quarterly NIM outcomes versus the approximate 3.90% NIM guide as confirmation points for the margin-defense playbook. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Columbia Banking’s Peers to Watch

East West Bancorp EWBC is a key peer with a Zacks Rank #2 (Buy) at present. EWBC’s NIM will likely be under pressure in the near-term because of rate cuts, while decent loan demand, lower deposit beta and funding costs, alongside balance sheet hedging, will offer support.

Zions Bancorporation ZION is a close peer with a Zacks Rank #2. ZION has been witnessing a rise in NIM for the last few quarters as funding costs declined. In the near-term, the company’s NIM is likely to be positively impacted, driven by relatively higher rates, stabilizing deposit costs and asset yield repricing.

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This article originally published on Zacks Investment Research (zacks.com).

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