KBRA Assigns Rating to $250 Million Subordinated Notes Issued by Columbia Bank

KBRA assigns a rating of A- with a Stable Outlook to the $250 million subordinated notes issued by Columbia Bank ("the bank") with a final maturity date of September 18, 2036. The notes are callable at the option of the bank, commencing on September 18, 2031. Net proceeds will be used for general corporate purposes and to retire trust preferred securities outstanding at its holding company, Columbia Banking System, Inc. (NASDAQ: COLB).

Key Credit Considerations

The ratings for Columbia Bank remain tied to its solid, multi-year performance record, underpinned by its rich deposit base, which anchors bottom line earnings. On a consolidated basis, NIM performance continued to exhibit strong results in 2Q26 at 3.93%, with slightly stronger performance at the bank. The key driver of the enviable margin performance remains the bank’s attractive deposit base, encompassing a large proportion of noninterest-bearing deposits that have been remarkably stable in relation to total deposits (33% at 2Q26). Capital ratios were essentially unchanged on a linked quarter basis, as shareholder distributions (common dividends and share repurchases) that exceeded quarterly net income were effectively counterbalanced by a modest decline in assets. The issuance of the subordinated notes, together with the repayment of certain trust preferred securities noted above, the proceeds of which were originally contributed to the bank as common equity, will result in a modest reduction in the bank’s capital ratios.

Rating Sensitivities

Positive rating action is unlikely over the intermediate term, given the company’s high rating position within KBRA’s rated universe. Conversely, negative rating pressure could arise if the gap between the company’s consolidated capital ratios and rated peer averages widens, particularly if KBRA views the company’s ability to rebuild capital as uncertain or limited. A significant deterioration in asset quality that results in elevated credit costs and materially pressures earnings could also result in negative rating action.

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