KBRA Affirms Ratings for Columbia Banking System, Inc.
30 Apr 2026 | New York
KBRA affirms the senior unsecured debt rating of A-, the subordinated debt rating of BBB+, and the short-term debt rating of K2 for Tacoma, Washington-based Columbia Banking System, Inc. (NASDAQ: COLB) ("the company"). Additionally, KBRA affirms the deposit and senior unsecured debt ratings of A, the subordinated debt rating of A-, and the short-term deposit and debt ratings of K1 for Columbia Bank. The Outlook for all long-term ratings is Stable. COLB is a $66 billion diversified banking institution that operates 348 offices in the Pacific Northwest, California, and other western states.
Key Credit Considerations
Noninterest-bearing deposits continue to comprise a considerable proportion of total deposits (32% at YE25), reflecting the company’s relationship-focused lending and the favorable economic dynamics in its footprint, which provide the company with a solid earnings foundation and the opportunity to be selective on credit risk (average loan yield of ~60 bps less than rated-peers at YE25).
Consolidated capital ratios continue to trail rated peer averages, though the gap has decreased relative to 2023 due to capital accretion and slight balance sheet shrinkage. After the capital-accretive Pacific Premier Bancorp, Inc. merger in 3Q25, the CET1 ratio increased in 4Q25 but declined ~30 bps in 1Q26 to 11.5% as the common dividend and share buybacks outpaced earnings accretion.
Earnings have generally performed commensurately with peers, anchored by the enviable deposit base, which underpins the consistently solid NIM (high 3% to low 4% range). While the contribution of noninterest income is lower than peers (~12% of total operating revenue), KBRA notes that the mix is durable. The declining interest rate environment has contributed to deposit repricing in 2025, buoying NIM. In 2026, NIM has benefitted from reductions in wholesale funding and continued runoff of multifamily and residential transactional-oriented loans funded by higher cost deposit and non-deposit borrowings.
Asset quality remains healthy overall with minimal charge-off activity recorded over the last several years, apart from the lease and equipment finance portfolio (only 3% of the total loan portfolio).
Balance-sheet liquidity at the end of 1Q26, in the form of cash and short-term investments and the AFS portfolio, was solid at 20% and 22% of total assets and total deposits, respectively, and has held fairly steady in recent periods.
Rating Sensitivities
Positive rating action is unlikely in the intermediate term, given the company’s high rating position within the KBRA-rated universe. Conversely, negative pressure would most likely emulate if the gap from rated-peer average consolidated capital ratios were to widen and KBRA also concluded that the ability to rebuild capital ratios were either uncertain or limited. Further, a significant deterioration in loan quality that pressures earnings could also cause ratings to be reassessed.
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