COLB
COLB
Accumulate 2026-03-20
Model
DDM
Price at Report
$26.41
Base IV
$35.91
Bear IV
$25.60
Bull IV
$47.95
Entry Zone: 27-33 · Sell Above: 41
Bore Family Office
Valuation Report — Columbia Banking System, Inc. (COLB) • March 20, 2026
3-Stage DDM (Ke) • Discount Rate: 7.80% • Current Price: $26.41
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Columbia Banking System is a Pacific Northwest and West Coast regional bank holding company formed through the 2023 merger of legacy Columbia Banking and Umpqua Holdings. With $66.8B in total assets, COLB is now one of the largest community-oriented banks in the western United States, operating approximately 300 branches across Oregon, Washington, California, Idaho, Nevada, Arizona, Colorado, and Utah. The combined entity leverages Umpqua's retail brand strength and Columbia's commercial banking expertise.
The merger created a bank with significant scale in attractive West Coast markets but required extensive integration — branch consolidation, system migration, and culture alignment. FY2025 marked the second full year post-merger with revenue of $4.15B (+18%) and NI of $550M. Analyst consensus expects FY2026 EPS of $3.12 (+36%), reflecting full realization of merger cost synergies. The stock has traded poorly since the merger (down ~20% from pre-merger highs) as investors await proof of earnings power from the combined franchise.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Net Interest Income | $4,006M | 96% | +17.0% | — | Spread income from loans & securities — core revenue driver |
| Non-Interest Income | $148M | 4% | +5.0% | — | Fees, service charges, wealth management, mortgage banking |
| Blended Growth Rate | — | 100% | +16.5% | — | Weighted avg across segments |
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 9.7% | 8–12% adequate |
| FCF Margin | 17.0% | ≥10% strong |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Stable (±1pp) | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $2,238 | $2,256 | $3,577 | $3,541 | $4,154 |
| EBITDA ($M) | $46 | $35 | $76 | $72 | $49 |
| Operating Income ($M) | $1,478 | $1,521 | $2,264 | $2,437 | $2,731 |
| Net Income ($M) | $420 | $337 | $349 | $534 | $550 |
| EPS (diluted) | $3.21 | $2.60 | $1.78 | $2.55 | $2.30 |
| Free Cash Flow ($M) | $647 | $1,038 | $711 | $623 | $706 |
| Annual DPS | $1.410 | $1.400 | $1.430 | $1.440 | $1.450 |
| Total Debt ($M) | $20 | $411 | $424 | $439 | $435 |
| Rev YoY Growth | — | +0.8% | +58.6% | -1.0% | +17.3% |
| Gross Margin | — | — | — | — | — |
| EBITDA Margin | 2.1% | 1.6% | 2.1% | 2.0% | 1.2% |
| Operating Margin | 66.0% | 67.4% | 63.3% | 68.8% | 65.7% |
| Net Margin | 18.8% | 14.9% | 9.8% | 15.1% | 13.2% |
📈 DDM Scenarios
$26
🔴 Bear
$36
📊 Base
$48
🚀 Bull
$26.41
Current Price
$31
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 2.0% | 1.5% | 2.0% | 7.80% | $26 | ▼3.1% |
| 📊 Base | 6.5% | 4.0% | 2.5% | 7.80% | $36 | ▲36.0% |
| 🚀 Bull | 10.0% | 6.0% | 3.0% | 7.80% | $48 | ▲81.6% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 2.0% | Stage 2: 1.5% | Terminal: 2.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.510 | $1.400 | $1.40 |
| Year 2 | Stage 1 | $1.540 | $1.325 | $2.73 |
| Year 3 | Stage 1 | $1.571 | $1.254 | $3.98 |
| Year 4 | Stage 1 | $1.602 | $1.186 | $5.17 |
| Year 5 | Stage 1 | $1.634 | $1.122 | $6.29 |
| Year 6 | Stage 2 | $1.659 | $1.057 | $7.34 |
| Year 7 | Stage 2 | $1.683 | $0.995 | $8.34 |
| Year 8 | Stage 2 | $1.709 | $0.937 | $9.28 |
| Year 9 | Stage 2 | $1.734 | $0.882 | $10.16 |
| Year 10 | Stage 2 | $1.760 | $0.831 | $10.99 |
| Terminal | — | TV=$30.96 | PV(TV)=$14.61 (57% of IV) | $25.60 |
| Intrinsic Value | — | — | PV(Divs) $10.99 + PV(TV) $14.61 | $25.60 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (7.80%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $30.96. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $14.61). Intrinsic value = PV of all dividends ($10.99) + PV of terminal value ($14.61) = $25.60 per share.
Base Scenario
Stage 1: 6.5% | Stage 2: 4.0% | Terminal: 2.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.576 | $1.462 | $1.46 |
| Year 2 | Stage 1 | $1.679 | $1.445 | $2.91 |
| Year 3 | Stage 1 | $1.788 | $1.427 | $4.33 |
| Year 4 | Stage 1 | $1.904 | $1.410 | $5.74 |
| Year 5 | Stage 1 | $2.028 | $1.393 | $7.14 |
| Year 6 | Stage 2 | $2.109 | $1.344 | $8.48 |
| Year 7 | Stage 2 | $2.193 | $1.296 | $9.78 |
| Year 8 | Stage 2 | $2.281 | $1.251 | $11.03 |
| Year 9 | Stage 2 | $2.372 | $1.207 | $12.23 |
| Year 10 | Stage 2 | $2.467 | $1.164 | $13.40 |
| Terminal | — | TV=$47.71 | PV(TV)=$22.51 (63% of IV) | $35.91 |
| Intrinsic Value | — | — | PV(Divs) $13.40 + PV(TV) $22.51 | $35.91 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (7.80%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $47.71. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $22.51). Intrinsic value = PV of all dividends ($13.40) + PV of terminal value ($22.51) = $35.91 per share.
Bull Scenario
Stage 1: 10.0% | Stage 2: 6.0% | Terminal: 3.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.628 | $1.510 | $1.51 |
| Year 2 | Stage 1 | $1.791 | $1.541 | $3.05 |
| Year 3 | Stage 1 | $1.970 | $1.572 | $4.62 |
| Year 4 | Stage 1 | $2.167 | $1.605 | $6.23 |
| Year 5 | Stage 1 | $2.384 | $1.637 | $7.87 |
| Year 6 | Stage 2 | $2.527 | $1.610 | $9.48 |
| Year 7 | Stage 2 | $2.678 | $1.583 | $11.06 |
| Year 8 | Stage 2 | $2.839 | $1.557 | $12.62 |
| Year 9 | Stage 2 | $3.009 | $1.531 | $14.15 |
| Year 10 | Stage 2 | $3.190 | $1.505 | $15.65 |
| Terminal | — | TV=$68.45 | PV(TV)=$32.30 (67% of IV) | $47.95 |
| Intrinsic Value | — | — | PV(Divs) $15.65 + PV(TV) $32.30 | $47.95 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (7.80%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $68.45. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $32.30). Intrinsic value = PV of all dividends ($15.65) + PV of terminal value ($32.30) = $47.95 per share.
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 5.8% | $48 | $52 | $58 | $66 | $78 |
| 6.3% | $43 | $46 | $51 | $56 | $64 |
| 6.8% | $39 | $41 | $45 | $49 | $54 |
| 7.3% | $35 | $37 | $40 | $43 | $47 |
| 7.8% | $32 | $34 | $36 | $38 | $41 |
| 8.3% | $30 | $31 | $33 | $35 | $37 |
| 8.8% | $28 | $29 | $30 | $32 | $33 |
| 9.3% | $26 | $27 | $28 | $29 | $31 |
| 9.8% | $24 | $25 | $26 | $27 | $28 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | P/E | Fwd P/E | Div Yield | P/TBV | Note |
|---|---|---|---|---|---|
| COLB (current) | 11.5x | 8.5x | 5.6% | ~0.9x | Post-merger; depressed multiples |
| BANR (Banner) | 10.5x | 9.8x | 3.4% | 0.9x | PNW peer; similar geography |
| WAFD (WaFd) | 11.0x | 9.5x | 3.0% | 1.1x | Pacific NW bank; smaller |
| FHN (First Horizon) | 12.5x | 10.5x | 3.5% | 1.3x | Southeast; post-merger success story |
| HBAN (Huntington) | 12.0x | 10.0x | 4.1% | 1.4x | Midwest; similar merger-driven growth |
| KEY (KeyCorp) | 13.5x | 10.0x | 4.8% | 1.0x | Super-regional; larger scale |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $1.480 |
| Current Yield | 5.60% |
| Consecutive Growth Years | 3 |
| 1-yr DPS CAGR | +1.4% |
| 3-yr DPS CAGR | +1.2% |
| 5-yr DPS CAGR | +1.0% |
| 10-yr DPS CAGR | — |
| Payout Ratio (DPS/EPS) | 64.3% |
| FCF Payout Ratio | 61.8% |
| Sustainability Verdict | ✅ Safe |
COLB's $1.48/yr dividend is currently covered at a 63% payout ratio, which is comfortable for a regional bank. On FY2026E EPS of $3.12, the payout ratio drops to just 47% — very conservative. Notably, COLB maintained the dividend through the Umpqua merger integration without a cut, demonstrating commitment even during a period of significant operational disruption. The main risk is if merger synergies fail to materialize and EPS stays near $2.30, keeping the payout ratio elevated. At current levels, the dividend is Safe with room for meaningful growth.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $3.21 | — | — | — | Actual |
| 2022 | $2.60 | — | — | — | Actual |
| 2023 | $1.78 | — | — | — | Actual |
| 2024 | $2.55 | — | — | — | Actual |
| 2025 | $2.30 | — | — | — | Actual |
| 2026 | $2.94 | $3.12 | $3.28 | 14 | Estimate |
| 2027 | $3.13 | $3.43 | $3.68 | 14 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $2.2B | — | — | — | Actual |
| 2022 | $2.3B | — | — | — | Actual |
| 2023 | $3.6B | — | — | — | Actual |
| 2024 | $3.5B | — | — | — | Actual |
| 2025 | $4.2B | — | — | — | Actual |
| 2026 | $2.7B | $2.8B | $3.0B | 14 | Estimate |
| 2027 | $2.7B | $2.9B | $3.1B | 14 | Estimate |
(c) Individual Analyst Price Targets
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Andrew Terrell | Stephens & Co. | Buy | $37 | +40.1% |
| Matthew Clark | Piper Sandler | Buy | $36 | +36.3% |
| Jeff Rulis | DA Davidson | Hold | $33 | +25.0% |
| Benjamin Gerlinger | Citigroup | Hold | $32 | +21.2% |
(d) Earnings Surprise History
| Quarter | EPS Act vs Est | EPS Beat/Miss | Rev Act vs Est | Rev Beat/Miss | Guidance |
|---|---|---|---|---|---|
| Q4 2025 | $0.82 vs $0.72 | +$0.10 ✅ | $0.7B vs $0.7B | +$0.0B ✅ | Synergy targets on track |
| Q3 2025 | $0.85 vs $0.66 | +$0.19 ✅ | $0.7B vs $0.7B | +$0.0B ✅ | N/A |
| Q2 2025 | $0.55 vs $0.52 | +$0.03 ✅ | $0.7B vs $0.6B | +$0.0B ✅ | N/A |
| Q1 2025 | $0.48 vs $0.45 | +$0.03 ✅ | $0.6B vs $0.6B | +$0.0B ✅ | N/A |
💡 Investment Thesis
- Merger Synergies Inflection Point: The Umpqua merger created a $67B-asset West Coast franchise. FY2026 analyst consensus EPS of $3.12 (+36%) reflects full synergy realization — cost saves from branch closures, system consolidation, and headcount reduction. At 8.5× forward P/E, the market is not fully pricing in this earnings ramp.
- Attractive 5.6% Yield: COLB offers one of the highest yields in regional banking at 5.6%. The 63% payout ratio on FY2025 EPS ($2.30) drops to ~47% on FY2026E EPS ($3.12), providing significant room for DPS growth as earnings normalize. The dividend was maintained through the merger integration period.
- West Coast Franchise Value: The combined Columbia/Umpqua franchise has a premier position in Pacific Northwest and West Coast markets — regions with above-average economic growth, tech industry presence, and population growth. This franchise would be valuable to larger banks in an M&A scenario.
- Beaten-Down Valuation: At $26.41, COLB trades at 0.9× tangible book value and 8.5× forward P/E — a significant discount to regional bank peers (1.2-1.5× TBV, 10-12× P/E). The discount reflects merger integration uncertainty that should narrow as synergies materialize.
- Key Risk — Integration Execution: Large bank mergers often destroy value. Branch consolidation, system migration, and talent retention remain ongoing risks. Share count has grown from 131M (2021) to 295M — significant dilution. CRE concentration in Pacific NW adds credit risk if the regional economy weakens.
⚖️ DDM Verdict: Accumulate — Columbia Banking System, Inc. (COLB)
Current price: $26.41 | Analyst Avg PT: $31.32
$26
🔴 Bear
$36
📊 Base
$48
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$33 | Begin position |
| Tier 2 — Add | ≤$31 | Add on weakness |
| Tier 3 — Full | ≤$27 | Full allocation |
| Sell Alert | ≥$41 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Accumulate at current prices with a Base DDM target of ~$31. At $26.41, COLB is 16% below our Base IV and 19% below analyst consensus PT — one of the wider discounts in regional banking. The 5.6% yield provides attractive income while waiting for the FY2026 earnings inflection ($3.12E, +36%).
Initiate at $25-27 and add on any weakness to $22-24. The stock should re-rate toward $30-33 as merger synergies become visible in quarterly results. Key risk: merger integration stumbles or Pacific NW CRE credit deterioration. COLB becomes a Hold above $33 (near the upper end of analyst PT range). The 5.6% yield and low forward P/E (8.5×) provide a meaningful margin of safety.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Selection | DDM on regular DPS ($1.48/yr). COLB is a post-merger bank with stable, growing dividends and no aggressive buyback program (share count has actually grown from the merger). Straightforward DDM on cash DPS is appropriate. |
| Ke Build | CAPM: Rf=4.30%, β=0.62 (Finnhub), ERP=5.5% → Ke=7.71%. Using 7.80% to account for merger integration risk premium. COLB's beta is depressed by its transition status; as integration completes, beta may drift toward regional bank average (~0.80-0.90). |
| Share Count & Dilution | Shares grew from 131M (2021) to ~295M (current) — primarily from Umpqua merger consideration. Weighted average FY2025 was 239M vs current outstanding 295M, suggesting additional issuance/conversion late in FY2025. Buyback yield is negative (-14%). This dilution risk is a headwind to per-share growth. |
| EPS Recovery Thesis | FY2026 consensus EPS $3.12 (+36%) reflects full merger synergy realization: branch closures, IT system consolidation, headcount optimization. If COLB delivers, forward P/E drops to 8.5× — cheap for a $67B-asset bank. The 4-quarter earnings beat streak (Q1-Q4 2025) suggests synergies are ahead of schedule. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.