Shares of Columbia Banking System (COLB 0.58%) fell 21% on Thursday after the parent company of Umpqua Bank on Wednesday delivered disappointing fourth-quarter 2023 results relative to Wall Street's expectations.
On Columbia Banking's profit headwinds
On the bottom line, Columbia Banking's fourth-quarter operating earnings declined 43% year over year, to $0.44 per share, arriving significantly below consensus estimates for $0.79.
Columbia Banking CEO Clint Stein called it a "noisy" quarter, as lower expenses related to its now-complete merger with Umpqua Holdings were more than offset by one-time costs and a $33 million non-interest expense related to an FDIC special assessment recorded during the quarter. Columbia Banking also saw net interest income contract modestly on a sequential basis to $454 million (from $481 million last quarter) amid higher deposit costs.
On a more encouraging note, Columbia had realized $143 million in net annualized merger-related cost savings as of the end of 2023, well ahead of its initial target for $135 million.
What's next for Columbia Banking shareholders?
"With the [Umpqua] integration behind us, we are now turning our focus to optimizing performance and driving shareholder value," Stein added.
That's all well and good, and Columbia Banking System should now be poised for a meaningful improvement to the profit headwinds that left the market recoiling today. But until we see more tangible evidence of an improvement, it's hardly surprising to see the stock pulling back.
