Columbia Banking System stock rating upgraded to Strong Buy by Raymond James

Investing.com - Raymond James upgraded Columbia Banking System (NASDAQ:COLB) from Outperform to Strong Buy and raised its price target to $31.00 from $27.00 on Monday. The $5.48 billion bank currently trades at an attractive P/E ratio of 10.3x, and according to InvestingPro analysis, the stock appears undervalued based on its Fair Value estimate.

The upgrade follows investor meetings hosted by Raymond James that addressed what the firm believes are misperceptions about the bank following its PPBI deal closing. Raymond James indicated that management clarified several key points, including that additional mergers and acquisitions are likely on pause for some time. The bank maintains a GOOD financial health score according to InvestingPro’s comprehensive analysis, with particularly strong marks in relative value metrics.

The firm highlighted Columbia Banking System’s ability to drive earnings per share growth despite maintaining a stable balance sheet, and noted that capital return to shareholders is likely on the horizon. Raymond James also pointed to the bank’s return to its legacy Columbia culture, evidenced by its recent rebranding, elimination of the executive chairman role, and ongoing balance sheet mix-shift.

Raymond James projects strong profitability metrics for Columbia Banking System, forecasting an 18.6% return on average tangible common equity and 1.37% return on average assets by 2026. The firm views these metrics favorably against what it considers a discounted valuation of 8.3 times 2026 estimated operating earnings per share, compared to peers at 10.8 times.

The bank’s 5.53% dividend yield, which Raymond James describes as well-covered, along with the potential for a share buyback announcement later this year, contributed to the firm’s more positive outlook on the stock. InvestingPro data reveals an impressive 29-year streak of consecutive dividend payments, demonstrating the bank’s commitment to shareholder returns.

In other recent news, Columbia Banking System has completed its acquisition of Pacific Premier Bancorp, with the merger officially closing on August 31, 2025. This significant transaction followed the receipt of all necessary regulatory approvals, which were announced earlier. In light of this development, Piper Sandler has increased its price target for Columbia Banking System to $35, maintaining an Overweight rating. Additionally, Columbia Banking System announced a quarterly cash dividend of $0.36 per share, payable on September 15, 2025, to shareholders recorded by August 29, 2025.

The company is also undergoing a brand transition, having renamed Umpqua Bank to Columbia Bank, with operations under the new name commencing on September 1, 2025. In leadership news, Columbia Bank appointed Ivan Seda as Executive Vice President and Deputy Chief Financial Officer. Seda brings extensive experience from his previous roles at Union Bank, MUFG Americas, and BECU. These developments mark a period of significant change and growth for Columbia Banking System.

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