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Columbia Banking System tumbles 16% after EPS miss, earns several rating cuts

Published 2024-01-25, 08:12 a/m
Updated 2024-01-25, 08:12 a/m
© Reuters.

Columbia Banking System (NASDAQ:COLB) reported soft results for its fourth quarter, prompting several Wall Street analysts to cut their rating on the stock.

Earnings per share of 45 cents compared to 88 cents year-over-year and an estimate of 79 cents. Revenue for the quarter reached $519.2 million, also missing the analyst target of $526.1 million.

Shares fell 16% in pre-open Thursday.

Funding costs were negatively impacted by higher brokered deposit levels, increased public fund deposit levels, and upward repricing on maturing CDs.

This resulted in pressure on the net interest margin (NIM), contributing to a miss on net interest income.

The guidance for FY24 provided by Columbia Banking System was also below their prior expectations. The NIM is guided to be in the range of 3.50% to 3.60%, below the consensus.

DA Davidson analysts cut their rating on the stock to Neutral from Buy with a price target lowered to $25 per share.

“We are downgrading COLB from Buy to NEUTRAL as 4Q23's results not only missed expectations, forward hope on NIM stability, above peer loan growth, iron clad credit quality and attractive capital return was dashed. Upside potential now looks limited,” analysts said.

Similarly, Wedbush analysts reiterated a Neutral rating “as we believe the company's outlook is appropriately reflected in its relative valuation.”

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