WFC - Avoiding Columbia Bank For Now: Expect Umpqua Merger Disruption To Create Further Opportunity
- On October 12, Columbia Bank and Umpqua Bank announced a merger creating a $50 billion West Coast bank.
- The smaller Columbia experienced a 14.9% price drop day of announcement; it remains down 14.2% 41 days later; Umpqua is down 3.4%; while the regional bank ETF "KRE" is up 5.1%.
- This article raises six material questions about the Columbia-Umpqua combination.
- I expect the new bank, symbol to be "COLB," to underperform peers over at least the next year.
- I will be a buyer if the new bank 1) maintains COLB strategy, 2) maintains COLB's risk profile, and if 3), Price to Tangible Book hits 1.5x. Target price: $27-$29.
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Avoiding Columbia Bank For Now: Expect Umpqua Merger Disruption To Create Further Opportunity