NYCB - Columbia Banking System Rips Off The Band-Aid Investors Feel The Pain

2024-02-08 13:06:08 ET

Summary

• Columbia Banking System's Q4 performance disappointed, missing analyst expectations and raising questions about the true sources of the bank's success.
• A sizable net interest income miss was driven by a sharp increase in deposit costs, while expenses and provision expense were also worse than expected.
• Guidance for 2024 was disappointing, with higher operating expenses and a lower net interest margin forecast as the bank catches up on deposit pricing.
• Management needs to re-establish investor confidence in the bank's long-term competitive advantages. The shares look undervalued, but 2024 will be more challenging here than for many other regionals.

Missing analyst expectations was bad enough for Columbia Banking System (COLB) in fiscal Q4, but the nature of the miss and the details of the weaker guidance for 2024 raise some uncomfortable questions for investors. Namely, there's a valid question now as to how much of the bank's success is really attributable to core structural business advantages and how much was just a byproduct of timing and shorter-term management decisions....

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