Columbia Banking System, the US regional lender, saw its shares tumble 5% in after-hours trading on Wednesday after reporting quarterly revenue that fell short of Wall Street expectations. The Tacoma-based bank posted revenue of $432 million for the three months to June, below the consensus estimate of $448 million, according to data compiled by Bloomberg.
The miss was attributed to lower net interest income, as the bank faced narrowing margins in a competitive deposit environment. Earnings per share came in at $0.71, compared with the $0.74 forecast, though the bank reiterated its full-year guidance. The stock closed at $24.15 before the announcement, down from a recent high of $26.80.
Analysts at Keefe, Bruyette & Woods said the results highlighted persistent pressure on regional lenders from rising funding costs. "While credit quality remains stable, the revenue trajectory is a concern for the second half of the year," they noted in a research note. The broader KBW Nasdaq Regional Banking Index fell 1.2% in sympathy.
For UK investors, the weakness in Columbia Banking System is a reminder of the risks embedded in global equity funds and pension portfolios that hold US regional bank stocks. Many UK pension schemes and investment trusts have exposure to US financials through passive tracker funds and actively managed global equity strategies.
The sector has been under scrutiny since the collapse of Silicon Valley Bank in 2023, and any sign of earnings strain can trigger broader sell-offs. The Bank of England has previously warned that UK institutions should monitor their indirect exposure to US regional lenders through derivatives and counterparty risk.