Columbia eschews more M&A amid activist investor heat

• Key insight: Columbia Banking System announced the latest move on its capital strategy just days after an activist investor published a related ultimatum.
• What’s at stake: HoldCo Asset Management has staged public campaigns against four banks this year, as it pushes the companies to pursue strategies ranging from buybacks to being acquired.
• Supporting data: Columbia said it will repurchase up to $700 million of its own shares over the next 12 months. It had earlier said that it would probably steer away from buybacks until at least 2026.

Columbia Banking System put an end to any speculation that it will continue to consolidate the West Coast banking market.

After two major acquisitions turned the Tacoma, Washington-based company into a regional heavyweight, Columbia won’t pursue another acquisition in the “foreseeable future,” CEO Clint Stein said during Columbia’s third-quarter earnings call Thursday. 

On top of icing the possibility of a deal, the bank provided a major update on stock buybacks, announcing that it will repurchase up to $700 million of its shares in the next year. Columbia had previously guided that repurchases were unlikely until at least 2026. On Thursday, Stein said the new plan reflects his, and the board’s, “confidence in the strength of Columbia’s balance sheet.”

“As we scan the horizon and look at things, our view is, the greatest investment we can make is in our own stock, our own company,” Stein told analysts.

The bank’s latest capital move came earlier than it had previously projected, but Stein said Thursday that Columbia has consistently targeted a “capital return story” that includes “meaningful buybacks.”

Still, the strategy also comes on the heels of mounting external pressure to increase shareholder value.

An activist investor target

HoldCo Asset Management, a bank-focused hedge fund and activist investor, has been pushing Columbia to meet a list of demands. The firm said in a 71-page presentation earlier this week that the bank should, among other actions, avoid acquisitions, ramp up share buybacks and explicitly lay out capital targets.

The report also called on Columbia to consider selling itself in five years.

HoldCo  — which owns about $152 million of market value in Columbia common shares, or roughly 1.9% of the outstanding voting shares — met with several members of the bank’s management team several times throughout this year. The firm showed Columbia’s management its presentation in September, about five weeks ahead of making its analysis and demands public.

The hedge fund has been on a roll in the last six months, unveiling campaigns against three other U.S. banks it has stakes in, some of which have yielded tangible, material results.

HoldCo published a scathing, sweeping presentation this summer that called on Comerica in Dallas to sell itself as soon as possible, due to what the report called “disastrous decisions” by the bank’s management. Comerica reached a deal to be acquired by Fifth Third Bancorp a few months later.

HoldCo emphasized in its push against Columbia that the West Coast bank “is not Comerica.”

“Although we believe that Columbia would fetch a substantial premium in a sale to a larger bank, unlike in the case of Comerica, we believe there may be a path for Columbia to create standalone shareholder value that does not require a sale of the bank, if directors have a genuine interest in doing so and an agreement as described herein can be reached between HoldCo and Columbia,” the presentation said.

Columbia is HoldCo’s largest position, and the hedge fund, which has about $2.6 billion of regulatory assets under management, didn’t mince words in its go-forward plan. The firm said that if the bank didn’t address the proposed actions, HoldCo would launch a proxy contest at the company’s 2026 shareholder meeting.

The bank’s stock is up about 2.8% over the last five days, trading at $26.56 as of Friday afternoon.

During the third quarter of 2025, Columbia reeled in $96 million of net income and 40 cents per diluted share, both ahead of analyst estimates, the bank said Thursday.

HoldCo declined to comment Friday on the bank’s third-quarter earnings presentation and latest strategy announcements. Columbia declined to provide additional comment for this story.

Stein said on Thursday’s call that Columbia was aware of the HoldCo presentation, but he declined to speak about specific conversations the bank has with individual shareholders. He also seemed to push back on the notion that the bank’s latest strategic moves are connected to HoldCo’s push, noting that Columbia has been preparing for additional capital returns for years. 

Buybacks were in the cards

When Columbia said it would acquire Pacific Premier in April, Stein said that buybacks would probably be pushed until 2026, but that it depended on when the transaction closed, and where capital ratios landed.

After the acquisition crossed the finish line on Aug. 31, on the early end of the expected schedule, Stein reiterated that a repurchase plan was still on the docket.

“The question that we get is, ‘Is this still a capital return story?'” Stein said at a conference in September. “And the answer is, ‘Absolutely, yes.’ And that’s conversations that we’ll have with our board next week, we’ll have with our board in October, we’ll have with our board in January, as to what that looks like and the timing of that.”

On Thursday, Columbia also offered specific capital ratio targets — another HoldCo demand. The bank said its long-term Common Equity Tier 1 capital ratio target is 9%, more than two percentage points below its current 11.6% position.

But the bank stopped short of certain long-term, explicit commitments HoldCo requested, such as promising to use all excess capital today and generated in the future to buy back shares; to keep the bank under $100 billion of assets; and to look into selling itself in five years. 

HoldCo said in its report that Columbia has focused on risky transactions and rapid growth over the last five years, which has damaged shareholder value. Since Stein took the reins as CEO in 2020, Columbia has acquired three banks and grown its assets from about $17 billion to nearly $70 billion.

On the Thursday call, Stein said he has “zero interest in M&A” while the bank works to integrate its acquisition of Pacific Premier. Columbia announced earlier this year that it would buy the Southern California-based bank in an effort to expand its retail footprint around Los Angeles. 

The Pacific Premier deal, which made investors jittery when it was announced, came about two years after Columbia bought Umpqua Holdings in a transaction that took longer to complete and came with more challenges than expected. Stein told American Banker in April that the Pacific Premier deal was very different from the Umpqua merger, and he expressed confidence that digesting the company would go smoothly.

Columbia announced Thursday that the $2.4 billion transaction was on track to achieve the expected $127 million of cost synergies by June 30, 2026. The systems conversion is slated for the first quarter, and Chief Financial Officer Ron Farnsworth said the company expects a “clean” expense run rate in the third quarter of next year.

Columbia also announced that Farnsworth will step down at the end of the year, and will be succeeded by Deputy CFO Ivan Seda. Farnsworth joined the company’s C-suite in March 2023, after previously serving in the role at Umpqua. He will stay on as an advisor at Columbia through June 1.

Columbia brought on Seda as deputy CFO in August, less than a week before it closed on its purchase of Pacific Premier.