Columbia Bank Prices $250 Million Subordinated Notes Offering

Columbia Bank has priced $250 million in subordinated notes due 2036, carrying an initial fixed interest rate of 6.721% per annum. The offering aims to strengthen the institution’s regulatory capital base and fund the redemption of legacy debt held by its parent company.

"The notes are intended to qualify as Tier 2 capital for regulatory purposes and are unsecured, subordinated obligations that rank below all existing and future senior debt, including depositor claims," the company stated in a press release.

Interest Structure and Terms

The notes will pay interest semi-annually through September 18, 2031. After this date, the interest rate resets to the Five-Year U.S. Treasury Rate plus 195 basis points, remaining at that adjusted level until the maturity date in 2036.

Because these notes are classified as Tier 2 capital, they provide a buffer that absorbs losses if a bank fails. Under Basel III regulatory frameworks, Tier 2 capital is considered supplementary capital. It is subordinate to depositor claims and senior debt, which makes it a riskier instrument for investors and a tool for banks to meet capital adequacy ratios.

Strategic Use of Proceeds

Columbia Bank plans to upstream up to $250 million of the proceeds to its parent entity, Columbia Banking System. The parent company intends to use these funds to redeem outstanding trust preferred securities. This replaces older debt instruments with the newly issued subordinated notes.

This capital restructuring occurs as Columbia Banking System (COLB) navigates current market conditions. As of September 16, 2026, the company’s stock was trading at $30.11 per share.

Impact on Regulatory Capital

By issuing these notes, Columbia Bank supports its balance sheet without diluting current shareholders. The subordination of the debt ensures that in the event of liquidation, the claims of depositors and other senior creditors are satisfied before the holders of these notes are repaid. This ranking is a standard requirement for debt instruments to be counted toward a bank's Tier 2 regulatory capital requirements.