Sterne Agee Modestly Increasing FY11E On Columbia Banking System

According to Sterne Agee, Columbia Banking System

is increased for FY11E, but modestly. Sterne Agee said that it is more positive on COLB post another FDIC transaction, but note its outlook for the shares continues to be for the name to be valued at ~1.25x TBV rather than forward earnings given the level of excess capital to be deployed and uncertainty regarding M&A pricing and timing. “We point out the shares are now trading only about 10% over 52-week lows compared to 14% for the PacNW banking group. Generally speaking PacNW institutions have underperformed other regions of the country the past year due to limited growth, private equity getting the bulk of FDIC assets, credit quality taking longer to rectify, and a slower economic recovery.” Columbia Banking System closed yesterday at $17.33.