• Columbia Financial, Inc. Announces Financial Results for the Third Quarter Ended September 30, 2023

    Source: Nasdaq GlobeNewswire / 25 Oct 2023 16:05:01   America/New_York

    FAIR LAWN, N.J., Oct. 25, 2023 (GLOBE NEWSWIRE) -- Columbia Financial, Inc. (the “Company”) (NASDAQ: CLBK), the mid-tier holding company for Columbia Bank ("Columbia") and Freehold Bank ("Freehold"), reported net income of $9.1 million, or $0.09 per basic and diluted share, for the quarter ended September 30, 2023, as compared to net income of $20.9 million, or $0.20 per basic share and $0.19 per diluted share, for the quarter ended September 30, 2022. Earnings for the quarter ended September 30, 2023 reflected lower net interest income, mainly due to an increase in interest expense and higher provision for credit losses, partially offset by lower non-interest expense and lower income tax expense. For the quarter ended September 30, 2023, the Company reported core net income of $9.1 million, a decrease of $13.6 million, or 59.8%, compared to core net income of $22.7 million for the quarter ended September 30, 2022.

    For the nine months ended September 30, 2023, the Company reported net income of $29.5 million, or $0.29 per basic and diluted share, as compared to net income of $64.3 million, or $0.61 per basic and diluted share, for the nine months ended September 30, 2022. Earnings for the nine months ended September 30, 2023 reflected lower net interest income, mainly due to an increase in interest expense, lower non-interest income, which was primarily due to a $10.8 million loss on the sale of available for sale securities included in the nine months ended September 30, 2023, and higher non-interest expense, partially offset by a lower provision for credit losses and a lower income tax expense. For the nine months ended September 30, 2023, the Company reported core net income of $40.7 million, a decrease of $28.0 million, or 40.8%, compared to core net income of $68.7 million for the nine months ended September 30, 2022.

    Mr. Thomas J. Kemly, President and Chief Executive Officer commented: “The Company's balance sheet, asset quality and capital remains strong. Net interest margin remains under pressure from rising funding costs due to the interest rate environment and intense deposit competition. We continue to manage operating expenses and have implemented various cost cutting strategies to mitigate the impact of the net interest margin compression."

    Results of Operations for the Three Months Ended September 30, 2023 and September 30, 2022

    Net income of $9.1 million was recorded for the quarter ended September 30, 2023, a decrease of $11.8 million, or 56.4%, compared to net income of $20.9 million for the quarter ended September 30, 2022. The decrease in net income was primarily attributable to a $20.6 million decrease in net interest income, and an $863,000 increase in provision for credit losses, partially offset by a $4.9 million decrease in non-interest expense and a $4.3 million decrease in income tax expense.

    Net interest income was $48.5 million for the quarter ended September 30, 2023, a decrease of $20.6 million, or 29.8%, from $69.2 million for the quarter ended September 30, 2022. The decrease in net interest income was primarily attributable to a $39.1 million increase in interest expense on deposits and borrowings, partially offset by a $18.5 million increase in interest income. The increase in interest income was primarily due to an increase in the average balance of total interest-earning assets coupled with an increase in average yields due to multiple market interest rate increases that occurred over the previous two years. The increase in interest expense on deposits was driven by these same rate increases coupled with intense competition for deposits in the market and the repricing of existing deposits into higher cost products. The increase in interest expense on borrowings was also impacted by the significant increase in interest rates for new borrowings since interest rates began rising in March 2022, along with an increase in the average balance of borrowings. Prepayment penalties, which are included in interest income on loans, totaled $83,000 for the quarter ended September 30, 2023, compared to $639,000 for the quarter ended September 30, 2022.

    The average yield on loans for the quarter ended September 30, 2023 increased 67 basis points to 4.47%, as compared to 3.80% for the quarter ended September 30, 2022, as interest income was influenced by rising interest rates and loan growth. The average yield on securities for the quarter ended September 30, 2023 increased 10 basis points to 2.37%, as compared to 2.27% for the quarter ended September 30, 2022, as a number of adjustable rate securities tied to various indexes repriced higher during the quarter, and new securities purchased during the 2023 period were at higher rates. The average yield on other interest-earning assets for the quarter ended September 30, 2023 increased 323 basis points to 5.91%, as compared to 2.68% for the quarter ended September 30, 2022, due to the rise in average balances and interest rates paid on cash balances and an increase in the dividend rate paid on Federal Home Loan Bank stock.

    Total interest expense was $49.9 million for the quarter ended September 30, 2023, an increase of $39.1 million, or 363.0%, from $10.8 million for the quarter ended September 30, 2022. The increase in interest expense was primarily attributable to a 223 basis point increase in the average cost of borrowings, and a significant increase in the average balance of borrowings, coupled with a 187 basis point increase in the average cost of interest-bearing deposits, partially offset by the decrease in the average balance of interest-bearing deposits. Interest expense on borrowings increased $10.2 million, or 266.9%, and interest expense on deposits increased $29.0 million, or 415.5%, due to the rise in interest rates as noted above.

    The Company's net interest margin for the quarter ended September 30, 2023 decreased 95 basis points to 2.06%, when compared to 3.01% for the quarter ended September 30, 2022. The weighted average yield on interest-earning assets increased 70 basis points to 4.17% for the quarter ended September 30, 2023, as compared to 3.47% for the quarter ended September 30, 2022. The average cost of interest-bearing liabilities increased 208 basis points to 2.70% for the quarter ended September 30, 2023, as compared to 0.62% for the quarter ended September 30, 2022. The increase in yields for the quarter ended September 30, 2023 was due to the impact of multiple market interest rate increases between periods. The net interest margin decreased for the quarter ended September 30, 2023, as the increase in the average cost of interest-bearing liabilities outweighed the increase in the average yield on interest-earning assets.

    The provision for credit losses for the quarter ended September 30, 2023 was $2.4 million, an increase of $863,000, from $1.5 million for the quarter ended September 30, 2022. The increase in provision for credit losses during the quarter was primarily attributable to an increase in the outstanding balance of loans and net charge-offs totaling $1.7 million, partially offset by a decrease in loan loss rates.

    Non-interest expense was $42.9 million for the quarter ended September 30, 2023, a decrease of $4.9 million, or 10.3%, from $47.8 million for the quarter ended September 30, 2022. The decrease was primarily attributable to a decrease in compensation and employee benefits expense of $2.8 million, a decrease in merger-related expenses of $1.2 million, and a decrease in other non-interest expense of $1.6 million, partially offset by an increase in federal deposit insurance premiums of $556,000, due to an increase in the assessment rate imposed by the FDIC effective January 1, 2023. The decrease in compensation and employee benefits expense was due to the result of a workforce reduction in June 2023, along with other related employee expense cutting strategies implemented during the current year. The decrease in other non-interest expense was primarily related to a decrease in pension plan related expense during the 2023 period, and $1.7 million in non-recurring litigation settlements included in the 2022 period, compounded with a $1.2 million recovery of provision for credit losses on off-balance sheet exposures.

    Income tax expense was $2.7 million for the quarter ended September 30, 2023, a decrease of $4.3 million, as compared to $7.0 million for the quarter ended September 30, 2022, mainly due to a decrease in pre-tax income, and to a lesser extent, the Company's effective tax rate. The Company's effective tax rate was 22.9% and 25.2% for the quarters ended September 30, 2023 and 2022, respectively. The effective tax rate for the 2023 period was primarily impacted by lower net interest income and the loss on the sale of securities.

    Results of Operations for the Nine Months Ended September 30, 2023 and September 30, 2022

    Net income of $29.5 million was recorded for the nine months ended September 30, 2023, a decrease of $34.8 million, or 54.1%, compared to net income of $64.3 million for the nine months ended September 30, 2022. The decrease in net income was primarily attributable to a $37.8 million decrease in net interest income, a $6.7 million decrease in non-interest income, and a $4.1 million increase in non-interest expense, partially offset by a $882,000 decrease in provision for credit losses, and a $13.1 million decrease in income tax expense.

    Net interest income was $160.5 million for the nine months ended September 30, 2023, a decrease of $37.8 million, or 19.1%, from $198.4 million for the nine months ended September 30, 2022. The decrease in net interest income was primarily attributable to a $103.5 million increase in interest expense on deposits and borrowings, partially offset by a $65.7 million increase in interest income. The increase in interest income was primarily due to an increase in the average balance of total interest-earning assets coupled with an increase in average yields due to the rise in interest rates in 2022 and 2023. The increase in interest expense on deposits and borrowings was driven by an increase in the average balance of deposits and borrowings coupled with an increase in the cost of deposits and borrowings. The increase in interest expense on interest-bearing liabilities was also impacted by the significant increase in interest rates due to multiple market interest rate increases that occurred over the previous two years, along with an increase in the average balance of borrowings. Prepayment penalties, which are included in interest income on loans, totaled $399,000 for the nine months ended September 30, 2023, compared to $3.4 million for the nine months ended September 30, 2022.

    The average yield on loans for the nine months ended September 30, 2023 increased 66 basis points to 4.36%, as compared to 3.70% for the nine months ended September 30, 2022, as interest income was influenced by rising interest rates and loan growth. The average yield on securities for the nine months ended September 30, 2023 increased 22 basis points to 2.42%, as compared to 2.20% for the nine months ended September 30, 2022, as a number of adjustable rate securities tied to various indexes repriced higher during the year and new securities purchased during the 2023 period were at higher rates. The average yield on other interest-earning assets for the nine months ended September 30, 2023 increased 299 basis points to 5.45%, as compared to 2.46% for the nine months ended September 30, 2022, due to the rise in average balances and interest rates, as noted above.

    Total interest expense was $126.9 million for the nine months ended September 30, 2023, an increase of $103.5 million, or 443.3%, from $23.4 million for the nine months ended September 30, 2022. The increase in interest expense was primarily attributable to a 276 basis point increase in the average cost of borrowings, and an increase in the average balance of borrowings, coupled with a 142 basis point increase in the average cost of interest-bearing deposits and an increase in the average balance of deposits. Interest expense on borrowings increased $38.1 million, or 542.5%, and interest expense on deposits increased $65.4 million, or 400.6%, due to the rise in interest rates as noted above.

    The Company's net interest margin for the nine months ended September 30, 2023 decreased 73 basis points to 2.27%, when compared to 3.00% for the nine months ended September 30, 2022. The weighted average yield on interest-earning assets increased 71 basis points to 4.06% for the nine months ended September 30, 2023, as compared to 3.35% for the nine months ended September 30, 2022. The average cost of interest-bearing liabilities increased 182 basis points to 2.29% for the nine months ended September 30, 2023, as compared to 0.47% for the nine months ended September 30, 2022. The increase in yields for the nine months ended September 30, 2023 was due to the impact of multiple market interest rate increases between periods. The net interest margin decreased for the nine months ended September 30, 2023, as the average cost of interest-bearing liabilities outweighed the increase in the average yield on interest-earning assets.

    The provision for credit losses for the nine months ended September 30, 2023 was $3.6 million, a decrease of $882,000, from $4.5 million for the nine months ended September 30, 2022. The decrease in provision for credit losses during the nine months was primarily attributable to a decrease in loan loss rates, partially offset by an increase in the outstanding balance of loans.

    Non-interest income was $16.1 million for the nine months ended September 30, 2023, a decrease of $6.7 million, or 29.5%, from $22.9 million for the nine months ended September 30, 2022. The decrease was primarily attributable to an increase in the loss on securities transactions of $11.1 million, partially offset by an increase in other non-interest income of $3.4 million, which is primarily related to swap income.

    Non-interest expense was $134.4 million for the nine months ended September 30, 2023, an increase of $4.1 million, or 3.2%, from $130.3 million for the nine months ended September 30, 2022. The increase was primarily attributable to an increase in compensation and employee benefits expense of $6.0 million, an increase in federal deposit insurance premiums of $1.7 million, due to an increase in the assessment rate imposed by the FDIC effective January 1, 2023, and an increase in data processing and software expenses of $849,000, partially offset by a decrease in merger-related expenses of $2.4 million, and a decrease in other non-interest expense of $3.6 million. The increase in compensation and employee benefits expense for the 2023 period was due to normal annual increases in employee related compensation, increased staff levels due to the May 2022 merger with RSI Bank, and severance expense recorded in June 2023 as a result of a workforce reduction. The decrease in other non-interest expense was primarily related to non-recurring litigation settlements included in the 2022 period and the decrease in expenses related to swap transactions.

    Income tax expense was $9.1 million for the nine months ended September 30, 2023, a decrease of $13.1 million, as compared to $22.2 million for the nine months ended September 30, 2022, mainly due to a decrease in pre-tax income, and to a lesser extent, a decrease in the Company's effective tax rate. The Company's effective tax rate was 23.6% and 25.6% for the nine months ended September 30, 2023 and 2022, respectively. The effective tax rate for the 2023 period was primarily impacted by lower net interest income and the loss on the sale of securities.

    Balance Sheet Summary

    Total assets decreased $84.6 million, or 0.8%, to $10.3 billion at September 30, 2023 from $10.4 billion at December 31, 2022. The decrease in total assets was primarily attributable to a decrease in debt securities available for sale of $310.3 million, partially offset by an increase in cash and cash equivalents of $25.3 million, an increase in loans receivable, net, of $161.7 million, an increase in Federal Home Loan Bank stock of $13.8 million and an increase in other assets of $28.6 million.

    Cash and cash equivalents increased $25.3 million, or 14.1%, to $204.5 million at September 30, 2023 from $179.2 million at December 31, 2022. The increase was primarily attributable to $298.0 million in proceeds from the sale of debt securities available for sale, and an increase in borrowings of $229.2 million, or 20.3%, partially offset by purchases of debt securities available for sale of $75.3 million, a decrease in total deposits of $298.0 million and $78.3 million in repurchases of common stock under our stock repurchase program.

    Debt securities available for sale decreased $310.3 million, or 23.4%, to $1.0 billion at September 30, 2023 from $1.3 billion at December 31, 2022. The decrease was attributable to sales of securities of $277.0 million which resulted in a realized loss of $10.8 million, repayments on securities of $79.3 million, and an increase in the gross unrealized loss of $16.7 million, which was partially offset by purchases of U.S. government obligations of $75.3 million. The Bank sold U.S. government obligations at a weighted average rate of 2.36%, and mortgage-backed securities at a weighted average rate of 3.26% during the nine months ended September 30, 2023.

    Loans receivable, net, increased $161.7 million, or 2.1%, to $7.8 billion at September 30, 2023 from $7.6 billion at December 31, 2022. Multifamily real estate loans, construction loans and commercial business loans increased $178.0 million, $54.4 million, and $49.3 million, respectively, partially offset by a decrease in one-to-four family real estate loans, commercial real estate loans, and home equity loans and advances of $68.2 million, $38.9 million, and $7.3 million, respectively. The allowance for credit losses on loans increased $1.3 million to $54.1 million at September 30, 2023 from $52.8 million at December 31, 2022. During the nine months ended September 30, 2023, the increase in the allowance for credit losses was primarily due to an increase in the outstanding balance of loans and an increase in qualitative factors, partially offset by a decrease in loan loss rates.

    Federal Home Loan Bank stock increased $13.8 million, or 23.7%, to $71.9 million at September 30, 2023 from $58.1 million at December 31, 2022. The increase was due to the purchase of stock required upon acquiring new FHLB borrowings.

    Other assets increased $28.6 million, or 10.1%, to $313.4 million at September 30, 2023 from $284.8 million at December 31, 2022, primarily due to a $10.5 million increase in the Company's pension plan balance, as the return on plan assets outpaced the growth in the plan’s obligations, and a $15.4 million increase in interest rate swaps assets.

    Total liabilities decreased $38.5 million, or 0.4%, to $9.3 billion at September 30, 2023 from $9.4 billion at December 31, 2022. The decrease was primarily attributable to a decrease in total deposits of $298.0 million, or 3.7%, partially offset by an increase in borrowings of $229.2 million, or 20.3%. The decrease in total deposits primarily consisted of decreases in non-interest-bearing demand deposits, interest-bearing demand deposits, and savings and club deposits of $366.6 million, $591.6 million, and $177.2 million, respectively, partially offset by increases in money market accounts of $478.5 million and certificates of deposit of $359.0 million. The Bank has priced select money market and certificates of deposit accounts very competitively to the market, but there continues to be strong competition for funds from other banks and non-bank investment products. The $229.2 million increase in borrowings was primarily driven by an increase in long-term borrowings of $299.8 million, partially offset by a decrease in short-term borrowings of $70.5 million. The $32.8 million increase in accrued expenses and other liabilities was primarily attributable to a $20.4 million increase in the collateral balance related to our interest rate swap program.

    Total stockholders’ equity decreased $46.2 million, or 4.4%, to $1.0 billion at September 30, 2023 from $1.1 billion at December 31, 2022. The decrease in equity was primarily attributable to the repurchase of 4,104,073 shares of common stock at a cost of approximately $78.3 million, or $19.08 per share, under our stock repurchase program, partially offset by net income of $29.5 million, and an increase of $11.8 million in unrealized losses on debt securities available for sale, net of taxes, included in other comprehensive income.

    Asset Quality

    The Company's non-performing loans at September 30, 2023 totaled $15.2 million, or 0.19% of total gross loans, as compared to $6.7 million, or 0.09% of total gross loans, at December 31, 2022. The $8.5 million increase in non-performing loans was primarily attributable to an increase in non-performing commercial business loans of $5.8 million, an increase in non-performing one-to-four family real estate loans of $1.6 million, and an increase in non-performing commercial real estate loans of $1.2 million. The increase in non-performing commercial business loans was due to an increase in the number of loans from three non-performing loans at December 31, 2022 to 10 loans at September 30, 2023, including a $3.7 million loan to a technology company. The increase in non-performing one-to-four family real estate loans was due to an increase in the number of loans from 12 non-performing loans at December 31, 2022 to 18 loans at September 30, 2023. The increase in non-performing commercial real estate loans was due to the addition of two loans from December 31, 2022 to September 30, 2023. Non-performing assets as a percentage of total assets totaled 0.15% and 0.06% at September 30, 2023 and December 31, 2022, respectively.

    For the quarter ended September 30, 2023, net charge-offs totaled $1.7 million, as compared to $208,000 in net charge-offs recorded for the quarter ended September 30, 2022. For the nine months ended September 30, 2023, net charge-offs totaled $2.3 million, as compared to $8,000 in net recoveries recorded for the nine months ended September 30, 2022. The 2023 periods included a partial charge-off of $2.0 million on a commercial business loan.

    The Company's allowance for credit losses on loans was $54.1 million, or 0.69% of total gross loans, at September 30, 2023, compared to $52.8 million, or 0.69% of total gross loans, at December 31, 2022. The increase in the allowance for credit losses for loans was primarily due to an increase in the outstanding balance of loans, partially offset by a decrease in loan loss rates.

    Additional Liquidity, Loan, and Deposit Information

    The Company services a diverse retail and commercial deposit base through its 67 branches. With over 214,000 accounts, the average deposit account balance was approximately $36,000 at September 30, 2023.

    The Company had uninsured deposits (excluding municipal deposits of $810.8 million, which are collateralized, and $3.6 billion of intercompany deposits) totaling $1.8 billion at September 30, 2023, down from $1.9 billion at June 30, 2023.

    The Company had uninsured deposits as summarized below:

     At September 30, 2023 At June 30, 2023
     (Dollars in thousands)
        
    Uninsured deposits$1,773,116  $1,858,275 
    Uninsured deposits to total deposits 23.0%  24.1%
            

    Deposit balances are summarized as follows:

     At September 30, 2023  At June 30, 2023
     Balance Weighted
    Average
    Rate    		 Balance Weighted
    Average
    Rate
     (Dollars in thousands)
            
    Non-interest-bearing demand$1,439,517  —% $1,509,852  —%
    Interest-bearing demand 2,001,260  1.77   2,064,803  1.51 
    Money market accounts 1,196,983  3.09   1,085,317  2.80 
    Savings and club deposits 736,558  0.38   782,996  0.24 
    Certificates of deposit 2,328,848  3.27   2,271,188  2.91 
    Total deposits$7,703,166  1.97% $7,714,156  1.68%


    The Company continues to maintain strong liquidity and capital positions. The Company has not utilized the Federal Reserve’s Bank Term Funding Program and had no outstanding borrowings from the Federal Reserve Discount Window at September 30, 2023. As of October 23, 2023, the Company had immediate access to approximately $2.7 billion of funding, with additional unpledged loan collateral available to pledge in excess of $1.6 billion. Available sources of liquidity include but are not limited to:

    • Cash and cash equivalents of $381.3 million;
    • Borrowing capacity based on unencumbered collateral pledged at the FHLB totaling $413.3 million;
    • Borrowing capacity based on unencumbered collateral pledged at the Federal Reserve Bank totaling $2.0 billion; and
    • Available correspondent lines of credit of $354.0 million with various third parties.

    At September 30, 2023, the Company's non-performing commercial real estate loans totaled $4.1 million, or 0.05%, of the total loans receivable loan portfolio balance.

    The following table presents multifamily real estate, owner occupied commercial real estate, and the components of investor owned commercial real estate loans included in the real estate loan portfolio.

     At September 30, 2023
     (Dollars in thousands)
     Balance % of Gross Loans Weighted Average
    Loan to Value Ratio    		 Weighted
    Average
    Debt Service
    Coverage
    Multifamily Real Estate$1,417,233  18.2% 61.8% 1.45x
             
    Owner Occupied Commercial Real Estate$498,525  6.4% 51.0% 2.08x
             
    Investor Owned Commercial Real Estate:        
    Retail / Shopping centers$497,075  6.4% 52.9% 1.47x
    Mixed Use 313,480  4.0  58.6  1.61 
    Industrial / Warehouse 385,889  4.9  52.2  1.56 
    Non-Medical Office 224,103  2.9  52.1  1.57 
    Medical Office 140,099  1.8  59.3  1.65 
    Single Purpose 77,043  1.0  56.4  2.19 
    Other 238,274  3.1  50.5  1.64 
    Total$1,875,963  24.1% 53.9% 1.59 
             
    Total Multifamily and Commercial Real Estate Loans$3,791,721  48.7% 56.5% 1.60x


    About Columbia Financial, Inc.

    The consolidated financial results include the accounts of Columbia Financial, Inc., its wholly-owned subsidiaries Columbia Bank and Freehold Bank, and their wholly-owned subsidiaries. Columbia Financial, Inc. is a Delaware corporation organized as Columbia Bank's mid-tier stock holding company. Columbia Financial, Inc. is a majority-owned subsidiary of Columbia Bank, MHC. Columbia Bank is a federally chartered savings bank headquartered in Fair Lawn, New Jersey that operates 65 full-service banking offices. Freehold Bank is a federally chartered savings bank headquartered in Freehold, New Jersey that operates 2 full-service banking offices. Both banks offer traditional financial services to consumers and businesses in their market areas.

    Forward Looking Statements

    Certain statements herein constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as “believes,” “will,” “would,” “expects,” “projects,” “may,” “could,” “developments,” “strategic,” “launching,” “opportunities,” “anticipates,” “estimates,” “intends,” “plans,” “targets” and similar expressions. These statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. Factors that could cause such differences to exist include, but are not limited to, adverse conditions in the capital and debt markets and the impact of such conditions on the Company’s business activities; changes in interest rates, higher inflation and their impact on national and local economic conditions; changes in monetary and fiscal policies of the U.S. Treasury, the Board of Governors of the Federal Reserve System and other governmental entities; competitive pressures from other financial institutions; the effects of general economic conditions on a national basis or in the local markets in which the Company operates, including changes that adversely affect a borrowers’ ability to service and repay the Company’s loans; the effect of acts of terrorism, war or pandemics, such as the recent COVID-19 pandemic, including on our credit quality and business operations, as well as its impact on general economic and financial market conditions; changes in the value of securities in the Company’s portfolio; changes in loan default and charge-off rates; fluctuations in real estate values; the adequacy of loan loss reserves; decreases in deposit levels necessitating increased borrowing to fund loans and securities; legislative changes and changes in government regulation; changes in accounting standards and practices; the risk that goodwill and intangibles recorded in the Company’s consolidated financial statements will become impaired; demand for loans in the Company’s market area; the Company’s ability to attract and maintain deposits and effectively manage liquidity; risks related to the implementation of acquisitions, dispositions, and restructurings; the risk that the Company may not be successful in the implementation of its business strategy, or its integration of acquired financial institutions and businesses, and changes in assumptions used in making such forward-looking statements which are subject to numerous risks and uncertainties, including but not limited to, those set forth in Item 1A of the Company's Annual Report on Form 10-K and those set forth in the Company's Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all as filed with the Securities and Exchange Commission (the “SEC”), which are available at the SEC’s website, www.sec.gov. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, the Company's actual results could differ materially from those discussed. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company disclaims any obligation to publicly update or revise any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes, except as required by law.

    Non-GAAP Financial Measures

    Reported amounts are presented in accordance with U.S. generally accepted accounting principles ("GAAP"). This press release also contains certain supplemental non-GAAP information that the Company’s management uses in its analysis of the Company’s financial results. Specifically, the Company provides measures based on what it believes are its operating earnings on a consistent basis and excludes material non-routine operating items which affect the GAAP reporting of results of operations. The Company’s management believes that providing this information to analysts and investors allows them to better understand and evaluate the Company’s core financial results for the periods presented. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

    The Company also provides measurements and ratios based on tangible stockholders' equity. These measures are commonly utilized by regulators and market analysts to evaluate a company’s financial condition and, therefore, the Company’s management believes that such information is useful to investors.

    A reconciliation of GAAP to non-GAAP financial measures are included at the end of this press release. See "Reconciliation of GAAP to Non-GAAP Financial Measures".


     
    COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
    Consolidated Statements of Financial Condition
    (In thousands)
     
     September 30, December 31,
      2023   2022 
    Assets(Unaudited)  
    Cash and due from banks$204,375  $179,097 
    Short-term investments 109   131 
    Total cash and cash equivalents 204,484   179,228 
        
    Debt securities available for sale, at fair value 1,018,379   1,328,634 
    Debt securities held to maturity, at amortized cost (fair value of $351,927, and $370,391 at September 30, 2023 and December 31, 2022, respectively) 411,945   421,523 
    Equity securities, at fair value 3,633   3,384 
    Federal Home Loan Bank stock 71,869   58,114 
        
    Loans receivable 7,840,540   7,677,564 
    Less: allowance for credit losses 54,113   52,803 
    Loans receivable, net 7,786,427   7,624,761 
        
    Accrued interest receivable 37,016   33,898 
    Office properties and equipment, net 83,344   83,877 
    Bank-owned life insurance 269,159   264,854 
    Goodwill and intangible assets 123,890   125,142 
    Other assets 313,393   284,754 
    Total assets$10,323,539  $10,408,169 
        
    Liabilities and Stockholders' Equity   
    Liabilities:   
    Deposits$7,703,166  $8,001,159 
    Borrowings 1,356,218   1,127,047 
    Advance payments by borrowers for taxes and insurance 42,417   45,460 
    Accrued expenses and other liabilities 214,307   180,908 
    Total liabilities 9,316,108   9,354,574 
        
    Stockholders' equity:   
    Total stockholders' equity 1,007,431   1,053,595 
    Total liabilities and stockholders' equity$10,323,539  $10,408,169 
        


    COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
    Consolidated Statements of Income
    (In thousands, except per share data)
     
     Three Months Ended
    September 30,    		 Nine Months Ended
    September 30,
      2023   2022   2023   2022 
    Interest income:(Unaudited) (Unaudited)
    Loans receivable$87,548  $68,516  $252,026  $187,400 
    Debt securities available for sale and equity securities 6,147   8,434   21,043   25,741 
    Debt securities held to maturity 2,434   2,440   7,338   7,223 
    Federal funds and interest-earning deposits 747   151   3,360   245 
    Federal Home Loan Bank stock dividends 1,529   384   3,661   1,129 
    Total interest income 98,405   79,925   287,428   221,738 
    Interest expense:       
    Deposits 35,918   6,968   81,733   16,326 
    Borrowings 13,965   3,806   45,158   7,028 
    Total interest expense 49,883   10,774   126,891   23,354 
            
    Net interest income 48,522   69,151   160,537   198,384 
            
    Provision for credit losses 2,379   1,516   3,632   4,514 
            
    Net interest income after provision for credit losses 46,143   67,635   156,905   193,870 
            
    Non-interest income:       
    Demand deposit account fees 1,348   1,510   3,815   4,129 
    Bank-owned life insurance 2,014   1,633   5,670   5,501 
    Title insurance fees 629   796   1,840   2,788 
    Loan fees and service charges 969   1,432   3,366   2,928 
    (Loss) gain on securities transactions —   —   (10,847)  210 
    Change in fair value of equity securities (81)  (264)  249   (332)
    Gain (loss) on sale of loans 397   (1)  1,060   109 
    Other non-interest income 3,326   3,058   10,977   7,541 
    Total non-interest income 8,602   8,164   16,130   22,874 
            
    Non-interest expense:       
    Compensation and employee benefits 28,765   31,523   92,383   86,393 
    Occupancy 5,845   5,973   17,337   16,838 
    Federal deposit insurance premiums 1,201   645   3,624   1,922 
    Advertising 834   771   2,307   2,215 
    Professional fees 2,490   2,134   6,741   5,727 
    Data processing and software expenses 3,459   3,670   10,885   10,036 
    Merger-related expenses 14   1,198   280   2,676 
    Other non-interest expense, net 302   1,925   861   4,501 
    Total non-interest expense 42,910   47,839   134,418   130,308 
            
    Income before income tax expense 11,835   27,960   38,617   86,436 
            
    Income tax expense 2,705   7,041   9,100   22,154 
            
    Net income$9,130  $20,919  $29,517  $64,282 
            
    Earnings per share-basic$0.09  $0.20  $0.29  $0.61 
    Earnings per share-diluted$0.09  $0.19  $0.29  $0.61 
    Weighted average shares outstanding-basic 101,968,294   106,926,864   102,993,215   105,440,345 
    Weighted average shares outstanding-diluted 102,097,491   107,534,498   103,257,616   106,040,240 
            


    COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
    Average Balances/Yields
     
      For the Three Months Ended September 30,
      2023   2022 
     Average
    Balance    		 Interest
    and
    Dividends    		 Yield / Cost Average
    Balance    		 Interest
    and
    Dividends    		 Yield / Cost
     (Dollars in thousands)
    Interest-earnings assets:           
    Loans$7,763,368  $87,548  4.47% $7,149,327  $68,516  3.80%
    Securities 1,437,944   8,581  2.37%  1,897,593   10,874  2.27%
    Other interest-earning assets 152,900   2,276  5.91%  79,329   535  2.68%
    Total interest-earning assets 9,354,212   98,405  4.17%  9,126,249   79,925  3.47%
    Non-interest-earning assets 844,884       807,764     
    Total assets$10,199,096      $9,934,013     
                
    Interest-bearing liabilities:           
    Interest-bearing demand$2,054,464  $10,274  1.98% $2,739,086  $3,162  0.46%
    Money market accounts 1,049,277   7,763  2.94%  718,402   653  0.36%
    Savings and club deposits 758,999   691  0.36%  975,152   119  0.05%
    Certificates of deposit 2,296,573   17,190  2.97%  1,840,898   3,034  0.65%
    Total interest-bearing deposits 6,159,313   35,918  2.31%  6,273,538   6,968  0.44%
    FHLB advances 1,142,484   13,508  4.69%  571,956   3,396  2.36%
    Notes payable 29,925   297  3.94%  30,736   310  4.00%
    Junior subordinated debentures 7,315   160  8.68%  7,556   100  5.25%
    Other borrowings —   —  —%  54   —  2.53%
    Total borrowings 1,179,724   13,965  4.70%  610,302   3,806  2.47%
    Total interest-bearing liabilities 7,339,037  $49,883  2.70%  6,883,840  $10,774  0.62%
                
    Non-interest-bearing liabilities:           
    Non-interest-bearing deposits 1,498,726       1,751,320     
    Other non-interest-bearing liabilities 241,463       221,586     
    Total liabilities 9,079,226       8,856,746     
    Total stockholders' equity 1,119,870       1,077,267     
    Total liabilities and stockholders' equity$10,199,096      $9,934,013     
                
    Net interest income  $48,522      $69,151   
    Interest rate spread    1.47%     2.85%
    Net interest-earning assets$2,015,175      $2,242,409     
    Net interest margin    2.06%     3.01%
    Ratio of interest-earning assets to interest-bearing liabilities 127.46%      132.57%    
                    


    COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
    Average Balances/Yields
     
     For the Nine Months Ended September 30,
      2023   2022 
     Average
    Balance    		 Interest
    and
    Dividends    		 Yield / Cost Average
    Balance    		 Interest
    and
    Dividends    		 Yield / Cost
     (Dollars in thousands)
    Interest-earnings assets:           
    Loans$7,725,121  $252,026  4.36% $6,764,501  $187,400  3.70%
    Securities 1,569,999   28,381  2.42%  2,000,131   32,964  2.20%
    Other interest-earning assets 172,151   7,021  5.45%  74,785   1,374  2.46%
    Total interest-earning assets 9,467,271   287,428  4.06%  8,839,417   221,738  3.35%
    Non-interest-earning assets 835,459       762,692     
    Total assets$10,302,730      $9,602,109     
                
    Interest-bearing liabilities:           
    Interest-bearing demand$2,244,978  $25,465  1.52% $2,686,207  $6,425  0.32%
    Money market accounts 894,520   15,334  2.29%  691,217   1,350  0.26%
    Savings and club deposits 819,804   1,384  0.23%  919,608   345  0.05%
    Certificates of deposit 2,165,778   39,550  2.44%  1,800,295   8,206  0.61%
    Total interest-bearing deposits 6,125,080   81,733  1.78%  6,097,327   16,326  0.36%
    FHLB advances 1,254,637   43,806  4.67%  454,174   5,891  1.73%
    Notes payable 30,148   895  3.97%  30,150   897  3.98%
    Junior subordinated debentures 7,377   457  8.28%  7,634   240  4.20%
    Other borrowings —   —  —%  18   —  2.56%
    Total borrowings 1,292,162   45,158  4.67%  491,976   7,028  1.91%
    Total interest-bearing liabilities 7,417,242  $126,891  2.29%  6,589,303  $23,354  0.47%
                
    Non-interest-bearing liabilities:           
    Non-interest-bearing deposits 1,572,497       1,736,957     
    Other non-interest-bearing liabilities 225,629       199,263     
    Total liabilities 9,215,368       8,525,523     
    Total stockholders' equity 1,087,362       1,076,586     
    Total liabilities and stockholders' equity$10,302,730      $9,602,109     
                
    Net interest income  $160,537      $198,384   
    Interest rate spread    1.77%     2.88%
    Net interest-earning assets$2,050,029      $2,250,114     
    Net interest margin    2.27%     3.00%
    Ratio of interest-earning assets to interest-bearing liabilities 127.64%      134.15%    
                    


    COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
    Components of Net Interest Rate Spread and Margin
      
     Average Yields/Costs by Quarter
     September 30,
    2023    		 June 30,
    2023    		 March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022
    Yield on interest-earning assets:         
    Loans4.47% 4.36% 4.24% 4.05% 3.80%
    Securities2.37  2.33  2.53  2.45  2.27 
    Other interest-earning assets5.91  6.08  4.22  4.00  2.68 
    Total interest-earning assets4.17% 4.07% 3.93% 3.75% 3.47%
              
    Cost of interest-bearing liabilities:         
    Total interest-bearing deposits2.31% 1.90% 1.13% 0.73% 0.44%
    Total borrowings4.70  4.72  4.60  3.69  2.47 
    Total interest-bearing liabilities2.70% 2.42% 1.74% 1.09% 0.62%
              
    Interest rate spread1.47% 1.65% 2.19% 2.66% 2.85%
    Net interest margin2.06% 2.17% 2.58% 2.91% 3.01%
              
    Ratio of interest-earning assets to interest-bearing liabilities127.46% 126.86% 128.60% 130.79% 132.57%
                   


    COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
    Selected Financial Highlights
      
     September 30,
    2023    		 June 30,
    2023    		 March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022
    SELECTED FINANCIAL RATIOS (1):         
    Return on average assets0.36% 0.06% 0.73% 0.86% 0.84%
    Core return on average assets0.36% 0.46% 0.77% 0.87% 0.91%
    Return on average equity3.23% 0.61% 7.20% 8.42% 7.70%
    Core return on average equity3.24% 4.29% 7.59% 8.52% 8.35%
    Core return on average tangible equity3.64% 4.89% 8.61% 9.70% 9.49%
    Interest rate spread1.47% 1.65% 2.19% 2.66% 2.85%
    Net interest margin2.06% 2.17% 2.58% 2.91% 3.01%
    Non-interest income to average assets0.33% (0.02)% 0.31% 0.29% 0.33%
    Non-interest expense to average assets1.67% 1.85% 1.71% 1.74% 1.91%
    Efficiency ratio75.12% 94.07% 63.68% 58.63% 61.88%
    Core efficiency ratio75.09% 75.68% 62.35% 58.26% 58.43%
    Average interest-earning assets to average interest-bearing liabilities127.46% 126.86% 128.60% 130.79% 132.57%
    Net charge-offs to average outstanding loans0.09% 0.03% 0.01% —% 0.01%
              
    (1) Ratios are annualized when appropriate.


    ASSET QUALITY DATA: 
     September 30,
    2023    		 June 30,
    2023    		 March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022
     (Dollars in thousands)
              
    Non-accrual loans$15,150  $11,091  $6,610  $6,721  $6,996 
    90+ and still accruing —   —   —   —   — 
    Non-performing loans 15,150   11,091   6,610   6,721   6,996 
    Real estate owned —   —   —   —   — 
    Total non-performing assets$15,150  $11,091  $6,610  $6,721  $6,996 
              
    Non-performing loans to total gross loans 0.19%  0.14%  0.09%  0.09%  0.10%
    Non-performing assets to total assets 0.15%  0.11%  0.06%  0.06%  0.07%
    Allowance for credit losses on loans ("ACL")$54,113  $53,456  $52,873  $52,803  $51,891 
    ACL to total non-performing loans 357.18%  481.98%  799.89%  785.64%  741.72%
    ACL to gross loans 0.69%  0.69%  0.68%  0.69%  0.71%


    LOAN DATA: 
     September 30,
    2023    		 June 30,
    2023    		 March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022
     (In thousands)
    Real estate loans:     
    One-to-four family$2,791,939  $2,789,269  $2,860,964  $2,860,184  $2,706,114 
    Multifamily 1,417,233   1,376,999   1,315,143   1,239,207   1,142,459 
    Commercial real estate 2,374,488   2,386,896   2,393,918   2,413,394   2,354,786 
    Construction 390,940   378,988   374,434   336,553   289,650 
    Commercial business loans 546,750   505,524   516,682   497,469   497,478 
    Consumer loans:         
    Home equity loans and advances 267,016   269,310   271,620   274,302   279,824 
    Other consumer loans 2,586   2,552   2,322   3,425   2,214 
    Total gross loans 7,790,952   7,709,538   7,735,083   7,624,534   7,272,525 
    Purchased credit deteriorated ("PCD") loans 15,228   16,107   16,245   17,059   19,771 
    Net deferred loan costs, fees and purchased premiums and discounts 34,360   34,791   35,744   35,971   33,927 
    Allowance for credit losses (54,113)  (53,456)  (52,873)  (52,803)  (51,891)
    Loans receivable, net$7,786,427  $7,706,980  $7,734,199  $7,624,761  $7,274,332 


    CAPITAL RATIOS:   
     September 30, December 31,
     2023 (1) 2022
    Company:   
    Total capital (to risk-weighted assets)13.91% 15.39%
    Tier 1 capital (to risk-weighted assets)13.16% 14.59%
    Common equity tier 1 capital (to risk-weighted assets)13.06% 14.49%
    Tier 1 capital (to adjusted total assets)10.25% 10.68%
        
    Columbia Bank:   
    Total capital (to risk-weighted assets)13.86% 14.12%
    Tier 1 capital (to risk-weighted assets)13.06% 13.32%
    Common equity tier 1 capital (to risk-weighted assets)13.06% 13.32%
    Tier 1 capital (to adjusted total assets)9.67% 9.74%
        
    Freehold Bank:   
    Total capital (to risk-weighted assets)22.24% 22.92%
    Tier 1 capital (to risk-weighted assets)21.57% 22.19%
    Common equity tier 1 capital (to risk-weighted assets)21.57% 22.19%
    Tier 1 capital (to adjusted total assets)15.27% 15.19%
        
    (1) Estimated ratios at September 30, 2023   


    Reconciliation of GAAP to Non-GAAP Financial Measures
          
    Book and Tangible Book Value per Share
       September 30, December 31,
        2023   2022 
       (Dollars in thousands)
        
    Total stockholders' equity  $1,007,431  $1,053,595 
    Less: goodwill   (110,715)  (110,715)
    Less: core deposit intangible   (11,728)  (13,505)
    Total tangible stockholders' equity  $884,988  $929,375 
          
    Shares outstanding   105,046,146   108,970,476 
          
    Book value per share  $9.59  $9.67 
    Tangible book value per share  $8.42  $8.53 


    Reconciliation of Core Net Income       
     Three Months Ended
    September 30,    		 Nine Months Ended
    September 30,
      2023   2022   2023   2022 
     (In thousands)
            
    Net income$9,130  $20,919  $29,517  $64,282 
    Add/Less: loss (gain) on securities transactions, net of tax —   —   9,249   (156)
    Less: insurance settlement, net of tax —   (486)  —   (486)
    Add: severance expense from reduction in workforce, net of tax —   —   1,390   — 
    Add: merger-related expenses, net of tax 11   898   241   2,042 
    Add: litigation expense, net of tax —   1,269   262   2,867 
    Add: branch closure expense, net of tax —   114   —   141 
    Core net income$9,141  $22,714  $40,659  $68,690 


    Reconciliation of GAAP to Non-GAAP Financial Measures (continued)    
            
    Return on Average Assets       
     Three Months Ended
    September 30,    		 Nine Months Ended
    September 30,
      2023   2022   2023   2022 
     (Dollars in thousands)
            
    Net income$9,130  $20,919  $29,517  $64,282 
            
    Average assets$10,199,096  $9,934,013  $10,302,730  $9,602,109 
            
    Return on average assets 0.36%  0.84%  0.38%  0.90%
            
    Core net income$9,141  $22,714  $40,659  $68,690 
            
    Core return on average assets 0.36%  0.91%  0.53%  0.96%


    Return on Average Equity       
     Three Months Ended
    September 30,    		 Nine Months Ended
    September 30,
      2023   2022   2023   2022 
     (Dollars in thousands)
            
    Total average stockholders' equity$1,119,870  $1,077,267  $1,087,362  $1,076,586 
    Add/Less: loss (gain) on securities transactions, net of tax —   —   9,249   (156)
    Less: insurance settlement, net of tax —   (486)  —   (486)
    Add: severance expense from reduction in workforce, net of tax —   —   1,390   — 
    Add: merger-related expenses, net of tax 11   898   241   2,042 
    Add: litigation expense, net of tax —   1,269   262   2,867 
    Add: branch closure expense, net of tax —   114   —   141 
    Core average stockholders' equity$1,119,881  $1,079,062  $1,098,504  $1,080,994 
            
    Return on average equity 3.23%  7.70%  3.63%  7.98%
            
    Core return on core average equity 3.24%  8.35%  4.95%  8.50%


    Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
            
    Return on Average Tangible Equity    
     Three Months Ended
    September 30,    		 Nine Months Ended
    September 30,
      2023   2022   2023   2022 
     (Dollars in thousands)
            
    Total average stockholders' equity$1,119,870  $1,077,267  $1,087,362  $1,076,586 
    Less: average goodwill (110,715)  (113,304)  (110,715)  (100,903)
    Less: average core deposit intangible (12,109)  (14,524)  (12,693)  (10,492)
    Total average tangible stockholders' equity$997,046  $949,439  $963,954  $965,191 
            
    Core return on average tangible equity 3.64%  9.49%  5.64%  9.52%


    Efficiency Ratios       
     Three Months Ended
    September 30,    		 Nine Months Ended
    September 30,
      2023   2022   2023   2022 
     (Dollars in thousands)
            
    Net interest income$48,522  $69,151  $160,537  $198,384 
    Non-interest income 8,602   8,164   16,130   22,874 
    Total income$57,124  $77,315  $176,667  $221,258 
            
    Non-interest expense$42,910  $47,839  $134,418  $130,308 
            
    Efficiency ratio 75.12%  61.88%  76.09%  58.89%
            
    Non-interest income$8,602  $8,164  $16,130  $22,874 
    Add/Less: loss (gain) on securities transactions —   —   10,847   (210)
    Less: insurance settlement —   (650)  —   (650)
    Core non-interest income$8,602  $7,514  $26,977  $22,014 
            
    Non-interest expense$42,910  $47,839  $134,418  $130,308 
    Less: severance expense from reduction in workforce —   —   (1,605)  — 
    Less: merger-related expenses (14)  (1,198)  (280)  (2,676)
    Less: litigation expense —   (1,696)  (317)  (3,854)
    Less: branch closure expense —   (152)  —   (188)
    Core non-interest expense$42,896  $44,793  $132,216  $123,590 
            
    Core efficiency ratio 75.09%  58.43%  70.51%  56.08%


    Columbia Financial, Inc.
    Investor Relations Department
    (833) 550-0717


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