Columbia Financial, Inc. Announces Financial Results for the Second Quarter Ended June 30, 2021

Wednesday, 28. July 2021 13:35

FAIR LAWN, N.J., July 28, 2021 (GLOBE NEWSWIRE) -- Columbia Financial, Inc. (the “Company”) (NASDAQ: CLBK), the mid-tier holding company for Columbia Bank (the "Bank"), reported net income of $26.7 million, or $0.26 per basic and diluted share, for the quarter ended June 30, 2021, as compared to net income of $15.1 million, or $0.14 per basic and diluted share, for the quarter ended June 30, 2020. Earnings for the quarter ended June 30, 2021 reflected higher net interest income, a reversal of provision for loan losses, and higher non-interest income, partially offset by higher income tax expense.

For the six months ended June 30, 2021, the Company reported net income of $47.7 million, or $0.45 per basic and diluted share, as compared to net income of $21.9 million, or $0.20 per basic and diluted share, for the six months ended June 30, 2020. Earnings for the six months ended June 30, 2021 reflected higher net interest income, a reversal of provision for loan losses, and higher non-interest income, partially offset by higher income tax expense.

Mr. Thomas J. Kemly, President and Chief Executive Officer commented: "We had strong growth in our net income which increased $11.6 million over the same 2020 period, as we successfully implemented strategies focused on increasing income while reducing our cost of funds and efficiently managing our operating expenses. This quarter included the sale of a significant portion of our lower yielding Paycheck Protection Program ("PPP") loans to an experienced servicer, which resulted in a gain of $7.7 million and allows us to refocus our efforts on our core business lending activities. We are looking forward to the continuation of these successful strategies throughout the remainder of the year, as well as the opportunity to expand our franchise with the acquisition of Freehold Bank, which is anticipated to close during the fourth quarter of 2021."

Results of Operations for the Quarters Ended June 30, 2021 and June 30, 2020

Net income of $26.7 million was recorded for the quarter ended June 30, 2021, an increase of $11.6 million, or 76.8%, compared to net income of $15.1 million for the quarter ended June 30, 2020. The increase in net income was primarily attributable to a $2.2 million increase in net interest income, a $7.5 million decrease in provision for loan losses, and a $7.4 million increase in non-interest income, partially offset by a $5.3 million increase in income tax expense.

Net interest income was $58.1 million for the quarter ended June 30, 2021, an increase of $2.2 million, or 4.0%, from $55.9 million for the quarter ended June 30, 2020. The increase in net interest income was primarily attributable to a $9.9 million decrease in interest expense, partially offset by a $7.7 million decrease in interest income. The decrease in interest expense on deposits was driven by both an inflow of lower cost deposits and the repricing of existing deposits at a significantly reduced rate as a result of a lower interest rate environment. The decrease in interest expense on borrowings was the result of decreases in both the average balance and average cost of borrowings. The decrease in interest income for the quarter ended June 30, 2021 was largely due to decreases in the average yields on interest-earning assets. Prepayment penalties, which are included in interest income on loans, totaled $1.1 million for the quarter ended June 30, 2021, compared to $964,000 for the quarter ended June 30, 2020.

The average yield on loans for the quarter ended June 30, 2021 decreased 24 basis points to 3.72%, as compared to 3.96% for the quarter ended June 30, 2020, while the average yield on securities for the quarter ended June 30, 2021 decreased 63 basis points to 1.93%, as compared to 2.56% for the quarter ended June 30, 2020. The average yield on other interest-earning assets for the quarter ended June 30, 2021 decreased 171 basis points to 1.24%, as compared to 2.95% for the quarter ended June 30, 2020, as there were substantially higher cash balances in low yielding bank accounts for the quarter ended June 30, 2021. Decreases in the average yields on these portfolios for the quarter ended June 30, 2021 were influenced by the lower interest rate environment as the Federal Reserve reduced interest rates by 150 basis points in March 2020 in response to the COVID-19 pandemic.

Total interest expense was $9.8 million for the quarter ended June 30, 2021, a decrease of $9.9 million, or 50.3%, from $19.7 million for the quarter ended June 30, 2020. The decrease in interest expense was primarily attributable to a 58 basis point decrease in the average cost of interest-bearing deposits which was partially offset by the impact of the increase in the average balance of deposits. The decrease in the cost of deposits was driven by both an inflow of lower cost deposits and the repricing of existing deposits at lower interest rates. Interest on borrowings decreased $2.9 million due to a decrease in the average balances of FHLB advances and subordinated notes, coupled with a 59 basis point decrease in the cost of total borrowings.

The Company's net interest margin for the quarter ended June 30, 2021 increased 4 basis points to 2.77%, when compared to 2.73% for the quarter ended June 30, 2020. The weighted average yield on interest-earning assets decreased 45 basis points to 3.24% for the quarter ended June 30, 2021 as compared to 3.69% for the quarter ended June 30, 2020. Excluding the impact of PPP loan deferred fee acceleration for the quarter ended June 30, 2021, the net interest margin would have been 2.66%. The average cost of interest-bearing liabilities decreased 63 basis points to 0.62% for the quarter ended June 30, 2021 as compared to 1.25% for the quarter ended June 30, 2020. The decrease in yields and costs for the quarter ended June 30, 2021 were largely driven by a continued lower interest rate environment. The net interest margin increased for the quarter ended June 30, 2021 as the cost of interest-bearing liabilities continued to reprice lower more rapidly than the yields on interest-earning assets.

The reversal of provision for loan loss recorded for the quarter ended June 30, 2021 was $1.8 million, a decrease of $7.5 million, from $5.7 million of provision for loan loss expense recorded for the quarter ended June 30, 2020. The comparatively lower level of provision for the 2021 period was primarily attributable to a decrease in the average balance of loans, a decrease in loan loss rates, a decrease in the balances of delinquent and non-accrual loans, and the consideration of the improving economic environment.

Non-interest income was $14.4 million for the quarter ended June 30, 2021, an increase of $7.4 million, or 105.4%, from $7.0 million for the quarter ended June 30, 2020. The increase was primarily attributable to an increase in income from a $7.7 million gain on the sale of $237.0 million of commercial business loans granted as part of the Small Business Administration PPP, and an increase in title insurance fees of $507,000, partially offset by the decrease in the fair value of equity securities of $1.4 million.

Non-interest expense was $37.6 million for the quarter ended June 30, 2021, an increase of $167,000, or 0.4%, from $37.4 million for the quarter ended June 30, 2020. The increase was primarily attributable to an increase in data processing and software expenses of $248,000, professional fees of $568,000, and other non-interest expenses of $1.1 million, partially offset by a decrease in compensation and employee benefits expense of $1.6 million, and a decrease in merger-related expenses of $357,000. Professional fees included an increase in consulting expenses related to information technology improvements, and the increase in other non-interest expense included $561,000 of branch closure costs.

Income tax expense was $9.9 million for the quarter ended June 30, 2021, an increase of $5.3 million, as compared to $4.6 million for the quarter ended June 30, 2020, mainly due to an increase in pre-tax income, and to a lesser extent, an increase in the Company's effective state income tax rate. The Company's effective tax rate was 27.1% and 23.4% for the quarters ended June 30, 2021 and 2020, respectively.

Results of Operations for the Six Months Ended June 30, 2021 and June 30, 2020

Net income of $47.7 million was recorded for the six months ended June 30, 2021, an increase of $25.9 million, or 118.3%, compared to net income of $21.9 million for the six months ended June 30, 2020. The increase in net income was primarily attributable to an $8.2 million increase in net interest income, an $18.3 million decrease in provision for loan losses, and a $9.6 million increase in non-interest income, partially offset by a $10.9 million increase in income tax expense.

Net interest income was $114.8 million for the six months ended June 30, 2021, an increase of $8.2 million, or 7.7%, from $106.6 million for the six months ended June 30, 2020. The increase in net interest income was primarily attributable to a $23.0 million decrease in interest expense, partially offset by a $14.8 million decrease in interest income. The decrease in interest expense on deposits was driven by both an inflow of lower cost deposits and the repricing of existing deposits at a significantly reduced rate as a result of a lower interest rate environment. The decrease in interest expense on borrowings was the result of decreases in both the average balance and average cost of borrowings. During the six months ended June 30, 2021, $56.5 million of Federal Home Loan Bank of New York ("FHLB") borrowings were prepaid, resulting in a $742,000 loss on early extinguishment of debt included in non-interest expense. The Company has significantly reduced the cost of borrowings over the period by prepaying high rate borrowings. The decrease in interest income for the six months ended June 30, 2021 was largely due to decreases in the average yields on interest-earning assets. Prepayment penalties, which are included in interest income on loans, totaled $2.0 million for the six months ended June 30, 2021, compared to $1.6 million for the six months ended June 30, 2020.

The average yield on loans for the six months ended June 30, 2021 decreased 26 basis points to 3.79%, as compared to 4.05% for the six months ended June 30, 2020, while the average yield on securities for the six months ended June 30, 2021 decreased 66 basis points to 1.98%, as compared to 2.64% for the six months ended June 30, 2020. The average yield on other interest-earning assets for the six months ended June 30, 2021 decreased 299 basis points to 0.82%, as compared to 3.81% for the six months ended June 30, 2020, as there were substantially higher cash balances in low yielding bank accounts for the six months ended June 30, 2021. Decreases in the average yields on these portfolios for the six months ended June 30, 2021 were influenced by the lower interest rate environment as the Federal Reserve reduced interest rates in early 2020 in response to the COVID-19 pandemic.

Total interest expense was $20.7 million for the six months ended June 30, 2021, a decrease of $23.0 million, or 52.6%, from $43.7 million for the six months ended June 30, 2020. The decrease in interest expense was primarily attributable to a 68 basis point decrease in the average cost of interest-bearing deposits which was partially offset by the impact of the increase in the average balance of deposits. The decrease in the cost of deposits was driven by both an inflow of lower cost deposits and the repricing of existing deposits at lower interest rates. Interest on borrowings decreased $8.0 million due to a decrease in the average balances of FHLB advances and subordinated notes, coupled with a 80 basis point decrease in the cost of total borrowings. During the six months ended June 30, 2021, we prepaid $53.5 million of FHLB borrowings with an average rate of 2.64% and original contractual maturities through March 2022, and a $3.0 million FHLB borrowing acquired in our acquisition of Roselle Bank with a rate of 2.74% and an original contractual maturity of March 2024. The prepayments were funded by excess cash liquidity. The transactions were accounted for as early debt extinguishments resulting in a loss of $742,000.

The Company's net interest margin for the six months ended June 30, 2021 increased 10 basis points to 2.79%, when compared to 2.69% for the six months ended June 30, 2020. The weighted average yield on interest-earning assets decreased 51 basis points to 3.29% for the six months ended June 30, 2021 as compared to 3.80% for the six months ended June 30, 2020. Excluding the impact of PPP loan deferred fee acceleration for the six months ended June 30, 2021, the net interest margin would have been 2.64%. The average cost of interest-bearing liabilities decreased 74 basis points to 0.67% for the six months ended June 30, 2021 as compared to 1.41% for the six months ended June 30, 2020. The decreases in yields and costs for the six months ended June 30, 2021 were largely driven by a continued lower interest rate environment. The net interest margin increased for the six months ended June 30, 2021 as the cost of interest-bearing liabilities continued to reprice lower more rapidly than the yields on interest-earning assets.

The reversal of provision for loan loss recorded for the six months ended June 30, 2021 was $3.0 million, a decrease of $18.3 million, from $15.3 million of provision for loan loss expense recorded for the six months ended June 30, 2020. The comparatively lower level of provision for the 2021 period was primarily attributable to a decrease in the average balance of loans, a decrease in loan loss rates, a decrease in the balances of delinquent and non-accrual loans, and the consideration of the improving economic environment.

Non-interest income was $23.0 million for the six months ended June 30, 2021, an increase of $9.6 million, or 71.6%, from $13.4 million for the six months ended June 30, 2020. The increase was primarily attributable to an increase in income from the gain on the sale of loans of $9.1 million and an increase in other non-interest income of $1.7 million, partially offset by the decrease in the fair value of equity securities of $1.4 million. The increase in the gain on sale of loans was primarily attributable to a gain of $7.7 million resulting from the sale of $237.0 million of commercial business loans granted as part of the Small Business Administration PPP. Other non-interest income included increases of $755,000 from debit card transactions and $651,000 from swap transactions.

Non-interest expense was $75.3 million for the six months ended June 30, 2021, a decrease of $638,000, or 0.8%, from $76.0 million for the six months ended June 30, 2020. The decrease was primarily attributable to a decrease in compensation and employee benefits expense of $2.7 million, and a decrease in merger-related expenses of $1.4 million, partially offset by an increase in professional fees of $992,000, an increase in data processing and software expenses of $789,000, and the loss on the extinguishment of debt of $742,000. The decrease in compensation and employee benefits was primarily attributable to an increase in amounts deferred as direct loan origination costs as a result of an increase in originations. Merger-related expenses recorded in the 2020 period related to the acquisitions of Stewardship Financial Corporation and Roselle Bank. Professional fees included an increase in consulting expenses related to information technology, and the increase in data processing and software expenses was attributable to the purchase and implementation of several digital banking and other Fintech solutions, as well as the amortization of software costs related to a digital small business lending solution. As noted above, during the six months ended June 30, 2021, the Company utilized excess liquidity to prepay long-term borrowings which resulted in a $742,000 loss on the early extinguishment of debt.

Income tax expense was $17.8 million for the six months ended June 30, 2021, an increase of $10.9 million, as compared to $6.9 million for the six months ended June 30, 2020, mainly due to an increase in pre-tax income, and to a lesser extent, an increase in the Company's effective state income tax rate. The Company's effective tax rate was 27.2% and 23.9% for the six months ended June 30, 2021 and 2020, respectively.

Balance Sheet Summary

Total assets increased $268.9 million, or 3.1%, to $9.1 billion at June 30, 2021 from $8.8 billion at December 31, 2020. The increase in total assets was primarily attributable to increases in debt securities available for sale of $325.5 million, debt securities held to maturity of $139.4 million, and other assets of $7.2 million, partially offset by decreases of $35.7 million in cash and cash equivalents, and $159.2 million in loans receivable, net.

Cash and cash equivalents decreased $35.7 million, or 8.4%, to $387.2 million at June 30, 2021 from $423.0 million at December 31, 2020. The decrease was primarily attributable to $576.6 million in purchases of debt securities available for sale and held to maturity, $58.5 million in repurchases of common stock under our stock repurchase program, and $56.5 million in prepayments of borrowings, partially offset by an increase in repayments on loans, repayments on mortgage-backed securities, and growth in deposits.

Debt securities available for sale increased $325.5 million, or 24.7%, to $1.6 billion at June 30, 2021 from $1.3 billion at December 31, 2020. The increase was attributable to purchases of $416.1 million of securities primarily consisting of U.S. government and agency obligations, mortgage-backed securities and municipal securities, and $99.6 million in purchases of guarantor swaps with Freddie Mac, partially offset by maturities, calls and sales of $9.9 million in U.S. government and agency obligations, corporate debt and municipal securities, and repayments of $164.4 million. The gross unrealized gain (loss) on debt securities available for sale decreased by $13.5 million during the six months ended June 30, 2021.

Debt securities held to maturity increased $139.4 million, or 53.1%, to $402.1 million at June 30, 2021 from $262.7 million at December 31, 2020. The increase was primarily attributable to purchases of $160.5 million of securities primarily consisting of U.S. agency obligations and mortgage-backed securities, partially offset by the call of a $5.0 million U.S. agency obligation and repayments of $15.5 million.

Loans receivable, net, decreased $159.2 million, or 2.6%, to $5.9 billion at June 30, 2021 from $6.1 billion at December 31, 2020. Multi-family and commercial real estate loans increased $297.1 million, partially offset by decreases in commercial business loans, one-to-four family real estate loans, construction loans, and home equity loans and advances of $281.2 million, $72.4 million, $67.6 million and $43.1 million, respectively. The increase in multi-family and commercial real estate loans included the purchase of $71.6 million of loan participations in June 2021. The decrease in commercial business loans was mainly due to the sale of $237.0 million in loans granted and $255.7 in forgiven PPP loans as part of the Small Business Administration PPP. The allowance for loan loss balance decreased $4.8 million to $69.9 million at June 30, 2021 from $74.7 million at December 31, 2020, which was primarily attributable to a decrease in loan loss rates, and a decrease in the balance of delinquent and non-accrual loans, as well as the consideration of improving economic conditions. The current allowance for loan losses was calculated utilizing the existing incurred loss methodology. The Company elected to defer the adoption of the Current Expected Credit Loss ("CECL") methodology as was originally permitted by the CARES Act and the Consolidated Appropriations Act, 2021, which, when enacted, extended certain provisions of the CARES Act. The Company expects to adopt CECL on January 1, 2022.

Other assets increased $7.2 million, or 3.4%, to $217.0 million at June 30, 2021 from $209.9 million at December 31, 2020. The increase in other assets consisted of an increase of $36.2 million in the Company's pension plan balance based on a revaluation of the plan, partially offset by a decrease of $13.3 million in the collateral balance related to our swap agreement obligations, a decrease of $6.8 million in interest rate swap assets, a decrease of $6.3 million in federal and state income tax receivables, and a decrease of $2.5 million in deferred taxes.

Total liabilities increased $247.1 million, or 3.2%, to $8.0 billion at June 30, 2021 from $7.8 billion at December 31, 2020. The increase was primarily attributable to an increase in total deposits of $300.7 million, or 4.4%, partially offset by a decrease in borrowings of $49.7 million, or 6.2%, and a decrease in accrued expenses and other liabilities of $7.4 million, or 4.2%. The increase in total deposits consisted of increases in non-interest-bearing and interest-bearing demand deposits of $158.6 million and $166.7 million, respectively, and money market accounts and savings and club deposits of $57.4 million and $61.2 million, respectively, partially offset by a decrease in certificates of deposit accounts of $143.2 million. The decrease in borrowings was primarily driven by the prepayment of $56.5 million of FHLB borrowings. The decrease in accrued expenses and other liabilities consisted of a $14.0 million decrease in interest rate swap liabilities, partially offset by a $7.6 million increase in balance of outstanding checks.

Total stockholders’ equity increased $21.8 million, or 2.2%, with a balance of $1.0 billion at both June 30, 2021 and December 31, 2020. The increase was primarily attributable to net income of $47.7 million, and a change in the pension obligation of $32.2 million due a revaluation of the plan, partially offset by the repurchase of 3,470,040 shares of common stock totaling $58.5 million under our stock repurchase program.

Asset Quality

The Company's non-performing loans at June 30, 2021 totaled $4.3 million, or 0.07% of total gross loans, as compared to $8.2 million, or 0.13% of total gross loans, at December 31, 2020. The $3.8 million decrease in non-performing loans was primarily attributable to decreases of $1.8 million in non-performing one-to-four family real estate loans, $2.6 million in non-performing commercial business loans, and $43,000 in non-performing home equity loans and advances, partially offset by an increase of $560,000 in non-performing multifamily and commercial real estate loans. The decrease in non-performing one-to-four family real estate loans was due to a decrease in the number of loans from 13 non-performing loans at December 31, 2020 to six non-performing loans at June 30, 2021. The decrease in non-performing commercial business loans was mainly due to charge-offs totaling $1.7 million. The decrease in non-performing home equity loans and advances was due to a decrease in the number of loans from 12 non-performing loans at December 31, 2020 to eight non-performing loans at June 30, 2021. Non-performing assets as a percentage of total assets totaled 0.05% at June 30, 2021 as compared to 0.09% at December 31, 2020.

For the quarter ended June 30, 2021, net charge-offs totaled $244,000 as compared to $2.9 million for the quarter ended June 30, 2020. For the six months ended June 30, 2021, net charge-offs totaled $1.7 million as compared to $3.0 million for the six months ended June 30, 2020.

The Company's allowance for loan losses was $69.9 million, or 1.17% of total loans, at June 30, 2021, compared to $74.7 million, or 1.21% of total loans, at December 31, 2020. The decrease in the allowance for loan losses was primarily attributable to a decrease in loan loss rates, and a decrease in the balance of delinquent and non-accrual loans, as well as the consideration of improving economic conditions.

COVID-19

Through June 30, 2021, the Company granted commercial loan modification requests with respect to multifamily, commercial, and construction real estate loans with current balances of $705.8 million and consumer-related loan modification requests with respect to one-to-four family real estate loans and home equity loans and advances with current balances of $142.4 million to our customers affected by the COVID-19 pandemic. These short-term loan modifications will be treated in accordance with Section 4013 of the CARES Act and will not be treated as troubled debt restructurings during the short-term modification period if the loan was not in arrears. The Consolidated Appropriations Act, 2021, which was enacted in late December 2020, extended certain provisions of the CARES Act, including provisions permitting loan deferral extension requests to not be treated as troubled debt restructurings. Furthermore, these loans will continue to accrue interest and will not be tested for impairment during the short-term modification period. Commercial loan modification requests include various industries and property types. The following table is a summary of loan modifications that have not begun to remit full payment:

 Balance at
December 31,
2020
 Percent of
Total Loans at
December 31,
2020
  Balance at
June 30,
2021
 Percent of
Total Loans at
June 30,
2021
 Balance at
July 22,
2021
 Percent of
Total Loans
at July 22,
2021
 (Dollars in thousands)
Real estate loans:           
One-to-four family$6,770  0.35% $2,459  0.13% $2,105  0.11%
Multifamily and commercial71,348  2.53  55,617  1.79  27,173  0.88 
Construction3,312  1.01  3,337  1.28  2,537  0.98 
Commercial business loans3,397  0.45  2,301  0.49  1,457  0.31 
Home equity loans and advances314  0.10  57  0.02  57  0.02 
Total loans$85,141  1.38% $63,771  1.06% $33,329  0.56%


At June 30, 2021, $37.9 million of the commercial loans in the above table are remitting partial payments and $61.3 million were granted an additional deferral period.

About Columbia Financial, Inc.

The consolidated financial results include the accounts of Columbia Financial, Inc. its wholly-owned subsidiary Columbia Bank (the "Bank") and the Bank's 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. The Bank offers traditional financial services to consumers and businesses in our market areas. We currently operate 61 full-services banking offices.

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; 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 the 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; 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, including the successful consummation of its pending acquisition of Freehold Bank, 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 Current Reports on Form 8-K filed with the Securities and Exchange Commission (the “SEC”), which is 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".

Contact:Tony Rose
 1st Senior Vice President/Marketing Director
 201-794-5828


COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(In thousands)

 June 30, December 31,
 2021 2020
Assets(Unaudited)  
Cash and due from banks$387,034  $422,787 
Short-term investments197  170 
     Total cash and cash equivalents387,231  422,957 
    
Debt securities available for sale, at fair value1,642,413  1,316,952 
Debt securities held to maturity, at amortized cost (fair value of $415,033, and $277,091 at June 30, 2021 and December 31, 2020, respectively)402,145  262,720 
Equity securities, at fair value4,053  5,418 
Federal Home Loan Bank stock40,922  43,759 
Loans held-for-sale, at fair value  4,146 
    
Loans receivable6,017,802  6,181,770 
Less: allowance for loan losses69,898  74,676 
     Loans receivable, net5,947,904  6,107,094 
    
Accrued interest receivable28,296  29,456 
Office properties and equipment, net75,450  75,974 
Bank-owned life insurance235,790  232,824 
Goodwill and intangible assets86,189  87,384 
Other assets217,042  209,852 
     Total assets$9,067,435  $8,798,536 
    
Liabilities and Stockholders' Equity   
Liabilities:   
Deposits$7,079,276  $6,778,624 
Borrowings749,683  799,364 
Advance payments by borrowers for taxes and insurance36,155  32,570 
Accrued expenses and other liabilities169,275  176,691 
     Total liabilities8,034,389  7,787,249 
    
Stockholders' equity:   
     Total stockholders' equity1,033,046  1,011,287 
     Total liabilities and stockholders' equity$9,067,435  $8,798,536 


COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except share and per share data)

 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2021 2020 2021 2020
Interest income:(Unaudited) (Unaudited)
Loans receivable$57,683  $65,235  $116,451  $129,253 
Debt securities available for sale and equity securities7,521  7,292  13,899  14,620 
Debt securities held to maturity2,151  1,993  3,903  4,058 
Federal funds and interest-earning deposits39  27  143  216 
Federal Home Loan Bank stock dividends487  1,040  1,122  2,130 
Total interest income67,881  75,587  135,518  150,277 
Interest expense:       
Deposits7,855  14,911  16,730  31,743 
Borrowings1,946  4,805  3,968  11,961 
Total interest expense9,801  19,716  20,698  43,704 
        
Net interest income58,080  55,871  114,820  106,573 
        
(Reversal of) provision for loan losses(1,761) 5,736  (3,041) 15,304 
        
Net interest income after (reversal of) provision for loan losses59,841  50,135  117,861  91,269 
        
Non-interest income:       
Demand deposit account fees858  620  1,696  1,919 
Bank-owned life insurance1,497  1,519  2,971  2,936 
Title insurance fees1,503  996  3,123  2,227 
Loan fees and service charges714  533  1,365  1,261 
(Loss) gain on securities transactions(281) 0  (281) 370 
Change in fair value of equity securities(778) 643  (1,366) 59 
Gain on sale of loans8,524  795  10,674  1,549 
Other non-interest income2,354  1,902  4,804  3,078 
Total non-interest income14,391  7,008  22,986  13,399 
        
Non-interest expense:       
Compensation and employee benefits23,601  25,218  46,994  49,683 
Occupancy4,814  4,701  10,066  9,496 
Federal deposit insurance premiums567  626  1,147  736 
Advertising663  447  1,198  1,591 
Professional fees1,651  1,083  3,441  2,449 
Data processing and software expenses2,612  2,364  5,383  4,594 
Merger-related expenses75  432  75  1,507 
Loss on extinguishment of debt    742   
Other non-interest expense3,627  2,572  6,267  5,895 
Total non-interest expense37,610  37,443  75,313  75,951 
        
Income before income tax expense36,622  19,700  65,534  28,717 
        
Income tax expense9,934  4,603  17,801  6,855 
        
Net income$26,688  $15,097  $47,733  $21,862 
        
Earnings per share-basic and diluted$0.26  $0.14  $0.45  $0.20 
Weighted average shares outstanding-basic and diluted104,537,656  111,102,306  105,253,661  109,770,239 


COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Average Balances/Yields

  For the Three Months Ended June 30,
 2021 2020
 Average
Balance
 Interest
and
Dividends
 Yield / Cost Average
Balance
 Interest
and
Dividends
 Yield / Cost
 (Dollars in thousands)
Interest-earnings assets:           
Loans$6,224,035  $57,683  3.72% $6,629,428  $65,235  3.96%
Securities2,006,842  9,672  1.93% 1,458,442  9,285  2.56%
Other interest-earning assets170,763  526  1.24% 145,677  1,067  2.95%
Total interest-earning assets8,401,640  67,881  3.24% 8,233,547  75,587  3.69%
Non-interest-earning assets611,674      652,255     
Total assets$9,013,314      $8,885,802     
            
Interest-bearing liabilities:           
Interest-bearing demand$2,333,638  $2,092  0.36% $1,862,312  $3,014  0.65%
Money market accounts636,964  533  0.34% 485,675  644  0.53%
Savings and club deposits745,827  205  0.11% 633,118  279  0.18%
Certificates of deposit1,844,425  5,025  1.09% 2,217,765  10,974  1.99%
Total interest-bearing deposits5,560,854  7,855  0.57% 5,198,870  14,911  1.15%
FHLB advances723,553  1,885  1.04% 1,133,975  4,565  1.62%
Subordinated notes    % 17,438  169  3.90%
Junior subordinated debentures7,455  61  3.28% 7,582  67  3.55%
Other borrowings    % 7,692  4  0.21%
Total borrowings731,008  1,946  1.07% 1,166,687  4,805  1.66%
Total interest-bearing liabilities6,291,862  $9,801  0.62% 6,365,557  $19,716  1.25%
            
Non-interest-bearing liabilities:           
Non-interest-bearing deposits1,491,084      1,280,181     
Other non-interest-bearing liabilities223,021      209,199     
Total liabilities8,005,967      7,854,937     
Total stockholders' equity1,007,347      1,030,865     
Total liabilities and stockholders' equity$9,013,314      $8,885,802     
            
Net interest income  $58,080      $55,871   
Interest rate spread    2.62%     2.44%
Net interest-earning assets$2,109,778      $1,867,990     
Net interest margin    2.77%     2.73%
Ratio of interest-earning assets to interest-bearing liabilities133.53%     129.35%    


COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Average Balances/Yields

 For the Six Months Ended June 30,
 2021 2020
 Average
Balance
 Interest
and
Dividends
 Yield / Cost Average
Balance
 Interest
and
Dividends
 Yield / Cost
 (Dollars in thousands)
Interest-earnings assets:           
Loans$6,192,893  $116,451  3.79% $6,413,943  $129,253  4.05%
Securities1,810,317  17,802  1.98% 1,422,649  18,678  2.64%
Other interest-earning assets309,401  1,265  0.82% 123,686  2,346  3.81%
Total interest-earning assets8,312,611  135,518  3.29% 7,960,278  150,277  3.80%
Non-interest-earning assets617,780      608,023     
Total assets$8,930,391      $8,568,301     
            
Interest-bearing liabilities:           
Interest-bearing demand$2,293,979  $4,231  0.37% $1,809,100  $7,686  0.85%
Money market accounts615,101  1,051  0.34% 452,453  1,715  0.76%
Savings and club deposits726,846  399  0.11% 588,368  494  0.17%
Certificates of deposit1,882,463  11,049  1.18% 2,116,873  21,848  2.08%
Total interest-bearing deposits5,518,389  16,730  0.61% 4,966,794  31,743  1.29%
FHLB advances733,369  3,846  1.06% 1,250,119  11,456  1.84%
Subordinated notes    % 17,285  336  3.91%
Junior subordinated debentures7,518  122  3.27% 7,515  165  4.42%
Other borrowings    % 3,846  4  0.21%
Total borrowings740,887  3,968  1.08% 1,278,765  11,961  1.88%
Total interest-bearing liabilities6,259,276  $20,698  0.67% 6,245,559  $43,704  1.41%
            
Non-interest-bearing liabilities:           
Non-interest-bearing deposits1,449,759      1,120,061     
Other non-interest-bearing liabilities215,415      197,295     
Total liabilities7,924,450      7,562,915     
Total stockholders' equity1,005,941      1,005,386     
Total liabilities and stockholders' equity$8,930,391      $8,568,301     
            
Net interest income  $114,820      $106,573   
Interest rate spread    2.62%     2.39%
Net interest-earning assets$2,053,335      $1,714,719     
Net interest margin    2.79%     2.69%
Ratio of interest-earning assets to interest-bearing liabilities132.80%     127.46%    


COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Components of Net Interest Rate Spread and Margin

 Average Yields/Costs by Quarter
 June 30,
2021
 March 31,
2021
 December 31,
2020
 September 30,
2020
 June 30,
2020
Yield on interest-earning assets:         
Loans3.72% 3.87% 3.97% 3.85% 3.96%
Securities1.93  2.05  2.30  2.38  2.56 
Other interest-earning assets1.24  0.67  0.68  1.26  2.95 
Total interest-earning assets3.24% 3.34% 3.47% 3.50% 3.69%
          
Cost of interest-bearing liabilities:         
Total interest-bearing deposits0.57% 0.66% 0.78% 0.96% 1.15%
Total borrowings1.07  1.09  1.32  1.41  1.66 
Total interest-bearing liabilities0.62% 0.71% 0.86% 1.04% 1.25%
          
Interest rate spread2.62% 2.63% 2.61% 2.46% 2.44%
Net interest margin2.77% 2.80% 2.81% 2.70% 2.73%
          
Ratio of interest-earning assets to interest-bearing liabilities133.53% 132.06% 130.35% 130.13% 129.35%


COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Selected Financial Highlights

        
  For the Three Months Ended
June 30,
 For the Six Months Ended
June 30,
 2021 2020 2021 2020
SELECTED FINANCIAL RATIOS (1):       
Return on average assets1.19% 0.68% 1.08% 0.51%
Core return on average assets1.22% 0.70% 1.11% 0.55%
Return on average equity10.63% 5.89% 9.57% 4.37%
Core return on average equity10.89% 6.03% 9.80% 4.72%
Core return on average tangible equity11.90% 6.64% 10.73% 5.14%
Interest rate spread2.62% 2.44% 2.62% 2.39%
Net interest margin2.77% 2.73% 2.79% 2.69%
Non-interest income to average assets0.64% 0.32% 0.52% 0.31%
Non-interest expense to average assets1.67% 1.69% 1.70% 1.78%
Efficiency ratio51.90% 59.55% 54.65% 63.31%
Core efficiency ratio50.82% 58.86% 53.54% 61.26%
Average interest-earning assets to average interest-bearing liabilities133.53% 129.35% 132.80% 127.46%
Net charge-offs to average outstanding loans0.02% 0.18% 0.06% 0.09%
        
(1) Ratios for the three and six months are annualized when appropriate.      



CAPITAL RATIOS:   
 June 30, December 31,
 2021 2020
Company:   
Total capital (to risk-weighted assets)17.87% 18.54%
Tier 1 capital (to risk-weighted assets)16.69% 17.29%
Common equity tier 1 capital (to risk-weighted assets)16.57% 17.17%
Tier 1 capital (to adjusted total assets)11.25% 11.38%
    
Bank:   
Total capital (to risk-weighted assets)16.41% 16.05%
Tier 1 capital (to risk-weighted assets)15.23% 14.80%
Common equity tier 1 capital (to risk-weighted assets)15.23% 14.80%
Tier 1 capital (to adjusted total assets)10.23% 9.72%



ASSET QUALITY:   
 June 30, December 31,
 2021 2020
 (Dollars in thousands)
Non-accrual loans$4,314  $8,156 
90+ and still accruing   
Non-performing loans4,314  8,156 
Real estate owned   
Total non-performing assets$4,314  $8,156 
    
Non-performing loans to total gross loans0.07% 0.13%
Non-performing assets to total assets0.05% 0.09%
Allowance for loan losses$69,898  $74,676 
Allowance for loan losses to total non-performing loans1,620.26% 915.60%
Allowance for loan losses to gross loans1.17% 1.21%
Allowance for loan losses to gross loans, excluding SBA PPP loans1.18% 1.28%
Unamortized purchase accounting fair value credit marks on acquired loans$5,228  $6,486 



LOAN DATA:   
 June 30, December 31,
 2021 2020
Real estate loans:(In thousands)
One-to-four family$1,867,924  $1,940,327 
Multifamily and commercial3,115,054  2,817,965 
Construction261,159  328,711 
Commercial business loans *471,700  752,870 
Consumer loans:   
Home equity loans and advances278,078  321,177 
Other consumer loans1,158  1,497 
Total gross loans5,995,073  6,162,547 
Purchased credit-impaired ("PCI") loans3,116  6,345 
Net deferred loan costs, fees and purchased premiums and discounts **19,613  12,878 
Allowance for loan losses(69,898) (74,676)
Loans receivable, net$5,947,904  $6,107,094 
    
* At June 30, 2021 and December 31, 2020 includes SBA PPP loans totaling $91.1 million and $344.4 million, respectively.
** At June 30, 2021 and December 31, 2020 includes SBA PPP net deferred loan fees totaling $2.3 million and $6.6 million, respectively.



Reconciliation of GAAP to Non-GAAP Financial Measures
    
Book and Tangible Book Value per Share
 June 30, December 31,
 2021 2020
    
Total stockholders' equity$1,033,046  $1,011,287 
Less: goodwill(79,220) (80,285)
Less: core deposit intangible(5,677) (6,197)
Total tangible stockholders' equity$948,149  $924,805 
    
Shares outstanding107,506,075  110,939,753 
    
Book value per share$9.61  $9.12 
Tangible book value per share$8.82  $8.34 


Reconciliation of Core Net Income       
 Three Months Ended June 30, Six Months Ended June 30,
 2021 2020 2021 2020
 (In thousands)
        
Net income$26,688  $15,097  $47,733  $21,862 
Add/Less: loss (gain) on securities transactions, net of tax205    205  (279)
Add: merger-related expenses, net of tax55  366  55  1,184 
Add: loss on extinguishment of debt, net of tax    540   
Add: branch closure expense, net of tax420    420  878 
Core net income$27,368  $15,463  $48,953  $23,645 


Reconciliation of GAAP to Non-GAAP Financial Measures (continued)

Return on Average Assets       
 Three Months Ended June 30, Six Months Ended June 30,
 2021 2020 2021 2020
 (Dollars in thousands)
        
Net income$26,688  $15,097  $47,733  $21,862 
        
Average assets$9,013,314  $8,885,802  $8,930,391  $8,568,301 
        
Return on average assets1.19% 0.68% 1.08% 0.51%
        
Core net income$27,368  $15,463  $48,953  $23,645 
        
Core return on average assets1.22% 0.70% 1.11% 0.55%



Return on Average Equity       
 Three Months Ended June 30, Six Months Ended June 30,
 2021 2020 2021 2020
 (Dollars in thousands)
        
Total average stockholders' equity$1,007,347  $1,030,865  $1,005,941  $1,005,386  
Add/Less: loss (gain) on securities transactions, net of tax205    205  (279) 
Add: merger-related expenses, net of tax55  366  55  1,184  
Add: loss on extinguishment of debt, net of tax    540    
Add: branch closure expense, net of tax420    420  878  
Core average stockholders' equity$1,008,027  $1,031,231  $1,007,161  $1,007,169  
        
Return on average equity10.63% 5.89% 9.57% 4.37 %
        
Core return on core average equity10.89% 6.03% 9.80% 4.72 %



Return on Average Tangible Equity    
 Three Months Ended June 30, Six Months Ended June 30,
 2021 2020 2021 2020
        
Total average stockholders' equity$1,007,347   $1,030,865   $1,005,941   $1,005,386  
Less: average goodwill(79,220)  (86,684)  (79,561)  (73,724) 
Less: average core deposit intangible(5,677)  (6,902)  (5,969)  (7,038) 
Total average tangible stockholders' equity$922,450   $937,279   $920,411   $924,624  
        
Core return on average tangible equity11.90 % 6.64 % 10.73 % 5.14 %


Reconciliation of GAAP to Non-GAAP Financial Measures (continued)

Efficiency Ratios       
 Three Months Ended June 30, Six Months Ended June 30,
 2021 2020 2021 2020
 (Dollars in thousands)
        
Net interest income$58,080   $55,871   $114,820   $106,573  
Non-interest income14,391   7,008   22,986   13,399  
Total income$72,471   $62,879   $137,806   $119,972  
        
Non-interest expense$37,610   $37,443   $75,313   $75,951  
        
Efficiency ratio51.90 % 59.55 % 54.65 % 63.31 %
        
Non-interest income$14,391   $7,008   $22,986   $13,399  
Add/Less: loss (gain) on securities transactions281      281   (370) 
Core non-interest income$14,672   $7,008   $23,267   $13,029  
        
Non-interest expense$37,610   $37,443   $75,313   $75,951  
Less: merger-related expenses(75)  (432)  (75)  (1,507) 
Less: loss on extinguishment of debt      (742)    
Less: branch closure expense(561)     (561)  (1,170) 
Core non-interest expense$36,974   $37,011   $73,935   $73,274  
        
Core efficiency ratio50.82 % 58.86 % 53.54 % 61.26 %


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