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Form 8-K Columbia Financial, Inc. For: Jul 28

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July 28, 2021 7:01 AM EDT

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

Fair Lawn, New Jersey (July 28, 2021): 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, 2020Percent of Total Loans at December 31, 2020 Balance at June 30, 2021Percent of Total Loans at June 30, 2021Balance at July 22, 2021Percent 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 commercial
71,348 2.53 55,617 1.79 27,173 0.88 
Construction
3,312 1.01 3,337 1.28 2,537 0.98 
Commercial business loans
3,397 0.45 2,301 0.49 1,457 0.31 
Home equity loans and advances
314 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".

    

7

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(In thousands)
June 30,December 31,
20212020
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 


8

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,
2021202020212020
Interest income:
(Unaudited)
(Unaudited)
Loans receivable
$57,683 $65,235 $116,451 $129,253 
Debt securities available for sale and equity securities
7,521 7,292 13,899 14,620 
Debt securities held to maturity
2,151 1,993 3,903 4,058 
Federal funds and interest-earning deposits
39 27 143 216 
Federal Home Loan Bank stock dividends
487 1,040 1,122 2,130 
Total interest income
67,881 75,587 135,518 150,277 
Interest expense:
Deposits
7,855 14,911 16,730 31,743 
Borrowings
1,946 4,805 3,968 11,961 
Total interest expense
9,801 19,716 20,698 43,704 
Net interest income
58,080 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 losses
59,841 50,135 117,861 91,269 
Non-interest income:
Demand deposit account fees
858 620 1,696 1,919 
Bank-owned life insurance
1,497 1,519 2,971 2,936 
Title insurance fees
1,503 996 3,123 2,227 
Loan fees and service charges
714 533 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 loans
8,524 795 10,674 1,549 
Other non-interest income
2,354 1,902 4,804 3,078 
Total non-interest income
14,391 7,008 22,986 13,399 
Non-interest expense:
Compensation and employee benefits
23,601 25,218 46,994 49,683 
Occupancy
4,814 4,701 10,066 9,496 
Federal deposit insurance premiums
567 626 1,147 736 
Advertising
663 447 1,198 1,591 
Professional fees
1,651 1,083 3,441 2,449 
Data processing and software expenses
2,612 2,364 5,383 4,594 
Merger-related expenses
75 432 75 1,507 
Loss on extinguishment of debt— — 742 — 
Other non-interest expense
3,627 2,572 6,267 5,895 
Total non-interest expense
37,610 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 
9

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Average Balances/Yields
 For the Three Months Ended June 30,
20212020
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 %
Securities
2,006,842 9,672 1.93 %1,458,442 9,285 2.56 %
Other interest-earning assets
170,763 526 1.24 %145,677 1,067 2.95 %
Total interest-earning assets
8,401,640 67,881 3.24 %8,233,547 75,587 3.69 %
Non-interest-earning assets
611,674 652,255 
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 accounts
636,964 533 0.34 %485,675 644 0.53 %
Savings and club deposits
745,827 205 0.11 %633,118 279 0.18 %
Certificates of deposit
1,844,425 5,025 1.09 %2,217,765 10,974 1.99 %
Total interest-bearing deposits
5,560,854 7,855 0.57 %5,198,870 14,911 1.15 %
FHLB advances
723,553 1,885 1.04 %1,133,975 4,565 1.62 %
Subordinated notes
— — — %17,438 169 3.90 %
Junior subordinated debentures
7,455 61 3.28 %7,582 67 3.55 %
Other borrowings
— — — %7,692 4 0.21 %
Total borrowings
731,008 1,946 1.07 %1,166,687 4,805 1.66 %
Total interest-bearing liabilities
6,291,862 $9,801 0.62 %6,365,557 $19,716 1.25 %
Non-interest-bearing liabilities:
Non-interest-bearing deposits
1,491,084 1,280,181 
Other non-interest-bearing liabilities
223,021 209,199 
Total liabilities
8,005,967 7,854,937 
Total stockholders' equity
1,007,347 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 liabilities
133.53 %129.35 %

10

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Average Balances/Yields
For the Six Months Ended June 30,
20212020
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 %
Securities
1,810,317 17,802 1.98 %1,422,649 18,678 2.64 %
Other interest-earning assets
309,401 1,265 0.82 %123,686 2,346 3.81 %
Total interest-earning assets
8,312,611 135,518 3.29 %7,960,278 150,277 3.80 %
Non-interest-earning assets
617,780 608,023 
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 accounts
615,101 1,051 0.34 %452,453 1,715 0.76 %
Savings and club deposits
726,846 399 0.11 %588,368 494 0.17 %
Certificates of deposit
1,882,463 11,049 1.18 %2,116,873 21,848 2.08 %
Total interest-bearing deposits
5,518,389 16,730 0.61 %4,966,794 31,743 1.29 %
FHLB advances
733,369 3,846 1.06 %1,250,119 11,456 1.84 %
Subordinated notes
— — — %17,285 336 3.91 %
Junior subordinated debentures
7,518 122 3.27 %7,515 165 4.42 %
Other borrowings
— — — %3,846 4 0.21 %
Total borrowings
740,887 3,968 1.08 %1,278,765 11,961 1.88 %
Total interest-bearing liabilities
6,259,276 $20,698 0.67 %6,245,559 $43,704 1.41 %
Non-interest-bearing liabilities:
Non-interest-bearing deposits
1,449,759 1,120,061 
Other non-interest-bearing liabilities
215,415 197,295 
Total liabilities
7,924,450 7,562,915 
Total stockholders' equity
1,005,941 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 liabilities
132.80 %127.46 %

11

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Components of Net Interest Rate Spread and Margin
Average Yields/Costs by Quarter
June 30, 2021March 31, 2021December 31, 2020September 30, 2020June 30, 2020
Yield on interest-earning assets:
Loans
3.72 %3.87 %3.97 %3.85 %3.96 %
Securities
1.93 2.05 2.30 2.38 2.56 
Other interest-earning assets
1.24 0.67 0.68 1.26 2.95 
Total interest-earning assets
3.24 %3.34 %3.47 %3.50 %3.69 %
Cost of interest-bearing liabilities:
Total interest-bearing deposits
0.57 %0.66 %0.78 %0.96 %1.15 %
Total borrowings
1.07 1.09 1.32 1.41 1.66 
Total interest-bearing liabilities
0.62 %0.71 %0.86 %1.04 %1.25 %
Interest rate spread
2.62 %2.63 %2.61 %2.46 %2.44 %
Net interest margin
2.77 %2.80 %2.81 %2.70 %2.73 %
Ratio of interest-earning assets to interest-bearing liabilities
133.53 %132.06 %130.35 %130.13 %129.35 %


12

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Selected Financial Highlights
 For the Three Months Ended June 30,For the Six Months Ended June 30,
2021202020212020
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,
20212020
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 %

13

ASSET QUALITY:
June 30,
December 31,
20212020
(Dollars in thousands)
Non-accrual loans
$4,314 $8,156 
90+ and still accruing
— — 
Non-performing loans
4,314 8,156 
Real estate owned
— — 
Total non-performing assets
$4,314 $8,156 
Non-performing loans to total gross loans
0.07 %0.13 %
Non-performing assets to total assets
0.05 %0.09 %
Allowance for loan losses
$69,898 $74,676 
Allowance for loan losses to total non-performing loans
1,620.26 %915.60 %
Allowance for loan losses to gross loans
1.17 %1.21 %
Allowance for loan losses to gross loans, excluding SBA PPP loans
1.18 %1.28 %
Unamortized purchase accounting fair value credit marks on acquired loans
$5,228 $6,486 

LOAN DATA:
June 30,
December 31,
20212020
Real estate loans:
(In thousands)
One-to-four family
$1,867,924 $1,940,327 
Multifamily and commercial
3,115,054 2,817,965 
Construction
261,159 328,711 
Commercial business loans *
471,700 752,870 
Consumer loans:
Home equity loans and advances
278,078 321,177 
Other consumer loans
1,158 1,497 
Total gross loans
5,995,073 6,162,547 
Purchased credit-impaired ("PCI") loans
3,116 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.
14

Reconciliation of GAAP to Non-GAAP Financial Measures
Book and Tangible Book Value per Share
June 30,December 31,
20212020
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,
2021202020212020
(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 





















15

Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Return on Average Assets
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
(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,
2021202020212020
(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,
2021202020212020
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 %





16

Reconciliation of GAAP to Non-GAAP Financial Measures (continued)
Efficiency Ratios
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
(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 %


17

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