Columbia Financial, Inc. Announces Financial Results for the Second Quarter Ended June 30, 2020

FAIR LAWN, N.J., July 29, 2020 (GLOBE NEWSWIRE) -- Columbia Financial, Inc. (the “Company”) (NASDAQ: CLBK), the mid-tier holding company for Columbia Bank (the "Bank"), reported net income of $15.1 million, or $0.14 per basic and diluted share, for the quarter ended June 30, 2020, as compared to net income of $12.0 million, or $0.11 per basic and diluted share, for the quarter ended June 30, 2019. Earnings for the three months ended June 30, 2020 reflected higher net interest income driven by asset growth, in part, due to the completion of the Company's acquisitions of Stewardship Financial Corporation and its wholly owned subsidiary, Atlantic Stewardship Bank ("Stewardship"), on November 1, 2019, and Roselle Bank and its parent companies ("Roselle") on April 1, 2020, and due to increases in loans, mainly granted as part of the Small Business Association's ("SBA") Paycheck Protection Program ("PPP"). These increases were partially offset by higher provision for loan losses, non-interest expense and income tax expense.

For the six months ended June 30, 2020, the Company reported net income of $21.9 million, or $0.20 per basic and diluted share, as compared to net income of $27.0 million, or $0.24 per basic and diluted share, for the six months ended June 30, 2019. Earnings for the six months ended June 30, 2020 reflected a higher provision for loan losses and non-interest expense, which was partially offset by higher net interest income.

The higher provision for loan losses for both the three and six months ended June 30, 2020 was primarily attributable to consideration of the deterioration of economic factors and loan performance due to the ongoing COVID-19 pandemic which resulted in increases to qualitative factors, and to a lesser extent, due to growth in the Bank's loan portfolio. The Company elected to defer the adoption of the Current Expected Credit Loss ("CECL") methodology permitted by the recently enacted Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). The Company will adopt CECL at the earlier of December 31, 2020 or when the national emergency has concluded.

Mr. Thomas J. Kemly, President and Chief Executive Officer commented: "Our quarterly results were strong even though we are continuing to operate in a challenging environment, where our focus is on offering support to our customers, employees, and communities. We continue to provide branch services with enhanced sanitary protocols and special senior citizen banking hours and are leveraging our digital capabilities for both customers and our operating divisions of the Bank. We are actively working with our commercial and consumer borrowers to assist them through the pandemic by providing short-term loan modifications and granting loans through the SBA Paycheck Protection Program. We are now working with borrowers to return them to making contractual payments on loans previously deferred and guiding SBA PPP borrowers through the process of obtaining forgiveness. On April 1, 2020 we successfully completed our acquisition of Roselle and subsequently, in July 2020, completed the system conversion related to this acquisition. We continue to pursue prudent strategies within our business plan that result in conservative, disciplined balance sheet growth."

Results of Operations for the Quarters Ended June 30, 2020 and June 30, 2019

Net income of $15.1 million was recorded for the quarter ended June 30, 2020, an increase of $3.1 million, or 25.5%, compared to net income of $12.0 million for the quarter ended June 30, 2019. The increase in net income was primarily attributable to a $15.0 million increase in net interest income and a $233,000 increase in non-interest income, partially offset by a $5.6 million increase in the provision for loan losses, a $5.6 million increase in non-interest expense and a $969,000 increase in income tax expense.

Net interest income was $55.9 million for the quarter ended June 30, 2020, an increase of $15.0 million, or 36.8%, from $40.8 million for the quarter ended June 30, 2019. The increase in net interest income was primarily attributable to a $12.9 million increase in interest income coupled with a $2.2 million decrease in interest expense. The increase in interest income for the quarter ended June 30, 2020 was largely due to increases in the average balances on loans, securities and other interest-earning assets, which was the result of internal growth and the acquisitions of Stewardship and Roselle, partially offset by decreases in the average yields on these assets. Prepayment penalties, which are included in interest income on loans, totaled $964,000 for the quarter ended June 30, 2020 compared to $155,000 for the quarter ended June 30, 2019.

The average yield on loans for the quarter ended June 30, 2020 decreased 18 basis points to 3.96%, as compared to 4.14% for the quarter ended June 30, 2019, while the average yield on securities for the quarter ended June 30, 2020 decreased 33 basis points to 2.56%, as compared to 2.89% for the quarter ended June 30, 2019. The average yield on other interest-earning assets for the quarter ended June 30, 2020 decreased 324 basis points to 2.95%, as compared to 6.19% for the quarter ended June 30, 2019. Decreases in the average yields on these portfolios for the quarter ended June 30, 2020 were influenced by the lower interest rate environment as the Federal Reserve reduced interest rates by 75 basis points in the third and fourth quarters of 2019, and in response to COVID-19, reduced interest rates again by 150 basis points in March 2020.

Total interest expense was $19.7 million for the quarter ended June 30, 2020, a decrease of $2.2 million, or 9.9%, from $21.9 million for the quarter ended June 30, 2019. The decrease in interest expense was primarily attributable to a  41 basis point decrease in the average cost of interest-bearing deposits which more than offset the impact from the increase in the average balance of deposits. The decrease in the cost of deposits was driven by both an inflow of lower costing deposits and the repricing of existing deposits at a significantly reduced rate. Interest on borrowings decreased $1.8 million due to a decrease in the average balance of borrowings coupled with an 84 basis point decrease in the cost of these borrowings due to a lower interest rate environment.

The Company's net interest margin for the quarter ended June 30, 2020 increased 20 basis points to 2.73%, when compared to 2.53% for the quarter ended June 30, 2019. The weighted average yield on interest-earning assets decreased 20 basis points to 3.69% for the quarter ended June 30, 2020 as compared to 3.89% for the quarter ended June 30, 2019. The average cost of interest-bearing liabilities decreased 51 basis points to 1.25% for the quarter ended June 30, 2020 as compared to 1.76% for the quarter ended June 30, 2019. The decrease in yields and costs for the quarter ended June 30, 2020 were largely driven by a lower interest rate environment. The net interest margin increased for the quarter as the cost of interest-bearing liabilities repriced lower more rapidly than the yields on interest-earning assets.

The provision for loan losses was $5.7 million for the quarter ended June 30, 2020, an increase of $5.6 million, from $112,000 for the quarter ended June 30, 2019. The increase was primarily attributable to consideration of the deterioration of economic conditions and loan performance due to the ongoing COVID-19 pandemic which resulted in increases to qualitative factors.

Non-interest income was $7.0 million for the quarter ended June 30, 2020, an increase of $233,000, or 3.4%, from $6.8 million for the quarter ended June 30, 2019.  The increase was primarily attributable to increases in the change in fair value of equity securities of $572,000, gain on sale of loans of $599,000 and other non-interest income of $728,000, partially offset by decreases in demand deposit account fees of $431,000, income from loan fees and service charges of $967,000 and gains on securities transactions of $339,000. The increase in other non-interest income consists of increases in ATM, check card and wealth management related activities. Demand deposit account fees and loan fees and service charges were lower due to the decrease in fees related to customer swaps and the impact of the COVID-19 pandemic, which resulted in higher fee waivers as well as customers carrying higher deposit balances related to government stimulus programs.

Non-interest expense was $37.4 million for the quarter ended June 30, 2020, an increase of $5.6 million, or 17.6%, from $31.8 million for the quarter ended June 30, 2019. The increase was primarily attributable to an increase in compensation and employee benefits expense of $4.9 million, an increase in occupancy expense of $877,000 and an increase in other non-interest expense of $860,000, partially offset by a decrease of $943,000 in advertising expense. The increase in compensation and employee benefits expense was primarily attributable to an increase of $2.2 million in expense recorded in connection with grants made under the Company's 2019 Equity Incentive Plan and an increase in expense due to a larger number of employees in the 2020 period, which included continuing employees of Stewardship and Roselle. During the quarter ended June 30, 2020, the Bank implemented a Voluntary Early Retirement Program which offers early retirement incentives for qualified employees. Employees may elect to retire during the third quarter of 2020 if they meet criteria established under the existing Columbia Bank Retirement Plan, with additional incentives under the program. There have been no expenses related to this program recorded through June 30, 2020, although management anticipates approximately $3.0 million in additional compensation and employee benefits expense related to the program in the third quarter. The increase in occupancy expense was primarily the result of an increase in the number of branch offices acquired from Stewardship and Roselle. In light of our focus during the pandemic of delivering our services digitally, the Bank plans to temporarily suspend de novo branching activities with an increased focus of enhancing digital capabilities. The increase in other non-interest expense includes $1.3 million related to interest rate swap transactions.

Income tax expense was $4.6 million for the quarter ended June 30, 2020, an increase of $1.0 million, as compared to $3.6 million for the quarter ended June 30, 2019. The increase in tax expense is attributable to higher pretax income during the quarter. The Company's effective tax rate was 23.4% and 23.2% for the quarters ended June 30, 2020 and 2019, respectively.

Results of Operations for the Six Months Ended June 30, 2020 and June 30, 2019

Net income of $21.9 million was recorded for the six months ended June 30, 2020, a decrease of $5.1 million, or 18.9%, compared to net income of $27.0 million for the six months ended June 30, 2019. The decrease in net income was primarily attributable to a $14.8 million increase in provision for loan losses and a $14.6 million increase in non-interest expense, partially offset by a $23.3 million increase in net interest income and a $587,000 increase in non-interest income.

Net interest income was $106.6 million for the six months ended June 30, 2020, an increase of $23.3 million, or 28.1%, from $83.2 million for the six months ended June 30, 2019. The increase in net interest income was primarily attributable to a $24.7 million increase in interest income and a $1.3 million increase in interest expense. The increase in interest income for the six months ended June 30, 2020 was largely due to increases in the average balances on loans, securities and other interest-earning assets, which were the result of internal growth and the acquisitions of Stewardship and Roselle, partially offset by decreases in the average yields on these assets. Prepayment penalties, which are included in interest income on loans, totaled $1.6 million for the six months ended June 30, 2020 compared to $877,000 for the six months ended June 30, 2019.

The average yield on loans for the six months ended June 30, 2020 decreased 15 basis points to 4.05%, as compared to 4.20% for the six months ended June 30, 2019, while the average yield on securities for the six months ended June 30, 2020 decreased 27 basis points to 2.64%, as compared to 2.91% for the six months ended June 30, 2019. The average yield on other interest-earning assets for the six months ended June 30, 2020 decreased 259 basis points to 3.81%, as compared to 6.40% for the six months ended June 30, 2019. Decreases in the average yields on these portfolios for the six months ended June 30, 2020 were influenced by the lower interest rate environment.

Total interest expense was $43.7 million for the six months ended June 30, 2020, an increase of $1.3 million, or 3.09%, from $42.4 million for the six months ended June 30, 2019. The increase in interest expense on interest-bearing deposits was primarily attributable to a $1.1 billion increase in average balances, partially offset by a 22 basis point decrease in the average cost of interest-bearing deposits. The decrease in the cost of deposits was driven by both an inflow of lower costing deposits and the repricing of existing deposits at a significantly reduced rate. Interest on borrowings decreased $1.5 million due to a 60 basis point decrease in the cost of these borrowings due to a lower interest rate environment, which was partially offset by an increase in the average balance of borrowings.

The Company's net interest margin for the six months ended June 30, 2020 increased 8 basis points to 2.69%, when compared to 2.61% for the six months ended June 30, 2019. The weighted average yield on interest-earning assets decreased 15 basis points to 3.80% for the six months ended June 30, 2020 as compared to 3.95% for the six months ended June 30, 2019. The average cost of interest-bearing liabilities decreased 31 basis points to 1.41% for the six months ended June 30, 2020 as compared to 1.72% for the six months ended June 30, 2019. The decrease in yields and costs for the six months ended June 30, 2020 were largely driven by a lower interest rate environment. The net interest margin increased for the six months ended June 30, 2020 as the cost of interest-bearing liabilities repriced lower more rapidly than the yields on interest-earning assets.

The provision for loan losses was $15.3 million for the six months ended June 30, 2020, an increase of $14.8 million, from $548,000 for the six months ended June 30, 2019. The increase was primarily attributable to consideration of the deterioration of economic conditions and loan performance due to the ongoing COVID-19 pandemic which resulted in increases to qualitative factors.

Non-interest income was $13.4 million for the six months ended June 30, 2020, an increase of $587,000, or 4.6%, from $12.8 million for the six months ended June 30, 2019.  The increase was primarily attributable to increases in gain on sale of loans of $1.2 million and other non-interest income of $441,000, partially offset by decreases in loan fees and service charges of $1.1 million and a change in fair value of equity securities of $188,000. The increase in gain on sale of loans is due to increased activities related to loan sales, and the increase in other non-interest income consists of increases in ATM, check card and wealth management related activities. Loan fees and service charges were lower due to the decrease in fees related to customer swaps, and the impact of the COVID-19 pandemic which resulted in higher fee waivers.

Non-interest expense was $76.0 million for the six months ended June 30, 2020, an increase of $14.6 million, or 23.7%, from $61.4 million for the six months ended June 30, 2019. The increase was primarily attributable to an increase in compensation and employee benefits expense of $9.8 million, occupancy expense of $1.8 million and other non-interest expense of $3.2 million. The increase in compensation and employee benefits expense was primarily attributable to an increase of $4.4 million in expense recorded in connection with grants made under the Company's 2019 Equity Incentive Plan and an increase in expense due to a larger number of employees in the 2020 period, which included continuing employees of Stewardship and Roselle. As noted above, during the period ended June 30, 2020, the Bank implemented a Voluntary Early Retirement Program for qualified employees. There have been no expenses related to this program recorded through June 30, 2020, although management anticipates approximately $3.0 million in additional compensation and employee benefits expense related to the program in the third quarter. The increase in occupancy expense was primarily the result of an increase in the number of branch offices acquired from Stewardship and Roselle, and the increase in other non-interest expense was due to losses of $1.3 million recorded in connection with the branch consolidation resulting from the Stewardship merger and includes $2.2 million related to interest rate swap transactions. In light of our focus during the pandemic on delivering our services digitally, the Bank plans to temporarily suspend de novo branching activities with an increased focus on enhancing digital capabilities.

Balance Sheet Summary

Total assets increased $774.5 million, or 9.5%, to $9.0 billion at June 30, 2020 from $8.2 billion at December 31, 2019. The increase in total assets was primarily attributable to increases in cash and cash equivalents of $150.3 million, debt securities available for sale of $79.6 million, loans receivable, net, of $430.0 million, bank-owned life insurance of $20.2 million, goodwill and intangible assets of $24.1 million and other assets of $71.4 million.

Cash and cash equivalents increased $150.3 million, or 199.0% to $225.9 million at June 30, 2020 from $75.5 million at December 31, 2019. The increase was primarily attributable to $155.2 million in cash acquired due to the Roselle merger, higher prepayments of loans and strong growth in deposits, partially offset by $53.4 million in repurchases of common stock under our stock repurchase program.

Debt securities available for sale increased $79.6 million, or 7.2%, to $1.2 billion at June 30, 2020 from $1.1 billion at December 31, 2019. The increase was attributable to $51.5 million of investments acquired in the Roselle merger, purchases of $111.1 million in mortgage-backed securities, partially offset by maturities and calls of $12.4 million in U.S. agency obligations and municipal securities, repayments of $82.4 million, and sales of $20.8 million. The gross unrealized gain on debt securities available for sale increased by $32.8 million during the six months ended June 30, 2020.

Loans receivable, net, increased $430.0 million, or 7.0%, to $6.6 billion at June 30, 2020 from $6.1 billion at December 31, 2019. The increase included $171.6 million of loans which were acquired due to the Roselle merger mainly consisting of one-to-four family real estate loans. The increases in one-to-four family real estate loans, construction and commercial business loans of $87.1 million, $27.4 million, and $416.3 million, respectively, were partially offset by decreases in multifamily and commercial real estate and home equity loans and advances of $46.0 million and $28.3 million, respectively. A significant portion of the increase in commercial business loans included loans granted as part of the SBA Paycheck Protection Program, which totaled $467.0 million at June 30, 2020. The allowance for loan loss balance increased $12.3 million to $74.0 million at June 30, 2020 from $61.7 million at December 31, 2019, which was primarily attributable to consideration of the deterioration of economic conditions and loan performance due to the ongoing COVID-19 pandemic resulting from increases to qualitative factors. The current allowance for loan losses was calculated utilizing the existing incurred loss methodology.

Bank-owned life insurance increased $20.2 million, or 9.5%, to $231.6 million at June 30, 2020 from $211.4 million at December 31, 2019.  The increase was primarily attributable to $17.2 million acquired in connection with the Roselle merger.

Goodwill and intangible assets increased $24.1 million, or 35.1%, to $92.6 million at June 30, 2020 from $68.6 million at December 31, 2019. The increase was primarily attributable to $23.8 million in goodwill recorded in connection with the Roselle merger.

Other assets increased $71.4 million, or 49.0%, to $217.1 million at June 30, 2020 from $145.7 million at December 31, 2019.  The increase in other assets consisted of a $20.8 million balance of a right-of-use asset recognized in connection with the adoption of Accounting Standards Update ("ASU") 2016-02-Leases, a $31.5 million increase in the collateral balance related to our swap agreement obligations, and a $17.2 million increase in interest rate swap fair value adjustments.

Total liabilities increased $716.0 million, or 9.9%, to $7.9 billion at June 30, 2020 from $7.2 billion at December 31, 2019. The increase was primarily attributable to an increase in total deposits of $935.3 million, or 16.6%, and an increase in accrued expenses and other liabilities of $56.6 million, or 48.0%, partially offset by a decrease in borrowings of $277.0 million, or 19.7%. The increase in total deposits was primarily driven by $333.2 million in deposits assumed due to the Roselle merger and increases in non-interest-bearing and interest-bearing demand deposits of $358.1 million and $205.6 million, respectively, which were mainly related to borrowers depositing funds received from SBA PPP loans into their business accounts. Money market accounts, savings and club deposits, and certificates of deposits also increased $91.6 million, $109.1 million and $170.9 million, respectively, during the period. The increase in accrued expenses and other liabilities consisted of a $21.9 million balance of the lease liability recognized in connection with the adoption of ASU 2016-02-Leases, and a $32.9 million increase in interest rate swap liabilities. The decrease in borrowings was primarily driven by maturing long-term borrowings of $116.5 million and a net decrease in short-term borrowings of $287.8 million, partially offset by new long-term borrowings of $90.0 million and $ 37.7 million in borrowings assumed from Roselle.

Total stockholders’ equity increased $58.5 million, or 6.0%, to $1.0 billion at June 30, 2020 from $982.5 million at December 31, 2019. The net increase was primarily attributable to net income of $21.9 million, an increase in additional capital of $68.5 million due to the issuance of 4,759,048 shares of Company common stock to Columbia Bank MHC related to the Roselle merger, and improved fair values on debt securities within our available for sale portfolio of $25.9 million, partially offset by the repurchase of approximately 3,456,200 shares of common stock totaling $53.4 million under our stock repurchase program. The repurchases under the stock repurchase program were completed in April 2020.

Asset Quality

The Company's non-performing loans at June 30, 2020 totaled $13.5 million, or 0.20% of total gross loans, as compared to $6.7 million, or 0.11% of total gross loans, at December 31, 2019. The $6.8 million increase in non-performing loans was primarily attributable to increases of $3.4 million in one-to-four family real estate loans, $1.7 million in multifamily and commercial real estate loans and $1.8 million in commercial business loans. The increase in non-performing one-to-four family real estate loans was due to an increase in the number of loans from 10 non-performing loans at December 31, 2019 to 27 non-performing loans at June 30, 2020. The increase in multifamily and commercial real estate loans was due to an increase in the number of loans from seven non-performing loans at December 31, 2019 to 12 non-performing loans at June 30, 2020. The increase in non-performing commercial business loans included the addition of a $1.1 million commercial loan during the period. Non-performing assets as a percentage of total assets totaled 0.15% at June 30, 2020 as compared to 0.08% at December 31, 2019.

For the quarter ended June 30, 2020, net charge-offs totaled $2.9 million as compared to $480,000 for the quarter ended June 30, 2019.  For the six months ended June 30, 2020, net charge-offs totaled $3.0 million as compared to $487,000 for the six months ended June 30, 2019.  The increase in net charge-offs during the three and six month periods was primarily attributable to a $2.8 million charge-off of one commercial business loan.

The Company's allowance for loan losses was $74.0 million, or 1.12% of total loans, at June 30, 2020, compared to $61.7 million, or 1.00% of total loans, at December 31, 2019. The increase in the allowance for loan losses is primarily attributable to consideration of economic conditions and loan performance due to the ongoing COVID-19 pandemic which resulted in increases to qualitative factors and, to a lesser extent, due to the growth in the Bank's loan portfolio.

COVID-19

Through June 30, 2020, the Company granted $768.0 million of commercial loan modification requests with respect to multifamily, commercial, and construction real estate loans, and $195.0 million of consumer-related loan modification requests with respect to one-to-four family real estate loans and home equity loans and advances from 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 at December 31, 2019. 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 as of July 21, 2020:

  Balance at July 21, 2020 Percent of Total Loans at June 30, 2020
 (Dollars in thousands)  
Real estate loans:   
One-to-four family$73,502  3.40%
Multifamily and commercial447,925  15.59%
Construction13,525  4.14%
Commercial business loans34,059  3.79%
Home equity loans and advances8,427  2.34%
Total loans$577,438  8.72%

At July 21, 2020, $248.0 million of the commercial loans in the above table are remitting partial payments and $162.0 million were granted an additional deferral period.

At June 30, 2020, the Company had originated 2,284 loans for $467.0 million under the SBA Paycheck Protection Program. Approximately eighty-one percent of the total number of loans granted have original balances of $250,000 or less.

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 66 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, 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 as supplemented  by its Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission (the “SEC”), which are available at the SEC’s website, www.sec.gov. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Columbia Financial, Inc.’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 in question. 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,
 2020 2019
Assets(Unaudited)  
Cash and due from banks$225,743  $75,420 
Short-term investments138  127 
Total cash and cash equivalents225,881  75,547 
    
Debt securities available for sale, at fair value1,177,925  1,098,336 
Debt securities held to maturity, at amortized cost (fair value of $289,836, and $289,505 at June 30, 2020 and December 31, 2019, respectively)273,997  285,756 
Equity securities, at fair value4,710  2,855 
Federal Home Loan Bank stock57,843  69,579 
Loans held-for-sale, at fair value9,639   
    
Loans receivable6,639,874  6,197,566 
Less: allowance for loan losses74,015  61,709 
Loans receivable, net6,565,859  6,135,857 
    
Accrued interest receivable28,414  22,092 
Office properties and equipment, net77,588  72,967 
Bank-owned life insurance231,596  211,415 
Goodwill and intangible assets92,642  68,582 
Other assets217,098  145,708 
Total assets$8,963,192  $8,188,694 
    
Liabilities and Stockholders' Equity   
Liabilities:   
Deposits$6,581,109  $5,645,842 
Borrowings1,129,979  1,407,022 
Advance payments by borrowers for taxes and insurance36,706  35,507 
Accrued expenses and other liabilities174,410  117,806 
Total liabilities7,922,204  7,206,177 
    
Stockholders' equity:   
Total stockholders' equity1,040,988  982,517 
Total liabilities and stockholders' equity$8,963,192  $8,188,694 


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,
 2020 2019 2020 2019
Interest income:(Unaudited) (Unaudited)
Loans receivable$65,235  $51,709  $129,253  $103,969 
Debt securities available for sale and equity securities7,292  7,900  14,620  15,559 
Debt securities held to maturity1,993  2,115  4,058  4,022 
Federal funds and interest-earning deposits27  134  216  223 
Federal Home Loan Bank stock dividends1,040  874  2,130  1,846 
Total interest income75,587  62,732  150,277  125,619 
Interest expense:       
Deposits14,911  15,250  31,743  28,929 
Borrowings4,805  6,639  11,961  13,463 
Total interest expense19,716  21,889  43,704  42,392 
        
Net interest income55,871  40,843  106,573  83,227 
        
Provision for loan losses5,736  112  15,304  548 
        
Net interest income after provision for loan losses50,135  40,731  91,269  82,679 
        
Non-interest income:       
Demand deposit account fees620  1,051  1,919  2,010 
Bank-owned life insurance1,519  1,345  2,936  2,665 
Title insurance fees996  1,099  2,227  2,140 
Loan fees and service charges533  1,500  1,261  2,320 
Gain on securities transactions0  339  370  465 
Change in fair value of equity securities643  71  59  247 
Gain on sale of loans795  196  1,549  328 
Other non-interest income1,902  1,174  3,078  2,637 
Total non-interest income7,008  6,775  13,399  12,812 
        
Non-interest expense:       
Compensation and employee benefits25,218  20,343  49,683  39,923 
Occupancy4,701  3,824  9,496  7,655 
Federal deposit insurance premiums626  462  736  887 
Advertising447  1,390  1,591  2,778 
Professional fees1,083  1,431  2,449  2,678 
Data processing816  669  1,581  1,307 
Merger-related expenses432  462  1,507  462 
Other non-interest expense4,120  3,260  8,908  5,710 
Total non-interest expense37,443  31,841  75,951  61,400 
        
Income before income tax expense19,700  15,665  28,717  34,091 
        
Income tax expense4,603  3,634  6,855  7,141 
        
Net income$15,097  $12,031  $21,862  $26,950 
        
Earnings per share-basic and diluted$0.14  $0.11  $0.20  $0.24 
Weighted average shares outstanding-basic and diluted111,102,306  111,553,203  109,770,239  111,544,339 


 COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Average Balances/Yields

 For the Three Months Ended June 30,
 2020 2019
 Average Balance Interest and Dividends Yield / Cost Average Balance Interest and Dividends Yield / Cost
 (Dollars in thousands)
Interest-earnings assets:           
Loans$6,629,428  $65,235  3.96% $5,012,533  $51,709  4.14%
Securities1,458,442  9,285  2.56% 1,391,009  10,015  2.89%
Other interest-earning assets145,677  1,067  2.95% 65,348  1,008  6.19%
Total interest-earning assets8,233,547  75,587  3.69% 6,468,890  62,732  3.89%
Non-interest-earning assets652,255      370,746     
Total assets$8,885,802      $6,839,636     
            
Interest-bearing liabilities:           
Interest-bearing demand$1,862,312  $3,014  0.65% $1,355,796  $4,432  1.31%
Money market accounts485,675  644  0.53% 261,110  516  0.79%
Savings and club deposits633,118  279  0.18% 490,271  190  0.16%
Certificates of deposit2,217,765  10,974  1.99% 1,816,313  10,112  2.23%
Total interest-bearing deposits5,198,870  14,911  1.15% 3,923,490  15,250  1.56%
FHLB advances1,133,975  4,565  1.62% 1,066,725  6,639  2.50%
Subordinated notes17,438  169  3.90%     %
Junior subordinated debentures7,582  67  3.55%     %
Other borrowings7,692  4  0.21%     %
Total borrowings1,166,687  4,805  1.66% 1,066,725  6,639  2.50%
Total interest-bearing liabilities6,365,557  $19,716  1.25% 4,990,215  $21,889  1.76%
            
Non-interest-bearing liabilities:           
Non-interest-bearing deposits1,280,181      725,684     
Other non-interest-bearing liabilities209,199      119,913     
Total liabilities7,854,937      5,835,812     
Total stockholders' equity1,030,865      1,003,824     
Total liabilities and stockholders' equity$8,885,802      $6,839,636     
            
Net interest income  $55,871      $40,843   
Interest rate spread    2.44%     2.13%
Net interest-earning assets$1,867,990      $1,478,675     
Net interest margin    2.73%     2.53%
Ratio of interest-earning assets to interest-bearing liabilities129.35%     129.63%    

 COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Average Balances/Yields

 For the Six Months Ended June 30,
 2020 2019
 Average Balance Interest and Dividends Yield / Cost Average Balance Interest and Dividends Yield / Cost
 (Dollars in thousands)
Interest-earnings assets:           
Loans$6,413,943  $129,253  4.05% $4,997,253  $103,969  4.20%
Securities1,422,649  18,678  2.64% 1,357,565  19,581  2.91%
Other interest-earning assets123,686  2,346  3.81% 65,152  2,069  6.40%
Total interest-earning assets7,960,278  150,277  3.80% 6,419,970  125,619  3.95%
Non-interest-earning assets608,023      369,779     
Total assets$8,568,301      $6,789,749     
            
Interest-bearing liabilities:           
Interest-bearing demand$1,809,100  $7,686  0.85% $1,337,477  $8,649  1.30%
Money market accounts452,453  1,715  0.76% 259,730  958  0.74%
Savings and club deposits588,368  494  0.17% 496,851  386  0.16%
Certificates of deposit2,116,873  21,848  2.08% 1,770,836  18,936  2.16%
Total interest-bearing deposits4,966,794  31,743  1.29% 3,864,894  28,929  1.51%
FHLB advances1,250,119  11,456  1.84% 1,092,542  13,463  2.48%
Subordinated notes17,285  336  3.91%     %
Junior subordinated debentures7,515  165  4.42%     %
Other borrowings3,846  4  0.21%     %
Total borrowings1,278,765  11,961  1.88% 1,092,542  13,463  2.48%
Total interest-bearing liabilities6,245,559  $43,704  1.41% 4,957,436  $42,392  1.72%
            
Non-interest-bearing liabilities:           
Non-interest-bearing deposits1,120,061      722,130     
Other non-interest-bearing liabilities197,295      118,415     
Total liabilities7,562,915      5,797,981     
Total stockholders' equity1,005,386      991,768     
Total liabilities and stockholders' equity$8,568,301      $6,789,749     
            
Net interest income  $106,573      $83,227   
Interest rate spread    2.39%     2.23%
Net interest-earning assets$1,714,719      $1,462,534     
Net interest margin    2.69%     2.61%
Ratio of interest-earning assets to interest-bearing liabilities127.46%     129.50%    


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

 Average Yields/Costs by Quarter
 June 30, 2020 March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019
Yield on interest-earning assets:         
Loans3.96% 4.15% 4.14% 4.16% 4.14%
Securities2.56  2.72  2.73  2.79  2.89 
Other interest-earning assets2.95  5.06  4.87  6.10  6.19 
Total interest-earning assets3.69% 3.91% 3.87% 3.89% 3.89%
          
Cost of interest-bearing liabilities:         
Total interest-bearing deposits1.15% 1.43% 1.48% 1.60% 1.56%
Total borrowings1.66  2.07  2.21  2.40  2.50 
Total interest-earning liabilities1.25% 1.58% 1.64% 1.77% 1.76%
          
Interest rate spread2.44% 2.33% 2.23% 2.12% 2.13%
Net interest margin2.73% 2.65% 2.59% 2.52% 2.53%
          
Ratio of interest-earning assets to interest-bearing liabilities129.35% 125.49% 127.34% 129.63% 129.63%



  COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Selected Financial Highlights

        
 For the Three Months Ended June 30, For the Six Months Ended June 30,
 2020 2019 2020 2019
SELECTED FINANCIAL RATIOS (1):       
Return on average assets0.68% 0.71% 0.51% 0.80%
Core return on average assets0.70% 0.71% 0.55% 0.80%
Return on average equity5.89% 4.81% 4.37% 5.48%
Core return on average equity6.03% 4.84% 4.72% 5.48%
Interest rate spread2.44% 2.13% 2.39% 2.23%
Net interest margin2.73% 2.53% 2.69% 2.61%
Non-interest expense to average assets1.69% 1.87% 1.78% 1.82%
Efficiency ratio59.55% 66.87% 63.31% 63.93%
Core efficiency ratio58.86% 66.37% 61.26% 63.76%
Average interest-earning assets to average interest-bearing liabilities129.35% 129.63% 127.46% 129.50%
Net charge-offs to average outstanding loans0.18% 0.04% 0.09% 0.02%
        
(1) Ratios for the three months are annualized when appropriate.       


CAPITAL RATIOS:   
 June 30, December 31,
 2020 2019
Company:   
Total capital (to risk-weighted assets)18.22% 17.25%
Tier 1 capital (to risk-weighted assets)16.79% 16.05%
Common equity tier 1 capital (to risk-weighted assets)16.67% 15.94%
Tier 1 capital (to adjusted total assets)11.56% 12.92%
    
Bank:   
Total capital (to risk-weighted assets)15.58% 14.25%
Tier 1 capital (to risk-weighted assets)14.33% 13.21%
Common equity tier 1 capital (to risk-weighted assets)14.33% 13.21%
Tier 1 capital (to adjusted total assets)9.79% 10.25%


ASSET QUALITY:   
 June 30, December 31,
 2020 2019
 (Dollars in thousands)
Non-accrual loans$13,502  $6,687 
90+ and still accruing   
Non-performing loans13,502  6,687 
Real estate owned   
Total non-performing assets$13,502  $6,687 
    
Non-performing loans to total gross loans0.20% 0.11%
Non-performing assets to total assets0.15% 0.08%
Allowance for loan losses$74,015  $61,709 
Allowance for loan losses to total non-performing loans548.18% 922.82%
Allowance for loan losses to gross loans1.12% 1.00%
Allowance for loan losses to gross loans, excluding SBA PPP loans1.20% %
Unamortized purchase accounting fair value credit marks on acquired loans$4,660  $ 


LOAN DATA:   
 June 30, December 31,
 2020 2019
Real estate loans:(In thousands)
One-to-four family$2,164,185  $2,077,079 
Multifamily and commercial2,874,019  2,919,985 
Construction326,343  298,942 
Commercial business loans *899,506  483,215 
Consumer loans:   
Home equity loans and advances359,813  388,127 
Other consumer loans1,600  1,960 
Total gross loans6,625,466  6,169,308 
Purchased credit-impaired ("PCI") loans6,881  7,021 
Net deferred loan costs, fees and purchased premiums and discounts **7,527  21,237 
Allowance for loan losses(74,015) (61,709)
Loans receivable, net$6,565,859  $6,135,857 
    
*  At June 30, 2020 includes SBA PPP loans totaling $467.0 million.   
** At June 30, 2020 includes SBA PPP net deferred loan fees totaling $13.5 million.   


Reconciliation of GAAP to Non-GAAP Financial Measures
    
Book and Tangible Book Value per Share
 June 30, December 31,
 2020 2019
    
Total stockholders' equity$1,040,988  $982,517 
Less: goodwill(85,426) (60,763)
Less: core deposit intangible(6,731) (7,245)
Total tangible stockholders' equity$948,831  $914,509 
    
Shares outstanding115,067,114  113,765,387 
    
Book value per share$9.05  $8.64 
Tangible book value per share$8.25  $8.04 


Reconciliation of Core Net Income       
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 2020 2019
 (In thousands)
        
Net income$15,097  $12,031  $21,862  $26,950 
Less: gain on securities transactions, net of tax  (260) (279) (360)
Add: merger-related expenses, net of tax366  355  1,184  355 
Add: branch closure expenses, net of tax    878   
Core net income$15,463  $12,126  $23,645  $26,945 


Return on Average Assets       
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 2020 2019
 (Dollars in thousands)
        
Net income$15,097  $12,031  $21,862  $26,950 
        
Average assets$8,885,802  $6,839,636  $8,568,301  $6,789,749 
        
Return on average assets0.68% 0.71% 0.51% 0.80%
        
Core net income$15,463  $12,126  $23,645  $26,945 
        
Core return on average assets0.70% 0.71% 0.55% 0.80%

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

Return on Average Equity       
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 2020 2019
 (Dollars in thousands)
        
Total average stockholders' equity$1,030,865  $1,003,824  $1,005,386  $991,768 
Less: gain on securities transactions, net of tax  (260) (279) (360)
Add: merger-related expenses, net of tax366  355  1,184  355 
Add: branch closure expenses, net of tax    878   
Core average stockholders' equity$1,031,231  $1,003,919  $1,007,169  $991,763 
        
Return on average equity5.89% 4.81% 4.37% 5.48%
        
Core return on core average equity6.03% 4.84% 4.72% 5.48%


Efficiency Ratios       
 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 2020 2019
 (Dollars in thousands)
        
Net interest income$55,871  $40,843  $106,573  $83,227 
Non-interest income7,008  6,775  13,399  12,812 
Total income$62,879  $47,618  $119,972  $96,039 
        
Non-interest expense$37,443  $31,841  $75,951  $61,400 
        
Efficiency ratio59.55% 66.87% 63.31% 63.93%
        
Non-interest income$7,008  $6,775  $13,399  $12,812 
Less: gain on securities transactions  (339) (370) (465)
Core non-interest income$7,008  $6,436  $13,029  $12,347 
        
Non-interest expense$37,443  $31,841  $75,951  $61,400 
Less: merger-related expenses(432) (462) (1,507) (462)
Less: branch closure expenses    (1,170)  
Core non-interest expense$37,011  $31,379  $73,274  $60,938 
        
Core efficiency ratio58.86% 66.37% 61.26% 63.76%

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