CLBK
$15.00
Columbia Financial
$.47
3.23%
Earnings Details
3rd Quarter September 2020
Thursday, October 29, 2020 4:01:00 PM
Tweet Share Watch
Summary

Columbia Financial (CLBK) Recent Earnings

Columbia Financial (CLBK) reported 3rd Quarter September 2020 earnings of $0.16 per share on revenue of $80.8 million. The consensus earnings estimate was $0.13 per share on revenue of $62.0 million. Revenue grew 8.4% on a year-over-year basis.

Results
Reported Earnings
$0.16
Earnings Whisper
-
Consensus Estimate
$0.13
Reported Revenue
$80.8 Mil
Revenue Estimate
$62.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Columbia Financial, Inc. Announces Financial Results for the Third Quarter Ended September 30, 2020

FAIR LAWN, N.J., Oct. 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 September 30, 2020, as compared to net income of $14.2 million, or $0.13 per basic and diluted share, for the quarter ended September 30, 2019. Earnings for the quarter ended September 30, 2020 reflected higher net interest income, partially offset by higher provision for loan losses and non-interest expense. During the quarter ended September 30, 2020, the Company recognized $3.0 million in expenses related to a voluntary employee retirement program completed during the quarter. Excluding the after tax impact of the voluntary employee retirement program and merger expenses, the Company's core net income was $17.7 million.

For the nine months ended September 30, 2020, the Company reported net income of $36.9 million, or $0.34 per basic and diluted share, as compared to net income of $41.2 million, or $0.37 per basic and diluted share, for the nine months ended September 30, 2019. Earnings for the nine months ended September 30, 2020 reflected higher net interest income, offset by a combination of a higher provision for loan losses and non-interest expense.

The higher provision for loan losses for both the three and nine months ended September 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 expects to adopt CECL on December 31, 2020.

Mr. Thomas J. Kemly, President and Chief Executive Officer commented: "During these times of economic uncertainty and margin pressure, I am pleased with our strong results and believe we are well positioned for future success because of our strong capital position and balance sheet. Lowering our cost of funds and expense discipline remain priorities going into the fourth quarter. We continue to assist those adversely impacted by COVID-19 and I am proud of our commitment to our customers, employees and communities. The system conversion related to our acquisition of Roselle Bank ("Roselle") was successfully completed in July 2020."

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

Net income of $15.1 million was recorded for the quarter ended September 30, 2020, an increase of $869,000, or 6.1%, compared to net income of $14.2 million for the quarter ended September 30, 2019. The increase in net income was primarily attributable to a $14.6 million increase in net interest income partially offset by a $2.2 million decrease in non-interest income, a $1.4 million increase in the provision for loan losses, and a $10.3 million increase in non-interest expense.

Net interest income was $56.3 million for the quarter ended September 30, 2020, an increase of $14.6 million, or 35.0%, from $41.7 million for the quarter ended September 30, 2019. The increase in net interest income was primarily attributable to an $8.5 million increase in interest income, compounded by a $6.1 million decrease in interest expense. The increase in interest income for the quarter ended September 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 Financial Corporation ("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 $380,000 for the quarter ended September 30, 2020, compared to $758,000 for the quarter ended September 30, 2019.

The average yield on loans for the quarter ended September 30, 2020 decreased 31 basis points to 3.85%, as compared to 4.16% for the quarter ended September 30, 2019, while the average yield on securities for the quarter ended September 30, 2020 decreased 41 basis points to 2.38%, as compared to 2.79% for the quarter ended September 30, 2019. The average yield on other interest-earning assets for the quarter ended September 30, 2020 decreased 484 basis points to 1.26%, as compared to 6.10% for the quarter ended September 30, 2019, as there were substantially higher cash balances in low yielding bank accounts  in the 2020 period. Decreases in the average yields on these portfolios for the quarter ended September 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 $16.6 million for the quarter ended September 30, 2020, a decrease of $6.1 million, or 26.9%, from $22.7 million for the quarter ended September 30, 2019. The decrease in interest expense was primarily attributable to a 64 basis point decrease in the average cost of interest-bearing deposits which was partially offset by 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 lower interest rates. Interest on borrowings decreased $2.9 million due to a decrease in the average balance of borrowings coupled with a 99 basis point decrease in the cost of these borrowings due to a lower interest rate environment. During the quarter, excess liquidity was used to repay long-term high rate borrowings as they matured.

The Company's net interest margin for the quarter ended September 30, 2020 increased 18 basis points to 2.70%, when compared to 2.52% for the quarter ended September 30, 2019. The weighted average yield on interest-earning assets decreased 39 basis points to 3.50% for the quarter ended September 30, 2020 as compared to 3.89% for the quarter ended September 30, 2019. The average cost of interest-bearing liabilities decreased 73 basis points to 1.04% for the quarter ended September 30, 2020 as compared to 1.77% for the quarter ended September 30, 2019. The decreases in yields and costs for the quarter ended September 30, 2020 were largely driven by a continued 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 $2.5 million for the quarter ended September 30, 2020, an increase of $1.4 million, from $1.2 million for the quarter ended September 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 risk factors.

Non-interest income was $7.9 million for the quarter ended September 30, 2020, a decrease of $2.2 million, or 21.8%, from $10.1 million for the quarter ended September 30, 2019.  The decrease is primarily attributable to a $2.5 million decrease in loan fees and service charges during the quarter and a $1.3 million decrease in gain on securities transactions, partially offset by a $1.5 million increase in gain on sale of loans. 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. 

Non-interest expense was $41.4 million for the quarter ended September 30, 2020, an increase of $10.3 million, or 33.2%, from $31.1 million for the quarter ended September 30, 2019. The increase was primarily attributable to an increase in compensation and employee benefits expense of $5.3 million, an increase in occupancy expense of $850,000, and an increase in other non-interest expense of $3.6 million. The increase in compensation and employee benefits expense was primarily attributable to an increase of $3.0 million in expense recorded in connection with the voluntary early retirement program which offered early retirement incentives for qualified employees. The increase in occupancy expense was primarily the result of an increase in the number of branch offices acquired from Stewardship and Roselle. The increase in other non-interest expense includes $1.9 million related to interest rate swap transactions.

Income tax expense was $5.3 million for the quarter ended September 30, 2020, a decrease of $140,000, or 1.0%, as compared to $5.4 million for the quarter ended September 30, 2019. The Company's effective tax rate was 25.8% and 27.5% for the quarters ended September 30, 2020 and 2019, respectively.

Results of Operations for the Nine Months Ended September 30, 2020 and September 30, 2019

Net income of $36.9 million was recorded for the nine months ended September 30, 2020, a decrease of $4.2 million, or 10.2%, compared to net income of $41.2 million for the nine months ended September 30, 2019. The decrease in net income was primarily attributable to a $16.1 million increase in provision for loan losses and a $24.9 million increase in non-interest expense, partially offset by a $38.0 million increase in net interest income.

Net interest income was $162.9 million for the nine months ended September 30, 2020, an increase of $38.0 million, or 30.4%, from $124.9 million for the nine months ended September 30, 2019. The increase in net interest income was primarily attributable to a $33.2 million increase in interest income and a $4.8 million decrease in interest expense. The increase in interest income for the nine months ended September 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 $2.0 million for the nine months ended September 30, 2020, compared to $1.6 million for the nine months ended September 30, 2019.

The average yield on loans for the nine months ended September 30, 2020 decreased 20 basis points to 3.98%, as compared to 4.18% for the nine months ended September 30, 2019, while the average yield on securities for the nine months ended September 30, 2020 decreased 32 basis points to 2.55%, as compared to 2.87% for the nine months ended September 30, 2019. The average yield on other interest-earning assets for the nine months ended September 30, 2020 decreased 385 basis points to 2.45%, as compared to 6.30% for the nine months ended September 30, 2019. Decreases in the average yields on these portfolios for the nine months ended September 30, 2020 were influenced by the lower interest rate environment.   

Total interest expense was $60.3 million for the nine months ended September 30, 2020, a decrease of $4.8 million, or 7.37%, from $65.1 million for the nine months ended September 30, 2019. The decrease in interest expense on deposits was primarily attributable to a 37 basis point decrease in the average cost of interest-bearing deposits which was partially offset by 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 $4.4 million due to a 72 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 nine months ended September 30, 2020 increased 12 basis points to 2.70%, when compared to 2.58% for the nine months ended September 30, 2019. The weighted average yield on interest-earning assets decreased 24 basis points to 3.69% for the nine months ended September 30, 2020 as compared to 3.93% for the nine months ended September 30, 2019. The average cost of interest-bearing liabilities decreased 46 basis points to 1.28% for the nine months ended September 30, 2020 as compared to 1.74% for the nine months ended September 30, 2019. The decreases in yields and costs for the nine months ended September 30, 2020 were largely driven by a lower interest rate environment. The net interest margin increased for the nine months ended September 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 $17.8 million for the nine months ended September 30, 2020, an increase of $16.1 million, from $1.7 million for the nine months ended September 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 $21.3 million for the nine months ended September 30, 2020, a decrease of $1.6 million, or 7.1%, from $22.9 million for the nine months ended September 30, 2019.  The decrease was primarily attributable to decreases in loan fees and service charges of $3.5 million and gain on securities transactions of $1.4 million partially offset by increases in gain on sale of loans of $2.7 million and other non-interest income of $1.1 million. 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. 

Non-interest expense was $117.3 million for the nine months ended September 30, 2020, an increase of $24.9 million, or 26.9%, from $92.5 million for the nine months ended September 30, 2019. The increase was primarily attributable to an increase in compensation and employee benefits expense of $15.1 million, occupancy expense of $2.7 million, and other non-interest expense of $6.8 million. The increase in compensation and employee benefits expense was primarily attributable to an increase of $4.6 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. In addition, $3.0 million in expense was recorded in connection with the voluntary early retirement program which offered early retirement incentives for qualified employees. 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 also includes $4.0 million related to interest rate swap transactions.

Income tax expense was $12.1 million for the nine months ended September 30, 2020, a decrease of $427,000, or 3.4%, as compared to $12.5 million for the nine months ended September 30, 2019. The Company's effective tax rate was 24.7% and 23.3% for the nine months ended September 30, 2020 and 2019, respectively.

Balance Sheet Summary

Total assets increased $676.8 million, or 8.3%, to $8.9 billion at September 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 $190.3 million, debt securities available for sale of $147.0 million, loans receivable, net, of $256.9 million, bank-owned life insurance of $21.7 million, goodwill and intangible assets of $23.9 million, and other assets of $47.1 million, partially offset by decreases of $13.0 million  in securities held to maturity and $16.2 million in Federal Home Loan Bank stock.

Cash and cash equivalents increased $190.3 million, or 252.0% to $265.9 million at September 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, and strong growth in deposits, partially offset by $60.3 million in repurchases of common stock under our stock repurchase program.

Debt securities available for sale increased $147.0 million, or 13.4%, to $1.2 billion at September 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 and purchases of $201.5 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 $149.8 million, and sales of $20.8 million. The gross unrealized gain on debt securities available for sale increased by $29.7 million during the nine months ended September 30, 2020.

Loans receivable, net, increased $256.9 million, or 4.2%, to $6.4 billion at September 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, which mainly consisted of one-to-four family real estate loans. The increases in construction and commercial business loans of $8.7 million, and $401.7 million, respectively, were partially offset by decreases in one-to-four family real estate loans, multifamily and commercial real estate and home equity loans and advances of $23.8 million, $56.3 million and $47.2 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 $474.9 million at September 30, 2020. The allowance for loan loss balance increased $14.4 million to $76.1 million at September 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 $21.7 million, or 10.3%, to $233.1 million at September 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 $23.9 million, or 34.9%, to $92.5 million at September 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 $47.1 million, or 32.4%, to $192.8 million at September 30, 2020 from $145.7 million at December 31, 2019.  The increase in other assets consisted of a $19.9 million balance of a right-of-use asset recognized in connection with the adoption of Accounting Standards Update 2016-02-Leases ("ASU 2016-02"), a $28.7 million increase in the collateral balance related to our swap agreement obligations, and a $16.2 million increase in interest rate swap fair value adjustments, partially offset by a decrease of $26.8 million in the Company's prepaid pension plan balance. An adjustment of $43.6 million was made to the Company's pension plan balance reflecting the revaluation impact related to the voluntary employee retirement program, partially offset by a $12.0 million contribution made to the plan in September 2020.

Total liabilities increased $642.0 million, or 8.9%, to $7.8 billion at September 30, 2020 from $7.2 billion at December 31, 2019. The increase was primarily attributable to an increase in total deposits of $983.8 million, or 17.4%, and an increase in accrued expenses and other liabilities of $51.2 million, or 43.5%, partially offset by a decrease in borrowings of $391.8 million, or 27.8%. The increase in total deposits was partially driven by $333.2 million in deposits assumed in connection with the Roselle merger. Non-interest-bearing and interest-bearing demand deposits increased $382.8 million and $313.3 million, respectively.  Money market accounts, savings and club deposits, and certificates of deposits also increased $130.3 million, $109.5 million and $47.8 million, respectively, during the period. The increase in accrued expenses and other liabilities consisted of a $21.0 million lease liability recognized in connection with the adoption of ASU 2016-02, and a $29.6 million increase in interest rate swap liabilities. The decrease in borrowings was primarily driven by maturing long-term borrowings of $181.3 million, a net decrease in short-term borrowings of $321.6 million, and a payoff of $16.6 million of subordinated notes, partially offset by new long-term borrowings of $90.0 million and $ 37.7 million in borrowings assumed from Roselle.

Total stockholders’ equity increased $34.8 million, or 3.5%, to $1.0 billion at September 30, 2020 from $982.5 million at December 31, 2019. The net increase was primarily attributable to net income of $36.9 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 in connection with the Roselle merger, and improved fair values on debt securities within our available for sale portfolio of $23.0 million, partially offset by the repurchase of 4,081,132 shares of common stock totaling $60.3 million under our stock repurchase program.  

Asset Quality

The Company's non-performing loans at September 30, 2020 totaled $10.9 million, or 0.17% of total gross loans, as compared to $6.7 million, or 0.11% of total gross loans, at December 31, 2019. The $4.2 million increase in non-performing loans was primarily attributable to increases of $1.1 million in non-performing one-to-four family real estate loans, $2.3 million in non-performing multifamily and commercial real estate loans and $850,000 in non-performing 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 17 non-performing loans at September 30, 2020. The increase in non-performing 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 September 30, 2020. The increase in non-performing commercial business loans was due to an increase in the number of loans from 16 non-performing loans at December 31, 2019 to 31 non-performing loans at September 30, 2020. Non-performing assets as a percentage of total assets totaled 0.12% at September 30, 2020 as compared to 0.08% at December 31, 2019.

For the quarter ended September 30, 2020, net charge-offs totaled $397,000 as compared to $931,000 for the quarter ended September 30, 2019.  For the nine months ended September 30, 2020, net charge-offs totaled $3.4 million as compared to $1.4 million for the nine months ended September 30, 2019. The increase in net charge-offs during the nine month period was primarily attributable to a $2.8 million charge-off of one commercial business loan. 

The Company's allowance for loan losses was $76.1 million, or 1.18% of total loans, at September 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 September 30, 2020, the Company granted $802.5 million of commercial loan modification requests with respect to multifamily, commercial, and construction real estate loans, and $197.4 million of consumer-related loan modification requests with respect to one-to-four family real estate loans and home equity loans and advances for 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:

  Balance at July 21, 2020 Percent of Total Loans at June 30, 2020 Balance at September 30, 2020 Percent of Total Loans at September 30, 2020 Balance at October 21, 2020 Percent of Total Loans at October 21, 2020
 (Dollars in thousands)
Real estate loans:           
One-to-four family$73,502  3.40% $43,515  2.12% $21,461  1.06%
Multifamily and commercial447,925  15.59  88,031  3.07  85,482  3.05
 
Construction13,525  4.14  13,525  4.40  3,400  1.08 
Commercial business loans34,059  3.79  9,479  1.07  1,850
  0.21
 
Home equity loans and advances8,427  2.34  1,574  0.46  1,088  0.32 
Total loans$577,438  8.72% $156,124  2.42% $113,281
  1.78%

At October 21, 2020, $80.8 million of the commercial loans in the above table are remitting partial payments and $48.6 million were granted an additional deferral period of which $46.5 million are remitting payments.  

Through September 30, 2020, the Company originated 2,449 loans for $488.5 million under the SBA Paycheck Protection Program. While some borrower applications for forgiveness were filed during the third quarter of 2020, none were approved until October 2020.

Covered Savings Association Designation

Effective October 15, 2020, the Bank has elected and has received regulatory approval to operate as a "covered savings association" pursuant to Section 5A of the Home Owners’ Loan Act, 12 USC 1464a, as amended, and the regulations of the Office of the Comptroller of the Currency promulgated thereunder.  A covered savings association generally has the same rights and privileges as a national bank, and is subject to the same duties, restrictions, penalties, liabilities, conditions, and limitations that would apply to such a national bank.  Management believes that the key benefits of the Bank's election to operate as a covered savings association include the elimination of the requirement to meet the qualified thrift lender test and that the Bank will no longer be subject to the limits on an aggregate amount of commercial loans that are applicable to savings associations.

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 62 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 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 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)

 September 30, December 31,
 2020 2019
Assets(Unaudited)  
Cash and due from banks$265,737  $75,420 
Short-term investments159  127 
Total cash and cash equivalents265,896  75,547 
    
Debt securities available for sale, at fair value1,245,300  1,098,336 
Debt securities held to maturity, at amortized cost (fair value of $288,439, and $289,505 at September 30, 2020 and December 31, 2019, respectively)272,712  285,756 
Equity securities, at fair value4,706  2,855 
Federal Home Loan Bank stock53,416  69,579 
Loans held-for-sale, at fair value4,146   
    
Loans receivable6,468,845  6,197,566 
Less: allowance for loan losses76,133  61,709 
Loans receivable, net6,392,712  6,135,857 
    
Accrued interest receivable31,252  22,092 
Office properties and equipment, net76,853  72,967 
Bank-owned life insurance233,127  211,415 
Goodwill and intangible assets92,506  68,582 
Other assets192,847  145,708 
Total assets$8,865,473  $8,188,694 
    
Liabilities and Stockholders' Equity   
Liabilities:   
Deposits$6,629,648  $5,645,842 
Borrowings1,015,210  1,407,022 
Advance payments by borrowers for taxes and insurance34,254  35,507 
Accrued expenses and other liabilities169,031  117,806 
Total liabilities7,848,143  7,206,177 
    
Stockholders' equity:   
Total stockholders' equity1,017,330  982,517 
Total liabilities and stockholders' equity$8,865,473  $8,188,694 


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

 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2020 2019 2020 2019
Interest income:(Unaudited) (Unaudited)
Loans receivable$63,258  $53,594  $192,511  $157,563 
Debt securities available for sale and equity securities7,034  7,736  21,654  23,295 
Debt securities held to maturity1,749  2,068  5,807  6,090 
Federal funds and interest-earning deposits71  182  287  405 
Federal Home Loan Bank stock dividends821  858  2,951  2,704 
Total interest income72,933  64,438  223,210  190,057 
Interest expense:       
Deposits12,826  16,055  44,569  44,984 
Borrowings3,783  6,667  15,744  20,130 
Total interest expense16,609  22,722  60,313  65,114 
        
Net interest income56,324  41,716  162,897  124,943 
        
Provision for loan losses2,516  1,157  17,820  1,705 
        
Net interest income after provision for loan losses53,808  40,559  145,077  123,238 
        
Non-interest income:       
Demand deposit account fees787  1,106  2,706  3,116 
Bank-owned life insurance1,531  1,784  4,467  4,449 
Title insurance fees1,218  1,350  3,445  3,490 
Loan fees and service charges565  3,038  1,826  5,358 
Gain on securities transactions  1,256  370  1,721 
Change in fair value of equity securities(4) (59) 55  189 
Gain on sale of loans1,873  382  3,422  710 
Other non-interest income1,939  1,258  5,017  3,895 
Total non-interest income7,909  10,115  21,308  22,928 
        
Non-interest expense:       
Compensation and employee benefits26,666  21,362  76,349  61,285 
Occupancy4,823  3,973  14,319  11,628 
Federal deposit insurance premiums614  40  1,350  927 
Advertising484  533  2,075  3,311 
Professional fees1,680  1,541  4,129  4,219 
Data processing839  658  2,420  1,965 
Merger-related expenses424  740  1,931  1,202 
Other non-interest expense5,848  2,217  14,756  7,927 
Total non-interest expense41,378  31,064  117,329  92,464 
        
Income before income tax expense20,339  19,610  49,056  53,702 
        
Income tax expense5,252  5,392  12,107  12,534 
        
Net income$15,087  $14,218  $36,949  $41,168 
        
Earnings per share-basic and diluted$0.14  $0.13  $0.34  $0.37 
Weighted average shares outstanding-basic and diluted110,983,871  111,371,754  110,177,736  111,486,179 


 COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Average Balances/Yields

 For the Three Months Ended September 30,
 2020 2019
 Average Balance Interest and Dividends Yield / Cost Average Balance Interest and Dividends Yield / Cost
 (Dollars in thousands)
Interest-earnings assets:           
Loans$6,544,206  $63,258  3.85% $5,115,590  $53,594  4.16%
Securities1,467,497  8,783  2.38% 1,391,820  9,804  2.79%
Other interest-earning assets281,361  892  1.26% 67,604  1,040  6.10%
Total interest-earning assets8,293,064  72,933  3.50% 6,575,014  64,438  3.89%
Non-interest-earning assets632,474      409,113     
Total assets$8,925,538      $6,984,127     
            
Interest-bearing liabilities:           
Interest-bearing demand$2,016,953  $2,608  0.51% $1,391,117  $4,487  1.28%
Money market accounts520,723  572  0.44% 262,593  552  0.83%
Savings and club deposits647,608  261  0.16% 473,727  187  0.16%
Certificates of deposit2,116,748  9,385  1.76% 1,862,147  10,829  2.31%
Total interest-bearing deposits5,302,032  12,826  0.96% 3,989,584  16,055  1.60%
FHLB advances1,050,422  3,606  1.37% 1,100,260  6,667  2.40%
Subordinated notes12,362  112  3.60%     %
Junior subordinated debentures7,975  65  3.24%     %
Total borrowings1,070,759  3,783  1.41% 1,100,260  6,667  2.40%
Total interest-bearing liabilities6,372,791  $16,609  1.04% 5,089,844  $22,722  1.77%
            
Non-interest-bearing liabilities:           
Non-interest-bearing deposits1,293,182      749,367     
Other non-interest-bearing liabilities209,772      142,145     
Total liabilities7,875,745      5,981,356     
Total stockholders' equity1,049,793      1,002,771     
Total liabilities and stockholders' equity$8,925,538      $6,984,127     
            
Net interest income  $56,324      $41,716   
Interest rate spread    2.46%     2.12%
Net interest-earning assets$1,920,273      $1,485,170     
Net interest margin    2.70%     2.52%
Ratio of interest-earning assets to interest-bearing liabilities130.13%     129.18%    


 COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Average Balances/Yields

 For the Nine Months Ended September 30,
 2020 2019
 Average Balance Interest and Dividends Yield / Cost Average Balance Interest and Dividends Yield / Cost
 (Dollars in thousands)
Interest-earnings assets:           
Loans$6,457,681  $192,511  3.98% $5,037,132  $157,563  4.18%
Securities1,437,708  27,461  2.55% 1,369,109  29,385  2.87%
Other interest-earning assets176,627  3,238  2.45% 65,980  3,109  6.30%
Total interest-earning assets8,072,016  223,210  3.69% 6,472,221  190,057  3.93%
Non-interest-earning assets615,698      383,014     
Total assets$8,687,714      $6,855,235     
            
Interest-bearing liabilities:           
Interest-bearing demand$1,878,890  $10,292  0.73% $1,355,553  $13,136  1.30%
Money market accounts475,376  2,287  0.64% 260,695  1,510  0.77%
Savings and club deposits608,259  755  0.17% 489,058  572  0.16%
Certificates of deposit2,116,831  31,235  1.97% 1,801,607  29,766  2.21%
Total interest-bearing deposits5,079,356  44,569  1.17% 3,906,913  44,984  1.54%
FHLB advances1,183,068  15,062  1.70% 1,095,143  20,130  2.46%
Subordinated notes15,573  448  3.84%     %
Junior subordinated debentures7,729  230  3.97%     %
Other borrowings2,555  4  0.21%     %
Total borrowings1,208,925  15,744  1.74% 1,095,143  20,130  2.46%
Total interest-bearing liabilities6,288,281  $60,313  1.28% 5,002,056  $65,114  1.74%
            
Non-interest-bearing liabilities:           
Non-interest-bearing deposits1,178,190      731,309     
Other non-interest-bearing liabilities200,947      126,394     
Total liabilities7,667,418      5,859,759     
Total stockholders' equity1,020,296      995,476     
Total liabilities and stockholders' equity$8,687,714      $6,855,235     
            
Net interest income  $162,897      $124,943   
Interest rate spread    2.41%     2.19%
Net interest-earning assets$1,783,735      $1,470,165     
Net interest margin    2.70%     2.58%
Ratio of interest-earning assets to interest-bearing liabilities128.37%     129.39%    


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

 Average Yields/Costs by Quarter
 September 30, 2020       June 30,      2020 March 31, 2020 December 31, 2019 September 30, 2019
Yield on interest-earning assets:         
Loans3.85% 3.96% 4.15% 4.14% 4.16%
Securities2.38  2.56  2.72  2.73  2.79 
Other interest-earning assets1.26  2.95  5.06  4.87  6.10 
Total interest-earning assets3.50% 3.69% 3.91% 3.87% 3.89%
          
Cost of interest-bearing liabilities:         
Total interest-bearing deposits0.96% 1.15% 1.43% 1.48% 1.60%
Total borrowings1.41  1.66  2.07  2.21  2.40 
Total interest-earning liabilities1.04% 1.25% 1.58% 1.64% 1.77%
          
Interest rate spread2.46% 2.44% 2.33% 2.23% 2.12%
Net interest margin2.70% 2.73% 2.65% 2.59% 2.52%
          
Ratio of interest-earning assets to interest-bearing liabilities130.13% 129.35% 125.49% 127.34% 129.18%



  COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Selected Financial Highlights

        
 For the Three Months Ended September 30, For the Nine Months Ended September 30,
 2020 2019 2020 2019
SELECTED FINANCIAL RATIOS (1):       
Return on average assets0.67% 0.81% 0.57% 0.80%
Core return on average assets0.79% 0.79% 0.64% 0.80%
Return on average equity5.72% 5.63% 4.84% 5.53%
Core return on average equity6.68% 5.51% 5.39% 5.50%
Interest rate spread2.46% 2.12% 2.41% 2.19%
Net interest margin2.70% 2.52% 2.70% 2.58%
Non-interest expense to average assets1.84% 1.76% 1.80% 1.80%
Efficiency ratio64.42% 59.93% 63.69% 62.53%
Core efficiency ratio59.06% 59.96% 60.49% 62.44%
Average interest-earning assets to average interest-bearing liabilities130.13% 129.18% 128.37% 129.39%
Net charge-offs to average outstanding loans0.02% 0.07% 0.07% 0.04%
        
(1) Ratios for the three months are annualized when appropriate.       


CAPITAL RATIOS:   
 September 30, December 31,
 2020 2019
Company:   
Total capital (to risk-weighted assets)18.66% 17.25%
Tier 1 capital (to risk-weighted assets)17.50% 16.05%
Common equity tier 1 capital (to risk-weighted assets)17.37% 15.94%
Tier 1 capital (to adjusted total assets)11.70% 12.92%
    
Bank:   
Total capital (to risk-weighted assets)16.24% 14.25%
Tier 1 capital (to risk-weighted assets)14.99% 13.21%
Common equity tier 1 capital (to risk-weighted assets)14.99% 13.21%
Tier 1 capital (to adjusted total assets)10.00% 10.25%


ASSET QUALITY:   
 September 30, December 31,
 2020 2019
 (Dollars in thousands)
Non-accrual loans$10,911  $6,687 
90+ and still accruing   
Non-performing loans10,911  6,687 
Real estate owned   
Total non-performing assets$10,911  $6,687 
    
Non-performing loans to total gross loans0.17% 0.11%
Non-performing assets to total assets0.12% 0.08%
Allowance for loan losses$76,133  $61,709 
Allowance for loan losses to total non-performing loans697.76% 922.82%
Allowance for loan losses to gross loans1.18% 1.00%
Allowance for loan losses to gross loans, excluding SBA PPP loans1.27% %
Unamortized purchase accounting fair value credit marks on acquired loans$4,015  $ 


LOAN DATA:   
 September 30, December 31,
 2020 2019
Real estate loans:(In thousands)
One-to-four family$2,053,293  $2,077,079 
Multifamily and commercial2,863,718  2,919,985 
Construction307,659  298,942 
Commercial business loans *884,931  483,215 
Consumer loans:   
Home equity loans and advances340,962  388,127 
Other consumer loans1,538  1,960 
Total gross loans6,452,101  6,169,308 
Purchased credit-impaired ("PCI") loans6,706  7,021 
Net deferred loan costs, fees and purchased premiums and discounts **10,038  21,237 
Allowance for loan losses(76,133) (61,709)
Loans receivable, net$6,392,712  $6,135,857 
    
*   At September 30, 2020 includes SBA PPP loans totaling $474.9 million.
** At September 30, 2020 includes SBA PPP net deferred loan fees totaling $11.2 million.


Reconciliation of GAAP to Non-GAAP Financial Measures
    
Book and Tangible Book Value per Share
 September 30, December 31,
 2020 2019
    
Total stockholders' equity$1,017,330  $982,517 
Less: goodwill(85,426) (60,763)
Less: core deposit intangible(6,462) (7,245)
Total tangible stockholders' equity$925,442  $914,509 
    
Shares outstanding114,415,010  113,765,387 
    
Book value per share$8.89  $8.64 
Tangible book value per share$8.09  $8.04 


Reconciliation of Core Net Income       
 Three Months Ended September 30, Nine Months Ended September 30,
 2020 2019 2020 2019
 (In thousands)
        
Net income$15,087  $14,218  $36,949  $41,168 
Less: gain on securities transactions, net of tax  (910) (279) (1,270)
Add: voluntary early retirement plan expenses, net of tax2,273    2,273   
Add: merger-related expenses, net of tax316  614  1,500  1,007 
Add: branch closure expenses, net of tax    878   
Core net income$17,676  $13,922  $41,321  $40,905 


Return on Average Assets       
 Three Months Ended September 30, Nine Months Ended September 30,
 2020 2019 2020 2019
 (Dollars in thousands)
        
Net income$15,087  $14,218  $36,949  $41,168 
        
Average assets$8,925,538  $6,984,127  $8,687,714  $6,855,235 
        
Return on average assets0.67% 0.81% 0.57% 0.80%
        
Core net income$17,676  $13,922  $41,321  $40,905 
        
Core return on average assets0.79% 0.79% 0.64% 0.80%

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

Return on Average Equity       
 Three Months Ended September 30, Nine Months Ended September 30,
 2020 2019 2020 2019
 (Dollars in thousands)
        
Total average stockholders' equity$1,049,793  $1,002,771  $1,020,296  $995,476 
Less: gain on securities transactions, net of tax  (910) (279) (1,270)
Add: voluntary early retirement plan expenses, net of tax2,273    2,273   
Add: merger-related expenses, net of tax316  614  1,500  1,007 
Add: branch closure expenses, net of tax    878   
Core average stockholders' equity$1,052,382  $1,002,475  $1,024,668  $995,213 
        
Return on average equity5.72% 5.63% 4.84% 5.53%
        
Core return on core average equity6.68% 5.51% 5.39% 5.50%


Efficiency Ratios       
 Three Months Ended September 30, Nine Months Ended September 30,
 2020 2019 2020 2019
 (Dollars in thousands)
        
Net interest income$56,324  $41,716  $162,897  $124,943 
Non-interest income7,909  10,115  21,308  22,928 
Total income$64,233  $51,831  $184,205  $147,871 
        
Non-interest expense$41,378  $31,064  $117,329  $92,464 
        
Efficiency ratio64.42% 59.93% 63.69% 62.53%
        
Non-interest income$7,909  $10,115  $21,308  $22,928 
Less: gain on securities transactions  (1,256) (370) (1,721)
Core non-interest income$7,909  $8,859  $20,938  $21,207 
        
Non-interest expense$41,378  $31,064  $117,329  $92,464 
Less: voluntary early retirement plan expenses(3,018)   (3,018)  
Less: merger-related expenses(424) (740) (1,931) (1,202)
Less: branch closure expenses    (1,170)  
Core non-interest expense$37,936  $30,324  $111,210  $91,262 
        
Core efficiency ratio59.06% 59.96% 60.49% 62.44%

 


Source: Columbia Financial, Inc.