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Columbia Financial, Inc. Announces Financial Results for the Fourth Quarter and Year Ended December 31, 2019

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FAIR LAWN, N.J., Jan. 30, 2020 (GLOBE NEWSWIRE) -- Columbia Financial, Inc. (the "Company") (NASDAQ:CLBK), the mid-tier holding company for Columbia Bank (the "Bank"), reported net income of $13.5 million, or $0.12 per basic and diluted share, for the quarter ended December 31, 2019, as compared to net income of $14.9 million, or $0.13 per basic and diluted share, for the quarter ended December 31, 2018.  Earnings for the three months ended December 31, 2019 reflected higher net interest income and non-interest income, driven by asset growth primarily in the Bank's loan portfolio, in part, due to the completion of the Company's acquisition of Stewardship Financial Corporation ("Stewardship") on November 1, 2019. These increases were offset by higher provision for loan losses, non-interest expense and income tax expense, which resulted in an overall decrease in net income for the quarter ended December 31, 2019.

For the year ended December 31, 2019, the Company reported net income of $54.7 million, or $0.49 per basic and diluted share, as compared to net income of $22.7 million, or $0.20 per basic and diluted share, for the year ended December 31, 2018.  Earnings for the year ended December 31, 2019 reflected higher net interest income and non-interest income, lower provision for loan losses, and a decrease in non-interest expense, as a one-time charitable contribution to the Columbia Bank Foundation of $34.8 million was included in the year ended December 31, 2018.  Excluding the impact of the charitable contribution in 2018, net income would have been $50.2 million for the year ended December 31, 2018, or $0.45 per basic and diluted share.

Mr. Thomas J. Kemly, President and Chief Executive Officer commented: "We achieved solid core profitability in 2019 despite a flat yield curve.  The Company's organic growth and acquisition strategies combined to result in balance sheet growth highlighted by an increase of approximately 25% in our loan portfolio and 28% in our deposits. These results demonstrate that our strategic plan is being implemented effectively, as we continue our efforts to invest in talented professionals and innovative technological products and stay focused on providing superior service as we enter new markets and continue to work to generate long-term shareholder value."

Results of Operations for the Quarters Ended December 31, 2019 and December 31, 2018

Net income of $13.5 million was recorded for the quarter ended December 31, 2019, a decrease of $1.3 million, or 8.9% compared to net income of $14.9 million for the quarter ended December 31, 2018.  The decrease in net income was primarily attributable to a $1.7 million increase in provision for loan losses, a $5.2 million increase in non-interest expense and a $709,000 increase in income tax expense, partially offset by a $4.1 million increase in net interest income and a $2.3 million increase in non-interest income.

Net interest income was $47.4 million for the quarter ended December 31, 2019, an increase of $4.1 million, or 9.3%, from $43.4 million for the quarter ended December 31, 2018.  The increase in net interest income was primarily attributable to a $9.2 million increase in interest income which was partially offset by a $5.2 million increase in interest expense.  The increase in interest income for the quarter ended December 31, 2019 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 acquisition of Stewardship, partially offset by decreases in the average yields on these assets.

The average yield on loans for the quarter ended December 31, 2019 decreased one basis point to 4.14%, as compared to 4.15% for the quarter ended December 31, 2018, while the average yield on securities for the quarter ended December 31, 2019 decreased 15 basis points to 2.73%, as compared to 2.88% for the quarter ended December 31, 2018. The average yield on other interest-earning assets for the quarter ended December 31, 2019 decreased 109 basis points to 4.87%, as compared to 5.96% for the quarter ended December 31, 2018. Decreases in the average yields on these portfolios for the quarter ended December 31, 2019 were influenced by the lower market rate environment coupled with the impact of the yields related to assets acquired from Stewardship.

Total interest expense was $23.6 million for the quarter ended December 31, 2019, an increase of $5.2 million, or 28.2%, from $18.4 million for the quarter ended December 31, 2018.  The increase in interest expense was primarily attributable to increases in the average balances of all categories of deposits totaling $757.2 million, combined with a 21 basis point increase in the average cost of deposits.  The increase in the cost of deposits was primarily driven by a shift in the mix from non-maturity deposits to higher cost certificates of deposits.  The increase in interest on borrowings was attributable to a $124.4 million increase in the average balance of Federal Home Loan Bank advances partially offset by a 12 basis point decrease in the cost of total borrowings.

The Company's net interest margin for the quarter ended December 31, 2019 decreased 15 basis points to 2.59%, when compared to 2.74% for the quarter ended December 31, 2018.  The weighted average yield on interest-earning assets decreased 4 basis points to 3.87% for the quarter ended December 31, 2019 as compared to 3.91% for the quarter ended December 31, 2018.  The average cost of interest-bearing liabilities increased 12 basis points to 1.64% for the quarter ended December 31, 2019 as compared to 1.52% for the quarter ended December 31, 2018.  The decrease in yields and the increase in costs for the quarter ended December 31, 2019 were largely driven by continued competitive pricing pressures for loans and deposits in the Company's market area.  The accretion of all fair value marks established as a component of the purchase accounting loan adjustment related to the acquisition totaled $359,000 for the quarter ended December 31, 2019.

The provision for loan losses was $2.5 million for the quarter ended December 31, 2019, an increase of $1.7 million, from $777,000 for the quarter ended December 31, 2018.  The increase was primarily attributable to increases in non-accrual loans and net charge-offs during the quarter ended December 31, 2019.  Non-accrual loans increased to $7.4 million at December 31, 2019 from $2.8 million at December 31, 2018.  Net charge-offs increased to $3.4 million for the quarter ended December 31, 2019, as compared to $1.8 million, for the quarter ended December 31, 2018.

Non-interest income was $8.7 million for the quarter ended December 31, 2019, an increase of $2.3 million, or 36.0%, from $6.4 million for the quarter ended December 31, 2018.  The increase was primarily attributable to an increase in income from loan fees and service charges of $367,000, which represented an increase in income from swap transactions, gains on the sale of securities of $891,000, title insurance fees of $412,000, and other non-interest income of $694,000, partially offset by a decrease in gains on the sale of loans of $527,000.  The increase in other non-interest income consists of increases in ATM, check card and wealth management related activities.

Non-interest expense was $36.2 million for the quarter ended December 31, 2019, an increase of $5.2 million, or 16.8%, from $31.0 million for the quarter ended December 31, 2018.  This increase was attributable to an increase in compensation and employee benefits expense of $3.0 million, an increase in occupancy expense of $768,000, and merger-related expenses of $1.6 million recorded in the quarter ended December 31, 2019, partially offset by a $521,000 decrease in federal deposit insurance premiums.   The increase in compensation and employee benefits expense was primarily attributable to $2.1 million in expense recorded in connection with grants made under the Company's 2019 Equity Incentive Plan. The increase in occupancy expense was primarily the result of an increase in depreciation expense related to newly opened branches and branch renovations, while merger-related expenses included expenses related to the Company's acquisition of Stewardship and pending acquisition of Roselle Bank. The federal deposit insurance premium expense decreased during the quarter ended December 31, 2019, as the Federal Deposit Insurance Corporation's reserve rates exceeded a limit at which a small bank assessment credit was applied against premiums due.

Income tax expense was $3.8 million for the quarter ended December 31, 2019, an increase of $709,000, as compared to $3.1 million for the quarter ended December 31, 2018.  The Company's effective tax rate was 22.0% and 17.4% for the quarters ended December 31, 2019 and 2018, respectively. The effective tax rates have remained consistently low throughout the periods primarily by maximizing the tax benefits related to the Bank's investment subsidiary.

Results of Operations for the Years Ended December 31, 2019 and December 31, 2018

Net income of $54.7 million was recorded for the year ended December 31, 2019, an increase of $32.0 million, compared to net income of $22.7 million, for the year ended December 31, 2018.  The increase in net income was primarily attributable to a $8.3 million increase in net interest income, a $2.5 million decrease in the provision for loan losses, a $9.9 million increase in non-interest income, and a $16.7 million decrease in non-interest expense, partially offset by a $5.4 million increase in income tax expense. The decrease in non-interest expense for the year ended December 31, 2019 was attributable to the previously noted $34.8 million one-time contribution to the Columbia Bank Foundation during 2018.

Net interest income was $172.4 million for the year ended December 31, 2019, an increase of $8.3 million, or 5.1%, from $164.0 million for the year ended December 31, 2018.  The increase in net interest income was attributable to a $34.8 million increase in interest income, which was partially offset by a $26.5 million increase in interest expense. The increase in interest income for the period was largely due to increases in both the average balances and yields on loans and securities, coupled with an increase in the yield on other interest-earning assets.

The average yield on loans for the year ended December 31, 2019 increased 14 basis point to 4.17%, as compared to 4.03%, for the year ended December 31, 2018, while the average yield on securities for the year ended December 31, 2019 increased 6 basis points to 2.83%, as compared to 2.77%, for the year ended December 31, 2018.  Increases in yields on loans for the year ended December 31, 2019 reflect more significant increases in balances of higher yielding multifamily and commercial loans from internal volume, as well as through the acquisition of Stewardship, whose loan portfolio consisted mostly of higher yielding multifamily and commercial real estate loans and commercial business loans.  Interest income on loans for the year ended December 31, 2019 included $2.7 million in prepayment fees as compared to $1.2 million for the year ended December 31, 2018.  The average yield on other interest-earning assets for the year ended December 31, 2019 increased 232 basis points to 5.86%, as compared to 3.54% for the year ended December 31, 2018.  This was driven by the 2019 average balance of other interest-earning assets including higher yielding Federal Home Loan Bank stock, while the 2018 average balance of other interest-earning assets included higher cash deposits related to the subscriptions for the Company's minority stock offering which yielded a lower rate of interest.

Total interest expense was $88.7 million for the year ended December 31, 2019, an increase of $26.5 million, or 42.5%, from $62.3 million for the year ended December 31, 2018.  The increase in interest expense on deposits was primarily attributable to a $96.9 million increase in the average balance of interest-bearing demand deposits and a $327.4 million increase in the average balance of certificates of deposit, partially offset by decreases of $13.1 million in the average balance of money market accounts and $133.5 million in the average balance of savings and club accounts, coupled with a 47 basis point increase in the cost of interest-bearing deposits. The increase in the average balance of interest-bearing demand deposits was primarily attributable to the acquisition of Stewardship, while the decrease in the average balance of savings and club accounts was primarily attributable to subscription funds from the minority stock offering in 2018.  The increase in interest on borrowings was attributable to a $221.2 million increase in the average balance of Federal Home Loan Bank advances, partially offset by a 2 basis point decrease in the cost of total borrowings.

The Company's net interest margin for the year ended December 31, 2019 decreased 16 basis points to 2.58%, when compared to 2.74% for the year ended December 31, 2018.  The weighted average yield on interest-earning assets increased 14 basis points to 3.91% for the year ended December 31, 2019 as compared to 3.77% for the year ended December 31, 2018.  The average cost of interest-bearing liabilities increased 39 basis points to 1.71% for the year ended December 31, 2019 as compared to 1.32% for the year ended December 31, 2018.  The increase in yields and costs for the year ended December 31, 2019 were largely driven by continued competitive pricing pressures in the Company's market area.

The provision for loan losses was $4.2 million for the year ended December 31, 2019, a decrease of $2.5 million, or 36.7%, from $6.7 million for the year ended December 31, 2018.  The decrease was primarily driven by a decrease in historical loss factors, partially offset by the growth in the loan portfolio.  Net charge-offs increased to $4.9 million for the year ended December 31, 2019, as compared to $2.5 million for the year ended December 31, 2018.

Non-interest income was $31.6 million for the year ended December 31, 2019, an increase of $9.9 million, or 45.9%, from $21.7 million for the year ended December 31, 2018.  The increase was primarily attributable to an increase in income from loan fees and service charges of $4.2 million, which included an increase in income form swap transactions of $4.1 million, and an increase in gains on the sale of securities of $2.5 million.   There was an increase of $979,000 in other non-interest income which primarily related to increases in ATM, check card and other related income.

Non-interest expense was $128.7 million for the year ended December 31, 2019, a decrease of $16.7 million, or 11.5%, from $145.4 million for the year ended December 31, 2018.  The decrease was primarily attributable to a decrease of $34.8 million in charitable contributions which were made during the 2018 period as previously noted.  Excluding the impact of this one-time contribution in 2018, non-interest expense increased $18.1 million, or 16.3%, for the year ended December 31, 2019.  This increase was attributable to an increase in compensation and employee benefits expense of $14.3 million, an increase in occupancy expense of $1.6 million, an increase in professional fees of $1.3 million, and merger-related expenses of $2.8 million recorded in the 2019 period, partially offset by a $998,000 decrease in federal deposit insurance premiums. The higher compensation and employee benefits expense was primarily attributable to $3.7 million in expense recorded in connection with grants made under the Company's 2019 Equity Incentive Plan, coupled with the cost of new hires. The increase in occupancy expense was primarily the result of an increase in depreciation expense related to newly opened branches and branch renovations, while the increase in professional fees was the result of higher legal, accounting and consulting fees commensurate with being a public company. The federal deposit insurance premium expense decreased during the year ended December 31, 2019, as the Federal Deposit Insurance Corporation's reserve rates exceeded a limit at which a small bank assessment credit was applied against premiums due.

Income tax expense was $16.4 million for the year ended December 31, 2019, an increase of $5.4 million, or 49.8%, from $10.9 million for the year ended December 31, 2018.  The Company's effective tax rate was 23.0% and 32.5% for the years ended December 31, 2019 and 2018, respectively.  The 2018 income tax expense and resulting effective tax rate was impacted by the net loss resulting from the one-time charitable contribution.  The 2019 income tax expense and resulting decrease in the effective tax rate was primarily driven by maximizing the tax benefits related to the Bank's investment subsidiary, coupled with other previously implemented tax strategies.

Balance Sheet Summary

Total assets increased $1.5 billion, or 22.4%, to $8.2 billion at December 31, 2019 from $6.7 billion at December 31, 2018.  The increase in total assets was primarily attributable to increases in cash and cash equivalents of $33.3 million, debt securities available for sale of $65.5 million, loans receivable, net, of $1.2 billion, goodwill and intangible assets of $62.5 million, and other assets of $38.7 million.  The increase was primarily impacted by the acquisition of $961.6 million in assets from Stewardship.

Cash and cash equivalents increased $33.3 million, or 79.0%, to $75.5 million at December 31, 2019 from $42.2 million at December 31, 2018.  The increase was mainly attributable to cash and cash equivalent balances acquired from Stewardship that had not yet been redeployed.

Debt securities available for sale increased $65.5 million, or 6.3%, to $1.1 billion at December 31, 2019 from $1.0 billion at December 31, 2018.  The increase was primarily impacted by the acquisition of $51.7 million in securities from Stewardship.  The  remaining increase was attributable to purchases of $176.2 million in U.S. agency obligations, mortgage-backed securities and corporate and municipal bonds, partially offset by calls of $24.1 million in U.S. agency obligations, maturities of $797,000 in municipal securities, repayments of $124.8 million in mortgage-backed securities, and sales of $65.2 million in U.S. agency obligations and mortgage-backed securities.  The gross unrealized gain on debt securities available for sale increased by $29.1 million during the year ended December 31, 2019.

Loans receivable, net, increased $1.2 billion, or 24.8%, to $6.1 billion at December 31, 2019 from $4.9 billion at December 31, 2018. The increases in most segments of the loan portfolio are due to the impact of the acquisition of $757.2 million in loans acquired from Stewardship, supplemented by favorable pricing of products which supported internal loan growth. The increase was mainly attributable to increases in one-to-four family real estate, multifamily and commercial real estate, construction and commercial business loans of $246.9 million, $777.8 million, $37.5 million and $149.3 million, respectively, partially offset by a decrease in home equity loans and advances of $5.4 million.

Goodwill and intangible assets increased $62.5 million due to the impact of recording goodwill of $55.0 million related to the acquisition of Stewardship during the fourth quarter of 2019.

Total liabilities increased $1.5 billion, or 26.0%, to $7.2 billion at December 31, 2019 from $5.7 billion at December 31, 2018.  The increase was primarily attributable to an increase in total deposits of $1.2 billion, or 27.9%, an increase in borrowings of $217.8 million, or 18.3%, and an increase in accrued expenses and other liabilities of $33.3 million, or 39.5%.  The increase in total deposits was primarily impacted by an increase of $782.7 million in deposits assumed from Stewardship, and mainly consisted of increases in the balances of interest-bearing and non-interest bearing demand deposit accounts, as well as, certificates of deposits. The increase in borrowings was attributable to the impact of $83.1 million in borrowings assumed from Stewardship, coupled with the proceeds from new long-term borrowings of $140.0 million, partially offset by maturing long-term borrowings of $230.0 million, and an increase of $225.2 million in short-term borrowings.  The increase in accrued expenses and other liabilities consisted of increases in benefit plan liabilities and swap liabilities.

Total stockholders' equity increased $10.5 million, or 1.1%, to $982.5 million at December 31, 2019 from $972.1 million at December 31, 2018.  The net increase was primarily attributable to net income of $54.7 million, coupled with improved fair values on debt securities within our available for sale portfolio, partially offset by the repurchase of approximately 3,544,000 shares of common stock for $55.3 million, through December 31, 2019, under our stock repurchase program.

Asset Quality

The Company's total non-performing loans at December 31, 2019 totaled $7.4 million, or 0.12% of total gross loans, as compared to $2.8 million, or 0.06% of total gross loans, at December 31, 2018.  The $4.6 million increase in non-performing loans was mainly attributable to increases of $1.3 million in one-to-four family real estate loans and $2.8 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 6 non-performing loans at December 31, 2018 to 12 non-performing loans at December 31, 2019, while the increase in the balance of non-performing commercial business loans was due to an increase in the number of loans from 3 non-performing loans at December 31, 2018 to 11 non-performing loans at December 31, 2019.  For the year ended December 31, 2019, net charge-offs totaled $4.9 million, as compared to $2.5 million for the year ended December 31, 2018.  The $2.4 million increase in net charge-offs is primarily attributable to a $3.0 million charge-off related to one commercial business loan recorded in the fourth quarter of 2019.  Non-performing assets as a percentage of total assets totaled 0.09% at December 31, 2019 as compared to 0.04% at December 31, 2018.

The Company had no real estate owned at December 31, 2019 compared to one property owned, with a carrying value of $92,000, at December 31, 2018.

The Company's allowance for loan losses was $61.7 million, or 1.00% of total loans at December 31, 2019, compared to $62.3 million, or 1.26% of total loans, at December 31, 2018. The decrease in the allowance for loan loss ratio largely reflects the impact of the acquisition and the related accounting standards in which acquired loans are initially recorded at fair value with no allowance for loan losses.

Merger with RSB Bancorp

On December 3, 2019, the Company announced the signing of a definitive agreement and plan of merger pursuant to which the Company will acquire RSB Bancorp, MHC, RSB Bancorp, Inc., and Roselle Bank (collectively "Roselle"). As part of the transaction, the Company will issue additional shares of its common stock to Columbia Bank, MHC in an amount equal to the fair value of Roselle as determined by an independent appraiser.  Subject to the receipt of all required regulatory approvals and the satisfaction of customary closing conditions, the Company expects to complete its acquisition of Roselle in the second quarter of 2020.

Annual Meeting of Stockholders

On January 30, 2020, the Company also announced that its annual meeting of stockholders will be held on May 21, 2020.

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 64 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; changes in the value of securities in the Company's portfolio; changes in loan default and charge-off rates; fluctuations in real estate values; the adequacy of loan loss reserves; decreases in deposit levels necessitating increased borrowing to fund loans and securities; legislative changes and changes in government regulation; changes in accounting standards and practices; the risk that goodwill and intangibles recorded in the Company's consolidated financial statements will become impaired; demand for loans in the Company's market area; the Company's ability to attract and maintain deposits; risks related to the implementation of acquisitions, dispositions, and restructurings; the risk that the Company may not be successful in the implementation of its business strategy, including successfully consummating its pending acquisition of Roselle; 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".


 
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(In thousands, except share and per share data)
 
  December 31,
  2019   2018
Assets (Unaudited)    
Cash and due from banks $ 75,420     $ 42,065  
Short-term investments 127     136  
Total cash and cash equivalents 75,547     42,201  
       
Debt securities available for sale, at fair value 1,098,336     1,032,868  
Debt securities held to maturity, at amortized cost (fair value of $289,505, and $254,841
at December 31, 2019 and 2018, respectively)
285,756     262,143  
Equity securities, at fair value 2,855     1,890  
Federal Home Loan Bank stock 69,579     58,938  
Loans held-for-sale, at fair value     8,081  
       
Loans receivable 6,197,566     4,979,182  
Less: allowance for loan losses 61,709     62,342  
Loans receivable, net 6,135,857     4,916,840  
       
Accrued interest receivable 22,092     18,894  
Real estate owned     92  
Office properties and equipment, net 72,967     52,050  
Bank-owned life insurance 211,415     184,488  
Goodwill and intangible assets 68,582     6,085  
Other assets 145,708     107,048  
Total assets $ 8,188,694     $ 6,691,618  
       
Liabilities and Stockholders' Equity      
Liabilities:      
Deposits $ 5,645,842     $ 4,413,873  
Borrowings 1,407,022     1,189,180  
Advance payments by borrowers for taxes and insurance 35,507     32,030  
Accrued expenses and other liabilities 117,806     84,475  
Total liabilities 7,206,177     5,719,558  
       
Stockholders' equity:      
Total stockholders' equity 982,517     972,060  
Total liabilities and stockholders' equity $ 8,188,694     $ 6,691,618  



COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except share and per share data)
 
  Three Months Ended December 31,   Year Ended December 31,
  2019   2018   2019   2018
Interest income: (Unaudited)       (Unaudited)    
Loans receivable $ 60,211     $ 51,580     $ 217,774     $ 189,869  
Debt securities available for sale and equity securities 7,643     7,351     30,938     25,338  
Debt securities held to maturity 2,090     1,895     8,180     7,147  
Federal funds and interest-earning deposits 189     59     594     1,175  
Federal Home Loan Bank stock dividends 893     900     3,597     2,761  
Total interest income 71,026     61,785     261,083     226,290  
Interest expense:              
Deposits 16,567     11,810     61,551     39,523  
Borrowings 7,031     6,600     27,161     22,733  
Total interest expense 23,598     18,410     88,712     62,256  
               
Net interest income 47,428     43,375     172,371     164,034  
               
Provision for loan losses 2,519     777     4,224     6,677  
               
Net interest income after provision for loan losses 44,909     42,598     168,147     157,357  
               
Non-interest income:              
Demand deposit account fees 1,362     1,067     4,478     3,987  
Bank-owned life insurance 1,397     1,342     5,846     5,208  
Title insurance fees 1,491     1,079     4,981     4,297  
Loan fees and service charges 1,349     982     6,707     2,519  
Gain on securities transactions 891       2,612     116  
Change in fair value of equity securities 117         305      
Gain on sale of loans 75     602     785     618  
Other non-interest income 2,027     1,333     5,922     4,943  
Total non-interest income 8,709     6,405     31,636     21,688  
               
Non-interest expense:              
Compensation and employee benefits 22,971     19,978     84,256     69,907  
Occupancy 4,552     3,784     16,180     14,547  
Federal deposit insurance premiums (32 )   489     895     1,893  
Advertising 621     995     3,932     4,137  
Professional fees 1,694     1,795     5,913     4,619  
Data processing 1,036     656     3,001     2,600  
Charitable contribution to foundation             34,767  
Merger-related expenses 1,553           2,755        
Other non-interest expense 3,842     3,316     11,769     12,916  
Total non-interest expense 36,237     31,013     128,701     145,386  
               
Income before income tax expense 17,381     17,990     71,082     33,659  
               
Income tax expense 3,832     3,123     16,365     10,923  
               
Net income $ 13,549     $ 14,867     $ 54,717     $ 22,736  
               
Earnings per share-basic and diluted $ 0.12     $ 0.13     $ 0.49     $ 0.20  
Weighted average shares outstanding-basic and diluted 109,958,999     111,423,361     111,101,246     111,395,723  



 COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Average Balances/Yields
 
  For the Three Months Ended December 31,
  2019   2018
  Average
Balance
  Interest
and
Dividends
  Yield /
Cost
  Average
Balance
  Interest
and
Dividends
  Yield /
Cost
                                           
  (Dollars in thousands)
Interest-earnings assets:                      
Loans $ 5,774,359     $ 60,211     4.14 %   $ 4,935,812     $ 51,580     4.15 %
Securities 1,415,495     9,733     2.73 %   1,273,348     9,246     2.88 %
Other interest-earning assets 88,081     1,082     4.87 %   63,821     959     5.96 %
Total interest-earning assets 7,277,935     71,026     3.87 %   6,272,981     61,785     3.91 %
Non-interest-earning assets 499,408             339,118          
Total assets $ 7,777,343             $ 6,612,099          
                       
Interest-bearing liabilities:                      
Interest-bearing demand $ 1,613,885     $ 4,484     1.10 %   $ 1,251,211     $ 3,098     0.98 %
Money market accounts 362,205     792     0.87 %   270,981     449     0.66 %
Savings and club deposits 513,667     198     0.15 %   510,543     201     0.16 %
Certificates of deposit 1,962,822     11,093     2.24 %   1,662,619     8,062     1.92 %
Total interest-bearing deposits 4,452,579     16,567     1.48 %   3,695,354     11,810     1.27 %
FHLB advances 1,246,444     6,853     2.18 %   1,122,047     6,600     2.33 %
Subordinated notes 11,434     113     3.92 %           %
Junior subordinated debentures 4,970     65     5.19 %           %
Total borrowings 1,262,848     7,031     2.21 %   1,122,047     6,600     2.33 %
Total interest-bearing liabilities 5,715,427     $ 23,598     1.64 %   4,817,401     $ 18,410     1.52 %
                       
Non-interest-bearing liabilities:                      
Non-interest-bearing deposits 911,990             727,308          
Other non-interest-bearing liabilities 156,637             112,437          
Total liabilities 6,784,054             5,657,146          
Total stockholders' equity 993,289             954,953          
Total liabilities and stockholders' equity $ 7,777,343             $ 6,612,099          
                       
Net interest income     $ 47,428             $ 43,375      
Interest rate spread         2.23 %           2.39 %
Net interest-earning assets $ 1,562,508             $ 1,455,580          
Net interest margin         2.59 %           2.74 %
Ratio of interest-earning assets to interest-bearing liabilities 127.34 %           130.22 %        


 
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Average Balances/Yields
  For the Year Ended December 31,
  2019   2018
  Average
Balance
  Interest
and
Dividends
  Yield /
Cost
  Average
Balance
  Interest
and
Dividends
  Yield /
Cost
                                               
  (Dollars in thousands)
Interest-earnings assets:                      
Loans $ 5,222,953     $ 217,774     4.17 %   $ 4,711,915     $ 189,869     4.03 %
Securities 1,380,801     39,118     2.83 %   1,171,617     32,485     2.77 %
Other interest-earning assets 71,551     4,191     5.86 %   111,218     3,936     3.54 %
Total interest-earning assets 6,675,305     $ 261,083     3.91 %   5,994,750     $ 226,290     3.77 %
Non-interest-earning assets 411,549             324,499          
Total assets $ 7,086,854             $ 6,319,249          
                       
Interest-bearing liabilities:                      
Interest-bearing demand $ 1,420,667     $ 17,621     1.24 %   $ 1,323,766     $ 11,395     0.86 %
Money market accounts 286,281     2,301     0.80 %   299,389     1,538     0.51 %
Savings and club deposits 495,261     770     0.16 %   628,746     993     0.16 %
Certificates of deposit 1,842,243     40,859     2.22 %   1,514,843     25,597     1.69 %
Total interest-bearing deposits 4,044,452     61,551     1.52 %   3,766,744     39,523     1.05 %
FHLB advances 1,133,280     26,983     2.38 %   912,032     19,263     2.11 %
Subordinated notes 2,881     113     3.92 %           %
Junior subordinated debentures 1,253     65     5.19 %   31,422     3,467     11.03 %
Other borrowings         %   222     3     1.35 %
Total borrowings 1,137,414     27,161     2.39 %   943,676     22,733     2.41 %
Total interest-bearing liabilities 5,181,866     $ 88,712     1.71 %   4,710,420     $ 62,256     1.32 %
                       
Non-interest-bearing liabilities:                      
Non-interest-bearing deposits 776,850             704,155          
Other non-interest-bearing liabilities 133,213             112,785          
Total liabilities 6,091,929             5,527,360          
Total stockholders' equity 994,925             791,889          
Total liabilities and stockholders' equity $ 7,086,854             $ 6,319,249          
                       
Net interest income     $ 172,371             $ 164,034      
Interest rate spread         2.20 %           2.45 %
Net interest-earning assets $ 1,493,439             $ 1,284,330          
Net interest margin         2.58 %           2.74 %
Ratio of interest-earning assets to interest-bearing liabilities   128.82 %               127.27 %          


 
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Components of Net Interest Rate Spread and Margin
 
  Average Yields/Costs by Quarter
  December 31,
2019
  September 30,
2019
  June 30,
2019
  March 31,
2019
  December 31,
2018
Yield on interest-earning assets:                  
Loans 4.14 %   4.16 %   4.14 %   4.25 %   4.15 %
Securities 2.73     2.79     2.89     2.93     2.88  
Other interest-earning assets 4.87     6.10     6.19     6.62     5.96  
Total interest-earning assets 3.87 %   3.89 %   3.89 %   4.00 %   3.91 %
                   
Cost of interest-bearing liabilities:                  
Total interest-bearing deposits 1.48 %   1.60 %   1.56 %   1.46 %   1.27 %
Total borrowings 2.21     2.40     2.50     2.47     2.33  
Total interest-earning liabilities 1.64 %   1.77 %   1.76 %   1.69 %   1.52 %
                   
Interest rate spread 2.23 %   2.12 %   2.13 %   2.31 %   2.39 %
Net interest margin 2.59 %   2.52 %   2.53 %   2.70 %   2.74 %
                   
Ratio of interest-earning assets to interest-bearing liabilities 127.34 %   129.18 %   129.63 %   129.37 %   130.22 %


 
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Selected Financial Highlights
 
  For the Three Months
Ended December 31,
  For the Year Ended
December 31,
  2019   2018   2019   2018
SELECTED FINANCIAL RATIOS (1):              
Return on average assets 0.69 %   0.89 %   0.77 %   0.36 %
Core return on average assets 0.72 %   0.89 %   0.77 %   0.79 %
Return on average equity 5.41 %   6.18 %   5.50 %   2.87 %
Core return on average equity 5.62 %   6.18 %   5.51 %   6.12 %
Interest rate spread 2.23 %   2.39 %   2.20 %   2.45 %
Net interest margin 2.59 %   2.74 %   2.58 %   2.74 %
Non-interest expense to average assets 1.85 %   1.86 %   1.82 %   2.30 %
Efficiency ratio 64.55 %   62.30 %   63.09 %   78.28 %
Core efficiency ratio 62.78 %   62.30 %   62.54 %   59.60 %
Average interest-earning assets to average interest-bearing liabilities 127.34 %   130.22 %   128.82 %   127.27 %
Net charge-offs to average outstanding loans 0.24 %   0.14 %   0.09 %   0.05 %
               
(1) Ratios for the three months are annualized when appropriate.              


CAPITAL RATIOS:      
  December 31,
  2019   2018
Company:      
Total capital (to risk-weighted assets) 17.25 %   23.45 %
Tier 1 capital (to risk-weighted assets) 16.05 %   22.19 %
Common equity tier 1 capital (to risk-weighted assets) 15.94 %   22.19 %
Tier 1 capital (to adjusted total assets) 12.92 %   15.75 %
       
Bank:      
Total capital (to risk-weighted assets) 14.25 %   19.04 %
Tier 1 capital (to risk-weighted assets) 13.21 %   17.79 %
Common equity tier 1 capital (to risk-weighted assets) 13.21 %   17.79 %
Tier 1 capital (to adjusted total assets) 10.25 %   12.60 %


ASSET QUALITY:      
  December 31,
  2019   2018
               
  (Dollars in thousands)
Non-accrual loans $ 7,418     $ 2,789  
90+ and still accruing      
Non-performing loans 7,418     2,789  
Real estate owned     92  
Total non-performing assets $ 7,418     $ 2,881  
       
Non-performing loans to total gross loans 0.12 %   0.06 %
Non-performing assets to total assets 0.09 %   0.04 %
Allowance for loan losses $ 61,709     $ 62,342  
Allowance for loan losses to total non-performing loans 831.88 %   2,235.28 %
Allowance for loan losses to gross loans 1.00 %   1.26 %


LOAN DATA:      
  December 31,
  2019   2018
               
Real estate loans: (In thousands)
One-to-four family $ 2,077,079     $ 1,830,186  
Multifamily and commercial 2,919,985     2,142,154  
Construction 298,942     261,473  
Commercial business loans 483,215     333,876  
Consumer loans:      
Home equity loans and advances 388,127     393,492  
Other consumer loans 1,960     1,108  
Total gross loans 6,169,308     4,962,289  
Purchased credit-impaired ("PCI") loans 7,021     0  
Net deferred loan costs, fees and purchased premiums and discounts 21,237     16,893  
Allowance for loan losses (61,709 )   (62,342 )
Loans receivable, net $ 6,135,857     $ 4,916,840  


Reconciliation of GAAP to Non-GAAP Financial Measures  
               
Book and Tangible Book Value per Share  
      December 31,    
      2019   2018    
               
Total stockholders' equity     $ 982,517     $ 972,060      
Less: goodwill     (60,763 )   (5,716 )    
Less: core deposit intangible     (7,245 )        
Total tangible stockholders' equity     $ 914,509     $ 966,344      
               
Shares outstanding     113,765,387     115,889,175      
               
Book value per share     $ 8.64     $ 8.39      
Tangible book value per share     $ 8.04     $ 8.34      

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

Reconciliation of Core Net Income
  Three Months Ended December 31,   For the Year Ended December 31,
  2019   2018   2019   2018
                               
  (In thousands)
Net income $ 13,549     $ 14,867     $ 54,717     $ 22,736  
Less: gain on securities transactions, net of tax (695 )       (2,006 )   (88 )
Add: charitable contribution to foundation, net of tax benefit             27,466  
Add: merger-related expenses, net of tax 1,229         2,162      
Core net income $ 14,083     $ 14,867     $ 54,873     $ 50,114  


Return on Average Assets
  Three Months Ended December 31,   For the Year Ended December 31,
  2019   2018   2019   2018
                               
  (Dollars in thousands)
Net income $ 13,549     $ 14,867     $ 54,717     $ 22,736  
               
Average assets $ 7,777,343     $ 6,612,099     $ 7,086,854     $ 6,319,249  
               
Return on average assets 0.69 %   0.89 %   0.77 %   0.36 %
               
Core net income $ 14,083     $ 14,867     $ 54,873     $ 50,114  
               
Core return on average assets 0.72 %   0.89 %   0.77 %   0.79 %


Return on Average Equity
  Three Months Ended December 31,   For the Year Ended December 31,
  2019   2018   2019   2018
                               
  (Dollars in thousands)
Total average stockholders' equity $ 993,289     $ 954,953     $ 994,925     $ 791,889  
Less: gain on securities transactions, net of tax (695 )       (2,006 )   (88 )
Add: charitable contribution to foundation, net of tax benefit             27,466  
Add: merger-related expenses, net of tax 1,229         2,162      
Core average stockholders' equity $ 993,823     $ 954,953     $ 995,081     $ 819,267  
               
Return on average equity 5.41 %   6.18 %   5.50 %   2.87 %
               
Core return on core average equity 5.62 %   6.18 %   5.51 %   6.12 %


Efficiency Ratios
  Three Months Ended December 31,   For the Year Ended December 31,
  2019   2018   2019   2018
                               
  (Dollars in thousands)
Net interest income $ 47,428     $ 43,375     $ 172,371     $ 164,034  
Non-interest income 8,709     6,405     31,636     21,688  
Total income $ 56,137     $ 49,780     $ 204,007     $ 185,722  
               
Non-interest expense $ 36,237     $ 31,013     $ 128,701     $ 145,386  
               
Efficiency ratio 64.55 %   62.30 %   63.09 %   78.28 %
               
Non-interest income $ 8,709     $ 6,405     $ 31,636     $ 21,688  
Less: gain on securities transactions (891 )       (2,612 )   (116 )
Core non-interest income $ 7,818     $ 6,405     $ 29,024     $ 21,572  
               
Non-interest expense $ 36,237     $ 31,013     $ 128,701     $ 145,386  
Less: charitable contribution to foundation             (34,767 )
Less: merger-related expenses (1,553 )       (2,755 )    
Core non-interest expense $ 34,684     $ 31,013     $ 125,946     $ 110,619  
               
Core efficiency ratio 62.78 %   62.30 %   62.54 %   59.60 %

CONTACT:
Tony Rose

1st Senior Vice President, Marketing/Advertising
201-794-5828

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