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Press Release

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

Company Release - 1/30/2020 4:01 PM ET

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 investments127  136 
Total cash and cash equivalents75,547  42,201 
    
Debt securities available for sale, at fair value1,098,336  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 value2,855  1,890 
Federal Home Loan Bank stock69,579  58,938 
Loans held-for-sale, at fair value  8,081 
    
Loans receivable6,197,566  4,979,182 
Less: allowance for loan losses61,709  62,342 
Loans receivable, net6,135,857  4,916,840 
    
Accrued interest receivable22,092  18,894 
Real estate owned  92 
Office properties and equipment, net72,967  52,050 
Bank-owned life insurance211,415  184,488 
Goodwill and intangible assets68,582  6,085 
Other assets145,708  107,048 
Total assets$8,188,694  $6,691,618 
    
Liabilities and Stockholders' Equity   
Liabilities:   
Deposits$5,645,842  $4,413,873 
Borrowings1,407,022  1,189,180 
Advance payments by borrowers for taxes and insurance35,507  32,030 
Accrued expenses and other liabilities117,806  84,475 
Total liabilities7,206,177  5,719,558 
    
Stockholders' equity:   
Total stockholders' equity982,517  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 securities7,643  7,351  30,938  25,338 
Debt securities held to maturity2,090  1,895  8,180  7,147 
Federal funds and interest-earning deposits189  59  594  1,175 
Federal Home Loan Bank stock dividends893  900  3,597  2,761 
Total interest income71,026  61,785  261,083  226,290 
Interest expense:       
Deposits16,567  11,810  61,551  39,523 
Borrowings7,031  6,600  27,161  22,733 
Total interest expense23,598  18,410  88,712  62,256 
        
Net interest income47,428  43,375  172,371  164,034 
        
Provision for loan losses2,519  777  4,224  6,677 
        
Net interest income after provision for loan losses44,909  42,598  168,147  157,357 
        
Non-interest income:       
Demand deposit account fees1,362  1,067  4,478  3,987 
Bank-owned life insurance1,397  1,342  5,846  5,208 
Title insurance fees1,491  1,079  4,981  4,297 
Loan fees and service charges1,349  982  6,707  2,519 
Gain on securities transactions891   2,612  116 
Change in fair value of equity securities117    305   
Gain on sale of loans75  602  785  618 
Other non-interest income2,027  1,333  5,922  4,943 
Total non-interest income8,709  6,405  31,636  21,688 
        
Non-interest expense:       
Compensation and employee benefits22,971  19,978  84,256  69,907 
Occupancy4,552  3,784  16,180  14,547 
Federal deposit insurance premiums(32) 489  895  1,893 
Advertising621  995  3,932  4,137 
Professional fees1,694  1,795  5,913  4,619 
Data processing1,036  656  3,001  2,600 
Charitable contribution to foundation      34,767 
Merger-related expenses1,553     2,755    
Other non-interest expense3,842  3,316  11,769  12,916 
Total non-interest expense36,237  31,013  128,701  145,386 
        
Income before income tax expense17,381  17,990  71,082  33,659 
        
Income tax expense3,832  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 diluted109,958,999  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%
Securities1,415,495  9,733  2.73% 1,273,348  9,246  2.88%
Other interest-earning assets88,081  1,082  4.87% 63,821  959  5.96%
Total interest-earning assets7,277,935  71,026  3.87% 6,272,981  61,785  3.91%
Non-interest-earning assets499,408      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 accounts362,205  792  0.87% 270,981  449  0.66%
Savings and club deposits513,667  198  0.15% 510,543  201  0.16%
Certificates of deposit1,962,822  11,093  2.24% 1,662,619  8,062  1.92%
Total interest-bearing deposits4,452,579  16,567  1.48% 3,695,354  11,810  1.27%
FHLB advances1,246,444  6,853  2.18% 1,122,047  6,600  2.33%
Subordinated notes11,434  113  3.92%     %
Junior subordinated debentures4,970  65  5.19%     %
Total borrowings1,262,848  7,031  2.21% 1,122,047  6,600  2.33%
Total interest-bearing liabilities5,715,427  $23,598  1.64% 4,817,401  $18,410  1.52%
            
Non-interest-bearing liabilities:           
Non-interest-bearing deposits911,990      727,308     
Other non-interest-bearing liabilities156,637      112,437     
Total liabilities6,784,054      5,657,146     
Total stockholders' equity993,289      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 liabilities127.34%     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%
Securities1,380,801  39,118  2.83% 1,171,617  32,485  2.77%
Other interest-earning assets71,551  4,191  5.86% 111,218  3,936  3.54%
Total interest-earning assets6,675,305  $261,083  3.91% 5,994,750  $226,290  3.77%
Non-interest-earning assets411,549      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 accounts286,281  2,301  0.80% 299,389  1,538  0.51%
Savings and club deposits495,261  770  0.16% 628,746  993  0.16%
Certificates of deposit1,842,243  40,859  2.22% 1,514,843  25,597  1.69%
Total interest-bearing deposits4,044,452  61,551  1.52% 3,766,744  39,523  1.05%
FHLB advances1,133,280  26,983  2.38% 912,032  19,263  2.11%
Subordinated notes2,881  113  3.92%     %
Junior subordinated debentures1,253  65  5.19% 31,422  3,467  11.03%
Other borrowings    % 222  3  1.35%
Total borrowings1,137,414  27,161  2.39% 943,676  22,733  2.41%
Total interest-bearing liabilities5,181,866  $88,712  1.71% 4,710,420  $62,256  1.32%
            
Non-interest-bearing liabilities:           
Non-interest-bearing deposits776,850      704,155     
Other non-interest-bearing liabilities133,213      112,785     
Total liabilities6,091,929      5,527,360     
Total stockholders' equity994,925      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:         
Loans4.14% 4.16% 4.14% 4.25% 4.15%
Securities2.73  2.79  2.89  2.93  2.88 
Other interest-earning assets4.87  6.10  6.19  6.62  5.96 
Total interest-earning assets3.87% 3.89% 3.89% 4.00% 3.91%
          
Cost of interest-bearing liabilities:         
Total interest-bearing deposits1.48% 1.60% 1.56% 1.46% 1.27%
Total borrowings2.21  2.40  2.50  2.47  2.33 
Total interest-earning liabilities1.64% 1.77% 1.76% 1.69% 1.52%
          
Interest rate spread2.23% 2.12% 2.13% 2.31% 2.39%
Net interest margin2.59% 2.52% 2.53% 2.70% 2.74%
          
Ratio of interest-earning assets to interest-bearing liabilities127.34% 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 assets0.69% 0.89% 0.77% 0.36%
Core return on average assets0.72% 0.89% 0.77% 0.79%
Return on average equity5.41% 6.18% 5.50% 2.87%
Core return on average equity5.62% 6.18% 5.51% 6.12%
Interest rate spread2.23% 2.39% 2.20% 2.45%
Net interest margin2.59% 2.74% 2.58% 2.74%
Non-interest expense to average assets1.85% 1.86% 1.82% 2.30%
Efficiency ratio64.55% 62.30% 63.09% 78.28%
Core efficiency ratio62.78% 62.30% 62.54% 59.60%
Average interest-earning assets to average interest-bearing liabilities127.34% 130.22% 128.82% 127.27%
Net charge-offs to average outstanding loans0.24% 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 loans7,418  2,789 
Real estate owned  92 
Total non-performing assets$7,418  $2,881 
    
Non-performing loans to total gross loans0.12% 0.06%
Non-performing assets to total assets0.09% 0.04%
Allowance for loan losses$61,709  $62,342 
Allowance for loan losses to total non-performing loans831.88% 2,235.28%
Allowance for loan losses to gross loans1.00% 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 commercial2,919,985  2,142,154 
Construction298,942  261,473 
Commercial business loans483,215  333,876 
Consumer loans:   
Home equity loans and advances388,127  393,492 
Other consumer loans1,960  1,108 
Total gross loans6,169,308  4,962,289 
Purchased credit-impaired ("PCI") loans7,021  0 
Net deferred loan costs, fees and purchased premiums and discounts21,237  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 tax1,229    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 assets0.69% 0.89% 0.77% 0.36%
        
Core net income$14,083  $14,867  $54,873  $50,114 
        
Core return on average assets0.72% 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 tax1,229    2,162   
Core average stockholders' equity$993,823  $954,953  $995,081  $819,267 
        
Return on average equity5.41% 6.18% 5.50% 2.87%
        
Core return on core average equity5.62% 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 income8,709  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 ratio64.55% 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 ratio62.78% 62.30% 62.54% 59.60%

CONTACT:
Tony Rose

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

Source: Columbia Financial, Inc.