Columbia Financial, Inc. Announces Third Quarter Earnings

Fair Lawn, New Jersey (October 25, 2018): Columbia Financial, Inc. (the “Company”) (NASDAQ: CLBK) reported net income of $10.8 million, or $0.10 per basic and diluted share, for the three months ended September 30, 2018, compared to net income of $1.5 million for the three months ended September 30, 2017. The September 30, 2018 quarterly earnings reflect increased tax expense of $2.2 million as a result of the changes in the New Jersey corporate business tax signed into law on July 1, 2018 (Assembly Bill 4202). The September 30, 2017 quarterly earnings reflected $3.3 million of cash contributions to the Columbia Bank Foundation.

For the nine months ended September 30, 2018, the Company reported net income of $7.9 million, or $0.07 per basic and diluted share, compared to net income of $21.1 million for the nine months ended September 30, 2017. The decrease in earnings for the nine month period is driven primarily by the one-time contribution of shares of the Company's common stock to the Columbia Bank Foundation during the quarter ended June 30, 2018 in connection with the completion of the minority stock offering. Excluding the charitable contribution and gains or losses on the sale of investment securities, core net income would have been $35.3 million for the nine months ended September 30, 2018, an increase of 34.6%, as compared to core net income of $26.2 million for the nine months ended September 30, 2017.

Mr. Thomas J. Kemly, President and Chief Executive Officer commented: "We experienced solid financial results during the quarter driven primarily by loan growth within the multifamily and commercial sectors and a slight improvement of our yield on investment securities. We do, however, continue to experience margin compression driven by the increasing cost of deposits and borrowings given the current interest rate and competitive environment".

Results of Operations for the Three Months Ended September 30, 2018 and September 30, 2017

Net income of $10.8 million was recorded for the three months ended September 30, 2018, compared to net income of $1.5 million for the three months ended September 30, 2017. The increase of $9.3 million was primarily attributable to a $4.6 million increase in net interest income coupled with a $4.2 million decrease in the provision for loan losses. Non-recurring expenses recorded during the three months ended September 30, 2017 included $3.3 million of cash contributions to the Columbia Bank Foundation, a $2.1 million loss on the sale of investment securities and a $959 thousand loss on the sale of loans.
On July 1, 2018, the State of New Jersey enacted tax law changes which impacted New Jersey's corporation business tax. Most notably is a new surtax of 2.5% which increases the New Jersey corporate business state tax rate from 9.0% to 11.5% which was applied retroactively to January 1, 2018. The Company has completed its analysis of the changes in the state tax laws and recorded the effect of the provisions in our financial results for the period ended September 30, 2018 as further discussed below.
The Company’s net interest income was $40.6 million for the three months ended September 30, 2018, an increase of $4.6 million, or 12.9% compared to $36.0 million for the three months ended September 30, 2017. The increase in net interest income was attributable to a $9.9 million increase in interest and dividend income which was partially offset by a $5.3 million increase in interest expense. The increase in interest and dividend income for the quarter ended September 30, 2018 was largely due to a $434.5 million increase in average loans and a $564.3 million increase in average investment securities.

The yield on total average earning assets increased five basis points for the quarter ended September 30, 2018. The yield on average loans increased 11 basis points to 4.01% from 3.90%, while the yield on investment securities increased 18 basis points to 2.75% from 2.57% for the quarter ended September 30, 2018 as compared to the quarter ended September 30, 2017.
The $3.5 million increase in interest expense on deposits was largely the result of a $153.1 million increase in the average balance of interest bearing deposits combined with a 36 basis point increase in the cost of deposits which was driven by higher market rates and a shift in the mix between core deposits and certificates of deposit.




The Company's net interest margin for the quarter ended September 30, 2018 decreased 14 basis points to 2.65% compared to 2.79% for the quarter ended September 30, 2017. The weighted average yield on interest-earning assets increased five basis points to 3.76% for the quarter ended September 30, 2018 compared to 3.71% for the quarter ended September 30, 2017. The cost of average total interest bearing liabilities increased 35 basis points to 1.47% for the quarter ended September 30, 2018 as compared to 1.12% for the quarter ended September 30, 2017.
The provision for loan losses was $1.5 million for the three months ended September 30, 2018, a decrease of approximately $4.2 million from $5.7 million for the three months ended September 30, 2017. The decrease is driven primarily by the decline in problem loans.
Non-interest income was $5.3 million for the three months ended September 30, 2018, an increase of $3.7 million from $1.6 million for the three months ended September 30, 2017. The increase is attributed to a $2.1 million loss on the sale of investment securities and a $959 thousand loss on mortgage loans sold to a third party during the quarter ended September 30, 2017 that did not reoccur during the quarter ended September 30, 2018. Proceeds from the sale of investment securities were reinvested into higher yielding investment securities.
Non-interest expense was $26.6 million for the three months ended September 30, 2018, a decrease of $3.6 million, or 12.0%, compared to $30.2 million for the three months ended September 30, 2017. The decrease was driven primarily by cash contributions totaling $3.3 million to the Columbia Bank Foundation during the quarter ended September 30, 2017 that did not reoccur during the quarter ended September 30, 2018.
Income tax expense was $7.0 million for the quarter ended September 30, 2018 compared to $0.2 million of income tax expense for the quarter ended September 30, 2017. The Company recorded an additional $2.2 million of tax expense for the three months ended September 30, 2018 related to the New Jersey corporate business surtax of 2.5% and revaluation of our gross deferred tax assets and liabilities.
Results of Operations for the Nine Months Ended September 30, 2018 and September 30, 2017

For the nine months ended September 30, 2018, net income decreased $13.2 million to $7.9 million, compared to net income of $21.1 million for the nine months ended September 30, 2017. The decrease was primarily attributable to the one-time $34.8 million contribution of shares of the Company's common stock to the Columbia Bank Foundation and related tax benefit associated with the contribution, partially offset by a $14.3 million increase in net interest income, a $2.1 million loss on the sale of investment securities and a $959 thousand loss on mortgage loans sold to a third party during the nine months ended September 30, 2017 that did not reoccur during the nine months ended September 30, 2018.

Net interest income was $120.7 million for the nine months ended September 30, 2018, an increase of $14.3 million, or 13.4% compared to $106.4 million for the nine months ended September 30, 2017. The increase in net interest income was attributable to a $24.4 million increase in interest and dividend income which was partially offset by a $10.1 million increase in interest expense. The increase in interest and dividend income for the nine months ended September 30, 2018 was primarily the result of a $341.2 million increase in average loans and a $467.8 million increase in average investment securities.

The yield on average loans increased eight basis points to 3.99% from 3.91% and the yield on investment securities increased 15 basis points to 2.73% from 2.58% for the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017.
For the nine months ended September 30, 2018, interest expense on deposits was $27.7 million, an increase of $8.3 million or 43.1% compared to $19.4 million for the nine months ended September 30, 2017. The increase was primarily the result of a $403.5 million increase in the average balance of total interest bearing deposits coupled with a 22 basis point increase in the cost of deposits.
   




The Company's net interest margin for the nine months ended September 30, 2018 decreased 10 basis points to 2.73% compared to 2.83% for the nine months ended September 30, 2017. The weighted average yield on interest-earning assets increased one basis point to 3.73% for the nine months ended September 30, 2018 compared to 3.72% for the nine months ended September 30, 2017. The cost of average total interest bearing liabilities increased 16 basis points to 1.25% for the nine months ended September 30, 2018 compared to 1.09% for the nine months ended September 30, 2017.
For the nine months ended September 30, 2018, the provision for loan losses was $5.9 million, representing a decrease of $526 thousand as compared to $6.4 million for the nine months ended September 30, 2017. The current provision reflects a continued decline in our non-performing loans and a decrease in net charge-offs for the comparable periods.
Non-interest income was $15.3 million for the nine months ended September 30, 2018, an increase of $3.0 million, or 24.6% compared to $12.3 million for the nine months ended September 30, 2017. The increase was driven primarily by $2.1 million of losses recorded on the sale of investment securities and losses of $959 thousand on the sale of loans during the nine months ended September 30, 2017, which did not reoccur in the 2018 period. Proceeds from the sale of investment securities were reinvested into higher yielding investment securities.
For the nine months ended September 30, 2018, non-interest expense was $114.4 million, an increase of $34.4 million, or 43.0%, compared to $80.0 million for the nine months ended September 30, 2017. The increase was driven primarily by the $34.8 million contribution of shares of Company common stock to the Columbia Bank Foundation during the nine months ended September 30, 2018.
Income tax expense was $7.8 million for the nine months ended September 30, 2018, a decrease of $3.3 million, or 30.0%, compared to $11.1 million for the nine months ended September 30, 2017. The Company recorded an additional $2.2 million of tax expense in our financial results for the nine months ended September 30, 2018 related to the New Jersey corporate business surtax of 2.5% and revaluation of our gross deferred tax assets and liabilities.
Balance Sheet Summary

Total assets increased $801.4 million, or 13.9%, to $6.6 billion at September 30, 2018 from $5.8 billion at December 31, 2017. The increase in total assets was primarily attributed to increases in loans receivable, net, of $442.8 million and available-for-sale securities of $276.5 million. Loan growth was funded by $492.4 million of net proceeds from the minority stock offering and increased borrowings and deposits.

Securities available-for-sale increased $276.5 million to $987.1 million at September 30, 2018 from $710.6 million at December 31, 2017. Securities held-to-maturity increased $24.6 million to $264.2 million at September 30, 2018 from $239.6 million at December 31, 2017. The net increase was driven by the purchase of investment securities funded by a portion of the proceeds received in connection with the minority stock offering.
Loans receivable, net increased $442.8 million to $4.8 billion at September 30, 2018 from $4.4 billion at December 31, 2017. Multifamily and commercial, one-to-four family, construction loans and commercial business lending contributed $217.9 million, $207.0 million, $36.1 million and $26.3 million respectively to our loan growth. Home equity loans and advances declined $44.0 million between December 31, 2017 and September 30, 2018. The decrease in home equity loans and advances was driven by lower originations.
Bank-owned life insurance increased $32.6 million to $183.1 million at September 30, 2018 from $150.5 million at December 31, 2017. The increase is primarily the result of the purchase of $30 million of additional bank-owned life insurance during the quarter ended September 30, 2018.







Total liabilities increased $326.4 million, or 6.2%, to $5.6 billion at September 30, 2018 from $5.3 billion at December 31, 2017. The increase is primarily attributable to an increase in borrowings of $206.7 million and total deposits of $109.0 million to fund the increased loan demand. In August 2018, the Company redeemed, in full, $51.5 million of junior subordinated debt securities. The increase in total deposits is attributed to higher certificate of deposit balances.

Total stockholders’ equity increased $475.0 million or 100.6%, to $947.0 million at September 30, 2018 from $472.1 million at December 31, 2017. The net increase was primarily due to the completion of the minority stock offering and earnings for the period.

Asset Quality
The Company's total non-performing loans at September 30, 2018 totaled $3.9 million, or 0.08% of total loans as compared to $6.5 million or 0.15% of total loans at December 31, 2017, and $3.8 million or 0.08% of total loans at June 30, 2018. The Company held $251 thousand in foreclosed assets at September 30, 2018, as compared to $959 thousand at December 31, 2017 and $660 thousand at June 30, 2018. Non-performing assets as a percentage of total assets were 0.06% at September 30, 2018 as compared to 0.13% at December 31, 2017 and 0.07% at June 30, 2018.
The Company transferred classified residential and home equity loans totaling $2.4 million from the loans held-for-investment portfolio to the loans held-for-sale portfolio during the three months ended September 30, 2018. The Company recorded charge-offs on these transferred loans totaling $482 thousand during the three months ended September 30, 2018. The pending loan sale is expected to close during the fourth quarter of 2018.
The Company's allowance for loan losses was $63.4 million, or 1.30% of total loans at September 30, 2018, as compared to $58.2 million or 1.31% of total loans at December 31, 2017 and $62.5 million or 1.35% of total loans at June 30, 2018.
About Columbia Financial, Inc.

The unaudited 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 49 full-service 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,” “project,” “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 borrowers’ ability to service and repay the Company’s loans; changes in the value of securities in the Company’s investment 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 investments; legislative changes and changes in government regulation; changes in accounting standards and practices; the risk that goodwill and intangibles recorded in the Company’s 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 deployment of the proceeds raised in its minority public offering; and changes in assumptions used in making such forward-looking statements. Additionally, other risks and uncertainties may be described in the Company's Annual Reports on Form 10-K in the future, Quarterly Reports on Form 10-Q and other reports 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

We believe that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends and financial position. We utilize these measures for internal planning and forecasting purposes. We believe that our presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting our business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. 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.


5



COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)

 
September 30,

December 31,
 
2018

2017
 
(In thousands)
Assets



Cash and cash equivalents
$
54,706


$
65,334

Short-term investments
128


164

Total cash and cash equivalents
54,834


65,498

 
 
 
 
Securities available-for-sale, at fair value
987,076


710,570

Securities held-to-maturity, at amortized cost (fair value of $251,417 and $236,125 at September 30, 2018 and December 31, 2017, respectively)
264,184


239,618

Federal Home Loan Bank stock
56,532


44,664

Loans held-for-sale, at fair value
1,860



Loans receivable, net
4,843,297


4,400,470

Accrued interest receivable
18,594


15,915

Real estate owned
251


959

Office properties and equipment, net
48,671


42,620

Bank-owned life insurance
183,145


150,521

Goodwill and intangible assets
5,940


5,997

Other assets
103,469


89,668

Total assets
$
6,567,853


$
5,766,500





Liabilities and Stockholders' Equity



Liabilities:



Deposits
$
4,372,345


$
4,263,315

Borrowings
1,135,730


929,057

Advance payments by borrowers for taxes and insurance
32,732


25,563

Accrued expenses and other liabilities
80,000


76,495

Total liabilities
5,620,807


5,294,430





Stockholders' equity:



Preferred stock, $0.01 par value. Authorized 10,000,000 shares; issued none



Common stock, $0.01 par value. Authorized 500,000,000 shares; 115,889,175 shares issued and outstanding at September 30, 2018 and $0 at December 31, 2017
1,159



Additional paid-in capital
526,716



Retained earnings
545,349


537,480

Accumulated other comprehensive loss
(81,770
)

(65,410
)
Unallocated common stock held by the Employee Stock Ownership Plan
(44,408
)


Total stockholders' equity
947,046


472,070

Total liabilities and stockholders' equity
$
6,567,853


$
5,766,500




6



COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except for per share data)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
Interest and dividend income:
 
 
 
 
 
 
 
Loans receivable
$
48,585

 
$
42,891

 
$
138,291

 
$
125,474

Securities available-for-sale
6,651

 
4,164

 
17,987

 
12,856

Securities held-to-maturity
1,798

 
68

 
5,253

 
68

Federal funds and interest earning deposits
44

 
185

 
1,116

 
274

Federal Home Loan Bank stock dividends
617

 
512

 
1,861

 
1,426

Total interest and dividend income
57,695

 
47,820

 
164,508

 
140,098

Interest expense:
 
 
 
 
 
 
 
Deposits
10,420

 
6,911

 
27,713

 
19,366

Borrowings
6,692

 
4,949

 
16,134

 
14,357

Total interest expense
17,112

 
11,860

 
43,847

 
33,723

 
 
 


 
 
 

Net interest income
40,583

 
35,960

 
120,661

 
106,375

 
 
 


 
 
 

Provision for loan losses
1,500

 
5,676

 
5,900

 
6,426

 
 
 

 
 
 

Net interest income after provision for loan losses
39,083

 
30,284

 
114,761

 
99,949

 
 
 
 
 
 
 
 
Non-interest income:
 
 
 
 
 
 
 
Demand deposit account fees
1,000

 
982

 
2,920

 
2,818

Bank-owned life insurance
1,309

 
1,091

 
3,865

 
3,849

Title insurance fees
1,189

 
910

 
3,218

 
2,826

Loan fees and service charges
616

 
519

 
1,537

 
1,577

(Loss) Gain on securities transactions, net

 
(2,099
)
 
116

 
(2,099
)
(Loss) Gain on sale of loans receivable, net

 
(959
)
 
15

 
(789
)
(Loss) Gain on sale of real estate owned
(32
)
 
(3
)
 
(45
)
 
245

Other non-interest income
1,208

 
1,189

 
3,654

 
3,839

Total non-interest income
5,290

 
1,630

 
15,280

 
12,266

 
 
 
 
 
 
 
 
Non-interest expense:
 
 
 
 
 
 
 
Compensation and employee benefits expense
16,654

 
16,700

 
49,928

 
47,983

Occupancy expense
3,529

 
3,380

 
10,763

 
10,276

Federal insurance premiums expense
503

 
415

 
1,404

 
1,240

Advertising expense
1,003

 
1,564

 
3,142

 
3,367

Professional fees expense
341

 
577

 
954

 
1,135

Data processing expense
630

 
570

 
1,944

 
1,714

Charitable contribution to foundation


3,251

 
34,767


3,510

Other non-interest expense
3,930

 
3,749

 
11,470

 
10,770

Total non-interest expense
26,590

 
30,206

 
114,372

 
79,995

 
 
 
 
 
 
 
 
Income before income tax expense
17,783

 
1,708

 
15,669

 
32,220

 
 
 

 
 
 

Income tax expense
6,956

 
194

 
7,800

 
11,140

 
 
 

 
 
 

Net income
$
10,827

 
$
1,514

 
$
7,869

 
$
21,080

 
 
 
 
 
 
 
 
Basic and diluted earnings per share
$
0.10

 
N/A

 
$
0.07

 
N/A

Weighted average shares outstanding
111,391,704

 
N/A

 
111,372,033

 
N/A


7



COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Average Balances/Yields (Unaudited)
 
For the Three Months Ended
 
September 30, 2018
 
September 30, 2017
 
Average Balance
 
Interest and Dividends
 
Yield / Cost
 
Average Balance
 
Interest and Dividends
 
Yield / Cost
 
(In thousands)
 
 
 
(In thousands)
 
 
Interest-earnings assets:
 
 
 
 
 
 
 
 
 
 
 
Loans
$
4,802,693

 
$
48,585

 
4.01
%
 
$
4,368,174

 
$
42,891

 
3.90
%
Investment securities
1,218,793

 
8,449

 
2.75
%
 
654,466

 
4,232

 
2.57
%
Other interest-earning assets
58,906

 
661

 
4.45
%
 
94,326

 
697

 
2.93
%
Total interest-earning assets
6,080,392

 
57,695

 
3.76
%
 
5,116,966

 
47,820

 
3.71
%
Non-interest-earning assets
321,980

 
 
 
 
 
265,069

 
 
 
 
Total assets
$
6,402,372

 
 
 
 
 
$
5,382,035

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
Interest bearing transaction accounts
$
1,236,046

 
$
2,919

 
0.94
%
 
$
1,281,080

 
$
2,080

 
0.64
%
Money market deposit accounts
257,466

 
367

 
0.57
%
 
271,421

 
193

 
0.28
%
Savings deposit accounts
527,706

 
213

 
0.16
%
 
550,567

 
213

 
0.15
%
Certificates of deposit
1,552,677

 
6,921

 
1.77
%
 
1,317,739

 
4,425

 
1.33
%
Total interest-bearing deposits
3,573,895

 
10,420

 
1.16
%
 
3,420,807

 
6,911

 
0.80
%
FHLB advances
1,029,858

 
5,595

 
2.16
%
 
671,347

 
3,508

 
2.07
%
Junior subordinated debt
24,977

 
1,094

 
17.38
%
 
50,634

 
1,044

 
8.18
%
Other borrowings
543

 
3

 
2.19
%
 
40,000

 
397

 
3.94
%
Total borrowings
1,055,378

 
6,692

 
2.52
%
 
761,981

 
4,949

 
2.58
%
Total interest-bearing liabilities
4,629,273

 
$
17,112

 
1.47
%
 
4,182,788

 
$
11,860

 
1.12
%
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits
710,774

 
 
 
 
 
635,143

 
 
 
 
Other non-interest bearing liabilities
114,097

 
 
 
 
 
99,771

 
 
 
 
Total liabilities
5,454,144

 
 
 
 
 
4,917,702

 
 
 
 
Total equity
948,228

 
 
 
 
 
464,333

 
 
 
 
Total liabilities and equity
$
6,402,372

 
 
 
 
 
$
5,382,035

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
40,583

 
 
 
 
 
$
35,960

 
 
Interest rate spread
 
 
 
 
2.29
%
 
 
 
 
 
2.59
%
Net interest-earning assets
$
1,451,119

 
 
 
 
 
$
934,178

 
 
 

Net interest margin
 
 
 
 
2.65
%
 
 
 
 
 
2.79
%
Ratio of interest-earning assets to interest-bearing liabilities
131.35
%
 
 
 
 
 
122.33
%
 
 
 
 


8



 
For the Nine Months Ended
 
September 30, 2018
 
September 30, 2017
 
Average Balance
 
Interest and Dividends
 
Yield / Cost
 
Average Balance
 
Interest and Dividends
 
Yield / Cost
 
(In thousands)
 
 
 
(In thousands)
 
 
Interest-earnings assets:
 
 
 
 
 
 
 
 
 
 
 
Loans
$
4,636,463

 
$
138,291

 
3.99
%
 
$
4,295,256

 
$
125,474

 
3.91
%
Investment securities
1,137,333

 
23,240

 
2.73
%
 
669,567

 
12,924

 
2.58
%
Other interest-earning assets
127,191

 
2,977

 
3.13
%
 
67,869

 
1,700

 
3.35
%
Total interest-earning assets
5,900,987

 
$
164,508

 
3.73
%
 
5,032,692

 
$
140,098

 
3.72
%
Non-interest-earning assets
319,169

 
 
 
 
 
257,707

 
 
 
 
Total assets
$
6,220,156

 
 
 
 
 
$
5,290,399

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
Interest bearing transaction accounts
$
1,348,217

 
$
8,298

 
0.82
%
 
$
1,290,069

 
$
5,735

 
0.59
%
Money market deposit accounts
308,962

 
1,088

 
0.47
%
 
272,430

 
574

 
0.28
%
Savings deposit accounts
668,580

 
792

 
0.16
%
 
546,438

 
630

 
0.15
%
Certificates of deposit
1,465,043

 
17,535

 
1.60
%
 
1,278,414

 
12,427

 
1.30
%
Total interest-bearing deposits
3,790,802

 
27,713

 
0.98
%
 
3,387,351

 
19,366

 
0.76
%
FHLB advances
841,257

 
12,660

 
2.01
%
 
652,946

 
10,047

 
2.06
%
Junior subordinated debt
42,011

 
3,468

 
11.04
%
 
50,621

 
3,133

 
8.27
%
Other borrowings
297

 
6

 
2.70
%
 
40,000

 
1,177

 
3.93
%
Total borrowings
883,565

 
16,134

 
2.44
%
 
743,567

 
14,357

 
2.58
%
Total interest-bearing liabilities
4,674,367

 
$
43,847

 
1.25
%
 
4,130,918

 
$
33,723

 
1.09
%
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits
696,352

 
 
 
 
 
612,802

 
 
 
 
Other non-interest bearing liabilities
112,499

 
 
 
 
 
94,134

 
 
 
 
Total liabilities
5,483,218

 
 
 
 
 
4,837,854

 
 
 
 
Total equity
736,938

 
 
 
 
 
452,545

 
 
 
 
Total liabilities and equity
$
6,220,156

 
 
 
 
 
$
5,290,399

 
 
 
 
 

 
 
 
 
 

 
 
 
 
Net interest income
 
 
$
120,661

 
 
 
 
 
$
106,375

 
 
Interest rate spread
 
 
 
 
2.48
%
 
 
 
 
 
2.63
%
Net interest-earning assets
$
1,226,620

 
 
 
 
 
$
901,774

 
 
 
 
Net interest margin
 
 
 
 
2.73
%
 
 
 
 
 
2.83
%
Ratio of interest-earning assets to interest-bearing liabilities
126.24
%
 
 
 
 
 
121.83%
 
 
 
 




9






The following table summarizes the quarterly net interest margin for the previous five quarters.
 
Average Yields/Costs by Quarter
 
September 30, 2018
 
June 30, 2018
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
Yield on interest earning assets:
 
 
 
 
 
 
 
 
 
Loans
4.01
%
 
3.98

 
3.96

 
3.91

 
3.90
%
Investment securities
2.75
%
 
2.70

 
2.74

 
2.64

 
2.57
%
Other interest-earning assets
4.45
%
 
2.99

 
2.77

 
3.99

 
2.93
%
Total interest-earning assets
3.76
%
 
3.70

 
3.71

 
3.71

 
3.71
%
 
 
 
 
 
 
 
 
 
 
Cost of interest bearing liabilities:
 
 
 
 
 
 
 
 
 
Total interest-bearing deposits
1.16
%
 
0.94

 
0.85

 
0.85

 
0.80
%
Total borrowings
2.52
%
 
2.59

 
2.22

 
2.50

 
2.58
%
Total interest-earning liabilities
1.47
%
 
1.20

 
1.09

 
1.13

 
1.12
%
 
 
 
 
 
 
 
 
 
 
Interest rate spread
2.29
%
 
2.50

 
2.62

 
2.58

 
2.59
%
Net interest margin
2.65
%
 
2.76

 
2.80

 
2.79

 
2.79
%
 
 
 
 
 
 
 
 
 
 
Ratio of interest-earning assets to interest bearing liabilities
131.35
%
 
127.44

 
119.93

 
122.50

 
122.33
%



10



COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Selected Financial Highlights (Unaudited)

SELECTED FINANCIAL RATIOS:
 
 
 
 
 
 
 
 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
Return on average assets
0.67
%
 
0.11
%
 
0.17
%
 
0.53
%
Core return on average assets
0.67
%
 
0.48
%
 
0.76
%
 
0.66
%
Return on average equity
4.53
%
 
1.29
%
 
1.43
%
 
6.23
%
Core return on average equity
4.53
%
 
5.52
%
 
6.17
%
 
7.70
%
Interest rate spread
2.29
%
 
2.59
%
 
2.48
%
 
2.63
%
Net interest margin
2.65
%
 
2.79
%
 
2.73
%
 
2.83
%
Non-interest expense to average assets
1.65
%
 
2.23
%
 
2.46
%
 
2.02
%
Efficiency ratio
57.96
%
 
80.36
%
 
84.13
%
 
67.43
%
Core efficiency ratio
57.96
%
 
67.92
%
 
58.61
%
 
63.35
%
Average interest-earning assets to average interest-bearing liabilities
131.35
%
 
122.33
%
 
126.24
%
 
121.83
%

CAPITAL RATIOS:
 
 
 
 
September 30,
 
December 31,
 
2018
 
2017
Columbia Financial, Inc.:
 
 
 
Total capital (to risk-weighted assets)
23.40
%
 
15.01
%
Tier 1 capital (to risk-weighted assets)
22.15
%
 
13.76
%
Common equity Tier 1 capital (to risk-weighted assets)
22.15
%
 
12.55
%
Tier 1 capital (to adjusted total assets)
16.00
%
 
10.54
%
 
 
 
 
Columbia Bank:
 
 
 
Total capital (to risk-weighted assets)
18.96
%
 
14.90
%
Tier 1 capital (to risk-weighted assets)
17.71
%
 
13.64
%
Common equity Tier 1 capital (to risk-weighted assets)
17.71
%
 
13.64
%
Tier 1 capital (to adjusted total assets)
12.74
%
 
10.44
%



11



ASSET QUALITY:
 
 
 
($ in thousands)
September 30,
 
December 31,
 
2018
 
2017
 
 
 
 
Non-accrual loans
$
3,927

 
$
6,525

90+ and still accruing

 

Non-performing loans
3,927

 
6,525

Foreclosed assets
251

 
959

Total non-performing assets
$
4,178

 
$
7,484

 


 

Non-performing loans to total loans
0.08
%
 
0.15
%
Non-performing assets to total assets
0.06
%
 
0.13
%
Allowance for loan losses
$
63,406

 
$
58,178

Allowance for loan losses to total non-performing loans
1,614.62
%
 
891.62
%
Allowance for loan losses to gross loans
1.30
%
 
1.31
%

LOAN DATA:
 
 
 
($ in thousands)
September 30,
 
December 31,
 
2018
 
2017
Real estate loans:
 
 
 
One to four family
$
1,823,266

 
$
1,616,259

Multifamily and commercial
2,089,130

 
1,871,210

Construction
269,729

 
233,652

Commercial business loans
304,221

 
277,970

Consumer loans:
 
 
 
Home equity loans and advances
404,028

 
448,020

Other consumer loans
1,028

 
998

Total loans
4,891,402

 
4,448,109

Net deferred loan costs
15,301

 
10,539

Allowance for loan losses
(63,406
)
 
(58,178
)
Loans receivable, net
$
4,843,297

 
$
4,400,470


Reconciliation of GAAP to Non-GAAP Financial Measures
 
 
 
 
 
 
 
 
 
Book and Tangible Book Value per Share
 
($ in thousands)
 
 
 
 
At September 30,
 
At December 31,
 
 
 
 
 
2018
 
2017
 
 
 
 
 
 
 
 
Total stockholders' equity
 
 
 
 
$
947,046

 
$
472,070

Less: goodwill
 
 
 
 
5,716

 
5,716

Total tangible stockholders' equity
 
 
 
 
$
941,330

 
$
466,354

 
 
 
 
 
 
 
 
Shares outstanding
 
 
 
 
115,889,175

 

 
 
 
 
 
 
 
 
Book value per share
 
 
 
 
$
8.17

 
N/A

Tangible book value per share
 
 
 
 
$
8.12

 
N/A

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

12



Reconciliation to Core Net Income
 
 
 
 
 
 
 
($ in thousands)
Three months ended September 30,
Nine months ended September 30,

2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
Net income
$
10,827

 
$
1,514

 
$
7,869

 
$
21,080

Add: contribution to foundation, net of tax

 
2,113

 
27,466

 
2,281

Add: losses (gains) on sale of investment securities, net of tax


2,834


(84
)

2,834

Core net income
$
10,827

 
$
6,461

 
$
35,251

 
$
26,195

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on Average Assets
($ in thousands)
Three months ended September 30,
Nine months ended September 30,

2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
Net income
$
10,827

 
$
1,514

 
$
7,869

 
$
21,080

Average assets
6,402,372

 
5,382,035

 
6,220,156

 
5,290,399

 
 
 
 
 
 
 
 
Return on average assets
0.67
%
 
0.11
%
 
0.17
%
 
0.53
%
 
 
 
 
 
 
 
 
Add: contribution to foundation, net of tax

 
2,113

 
27,466

 
2,281

Add: losses (gains) on sale of investment securities, net of tax


2,834


(84
)

2,834

Core net income
$
10,827

 
$
6,461

 
$
35,251

 
$
26,195

 
 
 
 
 
 
 
 
Core return on average assets
0.67
%
 
0.48
%
 
0.76
%
 
0.66
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on Average Equity
($ in thousands)
Three months ended September 30,
Nine months ended September 30,

2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
Total average stockholders' equity
$
948,228

 
$
464,333

 
$
736,938

 
$
452,545

 
 
 
 
 
 
 
 
Net income
10,827

 
1,514

 
7,869

 
21,080

 
 
 
 
 
 
 
 
Return on average equity
4.53
%
 
1.29
%
 
1.43
%
 
6.23
%
 
 
 
 
 
 
 
 
Add: contribution to foundation, net of tax

 
2,113

 
27,466

 
2,281

Add: losses (gains) on sale of investment securities, net of tax


2,834


(84
)

2,834

Core average stockholders' equity
948,228

 
466,446

 
764,404

 
454,826

Core net income
$
10,827

 
$
6,461

 
$
35,251

 
$
26,195

 
 
 
 
 
 
 
 
Core return on average equity
4.53
%
 
5.52
%
 
6.17
%
 
7.70
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

13



Efficiency Ratios
($ in thousands)
Three months ended September 30,
Nine months ended September 30,

2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
Net interest income
$
40,583

 
$
35,960

 
$
120,661

 
$
106,375

Non-interest income
5,290

 
1,630

 
15,280

 
12,266

Total income
$
45,873

 
$
37,590

 
$
135,941

 
$
118,641

 
 
 
 
 
 
 
 
Non-interest expense
$
26,590

 
$
30,206

 
$
114,372

 
$
79,995

 
 
 
 
 
 
 
 
Efficiency ratio
57.96
%
 
80.36
%
 
84.13
%
 
67.43
%
 
 
 
 
 
 
 
 
Add: losses (gains) on sale of investment securities

 
2,099

 
(116
)
 
2,099

Core non-interest income
5,290

 
3,729

 
15,164

 
14,365

 
 
 
 
 
 
 
 
Less: contribution to charitable foundation

 
3,251

 
34,767

 
3,510

Core non-interest expense
$
26,590

 
$
26,955

 
$
79,605

 
$
76,485

 

 

 

 

Core efficiency ratio
57.96
%
 
67.92
%
 
58.61
%
 
63.35
%



14

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