The Company’s Board of Directors consists of ten (10) members, all of whom are independent under the current listing standards of the Nasdaq Stock Market, Inc. except for Thomas J. Kemly, who is the President and Chief Executive Officer of the Company and the Bank. In determining the independence of its directors, the Board considered transactions, relationships or arrangements between the Company, the Bank and its directors that are not required to be disclosed in Form 10-K/A under the heading “Transactions with Related Persons.” The Board is divided into three classes with approximately three-year staggered terms, with approximately one-third of the directors elected each year.

Set forth in the table below is the list of our directors, together with certain biographical information, including their ages as of April 27, 2022.

Information relating to our executive officers is presented in Part I, Item 1, Business, under the caption “Our Executive Officers” of the Original Form 10-K, ~~contains forward-looking statements, which can be identified~~and is hereby incorporated in this Part III, Item 10 by reference.

Compliance with Section 16(a) of the ~~use~~Securities Exchange Act of ~~words such as “believes,” “expects,” “anticipates,” “estimates” or similar expressions. Forward-looking statements include, but are not limited to:~~

The capital standards require the maintenance of common equity Tier 1 capital, Tier 1 capital and Total capital to risk-weighted assets of at least 4.5%, 6% and 8%, respectively. The regulations also establish a minimum required leverage ratio of at least 4% Tier 1 capital. Common equity Tier 1 capital is generally defined as common stockholders’ equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 capital plus additional Tier 1 capital. Additional Tier 1 capital generally includes certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus additional Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt. Also included in Tier 2 capital is the allowance for loan losses limitedservice, up to a maximum of ~~1.25%~~45 years. If a participant elects to retire upon attainment of ~~risk-weighted~~age 65, and the participant was hired on or after July 1, 2005, the plan provides that the participant’s normal retirement benefit will equal 1.8% of his or her average annual highest compensation over five consecutive years for each plan year and month of service, up to a maximum of 45 years. Participants who have attained age 55 and have completed 10 years of service may retire early. If the participant was hired prior to July 1, 2005, his or her benefit will be reduced by 0.25% for each year of early commencement between age 55 and 65; if the participant was hired on or after July 1, 2005, his or her benefit will be reduced by 1/15th for each year of early commencement between age 60 and 65 and an additional 1/30th for each year of early commencement between age 55 and 60. Participants become fully vested in their accrued plan benefit after five years of service. Under the plan, “average annual compensation” is defined as the average of a participant’s compensation for the period of five consecutive years during which his or her compensation was the highest. The Pension Plan was closed to new participants effective October 1, 2018. The Pension Plan was overfunded at December 31, 2021, with assets ~~and, for institutions~~representing 158.5% of our benefit obligation at that ~~have exercised an opt-out election regarding the treatment of accumulated other comprehensive income such as~~date.

Retirement Income Maintenance Plan. The Columbia Bank upRetirement Income Maintenance Plan (“RIM”) is a nonqualified and unfunded defined benefit retirement plan that provides supplemental retirement benefits to ~~45%~~certain highly compensated employees of ~~net unrealized gains~~the Company and its subsidiaries whose benefits under the Pension Plan are limited due to the restrictions of Section 415 and/or Section 401(a)(17) of the Internal Revenue Code. All of the NEOs who participate in the Pension Plan also participate in the RIM. A participant’s benefit under the RIM is equal to the excess of (i) the benefit that would be payable to the participant in accordance with the terms of the tax-qualified pension plan disregarding the limitations imposed by Section 415 and Section 401(a)(17) of the Internal Revenue Code, less (ii) the benefit actually payable to the participant under the Pension Plan after taking such limitations into account. A participant becomes vested in his or her RIM benefits upon satisfying the requirements for early retirement (attaining age 55 while employed and completing 10 years of service) or normal retirement (attaining age 65 while employed and completing 5 years of service). A participant’s vested RIM benefit will be paid at the time and in the form elected by the participant; the default time and form of payment is a life annuity with a minimum of 120 monthly payments commencing on ~~available~~the first day of the month following the month in which the participant separates from service, provided that if the participant is a “specified employee” for ~~sale equity securities with readily determinable fair market values. Institutions that have not exercised~~purposes of Section 409A of the Internal Revenue Code on the date of the participant’s separation from service, payment will be delayed for six months following the participant’s separation from service.

Pension Benefits Table. The following table shows the actuarial present value of the accumulated ~~other comprehensive income opt-out have accumulated other comprehensive income incorporated into common equity Tier 1 capital (including unrealized gains~~benefit under our tax-qualified pension plan and ~~losses on available~~the RIM, along with the number of years of credited service under the respective plans, for ~~sale securities). Calculation~~each of our named executive officers.

Name	Plan Name	Number of Years of Credited Service		Present Value of Accumulated Benefit⁽¹⁾
Thomas J. Kemly	Columbia Bank Retirement Plan		40.67		4,327,332
	Columbia Bank Retirement Income Maintenance Plan		40.67		7,725,765
Dennis E. Gibney	Columbia Bank Retirement Plan		7.50		406,744
	Columbia Bank Retirement Income Maintenance Plan		7.50		168,932
E. Thomas Allen, Jr.	Columbia Bank Retirement Plan		27.25		2,971,349
	Columbia Bank Retirement Income Maintenance Plan		27.25		1,877,664
John Klimowich	Columbia Bank Retirement Plan		36.17		3,280,266
	Columbia Bank Retirement Income Maintenance Plan		36.17		511,867
Allyson Schlesinger	Columbia Bank Retirement Plan		3.25		212,059
	Columbia Bank Retirement Income Maintenance Plan		3.25		56,721
Oliver E. Lewis, Jr.	Columbia Bank Retirement Plan		—		—
	Columbia Bank Retirement Income Maintenance Plan		—		—

(1)

The Company provides its actuaries with certain rate assumptions used in measuring its benefit obligations under the Pension Plan. The most significant of these is the discount rate used to calculate the period-end present value of the benefit obligations, and the expense to be included in the following year’s financial statements. The discount rate assumption for 2021 was determined based on a cash flow-yield curve model specific to the Company’s Pension Plan. The Pension Plan was overfunded at December 31, 2021, with assets representing 158.5% of our benefit obligation at that date.

Pay Ratio

The Company is required by SEC rules to disclose the median of the annual total compensation of all ~~types~~employees of ~~regulatory capital~~the Company (excluding the Chief Executive Officer), the annual total compensation of the Chief Executive Officer, and the ratio of these two amounts (the “pay ratio”). The pay ratio below is ~~subject~~a reasonable estimate based on the Company’s payroll records and the methodology described below and was calculated in a manner consistent with SEC rules. Because SEC rules for identifying the median employee and calculating the pay ratio allow companies to ~~deductions~~use variety of methodologies, the pay ratio reported by other companies may not be comparable to the pay ratio reported below, as other companies may have different employment and ~~adjustments specified~~compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

For purposes of calculating the 2021 pay ratio, the Company selected December 31, 2021 as the determination date for identifying the median employee. Year-to-date taxable wages paid from January 1, 2021 to December 31, 2021 for all employees as of the determination date, with the exception of Mr. Kemly, were arrayed from lowest to highest. Wages of newly hired permanent employees were adjusted to represent wages for the entire measurement period. This period captured all incentive payments for the tax year as well as the vesting of equity awards, as applicable. The median employee was identified, and total compensation for the median employee was calculated in the ~~regulations.~~manner required for the Summary Compensation Table. Mr. Kemly’s total compensation for 2021, as disclosed in the Summary Compensation Table, was $2,131,936 and the median employee’s total compensation was $121,439 producing a ratio of 18 to 1.

Nonqualified Deferred Compensation

Supplemental Executive Retirement Plan. The Columbia Bank ESOP Supplemental Executive Retirement Plan (“ESOP SERP”) is a nonqualified and unfunded defined contribution retirement plan that provides supplemental retirement benefits related to its tax-qualified employee stock ownership plan. The ESOP SERP provides benefits to eligible officers of the Company and its subsidiaries designated by the Board that cannot be provided under the tax-qualified employee stock ownership plan but for the eligibility requirements of the plans or limitations imposed by the Internal Revenue Code. All NEOs are eligible to participate in the ESOP SERP. A NEO becomes vested in these benefits in 25% increments after completing two, three, four and five years of service with the Company. In ~~determining~~addition to providing benefits that would otherwise be lost as a result of eligibility requirements or the Internal Revenue Code limitations on tax-qualified plans, the ESOP SERP also provides a supplemental benefit upon a change of control prior to the scheduled repayment of the tax-qualified employee stock ownership plan loan. Under the terms of the ESOP SERP, each NEO is eligible to receive a cash payment in the event of a change in control equal to the dollar value of the stock benefit the NEO would have received under the tax-qualified employee stock ownership plan and ESOP SERP had the executives remained employed throughout the term of the loan, less the shares of common stock allocated under the tax-qualified employee stock ownership plan and ESOP SERP on the NEO’s behalf. The supplemental change in control benefits under the ESOP SERP are nonforfeitable and distributable upon termination of employment for any reason.

Non-Qualified Savings Income Maintenance Plan. The Columbia Bank Savings Income Maintenance Plan (the “SIM”) is a non-qualified and unfunded defined contribution retirement plan for the benefit of certain highly compensated employees of the Company and its subsidiaries. All NEOs are eligible to participate in the SIM. Under the SIM, a participant may defer between 3% and 13% of the participant’s compensation above the salary limit imposed by Section 401(a)(17), reduced by the amount of risk-weighted assets for purposes of calculating risk-based capital ratios, an institution’s assets, including certain off-balance sheet assets (e.g., recourse obligations, direct credit substitutes, residual interests), are multiplied byFederal Insurance Contribution Act taxes that the participant must pay in a ~~risk weight factor assigned by the regulations based on the risk deemed inherent in the type of asset. Higher levels of capital are required for asset categories believed~~plan year with respect to present greater risk. For example, a risk weight of 0% is assigned to cash and U.S. government securities, a risk weight of 50% is generally assigned to prudently underwritten first lien one- to four-family residential mortgages, a risk weight of 100% is assigned to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans and a risk weight of between 0% to 600% is assigned to permissible equity interests, depending on certain specified factors.

such compensation. In addition, ~~to establishing~~ the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements. The capital conservation buffer requirement is being phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and increased each year until fully implemented at 2.5% on January 1, 2019.

~~At December 31, 2018, Columbia Bank’s capital exceeded all applicable requirements.~~

~~Loans-to-One Borrower.~~ ~~Generally, a federal savings bank~~Company may ~~not~~ make ~~a loan or extend credit~~matching contributions equal to a ~~single or related group~~portion of borrowers in excess of 15% of unimpaired capital and surplus. An additional amount may be lent, equal to 10% of unimpaired capital and surplus, if secured by “readily marketable collateral,” which generally includes certain financial instruments (but not real estate). As of December 31, 2018,a participant’s compensation deferred under the SIM. For 2021, Columbia Bank ~~was in compliance with the loans-to-one borrower limitations.~~

~~Standards for Safety and Soundness~~. Federal law requires each federal banking agency to prescribe certain standards for all insured depository institutions. These standards relate to, among other things, internal controls, information systems and audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, compensation and other operational and managerial standards as the agency deems appropriate. Interagency guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard. Failure to implement such a plan can result in further enforcement action, including the issuance of a cease and desist order or the imposition of civil money penalties.

~~Prompt Corrective Action~~. Under the federal prompt corrective action statute, the Office of the Comptroller of the Currency is required to take supervisory actions against undercapitalized institutions under its jurisdiction, the severity of which depends upon the institution’s level of capital. An institution that has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a common equity Tier 1 ratio of less than 4.5% or a leverage ratio of less than 4% is considered to be “undercapitalized”. A savings institution that has total risk-based capital of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a common equity Tier 1 ratio of less than 3.0% or a leverage ratio that is less than 3.0% is considered to be “significantly undercapitalized”. A savings institution that has a tangible capital to assets ratio equal to or less than 2.0% is deemed to be “critically undercapitalized”.

Generally, the Office of the Comptroller of the Currency is required to appoint a receiver or conservator for a federal savings association that becomes “critically undercapitalized” within specific time frames. The regulations also provide that a capital restoration plan must be filed with the Office of the Comptroller of the Currency within 45 days of the date that a federal savings association is deemed to have received notice that it is “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized”. Any holding company of a federal savings association that is required to submit a capital restoration plan must guarantee performance under the planmade matching contributions in an amount equal to 100% of up to the ~~lesser~~first 3% of ~~5.0%~~a participant’s compensation in excess of $295,000 that the participant deferred under the SIM including all of the ~~savings association’s assets at~~NEOs other than Mr. Lewis, whose match was based on 4.5% of his compensation. Participants earn a return on their notional account balances based on investment in phantom investment funds (similar to those available under the ~~time it was deemed to be undercapitalized~~401(k) Plan) selected by ~~the Office~~participants. The SIM does not guarantee a rate of return and none of the ~~Comptroller~~investment funds provide above market earnings. Participants are immediately 100% vested in their account balances attributable to compensation deferral contributions. Participants generally become vested in their account balances attributable to matching contributions in installments – 25% after two years of service, 50% after three years of service, 75% after four years of service and 100% after five years of service – and become 100% vested upon death. A participant’s vested account balance will be distributed to the participant in a single lump sum upon the earlier of the ~~Currency~~participant’s separation from service or a change in control of Columbia Bank. If distribution is triggered by separation from service, it will be made on the ~~amount necessary to restore the savings association to adequately capitalized status. This guarantee remains in place until the Office~~first day of the ~~Comptroller~~month next following the two-month anniversary of the ~~Currency notifies~~participant’s separation from service, provided that if the ~~savings association that~~participant is a “specified employee” for purposes of Section 409A of the Internal Revenue Code on the date of the participant’s separation from service, payment will be delayed for six months following the participant’s separation from service. If distribution is triggered by a change in control, it ~~has maintained adequately capitalized status~~will be made on the first day of the month next following the change in control.

Stock-Based Deferral Plan. In connection with the public offering of Columbia Financial common stock in 2018, participants in the SIM and the Columbia Bank Director Deferred Compensation Plan were provided with the opportunity to direct the investment of portions of their account balances under those plans into phantom shares of Columbia Financial common stock by way of a transfer of these amounts to the new Columbia Bank Stock-Based Deferral Plan. The Plan Administrator may, in its discretion, specify an annual window period during which participants may direct the investment of portions of their SIM and the Columbia Bank Director Deferred Compensation Plan account balances into phantom shares of Columbia Financial common stock by way of a transfer of these amounts to the Columbia Bank Stock-Based Deferral Plan. This plan in effect is an additional phantom investment alternative available with respect to the SIM and the Columbia Bank Director Deferred Compensation Plan. As a result, data for this plan is not included in the table below.

Nonqualified Deferred Compensation Table. The following table discloses contributions made under the SIM and the ESOP SERP for each named executive officer in 2021, along with the earnings and balances on each executive’s account as of ~~four consecutive calendar quarters. Institutions that are undercapitalized become subject to certain mandatory measures such as restrictions on capital distributions~~December 31, 2021.

Name	Plan	Executive Contributions in Last Fiscal Year		Company Contributions in Last Fiscal Year⁽²⁾		Aggregate Earnings in Last Fiscal Year⁽³⁾		Aggregate Balance at Last Fiscal Year End⁽⁴⁾
Thomas J. Kemly	Columbia Bank Savings Income Maintenance Plan		95,099		2,086		—		1,436,130
	ESOP Supplemental Executive Retirement Plan⁽¹⁾		—		117,754		—		463,962
Dennis E. Gibney	Columbia Bank Savings Income Maintenance Plan		26,969		—		—		242,787
	ESOP Supplemental Executive Retirement Plan		—		40,644		—		152,869
E. Thomas Allen, Jr.	Columbia Bank Savings Income Maintenance Plan		56,473		—		—		154,653
	ESOP Supplemental Executive Retirement Plan		—		54,325		—		206,732
John Klimowich	Columbia Bank Savings Income Maintenance Plan		14,104		—		—		68,676
	ESOP Supplemental Executive Retirement Plan		—		29,257		—		98,940
Allyson Schlesinger	Columbia Bank Savings Income Maintenance Plan		22,913		—		—		35,818
	ESOP Supplemental Executive Retirement Plan		—		28,771		—		76,389
Oliver E. Lewis, Jr.	Columbia Bank Savings Income Maintenance Plan		—		—		—		15,997
	ESOP Supplemental Executive Retirement Plan		—		13,063		—		13,063

(1)	Executive contributions are not permitted under the ESOP SERP.

(2)	Represents amounts earned in 2021 and credited to the NEO’s account in 2022. These amounts are disclosed in the Summary Compensation Table under “All Other Compensation” for each NEO.

(3)	The Company does not provide above-market or preferential rates and, as a result, the notional earnings are not included in the 2021 Summary Compensation Table.

(4)

Includes amounts earned in 2021 and credited to the accounts of the NEOs in 2022. None of the amounts reported in this column are reflected in the 2021 Summary Compensation Table. Deferral balances of the NEOs under the SIM were notionally invested among a variety of mutual fund alternatives and our common stock, and deferral balances under the ESOP SERP were notionally invested in shares of our common stock.

Summary of Executive Employment Agreements and ~~asset growth.~~Potential Payments Upon Termination or Change in Control

We have entered into two-year employment agreements with Messrs. Kemly, Gibney, Allen, Klimowich, Lewis and Ms. Schlesinger. Each employment agreement provides for a two-year term. The ~~Office~~Board may extend the terms of the ~~Comptroller~~employment agreements with the NEOs annually for another twelve-month period, unless the NEO gives notice of non-renewal at least sixty days prior to such extension. The Compensation Committee annually reviews the NEO’s base salaries. In addition to base salary, the agreements provide that the NEOs shall be eligible to participate in the short-term and long-term incentive compensation plans of Columbia Bank. Each NEO shall also be entitled to continue participation in any fringe benefit arrangements in which he or she was participating on the effective date of the ~~Currency may also take any one~~employment agreement. In addition, the agreements provide for reimbursement of reasonable travel and other business expenses incurred in connection with the performance of the NEO’s duties.

If a number of discretionary supervisory actions against undercapitalized federal savings associations, including the issuance of a capital directive and the replacement of senior executive officers and directors.

~~At December 31, 2018,~~NEO’s employment is terminated by Columbia Financial or Columbia Bank ~~met~~during the criteria for being considered “well capitalized,” which means that its total risk-based capital ratio exceeded 10%, its Tier 1 risk-based ratio exceeded 8.0%, its common equity Tier 1 ratio exceeded 6.5% and its leverage ratio exceeded 5.0%.

~~Qualified Thrift Lender Test.~~ As a federal savings bank, Columbia Bank must satisfy the qualified thrift lender, or “QTL,” test. Under the QTL test, Columbia Bank must maintain at least 65% of its “portfolio assets” in “qualified thrift investments” (primarily residential mortgages and related investments, including mortgage-backed securities) in at least nine months of every 12-month period. “Portfolio assets” generally means total assets of a savings association, less the sum of specified liquid assets up to 20% of total assets, goodwill and other intangible assets, and the value of property used in the conductterm of the ~~savings association’s business.~~

~~Alternatively, Columbia Bank may satisfy the QTL test by qualifying as~~agreement, without cause, including a ~~“domestic building and loan association” as~~resignation for good reason (as defined in the ~~Internal Revenue Code.~~

~~A savings association that fails~~agreement), but excluding termination for cause or due to death, disability, retirement, the ~~QTL test must operate under specified restrictions~~executive would be entitled to a payment equal to a multiple (three times for Mr. Kemly and two times for Messrs. Gibney, Allen, and Klimowich and one times for Ms. Schlesinger and Mr. Lewis) of the sum of: (i) his or her annual base salary plus (ii) his or her target annual bonus in effect on the termination date. The severance payment shall be paid to the NEO as salary continuation in substantially equal installments over the thirty-six, twenty-four or twelve-month period, respectively, in accordance with Columbia Bank’s customary payroll practices, subject to the receipt of a signed release of claims from the NEO within the time frame set forth in the ~~Home Owners’ Loan Act. The Dodd-Frank Act made noncompliance with~~agreement. Assuming the ~~QTL test subject~~NEO elects continued medical, vision and dental coverage under COBRA, Columbia Bank will reimburse the executive the amount equal to ~~agency enforcement action~~the monthly COBRA premium paid by the NEO for such coverage less the active employee premium for such coverage for a ~~violation~~period of ~~law. At December 31, 2018,~~36 months, in the case of Mr. Kemly, and 24 months, in the case of Messrs. Gibney, Allen, and Klimowich and 12 months in the case of Ms. Schlesinger and Mr. Lewis or such lesser period as may be required under COBRA.

If executive NEO’s employment is terminated during the term of the agreement by Columbia Financial or Columbia Bank ~~satisfied~~without cause, including a resignation for good reason (as defined in the ~~QTL test.~~

~~Capital Distributions~~agreements), within 24 months after a change in control (as also defined in the agreements), the NEO would be entitled to a payment equal to a multiple of three times (two times in the case of Ms. Schlesinger and Mr. Lewis) of the sum of: (i) his or her annual base salary (or his base salary in effect immediately before the change in control, if higher) plus (ii) his or her annual target bonus (or his target bonus in effect immediately before the change in control, if higher). ~~Federal regulations govern capital distributions by a federal savings bank, which include cash dividends, stock repurchases and other transactions charged~~The severance payment shall be paid to the ~~savings association’s capital account. A federal savings bank must file an application with the Office~~NEO within sixty days of the ~~Comptroller~~termination date in a single lump sum payment. The payment shall also include a sum equal to his or her prior year bonus in a lump sum on the date on which the annual bonus would have been paid to NEO but for NEO’s termination of employment. In addition, each NEO shall receive a lump sum payment equal to the cost of providing continued life, medical, vision and dental coverage for 36 months following termination less the active employee charge for such coverage in effect on the termination date.

For purposes of the ~~Currency for approval~~NEO’s ability to resign and receive a payment under the agreement, “good reason” would include the occurrence of ~~a capital distribution if:~~

~~the total capital distributions for the applicable calendar year exceed the sum~~any of the ~~savings association’s net income for that year to date plus~~following events: (i) a material reduction in the ~~savings association’s retained net income for the preceding two years;~~

~~the savings association would not be at least adequately capitalized following the distribution;~~

~~the distribution would violate an applicable statute, regulation, agreement~~NEO’s base salary or ~~regulatory condition; or~~

~~the savings association is not eligible for expedited treatment of its filings.~~

Even if an application is not otherwise required, every savings association that is a subsidiary of a savings and loan holding company, such as Columbia Bank, must file a notice with the Federal Reserve Board at least 30 days before the board of directors declares a dividend.

~~An application or notice related to a capital distribution may be disapproved if:~~

~~the federal savings association would be undercapitalized following the distribution;~~

~~the proposed capital distribution raises safety and soundness concerns; or~~

~~the capital distribution would violate a prohibition contained in any statute, regulation or agreement.~~

In addition, the Federal Deposit Insurance Act provides that an insured depository institution shall not make any capital distribution if, after making such distribution, the institution would fail to meet any applicable regulatory capital requirement.

~~Community Reinvestment Act and Fair Lending Laws.~~ ~~All financial institution banks have a responsibility~~target bonus under the ~~Community Reinvestment Act and related regulations~~cash incentive plans, if applicable, except for reductions proportionate with similar reductions to ~~help meet the credit needs of their communities, including low and moderate-income borrowers. In connection with its examination of a federal savings bank, the Office~~all other members of the ~~Comptroller of~~executive leadership team; (ii) a material adverse change in NEO’s position that results in a demotion in the ~~Currency~~NEO’s status within Columbia Financial or Columbia Bank; (iii) a change in the primary location at which the NEO is required to ~~assess~~perform the ~~federal savings bank’s record~~duties of ~~compliance~~his employment with the Community Reinvestment Act. A savings bank’s failure to comply with the provisions of the Community Reinvestment Act could, at a minimum, result in denial of certain corporate applications such as branches or mergers, or in restrictions on its activities. In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in their lending practices on the basis of characteristics specified in those statutes. The failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions by the Office of the Comptroller of the Currency, as well as other federal regulatory agencies and the Department of Justice.

The Community Reinvestment Act requires all institutions insured by the FDIC to publicly disclose their rating. Columbia Bank received a “satisfactory” Community Reinvestment Act rating in its most recent federal examination.

~~Transactions with Related Parties.~~ A federal savings bank’s authority to engage in transactions with its affiliates is limited by Sections 23A and 23B of the Federal Reserve Act and federal regulation. An affiliate is generally a company that controls, or is under common control with an insured depository institution such as Columbia Bank. Columbia Financial and Columbia Bank ~~MHC~~to a location that is more than thirty (30) miles from the location of the Bank’s headquarters as of the date of the agreement; or (iv) a material breach by Columbia Financial or Columbia Bank of any written agreement between the NEO, on the one hand, and any of Columbia Financial and Columbia Bank or any other affiliate of Columbia Financial, on the other hand, unless arising from the NEO’s inability to materially perform his or her duties under the agreement.

Section 280G of the Internal Revenue Code provides that severance payments that equal or exceed three times an individual’s base amount are deemed to be “excess parachute payments” if they are contingent upon a change in control. An individual’s base amount is generally equal to an average of the individual’s taxable compensation for the five taxable years preceding the year a change in control occurs. The employment agreements with our NEOs provide for a “best net benefits” approach in the event that severance benefits under the agreements or otherwise result in “excess parachute payments” under Section 280G. The best net benefits approach reduces a NEO’s payments and benefits to avoid triggering the excise tax if the reduction would result in a greater after-tax amount to the NEO compared to the amount the NEO would receive net of the excise tax if no reduction were made.

Under the employment agreements, if executive NEO’s employment terminates as a result of disability, the employment agreement will terminate and the NEO will receive an amount equal to one time the sum of his or her base salary and target bonus in effect on the termination date less the amount expected to be paid to the NEO under the Columbia Bank long term disability plan, payable as salary continuation in substantially equal installments over a twelve-month period. For these purposes, disability will occur on the date on which the insurer or administrator of the Bank’s long-term disability insurance determines that the NEO is eligible to commence benefits under such insurance. If the NEO dies while employed, (i) the NEO will remain entitled to life insurance benefits pursuant to Columbia Bank’s plans, programs, arrangements, and practices in this regard and (ii) Columbia Bank will pay to his or her designated beneficiary an amount equal to one time the sum of the NEO’s base salary and target bonus in effect on the termination date.

Under the 2019 Equity Incentive Plan and the award agreements for the equity awards made to the NEOs, in the event of a change in control (as defined in the plan) and the involuntary separation of the NEO from service with the Company and its affiliates without cause within 12 months of the change in control and prior to the last vesting date for such awards, if such awards are not assumed by the surviving entity in the change in control, all such awards that are unvested at the time of the change in control will become immediately vested upon the effective date of the change in control.

As disclosed under “Nonqualified Deferred Compensation” at page 31 above, under the terms of the ESOP SERP, an NEO will receive an additional cash payment in the event of a change in control equal to the benefit the NEO would have received under the ESOP and the ESOP SERP had the NEO remained employed throughout the term of the ESOP loan, less the benefits actually provided under the ESOP and ESOP SERP on the NEO’s behalf. The supplemental change in control benefits credited to NEO accounts under the ESOP SERP are nonforfeitable and will be distributed upon termination of employment for any reason. Payments under the ESOP SERP are not categorized as parachute payments and, therefore, do not count towards a participating executive’s limitation under Section 280G of the Internal Revenue Code.

Each NEO’s account balance under the SIM will become fully vested upon the NEO’s death. RIM benefits are described in more detail under “Nonqualified Deferred Compensation” at page 31 above.

Messrs. Kemly, Allen and Klimowich are vested in their RIM benefits and they have each elected to receive payment of their accrued benefits under the RIM upon a change in control (as defined in the RIM). RIM benefits are described in more detail under “Pension Benefits” at page 29 above.

Tabular Information Regarding Potential Payments to Executives Upon Termination or a Change in Control

The following table summarizes the estimated payments to which the named executive officers were entitled upon termination as of December 31, 2021. Benefits payable under the Retirement Plan, the RIM, the 401(k) Plan and vested balances under non-qualified, deferred compensation plans are not included. For additional information on the benefits payable to our named executive officers upon termination or a change in control, see “— Employment Agreements with Named Executive Officers.”

	Thomas J. Kemly		Dennis E. Gibney		E. Thomas Allen, Jr.		John Klimowich		Allyson Schlesinger			Oliver E. Lewis, Jr.
Death:
Employment Agreements⁽¹⁾	$	1,431,028	$	696,280	$	824,820	$	582,750	$	598,500		$	551,250
Executive Life Insurance		1,228,500		618,000		708,500		555,500		—			—
Performance Achievement Incentive Plan⁽²⁾		765,160		334,029		441,025		240,408		294,737			262,719
Equity Awards⁽³⁾		2,024,163		740,025		870,611		580,421		478,862			382,372
Total	$	5,448,851	$	2,388,334	$	2,844,956	$	1,959,079	$	1,372,099		$	1,196,341
Disability:
Employment Agreements⁽⁴⁾	$	1,431,028	$	696,280	$	441,025	$	240,408	$	294,737		$	262,719
Performance Achievement Incentive Plan⁽²⁾		765,160		334,029		441,025		240,408		294,737			262,719
Equity Awards⁽³⁾		2,024,163		740,025		870,611		580,421		478,862			382,372
Total	$	4,220,351	$	1,770,334	$	2,136,456	$	1,403,579	$	1,372,099		$	1,196,341
Retirement:
Employment Agreements	$	—	$	—	$	—	$	—	$	—		$	—
Performance Achievement Incentive Plan⁽²⁾		765,160		334,029		441,025		240,408		294,737			262,719
Equity Awards	$	—	$	—	$	—	$	—	$	—		$	—
Total	$	765,160	$	334,029	$	441,025	$	240,408	$	294,737		$	262,719
Involuntary Termination by Company without Cause or Resignation by Executive Officer for Good Reason Prior to Change in Control:
Employment Agreements⁽⁵⁾	$	5,136,589	$	1,803,764	$	2,145,425	$	1,483,084	$	893,237		$	862,694
Equity Awards		—		—		—		—		—			—
Total	$	5,136,589	$	1,803,764	$	2,145,425	$	1,483,084	$	893,237		$	862,694
Involuntary Termination by Company without Cause or Resignation by Executive Officer for Good Reason Upon or After Change in Control:
Employment Agreements⁽⁶⁾	$	5,214,934	$	2,577,220	$	3,025,005	$	2,143,009	$	1,491,737		$	1,462,668
Equity Awards^(7)(10)		6,548,714		2,394,157		2,816,652		1,877,773		1,549,173			821,773
ESOP SERP⁽⁸⁾		2,180,399		879,069		1,110,921		666,353		635,758			288,273
Potential Forfeiture (Best Net After Tax)⁽⁹⁾		—		—		—		—		(369,527	)
Total	$	13,944,048	$	5,850,446	$	6,952,579	$	4,687,135	$	3,307,141		$	2,572,714

(1)

Reflects payment under the applicable employment agreement equal to the sum of (1) the executive’s base salary in effect on December 31, 2021 and (2) target annual bonus in effect on December 31, 2021, plus the amount of the executive’s life insurance death benefit.

(2)

In the event of separation from service with the Company due to death, disability, or retirement, an executive would receive a prorated portion of the PAIP award earned for the year in which such separation occurs based on the period of active employment during such year. The amounts included in the table reflect 100% of the earned PAIP award given for 2021 given the assumption that separation occurs on the last day of the year.

(3)

In the event of separation from service with the Company due to death or disability, an executive would vest in 50% of his or her net outstanding 2021 stock options and time-vested restricted stock, unless the executive is already vested in at least 50% of such awards in which case there is no accelerated vesting, and in 50% of his or her outstanding 2021 performance-based restricted stock (at target). The amount included in the table for the time-based and performance-based restricted stock awards reflects 50% of the total number of outstanding shares multiplied by the closing market price of our common stock on December 31, 2021 of $20.86. The amount included in the table for stock options reflects the difference between the aggregate market value of 50% of the underlying shares as of December 31, 2021, calculated based on the closing market price of our common stock on that day of $20.86 and the aggregate exercise price 50% of all outstanding stock options.

(4)

Reflects payment under the applicable employment agreement equal to the sum of (A) the executive’s base salary in effect on December 31, 2021, and (B) target annual bonus in effect on December 31, 2021. This payment will be reduced by the amount expected to be paid to the executive under the Company’s program of long-term disability insurance over the 12-month period following the executive’s termination.

(5)

Reflects payment under the applicable employment agreement equal to the sum of (1) two times (three times for Mr. Kemly and one times for Ms. Schlesinger and Mr. Lewis) the sum of the executive’s (A) base salary in effect on December 31, 2021, and (B) target annual bonus in effect on December 31, 2021, (2) 18 times (12 times for Ms. Schlesinger and Mr. Lewis) an amount which after taxes (determined using an assumed aggregate 40% tax rate) equals the difference between (A) the Company’s monthly COBRA premium for the type of Company-provided group health plan coverage in effect on December 31, 2021, for the executive, and (B) the active employee charge for such coverage, (3) the unpaid bonus due to the executive for the 2021 fiscal year of the Company.

(6)

Reflects payment under the applicable employment agreement equal to the sum of (1) three times (two times for Ms. Schlesinger and Mr. Lewis) the sum of the Executive’s (A) base salary in effect on December 31, 2021, and (B) target annual bonus in effect on December 31, 2021, (2) 36 times an amount which after taxes (determined using an assumed aggregate 40% tax rate) equals the difference between the Company’s monthly COBRA premium for the type of Company-provided group health plan coverage in effect on December 31, 2021, for the executive, and (B) the active employee charge for such coverage, and (3) the unpaid bonus due to the executive for the 2021 fiscal year of the Company.

(7)

In the event of separation from service with the Company without Cause within 12 months after the effective date of a change in control, an executive would become 100% vested in the executive’s 2021 outstanding stock options, time-based restricted stock and performance-based restricted stock. For the performance based restricted stock, the executive would vest at target. The amount included in the table for the time-based and performance-based restricted stock awards reflects the total number of outstanding shares multiplied by the closing market price of our common stock on December 31, 2021 of $20.86. The amount included in the table for stock options reflects the difference between the aggregate market value of 100% of the underlying shares as of December 31, 2021 calculated based on the closing market price of our common stock on that day of $20.86 and the aggregate exercise price of all outstanding stock options.

(8)

Represents additional benefit due in the event of a change in control and full repayment of all outstanding ESOP loans.

(9)

These payments are subject to reduction if the parachute amounts associated with the payments under Section 280G of the Internal Revenue Code equal or exceed three times the executive’s average taxable compensation received from the Company for the five-year period ending December 31, 2021, and if the executive would receive on an after-tax basis by reducing the payments that he or she would receive by getting all the payments and paying the 20% excise tax imposed by Section 4999 of the Internal Revenue Code. The potential reduction could be less or greater depending on the actual circumstances at the time of a real transaction.

(10)

Assumes that the surviving entity in such change in control does not assume or replace the equity awards in connection with the change in control.

DIRECTOR COMPENSATION

Elements of Director Compensation

Director Fees. During 2021, the non-employee directors of Columbia Bank ~~because~~received compensation for service and attendance as follows:

The Chairman of the Board of Directors received an annual retainer of $134,500;

The Chairman of the Audit Committee received an annual retainer of $7,500;

The Chairman of the Nominating and Corporate Governance Committee received an annual retainer of $7,500;

Directors (other than the Chairman of the Board) received an annual retainer of $67,800;

Members of the Nominating/Corporate Governance Committee received an annual retainer of $5,000;

The Chairman of the Board received an additional fee of $1,500 for each Board meeting attended; and

Directors (other than the Chairman of the Board) received an additional fee of $1,300 for each Board meeting attended.

Board members do not receive any additional compensation as a result of their ~~direct and indirect control~~service as directors of Columbia ~~Bank. In general,~~Bank MHC and, with exception of special meetings of Columbia Financial only, do not receive any additional compensation as a result of their services as directors of Columbia Financial.

Long-Term Equity Program. The 2019 Equity Incentive Plan was adopted by the Company and approved by our shareholders to enhance the alignment between the financial interests of our employees and non-employee directors and those of our shareholders. No equity awards were made to the Company’s non-employee directors in 2021.

2021 Director Compensation

The following table sets forth the compensation received by individuals who served as our non-employee directors during the year ended December 31, 2021.

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)⁽¹⁾		Option Awards ($)⁽²⁾		Nonqualified Deferred Compensation Earnings ($)⁽³⁾		All Other Compensation ($)⁽⁴⁾		Total ($)
Frank Czerwinski		113,000		—		—		—		1,778		114,778
Noel R. Holland		165,735		—		—		24,765		3,830		194,330
James M. Kuiken		105,500		—		—		—		—		105,500
Michael Massood, Jr.		113,000		—		—		—		14,043		127,043
Elizabeth E. Randall		55,250		—		—		55,250		1,243		111,743
Lucy Sorrentini		55,042		—		—		55,042		30,012		140,096
Daria Stacy-Walls Torres⁽⁵⁾		6,950		—		—		42,550		—		49,500
Robert Van Dyk		109,200		—		—		—		—		109,200
Paul Van Ostenbridge		109,200		—		—		—		142		109,342

(1)

As of December 31, 2021, each director other than Ms. Sorrentini, Mr. Kuiken, Ms. Torres and Mr. Van Ostenbridge, held 20,423 shares of unvested restricted stock. As of December 31, 2021, each of Ms. Sorrentini, Mr. Kuiken and Mr. Van Ostenbridge held 2,211 shares of unvested restricted stock and Ms. Torres had no shares of unvested restricted stock.

(2)

As of December 31, 2021, each director other than Ms. Sorrentini, Mr. Kuiken, Ms. Torres and Mr. Van Ostenbridge, held 49,977 shares of unvested stock options. As of December 31, 2021, neither Ms. Sorrentini, Mr. Kuiken, Ms. Torres and Mr. Van Ostenbridge had any options outstanding.

(3)

Represents director fees deferred under the Stock-Based Deferral Plan.

(4)

Includes imputed income for bank owned life insurance for Mr. Czerwinski, Mr. Holland, Mr. Massood, Ms. Randall and Mr. Van Ostenbridge and premiums for health insurance paid by Columbia Bank on behalf of Mr. Massood, Mr. Holland and Ms. Sorrentini.

(5)

Ms. Torres was appointed to the Board of Directors effective July 26, 2021.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Stock Ownership Tables

The following table provides information as of the Record Date about the persons and entities known to the Company to be the beneficial owners of more than 5% of the Company’s outstanding common stock. A person or entity may be considered to beneficially own any shares of common stock over which the person or entity has, directly or indirectly, sole or shared voting or investment power.

Name and Address		Number of Shares Owned				Percent of Common Stock Outstanding⁽¹⁾
Columbia Bank MHC 19-01 Route 208 North Fair Lawn, New Jersey 07410			69,930,210				65.9	%

(1)

Based on 106,191,527 shares of Company common stock outstanding and entitled to vote as of the April 27, 2022.

The following table provides information as of the Record Date about the shares of Columbia Financial common stock that may be considered to be beneficially owned by each director or nominee for director of the Company, by the executive officers of the Company and by all directors and executive officers of the Company as a group. A person may be considered to beneficially own any shares of common stock over which he or she has directly or indirectly, sole or shared voting or investment power. Unless otherwise indicated, none of the shares listed are pledged as security and each of the named individuals has sole voting and sole investment power with respect to the number of shares shown. As of the Record Date, none of our directors or executive officers beneficially owned more than 1% of the Company’s outstanding shares of common stock and the number of shares beneficially owned by all directors and executive officers as a group totaled 2.7% of our outstanding shares.

Name and Address	Number of Shares Owned		Number of Shares That May be Acquired Within 60 Days by Exercising Options⁽¹⁾
Directors:
Noel R. Holland		92,880		33,317
Frank Czerwinski⁽²⁾		89,038		33,317
Thomas J. Kemly⁽³⁾		489,730		262,588
James M. Kuiken		4,816		—
Michael Massood, Jr.		87,998		33,317
Elizabeth E. Randall		88,824		33,317
Lucy Sorrentini		7,344		—
Robert Van Dyk⁽⁴⁾		131,038		33,317
Paul Van Ostenbridge		11,491		—
Daria Stacy-Walls Torres		3,440		—
Executive Officers Who Are Not Directors:
E. Thomas Allen, Jr.		189,689		112,941
Dennis E. Gibney⁽⁵⁾		191,865		96,000
W. Justin Jennings		—		—
Geri M. Kelly		132,675		60,235
John Klimowich		114,630		75,294
Mark S. Krukar		117,080		56,470
Oliver E. Lewis, Jr.		32,508		7,058
Brian W. Murphy⁽⁶⁾		70,555		31,058
Allyson Schlesinger		91,436		62,117
All Directors, Director Nominees and Executive Officers as a Group (19 persons)		1,947,037		930,346

(1)

This column includes shares of Company common stock beneficially owned as follows:

	Stock Ownership Plan (ESOP)		Columbia Bank Supplemental Executive Retirement Plan (SERP)		Columbia Bank Savings and Investment Plan (401(k) Plan)		Columbia Bank Savings Income Maintenance Plan		Columbia Bank Stock Based Deferral Plan		Columbia Financial, Inc. 2019 Equity Incentive Plan⁽¹⁾
Noel R. Holland		—		—		—		—		8,842		20,423
Frank Czerwinski⁽²⁾		—		—		—		—		—		20,423
Thomas J. Kemly⁽³⁾		4,509		22,239		40,930		41,572		51,023		214,616
James M. Kuiken		—		—		—		—		—		2,211
Michael Massood, Jr.		—		—		—		—		—		20,423
Elizabeth E. Randall		—		—		—		—		3,500		20,423
Lucy Sorrentini		—		—		—		—		3,728		2,211
Daria S. Torres		—		—		—		—		3,440		—
Robert Van Dyk⁽⁴⁾		—		—		—		—		—		20,423
Paul Van Ostenbridge		—		—		—		—		—		2,211
E. Thomas Allen, Jr.		4,509		9,910		31,000		1,352		5,584		92,308
Dennis E. Gibney⁽⁵⁾		4,509		7,326		—		—		1,953		78,462
Geri M. Kelly		4,509		3,743		25,050		1,003		8,853		49,231
John Klimowich		4,509		4,741		17,143		3,462		3,528		61,539
Mark S. Krukar		4,509		4,186		25,529		5,416		9,748		46,154
Oliver E. Lewis, Jr.		3,411		636		—		—		1,035		21,396
Brian W. Murphy⁽⁶⁾		4,509		1,585		30,000		569		2,180		25,385
Allyson Schlesinger		3,573		3,661		—		3,130		7,960		50,770

(1)

Represents shares of unvested restricted stock granted under the Company’s 2019 Equity Incentive Plan.

(2)

Includes 35,000 shares held in a revocable trust.

(3)

Includes 5,933 shares held by Mr. Kemly’s spouse and 7,755 shares held by one of Mr. Kemly’s children.

(4)

Includes 6,000 shares held by Mr. Van Dyk’s spouse and 1,000 shares held in a trust for which Mr. Van Dyk’s spouse serves as trustee.

(5)

Includes 10,000 shares held by Mr. Gibney’s spouse.

(6)

Mr. Murphy will be retiring from the Company in 2022. Includes 100 shares held by Mr. Murphy’s daughter.

Item 13.

Certain Relationships and Related Transactions and Director Independence

Policies and Procedures for Approval of Related Person Transactions

We maintain a Policy and Procedures Governing Related Person Transactions, which is a written policy and set of procedures for the review and approval or ratification of transactions ~~between an insured depository institution and its affiliates are subject~~involving related persons. Under the policy, related persons consist of directors, director nominees, executive officers, persons or entities known to us to be the beneficial owner of more than five percent of any outstanding class of the voting securities of the Company, or immediate family members or certain ~~quantitative limits and collateral requirements. In addition, federal regulations prohibit a savings association from lending to~~affiliated entities of any of ~~its affiliates that are engaged in activities that are not permissible for bank holding companies and from purchasing~~ the ~~securities~~foregoing persons.

Transactions covered by the policy consist of any ~~affiliate, other than~~financial transaction, arrangement or relationship or series of similar transactions, arrangements or relationships, in which:

the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year;

the Company is, will, or may be expected to be a participant; and

any related person has or will have a direct or indirect material interest.

This policy excludes:

any compensation paid to an executive officer of the Company if the Compensation Committee of the Board approved (or recommended that the Board approve) such compensation;

any compensation paid to a director of the Company if the Board or an authorized committee of the Board approved such compensation; and

any related person has or will have a direct or indirect material interest. transaction with a related person involving consumer and investor financial products and services provided in the ordinary course of the Company’s business and on substantially the same terms as those prevailing at the time for comparable services provided to unrelated third parties or to the Company’s employees on a broad basis (and, in the case of loans, in compliance with the Sarbanes-Oxley Act of 2002).

Related person transactions will be approved or ratified by the Audit Committee. In determining whether to approve or ratify a ~~subsidiary. Finally, transactions~~related person transaction, the Audit Committee will consider all relevant factors, including:

whether the terms of the proposed transaction are at least as favorable to the Company as those that might be achieved with an unaffiliated third party;

the size of the transaction and the amount of consideration payable to the related person;

the nature of the interest of the related person;

whether the transaction may involve a conflict of interest; and

whether the transaction involves the provision of goods and services to the Company that are available from unaffiliated third parties.

A member of the Audit Committee who has an interest in the transaction will abstain from voting on approval of the transaction, but may, if so requested by the chair of the Audit Committee, participate in some or all of the discussion.

Transactions with ~~affiliates must be consistent with safe and sound banking practices, not involve the purchase~~Related Persons

The Sarbanes-Oxley Act of ~~low-quality assets and be on terms that are as favorable~~2002 generally prohibits loans by Columbia Financial to ~~the institution as comparable transactions with non-affiliates.~~

~~Columbia Bank’s authority to extend credit to~~ its ~~directors,~~ executive officers and ~~10% stockholders, as well as~~directors. However, the Sarbanes-Oxley Act contains a specific exemption from such prohibition for loans by Columbia Bank to ~~entities controlled by such persons, is currently governed by the requirements of Sections 22(g)~~its executive officers and ~~22(h) of the~~directors in compliance with federal banking regulations. Federal ~~Reserve Act and Regulation O of the Federal Reserve Board. Among other things, these provisions generally~~regulations require that all loans or extensions of credit to ~~insiders:~~

executive officers and directors of insured financial institutions must be made on ~~terms that are~~ substantially the same ~~as,~~terms, including interest rates and ~~follow credit underwriting procedures that are not less stringent than,~~collateral, as those prevailing at the time for comparable transactions with ~~unaffiliated~~other persons and ~~that do~~must not involve more than the normal risk of repayment or present other unfavorable ~~features; and~~

~~not exceed certain limitations on the amount of credit extended to such persons, individually and in the aggregate, which limits are based, in part, on the amount of~~features. Columbia ~~Bank’s capital.~~

~~In addition,~~Bank is therefore prohibited from making any new loans or extensions ~~of credit in excess of certain limits must be approved by Columbia Bank’s board of directors. Extensions~~ of credit to executive officers ~~are subject~~and directors at different rates or terms than those offered to ~~additional limits based on~~ the ~~type of extension involved.~~

~~Enforcement.~~ ~~The Office of the Comptroller of the Currency has primary enforcement responsibility over~~general public. Notwithstanding this rule, federal savings banks and has authority to bring enforcement action against all “institution-affiliated parties,” including directors, officers, stockholders, attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful action likely to have an adverse effect onregulations permit a federal savings association. Formal enforcement action by the Office of the Comptroller of the Currency may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors of thefinancial institution to make loans to executive officers and directors at reduced interest rates if the ~~appointment of a receiver or conservator. Civil penalties cover a wide range of violations and actions, and range up to $25,000 per day, unless a finding of reckless disregard~~loan is made ~~in which case penalties may be~~under a benefit program generally available to all other employees and does not give preference to any executive officer or director over any other employee. Columbia Bank currently offers such a program to its executive officers and directors.

Pursuant to Columbia Financial’s Audit Committee Charter, the audit committee periodically reviews, no less frequently than quarterly, a summary of Columbia Financial’s transactions with directors and executive officers of Columbia Financial and with firms that employ directors, as ~~high~~well as ~~$1.0 million per day. The FDIC also has the authority~~any other related person transactions, to ~~terminate deposit~~

~~insurance or~~ recommend to the ~~Office~~disinterested members of the ~~Comptroller~~Board of Directors that the ~~Currency that enforcement action~~transactions are fair, reasonable and within our policy and should be ~~taken~~ratified and approved. Also, in accordance with ~~respect~~banking regulations and its policy, the Board of Directors reviews all loans made to a ~~particular savings association. If~~director or executive officer in an amount that, when aggregated with the amount of all other loans to such ~~action is not taken,~~person and his or her related interests, exceed the ~~FDIC has authority to take the action under specified circumstances.~~

~~Insurance~~greater of ~~Deposit Accounts.~~ ~~The Deposit Insurance Fund~~$25,000 or 5% of ~~the FDIC insures deposits at FDIC-insured financial institutions such as~~ Columbia ~~Bank. Deposit accounts in Columbia Bank are insured by the FDIC generally up~~Financial’s capital and surplus (up to a maximum of ~~$250,000 per separately insured depositor~~$500,000) and ~~up to~~such loan must be approved in advance by a ~~maximum of $250,000 for self-directed retirement accounts.~~

The FDIC charges insured depository institutions premiums to maintain the Deposit Insurance Fund. Assessments for most institutions are now based on financial measures and supervisory ratings derived from statistical modeling estimating the probability of failure within three years. In conjunction with the Deposit Insurance Fund reserve ratio achieving 1.15%, the assessment range (inclusive of possible adjustments) was reduced for most banks and savings associations to 1.5 basis points to 30 basis points.

~~In addition to the FDIC assessments, the Financing Corporation (“FICO”) is authorized to impose and collect, with the approval~~majority of the FDIC, assessments for anticipated payments, issuance costs and custodial fees on bonds issued by the FICO in the 1980s to recapitalize the former Federal Savings and Loan Insurance Corporation. The bonds issued by the FICO are due to mature in 2017 through 2019.

The FDIC has authority to increase insurance assessments. Any significant increases would have an adverse effect on the operating expenses and results of operations of Columbia Bank. Columbia Bank cannot predict what assessment rates will be in the future.

Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. We do not currently know of any practice, condition or violation that may lead to termination of our deposit insurance.

~~Federal Home Loan Bank System.~~ ~~Columbia Bank is a member~~disinterested members of the ~~Federal Home Loan Bank System, which consists~~Board of 11 regional Federal Home Loan Banks. The Federal Home Loan Bank System provides a central credit facility primarily for member institutions as well as other entities involved in home mortgage lending. As a memberDirectors. Additionally, pursuant to Columbia Financial’s Code of ~~the FHLB of New York, Columbia Bank is required to acquire~~Ethics and ~~hold shares of capital stock in the FHLB of New York. As of December 31, 2018, Columbia Bank was in compliance with this requirement.~~

~~Other Regulations.~~ ~~Interest~~Business Conduct, all executive officers and other charges collected or contracted for by Columbia Bank are subject to state usury laws and federal laws concerning interest rates. Columbia Bank’s operations are also subject to federal laws applicable to credit transactions, such as the:

~~Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;~~

Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;

~~Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;~~

~~Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies;~~

~~Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies;~~

~~Truth in Savings Act; and~~

~~Rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.~~

~~The operations of Columbia Bank also are subject to the:~~

Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records;

Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services;

Check Clearing for the 21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check;

The USA PATRIOT Act, which requires savings associations to, among other things, establish broadened anti-money laundering compliance programs, and due diligence policies and controls to ensure the detection and reporting of money laundering. Such required compliance programs are intended to supplement existing compliance requirements that also apply to financial institutions under the Bank Secrecy Act and the Office of Foreign Assets Control regulations; and

The Gramm-Leach-Bliley Act, which places limitations on the sharing of consumer financial information by financial institutions with unaffiliated third parties. Specifically, the Gramm-Leach-Bliley Act requires all financial institutions offering financial products or services to retail customers to provide such customers with the financial institution’s privacy policy and provide such customers the opportunity to “opt out” of the sharing of certain personal financial information with unaffiliated third parties.

~~Holding Company Regulation~~

~~General.~~ Columbia Financial and Columbia Bank MHC are non-diversified savings and loan holding companies within the meaning of the Home Owners’ Loan Act. As such, Columbia Financial and Columbia Bank MHC are registered with the Federal Reserve Board and are subject to the regulation, examination, supervision and reporting requirements applicable to savings and loan holding companies and mutual holding companies. In addition, the Federal Reserve Board has enforcement authority over Columbia Financial, Columbia Bank MHC and their non-savings institution subsidiaries. Among other things, this authority permits the Federal Reserve Board to restrict or prohibit activities that are determined to be a serious risk to the subsidiary savings bank.

~~Permissible Activities.~~ ~~Under present law, the business activities~~directors of Columbia Financial must disclose any existing or potential conflicts of interest to the President and Chief Executive Officer of Columbia ~~Bank MHC~~Financial. Such potential conflicts of interest include but are ~~generally~~not limited ~~to those activities permissible for financial holding companies under Section 4(k)~~to: (1) Columbia Financial conducting business with or competing against an organization in which a family member of an executive officer or director has an ownership or employment interest; and (2) the ownership of more than 1% of the ~~Bank Holding Company Act~~outstanding securities or capital value of 1956, as amended, provided certain conditions are met and financial holding company status is elected. A financial holding company may engage in activities that are financial in nature, including underwriting equity securities and insurance as well as activities that are incidental to financial activitiesa business or complementary to a financial activity. A multiple savings and loan holding company is generally limited to activities permissible for bank holding companies under Section 4(c)(8) of the Bank Holding Company Act, subject to regulatory approval, and certain additional activities authorized by federal regulations. Columbia Financial and Columbia Bank MHC have not elected financial holding company status.

~~Federal law prohibits a savings and loan holding company, including Columbia Financial and Columbia Bank MHC, directly or indirectly, or through one or more subsidiaries, from acquiring control of~~where such investment represents more than 5% of ~~another savings institution or savings and loan holding company, without prior Federal Reserve Board approval. In evaluating applications by holding companies to acquire savings institutions,~~ the ~~Federal Reserve Board considers factors such as the financial and managerial resources, future prospects~~total assets of the ~~company and institution involved, the effect of the acquisition on the risk to the federal deposit insurance fund, the convenience and needs of the community and competitive factors.~~

executive officer or director and/or family members.

The Federal Reserve Board is prohibited from approving any acquisition that would result in a multiple savings and loan holding company controlling savings institutions in more than one state, subject to two exceptions:

~~the approval of interstate supervisory acquisitions by savings and loan holding companies; and~~

~~the acquisition of a savings institution in another state if the laws of the state of the target savings institution specifically permit such acquisition.~~

~~Capital.~~ Savings and loan holding companies have historically not been subjected to consolidated regulatory capital requirements. The Dodd-Frank Act required the Federal Reserve Board to establish for all bank and savings and loan holding companies minimum consolidated capital requirements that are as stringent as those required for the insured depository subsidiaries. Columbia Financial is subject to consolidated regulatory capital requirements that are similar to those that apply to Columbia Bank.

~~Source of Strength.~~ The Dodd-Frank Act extended the “source of strength” doctrine to savings and loan holding companies. The Federal Reserve Board has issued regulations requiring that all savings and loan holding companies serve as a source of strength to their subsidiary depository institutions.

~~Dividends and Stock Repurchases~~. The Federal Reserve Board has issued a policy statement regarding the payment of dividends by holding companies. In general, the policy provides that dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the holding company appears consistent with the organization’s capital needs, asset quality and overall supervisory financial condition. Separate regulatory guidance provides for prior consultation with Federal Reserve Bank staff concerning dividends in certain circumstances such as where the company’s net income for the past four quarters, net of dividends previously paid over that period, is insufficient to fully fund the dividend or the company’s overall rate or earnings retention is inconsistent with the company’s capital needs and overall financial condition. The ability of a savings and loan holding company to pay dividends may be restricted if a subsidiary savings association becomes undercapitalized. The regulatory guidance also states that a savings and loan holding company should inform Federal Reserve Bank supervisory staff prior to redeeming or repurchasing common stock or perpetual preferred stock if the savings and loan holding company is experiencing financial weaknesses or the repurchase or redemption would result in a net reduction, at the end of a quarter, in theaggregate amount of such equity instruments outstanding compared with the beginning of the quarter in which the redemption or repurchase occurred. These regulatory policies may affect the ability of Columbia Financial to pay dividends, repurchase shares of common stock or otherwise engage in capital distributions.

~~Waivers of Dividends~~loans by Columbia Bank ~~MHC.~~ ~~Columbia Financial may pay dividends on~~to its common stock to public stockholders. If it does, it is also required to pay dividends to Columbia Bank MHC, unless Columbia Bank MHC elects to waive the receipt of dividends. Under the Dodd-Frank Act, Columbia Bank MHC must receive the approval of the Federal Reserve Board before it may waive the receipt of any dividends from Columbia Financial. The Federal Reserve Board has issued an interim final rule providing that it will not object to dividend waivers under certain circumstances, including circumstances where the waiver is not detrimental to the safe and sound operation of the savings association and a majority of the mutual holding company’s members have approved the waiver of dividends by the mutual holding company within the previous twelve months. In addition, for a “non-grandfathered” mutual holding company such as Columbia Bank MHC, each officer or director of Columbia Financial and Columbia Bank, and any tax-qualified stock benefit plan or non-tax-qualified stock benefit plan in which such individual participates that holds any shares of stock to which the waiver would apply, must waive the right to receive any such dividend declared. The Federal Reserve Board’s current position is to not permit a non-grandfathered savings and loan or bank holding company to waive dividends declared by its subsidiary. In addition, any dividends waived by Columbia Bank MHC must be considered in determining an appropriate exchange ratio in the event of a conversion of the mutual holding company to stock form.

~~Conversion of Columbia Bank MHC to Stock Form.~~ Federal Reserve Board regulations permit Columbia Bank MHC to convert from the mutual form of organization to the capital stock form of organization (a “Conversion Transaction”). There can be no assurance when, if ever, a Conversion Transaction will occur, and the board of directors has no current intention or plan to undertake a Conversion Transaction. In a Conversion Transaction, a new stock holding company would be formed as the successor to Columbia Financial (the “New Holding Company”), Columbia Bank MHC’s corporate existence would end, and certain depositors and borrowers of Columbia Bank would receive the right to subscribe for shares of the New Holding Company. In a Conversion Transaction, each share of common stock held by stockholders other than Columbia Bank MHC (“Minority Stockholders”) would be automatically converted into a number of shares of common stock of the New Holding Company determined pursuant to an exchange ratio that ensures that Minority Stockholders own the same percentage of common stock in the New Holding Company as they owned in Columbia Financial immediately prior to the Conversion Transaction. Any Conversion Transaction would be subject to approvals by Minority Stockholders and members of Columbia Bank MHC. Minority Stockholders will not be able to force a Conversion Transaction without the consent of Columbia Bank MHC since such transaction also requires, under federal corporate law, the approval of a majority of all of the outstanding voting stock, which can only be achieved if Columbia Bank MHC voted to approve such transaction.

~~Acquisition.~~ Under the Federal Change in Bank Control Act, a notice must be submitted to the Federal Reserve Board if any person (including a company), or group acting in concert, seeks to acquire direct or indirect “control” of a savings and loan holding company. Under certain circumstances, a change of control may occur, and prior notice is required, upon the acquisition of 10% or more of the company’s outstanding voting stock, unless the Federal Reserve Board has found that the acquisition will not result in control of the company. A change in control definitively occurs upon the acquisition of 25% or more of the company’s outstanding voting stock. Under the Change in Bank Control Act, the Federal Reserve Board generally has 60 days from the filing of a complete notice to act, taking into consideration certain factors, including the financial and managerial resources of the acquirer and the competitive effects of the acquisition.

~~Federal Securities Laws~~

Columbia Financial’s common stock is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934. Columbia Financial is therefore subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934.

~~Emerging Growth Company Status~~

The JOBS Act, which was enacted in April 2012, has made numerous changes to the federal securities laws to facilitate access to capital markets. Under the JOBS Act, a company with total annual gross revenues of less than $1.07 billion during its most recently completed fiscal year qualifies as an “emerging growth company”. Columbia Financial qualifies as an emerging growth company under the JOBS Act.

An “emerging growth company” may choose not to hold stockholder votes to approve annual executive compensation (more frequently referred to as “say-on-pay” votes) or executive compensation payable in connection with a merger (more frequently referred to as “say-on-golden parachute” votes). An emerging growth company also is not subject to the requirement that its auditors attest to the effectiveness of the company’s internal control over financial reporting, and can provide scaled disclosure regarding executive compensation. Finally, an emerging growth company may elect to comply with new or amended accounting pronouncements in the same manner as a private company, but must make such election when the company is first required to file a registration statement. Such an election is irrevocable during the period a company is an emerging growth company. Columbia Financial has elected to comply with new or amended accounting pronouncements in the same manner as a private company.

A company loses emerging growth company status on the earlier of: (i) the last day of the fiscal year of the company during which it had total annual gross revenues of $1.07 billion or more; (ii) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the company pursuant to an effective registration statement under the Securities Act of 1933; (iii) the date on which such company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which such company is deemed to be a “large accelerated filer” under Securities and Exchange Commission regulations (generally, at least $700 million of voting and non-voting equity held by non-affiliates).

~~Personnel~~

As of December 31, 2018, we had 546 full-time employees and 117 part-time employees, none of whom is represented by a collective bargaining unit. We believe the relationship with our employees is good.

~~Subsidiaries~~

~~Columbia Financial’s sole banking subsidiary is Columbia Bank.~~

~~Columbia Bank’s active subsidiaries are as follows:~~

First Jersey Title Services, Inc., a title insurance agency that we acquired in 2002. At December 31, 2018, total assets were approximately $12.9 million. For the year ended December 31, 2018, First Jersey Title Services, Inc. had net income of approximately $379,000.

1901 Commercial Management Co. LLC, which was established in 2009 to hold commercial other real estate owned, and 1901 Residential Management Co. LLC, which was established in 2009 to hold residential other real estate owned. At December 31, 2018, these subsidiaries held $12.1 million and $9.0 million in total assets, respectively.

~~2500 Broadway Corp. is a passive investment company that holds an investment in CSB Realty Corp. At December 31, 2018, total assets were approximately $4.4 billion.~~

CSB Realty Corp., which is a majority owned subsidiary of 2500 Broadway Corp. CSB Realty Corp. is a real estate investment trust which holds commercial real estate, mortgage and home equity loans for investment. At December 31, 2018, total assets were approximately $3.9 billion.

~~Columbia Bank also currently maintains three inactive subsidiaries: (i) Columbia Investment Services, Inc., (ii) Real Estate Management Corp, LLC and (iii) Plaza Financial Services, Inc.~~

~~Executive Officers~~

~~Our~~ executive officers ~~are elected annually by the board of~~and directors and ~~serve at the board’s discretion. The following individuals currently serve as executive officers:~~



~~Name~~		~~Position~~
~~Thomas J. Kemly~~		~~President and Chief Executive Officer~~
~~E. Thomas Allen, Jr.~~		~~Senior Executive Vice President and Chief Operating Officer~~
~~Dennis E. Gibney, CFA~~		~~Executive Vice President and Chief Financial Officer~~
~~Joseph F. Dempsey~~		~~Executive Vice President and Head of Commercial Banking~~
~~Geri M. Kelly~~		~~Executive Vice President and Human Resources Officer~~
~~John Klimowich~~		~~Executive Vice President and Chief Risk Officer~~
~~Mark S. Krukar~~		~~Executive Vice President and Chief Credit Officer~~
~~Brian W. Murphy~~		~~Executive Vice President and Operations Officer~~
~~Allyson Schlesinger~~		~~Executive Vice President and Head of Consumer Banking~~

Below is information regarding our executive officers who are not also directors. Each executive officer has held his or her current position for the period indicated below. Ages presented are as of December 31, 2018.

~~E. Thomas Allen, Jr~~.their affiliates was appointed Senior Executive President, Chief Operating Officer of Columbia Bank on December 24, 2014. Mr. Allen began his career with Columbia Bank on October 17, 1994 and held various positions in the finance department. He was promoted to Treasurer in 1996, appointed Vice President, Treasurer in 1998, and named Senior Vice President, Treasurer in 2001. In 2002, Mr. Allen was promoted to Executive Vice President, Chief Financial Officer and served in that capacity until his appointment to Senior Executive Vice President, Chief Operating Officer. Mr. Allen holds a BS/BA in Banking & Finance from the University of Missouri and an MBA in Financial Management from Pace University. Age 61.

~~Dennis E. Gibney, CFA~~ was appointed Executive Vice President and Chief Financial Officer of Columbia Bank in 2014. Prior to joining Columbia Bank, Mr. Gibney worked for FinPro, Inc. a bank consulting firm, and its wholly owned investment banking subsidiary, FinPro Capital Advisors, Inc., for 17 years. While at FinPro, Mr. Gibney worked on mergers and acquisitions, mutual-to-stock conversions, corporate valuations, strategic planning and interest rate risk management engagements for community banks. Mr. Gibney graduated Magna Cum Laude from Babson College with a triple major in Finance, Investments and Economics. He is a CFA Charterholder and a member of the New York Society of Security Analysts. Age 45.

~~Joseph F. Dempsey~~ was appointed Executive Vice President and Head of Commercial Banking of Columbia Bank in September 2018. In this role, Mr. Dempsey will be responsible for the Bank’s Commercial Lending functions, including C&I, SBA, Middle Market Lending, Commercial Real Estate and Construction financing, as well as the Bank’s Business Development division. Mr. Dempsey previously served as New Jersey Market President and Chair of Market Leadership Team, at JP Morgan Chase, where he directed Chase’s middle market operations for the State of New Jersey before moving to Capital One as its Senior Regional Commercial Credit Officer. In that role, he was responsible for Middle Market lending activities in New Jersey, New York, Long Island and Pennsylvania. Mr. Dempsey holds a Bachelor’s degree from Dartmouth College and an MBA in Finance from New York University. Age 57.

~~Geri M. Kelly~~ was appointed Executive Vice President, Human Resources Officer of Columbia Bank on January 1, 2012. Ms. Kelly began her career at Columbia Bank in December 1979 and held various positions in the human resources department. In 1998, Ms. Kelly was promoted to Vice President, Human Resources Officer and in December 2000 she was promoted to Senior Vice President, Human Resources Officer. Ms. Kelly served Columbia Bank in that capacity until her appointment to Executive Vice President, Human Resources Officer in 2012. She graduated from Douglass College with a Bachelor’s of Arts degree in Foreign Languages and received her Masters of Business Administration from Rutgers University. Age 61.

~~John Klimowich~~ was appointed Executive Vice President and Chief Risk Officer of Columbia Bank on October 5, 2013. Mr. Klimowich began working for Columbia Bank in November 1985 and held various positions in the accounting department. Mr. Klimowich was promoted to Senior Vice President, Controller in March, 2002 and served Columbia Bank in that capacity until his appointment as Executive Vice President and Chief Risk Officer in 2013. Mr. Klimowich holds a Bachelor’s degree in Economics from William Paterson University and an MBA in Accounting from Seton Hall University. Age 55.

~~Mark S. Krukar~~ was appointed Executive Vice President and Chief Credit Officer of Columbia Bank in September 2018. He previously served as Executive Vice President and Chief Lending Officer of Columbia Bank in April 2012. Mr. Krukar began his career at Columbia Bank in December 1987 as a Commercial Lender and was promoted to Vice President/Commercial Lending in April 1995. Mr. Krukar was named Senior Vice President/Commercial Lending in 2002 and served in that capacity until he was promoted to Executive Vice President and Chief Lending Officer in 2012. Mr. Krukar graduated Magna Cum Laude with a Bachelor’s degree in Finance and received an MBA in Finance, both from Fairleigh Dickinson University. Age 58.

~~Brian W. Murphy~~ was appointed Executive Vice President, Operations of Columbia Bank in March 2009. Mr. Murphy began his career at Columbia Bank as a Management Trainee in 1981 and held various positions in the retail department. In 1996, Mr. Murphy became Columbia Bank’s Branch Administrator and was promoted to Senior Vice President in 2001. He served Columbia Bank in that capacity until his appointment to Executive Vice President, Operations in 2009. Mr. Murphy holds a Bachelor’s degree in Accounting from William Paterson University. Age 59.

~~Allyson Schlesinger~~ was appointed Executive Vice President and Head of Consumer Banking of Columbia Bank in September 2018. In this role, Ms. Schlesinger is responsible for the retail banking, retail lending, wealth management and marketing divisions of the Bank. Ms. Schlesinger was previously with Citigroup, Inc. for 25 years, most recently as its Managing Director, U.S. Retail and Division Manager for Citigroup, Inc. in the New York City and New Jersey markets. Ms. Schlesinger holds a Bachelor’s degree from the University of Michigan. Age 47.

~~Item 1A.Risk Factors~~

Investing in the Company’s common stock involves risks. The investor should carefully consider the following risk factors before deciding to make an investment decision regarding the Company’s stock. The risk factors may cause future earnings to be lower or the financial condition to be less favorable than expected. In addition, other risks that the Company is not aware of, or which are not believed to be material, may cause earnings to be lower, or may deteriorate the financial condition of the Company. Consideration should also be given to the other information in this Annual Report on Form 10-K, as well as in the documents incorporated by reference into this Form 10-K.

~~Our multifamily and commercial real estate lending practices expose us to increased lending risks and related loan losses.~~

At December 31, 2018, our multifamily and commercial real estate loan portfolios totaled $2.1 billion, or 43.2% of our total loan portfolio. Our current business strategy is to continue our originations of multifamily and commercial real estate loans. These loans generally expose a lender to greater risk of non-payment and loss than one-to-four family residential mortgage loans because repayment of the loans often depends on the successful operation of the properties and the income stream of the borrowers. These loans involve larger loan balances to single borrowers or groups of related borrowers compared to one-to four-family residential mortgage loans. Further, we may increase our loans to individual borrowers, which would result in larger loan balances. To the extent that borrowers have more than one multifamily or commercial real estate loan outstanding, an adverse development with respect to one loan or one credit relationship could expose us to a significantly greater risk of loss compared to an adverse development with respect to a one-to- four family residential real estate loan. Moreover, if loans that are collateralized by multifamily or commercial real estate properties, become troubled and the value of the real estate has been significantly impaired, then we may not be able to recover the full contractual amount of principal and interest that we anticipated at the time we originated the loan, which could cause us to increase our provision for loan losses and adversely affect our earnings and financial condition.

~~Imposition of limits by the bank regulators on commercial and multifamily real estate lending activities could curtail our growth and adversely affect our earnings.~~

In 2006, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System (collectively, the “Agencies”) issued joint guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” (the “CRE Guidance”). Although the CRE Guidance did not establish specific lending limits, it provides that a bank’s commercial real estate lending exposure could receive increased supervisory scrutiny where total non-owner-occupied commercial real estate loans, including loans secured by apartment buildings, investor commercial real estate, and construction and land loans, represent 300% or more of an institution’s total risk-based capital, and the outstanding balance of the commercial real estate loan portfolio has increased by 50% or more during the preceding 36 months. Our level of multifamily and commercial real estate loans represented 241.6% of Columbia Bank’s total risk-based capital at December 31, 2018.

In December 2015, the Agencies released a new statement on prudent risk management for commercial real estate lending (the “2015 Statement”). In the 2015 Statement, the Agencies, among other things, indicate the intent to continue “to pay special attention” to commercial real estate lending activities and concentrations going forward. If the Office of the Comptroller of the Currency, our primary federal regulator, were to impose restrictions on the amount of commercial real estate loans we can hold in our portfolio, for reasons noted above or otherwise, our earnings would be adversely affected.

Our business strategy includes growth, and our financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively. Growing our operations could also cause our expenses to increase faster than our revenues.

Our business strategy includes growth in assets, deposits and the scale of our operations. Achieving such growth will require us to attract customers that currently bank at other financial institutions in our market area. Our ability to successfully grow will depend on a variety of factors, including our ability to attract and retain experienced bankers, the continued availability of desirable business opportunities, competition from other financial institutions in our market area and our ability to manage our growth. Growth opportunities may not be available or we may not be able to manage our growth successfully. If we do not manage our growth effectively, our financial condition and operating results could be negatively affected. Furthermore, there can be considerable costs involved in expanding deposit and lending capacity that generally require a period of time to generate the necessary revenues to offset their costs, especially in areas in which we do not have an established presence and that require alternative delivery methods. Accordingly, any such business expansion can be expected to negatively impact our earnings for some period of time until certain economies of scale are reached. Our expenses could be further increased if we encounter delays in modernizing existing facilities, opening new branches or deploying new services.

~~Our origination of construction loans exposes us to increased lending risks.~~

We originate commercial construction loans, including speculative construction loans, primarily to professional builders for the construction and acquisition of personal residences, apartment buildings, retail, industrial/warehouse, office buildings and special purpose facilities. Speculative construction loans are loans made to builders who have not identified a buyer for the completed property at the time of loan origination. At December 31, 2018, $261.5 million, or 5.3%, of our loan portfolio, consisted of construction loans, of which $190.4 million, or 72.8%, consisted of speculative construction loans. In addition, we originate residential construction loans primarily on a construction-to-permanent basis with such loans converting to an amortizing loan following the completion of the construction phase. Our construction loans present a greater level of risk than loans secured by improved, occupied real estate due to: (1) the increased difficulty at the time the loan is made of estimating the building costs and the selling price of the property to be built; (2) the increased difficulty and costs of monitoring the loan; (3) the higher degree of sensitivity to increases in market rates of interest; and (4) the increased difficulty of working out loan problems. In addition, with respect to speculative construction loans, repayment often depends on the successful construction or development and ultimate sale of the property and, possibly, unrelated cash needs of the borrowers. Further, construction costs may exceed original estimates as a result of increased materials, labor or other costs. Construction loans also often involve the disbursement of funds with repayment dependent, in part, on the success of the project and the ability of the borrower to sell or lease the property or refinance the indebtedness.

~~Our concentration of residential mortgage loans exposes us to increased lending risks.~~

At December 31, 2018, $1.8 billion, or 36.8%, of our loan portfolio was secured by one-to-four family real estate, a significant majority of which is located in the State of New Jersey, and to a lesser extent New York and Pennsylvania, and we intend to continue this type of lending in the foreseeable future. One-to-four family residential mortgage lending is generally sensitive to regional and local economic conditions that significantly impact the ability of borrowers to meet their loan payment obligations, making loss levels difficult to predict. A decline in residential real estate values as a result of a downturn in the local housing market or in the markets in neighboring states in which we originate residential mortgage loans could reduce the value of the real estate collateral securing these types of loans. Declines in real estate values could cause some of our residential mortgages to be inadequately collateralized, which would expose us to a greater risk of loss if we seek to recover on defaulted loans by selling the real estate collateral.

~~Our commercial business lending activities expose us to additional lending risks.~~

We make commercial business loans in our market area to a variety of professionals, sole proprietorships, partnerships and corporations. Unlike residential mortgage loans, which generally are made on the basis of the borrower’s ability to make repayment from his or her employment or other income, and which are secured by real property, the value of which tends to be more easily ascertainable, commercial business loans are of higher risk and typically are made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. As a result, the availability of funds for the repayment of commercial business loans may depend substantially on the success of the business itself. Further, any collateral securing such loans may depreciate over time, may be difficult to appraise, may fluctuate in value and may depend on the borrower’s ability to collect receivables. We have increased our focus on commercial business lending in recent years and intend to continue to focus on this type of lending in the future.

~~If our allowance for loan losses is not sufficient to cover actual loan losses, our results of operations would be negatively affected.~~

In determining the amount of the allowance for loan losses, we analyze our loss and delinquency experience by loan categories and we consider the effect of existing economic conditions. In addition, we make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. If the actual results are different from our estimates, or our analyses are incorrect, our allowance for loan losses may not be sufficient to cover losses inherent in our loan portfolio, which would require additions to our allowance and would decrease our net income. Our emphasis on loan growth and on increasing our portfolio, as well as any future credit deterioration, will require us to increase our allowance further in the future.

In addition, our banking regulators periodically review our allowance for loan losses and could require us to increase our provision for loan losses. Any increase in our allowance for loan losses or loan charge-offs as required by regulatory authorities may have a material adverse effect on our results of operations and financial condition.

~~Ineffective liquidity management could adversely affect our financial results and condition.~~

Effective liquidity management is essential for the operation of our business. We require sufficient liquidity to meet customer loan requests, customer deposit maturities/withdrawals, payments on our debt obligations as they come due and other cash commitments under both normal operating conditions and other unpredictable circumstances causing industry or general financial market stress. Our

access to funding sources in amounts adequate to finance our activities on terms that are acceptable to us could be impaired by factors that affect us specifically or the financial services industry or economy generally. Factors that could detrimentally impact our access to liquidity sources include a downturn in the geographic markets in which our loans and operations are concentrated or difficult credit markets. Our access to deposits may also be affected by the liquidity needs of our depositors. In particular, a majority of our liabilities are checking accounts and other liquid deposits, which are payable on demand or upon several days’ notice, while by comparison, a substantial majority of our assets are loans, which cannot be called or sold in the same time frame. Although we have historically been able to replace maturing deposits and advances as necessary, we might not be able to replace such funds in the future, especially if a large number of our depositors seek to withdraw their accounts, regardless of the reason. A failure to maintain adequate liquidity could materially and adversely affect our business, results of operations or financial condition.

~~The geographic concentration of our loan portfolio and lending activities makes us vulnerable to a downturn in the New Jersey and metropolitan New York and Philadelphia economies.~~

While there is not a single employer or industry in our market area on which a significant number of our customers are dependent, a substantial portion of our loan portfolio is comprised of loans secured by property located in northern New Jersey and in metropolitan New York and Philadelphia. This makes us vulnerable to a downturn in the local economy and real estate markets. Adverse conditions in the local economy such as unemployment, recession, a catastrophic event or other factors beyond our control could impact the ability of our borrowers to repay their loans, which could impact our net interest income. Decreases in local real estate values caused by economic conditions, recent changes in tax laws or other events could adversely affect the value of the property used as collateral for our loans, which could cause us to realize a loss in the event of a foreclosure. Further, deterioration in local economic conditions could drive the level of loan losses beyond the level we have provided for in our allowance for loan losses, which in turn could necessitate an increase in our provision for loan losses and a resulting reduction to our earnings and capital.

~~Economic conditions could result in increases in our level of non-performing loans and/or reduce demand for our products and services, which could have an adverse effect on our results of operations.~~

Prolonged deteriorating economic conditions could significantly affect the markets in which we do business, the value of our loans and investment securities, and our ongoing operations, costs and profitability. Further, declines in real estate values and sales volumes and elevated unemployment levels may result in higher loan delinquencies, increases in our non-performing and classified assets and a decline in demand for our products and services. These events may cause us to incur losses and may adversely affect our financial condition and results of operations. Reduction in problem assets can be slow, and the process can be exacerbated by the condition of the properties securing non-performing loans and the lengthy foreclosure process in New Jersey. To the extent that we must work through the resolution of assets, economic problems may cause us to incur losses and adversely affect our capital, liquidity, and financial condition.

~~We are subject to certain risks in connection with our strategy of growing through mergers and acquisitions.~~

Mergers and acquisitions are currently a component of our business model and growth strategy. Accordingly, it is possible that we could acquire other banking institutions, other financial services companies or branches of banks in the future. Acquisitions typically involve the payment of a premium over book and trading values and, therefore, may result in the dilution of our tangible book value per share. Our ability to engage in future mergers and acquisitions depends on various factors, including: (1) our ability to identify suitable merger partners and acquisition opportunities; (2) our ability to finance and complete transactions on acceptable terms and at acceptable prices; and (3) our ability to receive the necessary regulatory and, when required, stockholder approvals. Our inability to engage in an acquisition or merger for any of these reasons could have an adverse impact on the implementation of our business strategies. Furthermore, mergers and acquisitions involve a number of risks and challenges, including (1) our ability to achieve planned synergies and to integrate the branches and operations we acquire, and the internal controls and regulatory functions into our current operations ; (2) the integration process could adversely affect our ability to maintain relationships with existing customers; (3) the diversion of management’s attention from existing operations, which may adversely affect our ability to successfully conduct our business and negatively impact our financial results and (4) our ability to identify potential asset quality issues or contingent liabilities during the due diligence process.

~~Changes in interest rates may hurt our profits and asset values and our strategies for managing interest rate risk may not be effective.~~

We are subject to significant interest rate risk as a financial institution with a high percentage of fixed rate loans and certificates of deposit on our balance sheet. In response to improving economic conditions, the Federal Reserve Board's Open Market Committee has slowly increased its federal funds rate target from a range of 0.00% - 0.25% that was in effect for several years, to the current range of 2.25% - 2.50% that was in effect at December 31, 2018. Our interest-bearing liabilities, on the other hand, likely will reprice or mature more quickly than our interest-earning assets, much of which has been booked relatively recently. Accordingly, if market interest rates continue to increase, our net interest income may be adversely affected and may decrease, which may have an adverse effect on our future profitability. Changes in the general level of interest rates can affect our net interest income by affecting the difference between the weighted-average yield earned on our interest-earning assets and the weighted-average rate paid on our interest-bearing liabilities, or

interest rate spread, and the average life of our interest-earning assets and interest-bearing liabilities. Changes in interest rates also can affect: (1) our ability to originate loans; (2) the value of our interest-earning assets and our ability to realize gains from the sale of such assets; (3) our ability to obtain and retain deposits in competition with other available investment alternatives; and (4) the ability of our borrowers to repay their loans, particularly adjustable or variable rate loans. Interest rates are highly sensitive to many factors, including government monetary policies, domestic and international economic and political conditions and other factors beyond our control.

~~We may be adversely affected by recent changes in U.S. tax laws and regulations.~~

Changes in tax laws contained in the Tax Cuts and Jobs Act ("Tax Act"), which was enacted in December 2017, include a number of provisions that have had an impact on the banking industry, borrowers and the market for residential real estate. Included in this legislation was a reduction of the corporate income tax rate from 35% to 21%. In addition, other changes which could effect our borrowers include: (i) a lower limit on the deductibility of mortgage interest on single-family residential mortgage loans, (ii) the elimination of interest deductions for certain home equity loans, (iii) a limitation on the deductibility of business interest expense and (iv) a limitation on the deductibility of property taxes and state and local income taxes.

The recent changes in the tax laws may have an adverse effect on the market for, and valuation of, residential properties, and on the demand for such loans in the future, and could make it harder for borrowers to make their loan payments. In addition, these recent changes may also have a disproportionate effect on taxpayers in states with high residential home prices and high state and local taxes, such as New Jersey and New York. If home ownership becomes less attractive, demand for mortgage loans could decrease. The value of the properties securing loans in our loan portfolio may be adversely impacted as a result of the changing economics of home ownership, which could require an increase in our provision for loan losses, which would reduce our profitability and could materially adversely affect our business, financial condition and results of operations.

Additionally, legislation in New Jersey that was adopted in July 2018 will increase our state income tax liability and could increase our overall tax expense. The legislation imposes a temporary surtax on corporations earning New Jersey allocated income in excess of $1 million of 2.5% for tax years beginning on or after January 1, 2018 through December 31, 2019, and of 1.5% for tax years beginning on or after January 1, 2020 through December 31, 2021. The new legislation also requires combined filing for members of an affiliated group for tax years beginning on or after January 1, 2019, changing New Jersey's current status as a separate return state, and limits the deductibility of dividends received. These changes are not temporary. All regulations implementing the legislative changes have not yet been issued, so we cannot fully evaluate the impact of the legislation on our overall tax expense. However, the new legislation may cause us to lose the benefit of certain of our tax management strategies and may cause our total tax expense to increase.

~~Municipal deposits are one important source of funds for us and a reduced level of such deposits may hurt our profits.~~

Municipal deposits are an important source of funds for our lending and investment activities. At December 31, 2018, $367.9 million, or 8.3%, of our total deposits were comprised of municipal deposits, including public funds deposits from local government entities primarily domiciled in the State of New Jersey. Given our use of these high-average balance municipal deposits as a source of funds, our inability to retain such funds could have an adverse effect on our liquidity. In addition, our municipal deposits are primarily demand deposit accounts or short-term deposits and therefore are more sensitive to changes in interest rates. If we are forced to pay higher rates on our municipal deposits to retain those funds, or if we are unable to retain those funds and we are forced to turn to borrowing sources for our lending and investment activities, the interest expense associated with such borrowings may be higher than the rates we are paying on our municipal deposits, which could adversely affect our net income.

We are dependent on our information technology and telecommunications systems and third-party service providers; systems failures, interruptions and cybersecurity breaches could have a material adverse effect on us.

Our business is dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party service providers. The failure of these systems, or the termination of a third-party software license or service agreement on which any of these systems is based, could interrupt our operations. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions. If significant, sustained or repeated, a system failure or service denial could compromise our ability to operate effectively, damage our reputation, result in a loss of customer business, and/or subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on us.

Our third-party service providers may be vulnerable to unauthorized access, computer viruses, phishing schemes and other security breaches. We likely will expend additional resources to protect against the threat of such security breaches and computer viruses, or to alleviate problems caused by such security breaches or viruses. To the extent that the activities of our third-party service providers or the activities of our customers involve the storage and transmission of confidential information, security breaches and viruses could expose us to claims, regulatory scrutiny, litigation costs and other possible liabilities.

~~Security breaches and cybersecurity threats could compromise our information and expose us to liability, which would cause our business and reputation to suffer.~~

In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and that of our customers, suppliers and business partners, as well as personally identifiable information about our customers and employees. The secure processing, maintenance and transmission of this information is critical to our operations and business strategy. We, our customers, and other financial institutions with which we interact, are subject to ongoing, continuous attempts to penetrate key systems by individual hackers, organized criminals, and in some cases, state-sponsored organizations. While we have established policies and procedures to prevent or limit the impact of cyber-attacks, there can be no assurance that such events will not occur or will be adequately addressed if they do. In addition, we also outsource certain cybersecurity functions, such as penetration testing, to third party service providers, and the failure of these service providers to adequately perform such functions could increase our exposure to security breaches and cybersecurity threats. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other malicious code and cyber-attacks that could have an impact on information security. Any such breach or attacks could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such unauthorized access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties; disrupt our operations and the services we provide to customers; damage our reputation; and cause a loss of confidence in our products and services, all of which could adversely affect our financial condition and results of operations.

~~We must keep pace with technological change to remain competitive.~~

Financial products and services have become increasingly technology-driven. Our ability to meet the needs of our customers competitively, and in a cost-efficient manner, is dependent on the ability to keep pace with technological advances and to invest in new technology as it becomes available, as well as related essential personnel. In addition, technology has lowered barriers to entry into the financial services market and made it possible for financial technology companies and other non-bank entities to offer financial products and services traditionally provided by banks. The ability to keep pace with technological change is important, and the failure to do so, due to cost, proficiency or otherwise, could have a material adverse impact on our business and therefore on our financial condition and results of operations.

~~Because the nature of the financial services business involves a high volume of transactions, we face significant operational risks.~~

We operate in diverse markets and rely on the ability of our employees and systems to process a high number of transactions. Operational risk is the risk of loss resulting from our operations, including but not limited to, the risk of fraud by employees or outside persons, the execution of unauthorized transactions by employees, errors relating to transaction processing and technology, breaches of our internal control system and compliance requirements, and business continuation and disaster recovery. Insurance coverage may not be available for such losses, or where available, such losses may exceed insurance limits. This risk of loss also includes the potential legal actions that could arise as a result of an operational deficiency or as a result of noncompliance with applicable regulations, adverse business decisions or their implementation, and customer attrition due to potential negative publicity. Although our control testing has not identified any significant deficiencies in our internal control system, a breakdown in our internal control system, improper operation of our systems or improper employee actions could result in material financial loss to us, the imposition of regulatory action, and damage to our reputation.

~~The building of market share through our branch office strategy, and our ability to achieve profitability on new branch offices, may increase our expenses and negatively affect our earnings.~~

We believe there are branch expansion opportunities within our market area and adjacent markets, including other states, and will seek to grow our deposit base by adding branches to our existing 50 branch network. There are considerable costs involved in opening branch offices, especially in light of the capabilities needed to compete in today’s environment. Moreover, new branch offices generally require a period of time to generate sufficient revenues to offset their costs, especially in areas in which we do not have an established presence. Accordingly, new branch offices could negatively impact our earnings and may do so for some period of time. Our investments in products and services, and the related personnel required to implement new policies and procedures, take time to earn returns and can be expected to negatively impact our earnings for the foreseeable future. The profitability of our expansion strategy will depend on whether the income that we generate from the new branch offices will offset the increased expenses resulting from operating these branch offices.

~~Strong competition within our market area could hurt our profits and slow growth.~~

Our profitability depends upon our continued ability to compete successfully in our market area. We face intense competition both in making loans and attracting deposits. We continue to face stiff competition for one-to four-family residential loans from other

financial service providers, including large national residential lenders and local community banks. Other competitors for one-to four-family residential loans include credit unions and mortgage brokers which keep overhead costs and mortgage rates down by selling loans and not holding or servicing them. Our competitors for commercial real estate and multifamily loans include other community banks and commercial lenders, some of which are larger than us and have greater resources and lending limits than we have and offer services that we do not provide. Price competition for loans and deposits might result in us earning less on our loans and paying more on our deposits, which reduces net interest income. We expect competition to remain strong in the future.

~~Acts of terrorism and other external events could impact our ability to conduct business.~~

Financial institutions have been, and continue to be, targets of terrorist threats aimed at compromising operating and communication systems. Additionally, the metropolitan New York area and northern New Jersey remain central targets for potential acts of terrorism. Such events could cause significant damage, impact the stability of our facilities and result in additional expenses, impair the ability of our borrowers to repay their loans, reduce the value of collateral securing repayment of our loans, and result in the loss of revenue. The occurrence of any such event could have a material adverse effect on our business, operations and financial condition.

~~Regulation of the financial services industry is intense, and we may be adversely affected by changes in laws and regulations.~~

We are subject to extensive government regulation, supervision and examination. Such regulation, supervision and examination govern the activities in which we may engage, and are intended primarily for the protection of the federal deposit insurance fund and Columbia Bank’s depositors.

In 2010 and 2011, in response to the financial crisis and recession that began in 2008, significant regulatory and legislative changes resulted in broad reform and increased regulation affecting financial institutions. The Dodd-Frank Act has created a significant shift in the way financial institutions operate and has restructured the regulation of depository institutions by merging the Office of Thrift Supervision, which previously regulated Columbia Bank, into the Office of the Comptroller of the Currency, and assigning the regulation of savings and loan holding companies to the Federal Reserve Board. The Dodd-Frank Act also created the Consumer Financial Protection Bureau to administer consumer protection and fair lending laws, a function that was formerly performed by the depository institution regulators. The Dodd-Frank Act contains various provisions designed to enhance the regulation of depository institutions and prevent the recurrence of a financial crisis such as that which occurred in 2008 and 2009. The Dodd-Frank Act has had and may continue to have a material impact on our operations, particularly through increased regulatory burden and compliance costs. Any future legislative changes could have a material impact on our profitability, the value of assets held for investment or the value of collateral for loans. Future legislative changes could also require changes to business practices and potentially expose us to additional costs, liabilities, enforcement action and reputational risk.

Federal regulatory agencies have the ability to take strong supervisory actions against financial institutions that have experienced increased loan production and losses and other underwriting weaknesses or have compliance weaknesses. These actions include the entering into of formal or informal written agreements and cease and desist orders that place certain limitations on their operations. If we were to become subject to a regulatory action, such action could negatively impact our ability to execute our business plan, and result in operational restrictions, as well as our ability to grow, pay dividends, repurchase stock or engage in mergers and acquisitions. See ~~“Item 1: Business - Regulation and Supervision -Federal Banking Regulation- Capital Requirements”~~ ~~for a discussion of regulatory capital requirements.~~

We expect that the implementation of a new accounting standard could require us to increase our allowance for loan losses and may have a material adverse effect on our financial condition and results of operations.

The Financial Accounting Standards Board (“FASB”) has adopted a new accounting standard that will be effective for Columbia Financial and Columbia Bank for our fiscal year beginning January 1, 2020. This standard, referred to as Current Expected Credit Loss, or CECL, will require financial institutions to determine periodic estimates of lifetime expected credit losses on loans, and provide for the expected credit losses as allowances for loan losses. This will change the current method of providing allowances for loan losses that are probable, which we expect could require us to increase our allowance for loan losses, and will likely greatly increase the data we would need to collect and review to determine the appropriate level of the allowance for loan losses. Any increase in our allowance for loan losses, or expenses incurred to determine the appropriate level of the allowance for loan losses, may have a material adverse effect on our financial condition and results of operations.

~~Changes to LIBOR may adversely impact the interest rate paid on some of our loans and other financial instruments.~~

On July 27, 2017, the U.K. Financial Conduct Authority, which regulates London Interbank Offered Rates (“LIBOR”), announced that it will no longer persuade or compel banks to submit rates for the calculation of LIBOR to the LIBOR administrator after 2021. The announcement also indicates that the continuation of LIBOR on the current basis cannot and will not be guaranteed after 2021. Consequently, at this time, it is not possible to predict whether and to what extent banks will continue to provide LIBOR submissions to

the LIBOR administrator or whether any additional reforms to LIBOR may be enacted in the United Kingdom or elsewhere. Similarly, it is not possible to predict whether LIBOR will continue to be viewed as an acceptable benchmark for certain securities, loans, and liabilities, what rate or rates may become accepted alternatives to LIBOR or the effect of any such changes in views or alternatives on the value of securities whose interest rates are tied to LIBOR.

Uncertainty as to the nature of such potential changes, alternative reference rates, the elimination or replacement of LIBOR, or other reforms may adversely affect the value of, and performance of, our securities, loans, and liabilities, including the interest we earn or pay on those financial instruments.

~~Item 1B.Unresolved Staff Comments~~

~~None.~~

~~Item 2.Properties~~

We conduct our business through our main office and 50 branch offices located in Bergen, Passaic, Morris, Essex, Union, Middlesex, Monmouth, Burlington, Camden and Gloucester counties, New Jersey. We own 23 properties and lease the other 26 properties. First Jersey Title Services, Inc. operates within one of our branch facilities.

~~Item 3.Legal Proceedings~~

From time to time, Columbia Financial and Columbia Bank are involved in routine legal proceedings in the ordinary course of business. Such routine legal proceedings, in the aggregate, are believed by management to be immaterial to our financial condition, results of operations and cash flows.

~~Item 4.Mine Safety Disclosures~~

~~None.~~

~~PART II~~

~~Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~

The Company’s common stock is listed on the Nasdaq Global Select Market (“Nasdaq”) under the trading symbol “CLBK.” As of March 22, 2019, the Company had approximately 4,412 holders of record of common stock.

The Company has not declared any dividends to holders of its common stock and we do not currently anticipate paying dividends on our common stock. Our board of directors has the authority to declare dividends on our shares of common stock, and may determine to pay dividends in the future, subject to statutory and regulatory requirements and other considerations such as the ability of Columbia Bank MHC to receive permission to waive receipt of any dividends we may determine to declare in the future.

A policy statement issued by the Federal Reserve Board provides that dividends should be paid only out of current earnings and only if our prospective rate of earnings retention is consistent with our capital needs, asset quality and overall financial condition. Regulatory guidance also provides for prior regulatory consultation with respect to capital distributions in certain circumstances, such as where a holding company’s net income for the past four quarters, net of dividends previously paid over that period, is insufficient to fully fund the dividend or a holding company’s overall rate of earnings retention is inconsistent with its capital needs and overall financial condition. In determining whether to pay a cash dividend in the future and the amount of any cash dividend, the board of directors is expected to take into account a number of factors, including regulatory capital requirements, our financial condition and results of operations, other uses of funds for the long-term value of stockholders, tax considerations, statutory and regulatory limitations and general economic conditions.

If Columbia Financial pays dividends to its stockholders, it also will be required to pay dividends to Columbia Bank MHC, unless Columbia Bank MHC is permitted by the Federal Reserve to waive the receipt of dividends. The Federal Reserve Board’s current position is to not permit a non-grandfathered mutual holding company, such as Columbia Bank MHC, to waive dividends declared by its subsidiary. Columbia Bank MHC may determine to apply to the Federal Reserve Board for approval to waive dividends if we determine to pay dividends to our stockholders without dilution of minority stockholders in the event of a second-step conversion to stock form. Given the Federal Reserve Board’s current position on this issue, there is no assurance that any request by Columbia Bank MHC to waive dividends from Columbia Financial would be permitted. The denial by the Federal Reserve Board of any such dividend waiver request,

~~if sought, could significantly affect any determination by Columbia Financial to pay dividends or the amount of any dividend it might determine to pay in the future, if any.~~

Dividends we can declare and pay will depend, in part, upon receipt of dividends from Columbia Bank, because initially we will have no source of income other than dividends from Columbia Bank and earnings from the investment of the net proceeds from the minority stock offering that were retained by Columbia Financial and interest payments received in connection with the loan to our employee stock ownership plan. Regulations of the Federal Reserve Board and the Office of the Comptroller of the Currency impose limitations on “capital distributions” by savings institutions. See ~~“Item 1: Business - Regulation And Supervision-Federal Banking Regulation-Capital Distributions.”~~

~~Stock Performance Graph~~

The following graph provided by S&P Global Market Intelligence compares the cumulative total return of the Company’s common stock with the cumulative total return of the Nasdaq Composite Index, SNL Thrift Index ($5B-$10B) and SNL Thrift MHCs Index. The graph assumes $100 was invested on April 20, 2018, the first day of trading of the Company’s common stock. Cumulative total return assumes reinvestment of all dividends. The performance graph is being furnished solely to accompany this report pursuant to Item 201(e) of Regulation S-K, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Period Ending
Index 4/20/2018 4/30/2018 5/31/2018 06/30/2018 7/31/2018 8/31/2018 9/30/2018 10/31/2018 11/30/2018 12/31/2018
Columbia Financial, Inc. 100.00
100.52
110.12
107.33
108.88
109.79
108.30
97.80
102.20
99.16
NASDAQ Composite Index 100.00
98.89
104.33
105.35
107.66
113.96
113.16
102.79
103.29
93.59
SNL Thrift $5B-$10B Index 100.00
99.36
104.55
104.07
103.48
101.79
97.78
90.93
95.47
86.98
SNL Thrift MHCs Index 100.00
99.17
103.95
104.32
102.48
104.02
102.00
97.11
103.83
101.57

Source: S&P Global Market Intelligence

~~Issuer Purchases of Equity Securities~~

The Company did not purchase any shares of its common stock during the year ended December 31, 2018. Under current Federal Reserve Board regulations, the Company may not repurchase shares of its common stock during the first year following the Company’s initial public offering, except to fund shareholder-approved equity benefit plans or, with prior regulatory approval, when extraordinary circumstances exist.

~~Item 6.Selected Consolidated Financial and Other Data~~

The summary financial information presented below is derived in part from our consolidated financial statements. The following is only a summary and should be read in conjunction with the consolidated financial statements and notes beginning on page 78. The information as of December 31, 2018 and 2017 and for the years ended December 31, 2018, September 30, 2017 and 2016, is derived in part from the audited consolidated financial statements that appear in this Annual Report on Form 10-K. The information at September 30, 2017, 2016, 2015 and 2014 and for the years ended September 30, 2015 and 2014 is derived in part from our audited consolidated financial statements that do not appear in this Annual Report on Form 10-K. The information for the year ended December 31, 2017 is unaudited. The information presented below reflects Columbia Financial on a consolidated basis and does not include the financial condition, results of operations or other data of Columbia Bank MHC.

At December 31, At September 30,
2018 2017 2017 2016 2015 2014
(In thousands)
Financial Condition Data:
Total assets $ 6,691,618
$ 5,766,500
$ 5,429,328
$ 5,037,412
$ 4,771,153
$ 4,612,645
Total cash and cash equivalents 42,201
65,498
100,975
45,694
43,178
41,652
Securities available for sale 1,034,758
710,570
557,176
771,779
653,283
777,537
Securities held to maturity 262,143
239,618
132,939
—
—
—
Loans receivable, net (1) 4,916,840
4,400,470
4,307,623
3,932,242
3,764,220
3,489,895
Deposits 4,413,873
4,263,315
4,123,428
3,822,815
3,572,624
3,386,714
Borrowings 1,189,180
929,057
733,043
681,990
702,536
775,283
Stockholder's equity 972,060
472,070
475,914
439,664
417,998
391,071

(1) Loans are shown net of allowance for loan losses, deferred costs and fees and purchased premiums and discounts.

For the years ended December 31, For the years ended September 30,
2018 2017 2017 2016 2015 2014
(In thousands)
Operating Data:
Interest income $ 226,290
$ 189,274
$ 184,226
$ 168,977
$ 163,165
$ 157,250
Interest expense 62,256
45,965
44,446
43,962
45,744
47,568
Net interest income 164,034
143,309
139,780
125,015
117,421
109,682
Provision for loan losses 6,677
9,826
6,426
417
5,099
8,741
Net interest income after provision for loan losses 157,357
133,483
133,354
124,598
112,322
100,941
Non-interest income 21,688
16,818
17,172
18,927
21,066
15,578
Non-interest expense 145,386
105,421
103,446
93,769
88,699
82,687
Income before income tax expense 33,659
44,880
47,080
49,756
44,689
33,832
Income tax expense 10,923
20,123
16,008
16,803
14,821
11,255
Net income $ 22,736
$ 24,757
$ 31,072
$ 32,953
$ 29,868
$ 22,577

At or for the Years Ended December 31, At or for the Years Ended September 30,
2018 2017 2017 2016 2015 2014
Performance Ratios:
Return on average assets 0.36 % 0.46 % 0.60 % 0.67 % 0.63 % 0.50 %
Core return on average assets (1) 0.79
0.55
0.70
0.67
0.60
0.53
Return on average equity 2.87
5.37
6.86
7.52
7.18
5.72
Core return on average equity (2) 6.12
6.27
7.93
7.52
6.82
6.14
Interest rate spread (3) 2.45
2.62
2.60
2.48
2.41
2.32
Net interest margin (4) 2.74
2.82
2.80
2.69
2.61
2.53
Non-interest expense to average assets 2.30
1.97
1.98
1.91
1.87
1.82
Efficiency ratio 78.28
65.84
65.91
65.14
64.05
66.01
Core efficiency ratio (5) 59.60
62.80
62.94
65.06
64.70
65.05
Average interest-earning assets to average interest-bearing liabilities 127.27
122.00
122.16
121.32
119.47
119.07
Average equity to average assets 12.53
8.61
8.68
8.92
8.76
8.67
Basic and diluted earnings per share $ 0.20
N/A
N/A
N/A
N/A
N/A

Capital Ratios for Columbia Financial (6):
Total capital (to risk-weighted assets) 23.45 % 15.01 % 15.11 % 15.93 % N/A
N/A
Tier 1 capital (to risk-weighted assets) 22.19
13.76
13.85 14.68 N/A
N/A
Common equity Tier 1 capital (to risk weighted assets) 22.19
12.55
12.60 13.29 N/A
N/A
Tier 1 capital (to adjusted total assets) 15.75
10.54
10.59 10.70 N/A
N/A

Capital Ratios for Columbia Bank:
Total capital (to risk-weighted assets) 19.04 % 14.90 % 14.95 % 15.67 % 15.53 % 16.15 %
Tier 1 capital (to risk-weighted assets) 17.79
13.64
13.69 14.42 14.27 14.90
Common equity Tier 1 capital (to risk weighted assets) 17.79
13.64
13.69 14.42 14.27 14.90
Tier 1 capital (to adjusted total assets) 12.60
10.44
10.47 10.56 10.29 10.15

Asset Quality Ratios:
Allowance for loan losses as a percent of total gross loans 1.26 % 1.31 % 1.26 % 1.30 % 1.49 % 1.63 %
Allowance for loan losses as a percent of non-performing loans 2,235.28
891.62
854.31 424.44 268.70 110.84
Net charge-offs to average outstanding loans during period 0.05
0.08
0.09 0.14 0.16 0.36
Non-performing loans as a percent of total gross loans 0.06
0.15
0.15 0.31 0.56 1.47
Non-performing assets as a percent of total assets 0.04
0.13
0.13 0.27 0.51 1.19

Other Data:
Number of offices 49
48
47 45 44 44

(1) Represents GAAP net income adjusted for unusual or one-time charges or non-core items as a percent of average assets.

(2) Represents GAAP net income adjusted for unusual or one-time charges or non-core items as a percent of average equity.

(3) Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost on average interest-bearing liabilities.

(4) Represents net interest income as a percent of average interest-earning assets.

(5) Core efficiency ratio represents our adjusted non-interest expense divided by our adjusted revenue. Core efficiency ratio is a non-GAAP measure derived from our efficiency ratio, which is calculated by dividing our total GAAP non-interest expense by our GAAP revenue, and is adjusted for unusual or one-time charges or non-core items as detailed below. Management believes that the presentation of core efficiency ratio assists investors and analysts in understanding the impact of these non-recurring items on our efficiency ratio.

~~(6) As a savings and loan holding company, capital ratios for Columbia Financial were not required to be calculated prior to December 31, 2015.~~

~~The following table provides a reconciliation of our core efficiency ratio for each of the periods presented in the table above.~~

For the Years Ended December 31, For the Years Ended September 30,
2018 2017 2017 2016 2015 2014
(In thousands)
Non-interest expense $ 145,386
$ 105,421
$ 103,446
$ 93,769
$ 88,699
$ 82,687
Less adjustments:
Charitable contribution to foundation (34,767 ) (3,509 ) (3,603 ) (347 ) (335 ) (200 )
Adjusted non-interest expense $ 110,619
$ 101,912
$ 99,843
$ 93,422
$ 88,364
$ 82,487

Net interest income 164,034
143,309
139,780
125,015
117,421
109,682
Non-interest income 21,688
16,818
17,172
18,927
21,066
15,578
Total revenue 185,722
160,127
156,952
143,942
138,487
125,260
Add adjustments:
(Gains) losses on securities transactions,net (116 ) 2,159
1,689
(355 ) (1,904 ) 1,543
Adjusted revenue $ 185,606
$ 162,286
$ 158,641
$ 143,587
$ 136,583
$ 126,803

Core efficiency ratio (adjusted non-interest expense divided by adjusted revenue) 59.60 % 62.80 % 62.94 % 65.06 % 64.70 % 65.05 %

~~PART II~~

~~Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations~~

The objective of this section is to help potential investors understand our views on our results of operations and financial condition. You should read this discussion in conjunction with the consolidated financial statements and notes to the consolidated financial statements that appear at the end of this report.

~~Executive Summary~~

Our primary source of pre-tax income is net interest income. Net interest income is the difference between the interest we earn on our loans and investment securities and the interest we pay on our deposits and borrowings. Changes in levels of interest rates as well as the balances of interest-earning assets and interest-bearing liabilities affect our net interest income.

A secondary source of income is non-interest income, which is revenue we receive from providing products and services. Traditionally, the majority of our non-interest income has come from service charges, loan fees, interchange income, gains on sales of loans and securities, revenue from mortgage servicing, income from bank-owned life insurance and fee income from title insurance and wealth management businesses.

The non-interest expense we incur in operating our business consists of salaries and employee benefits expenses, occupancy expenses, depreciation, amortization and maintenance expenses and other miscellaneous expenses, such as loan and owned real estate expenses, advertising, insurance, professional services and federal deposit insurance premiums. Our largest non-interest expense is salaries and employee benefits, which consist primarily of salaries and wages paid to our employees, payroll taxes, and expenses for health insurance, retirement plans and other employee benefits.

Our business results are impacted by the pace of economic growth and the level of market interest rates, and the difference between short-term and long-term rates. The Federal Reserve Board has begun to “normalize” short term interest rates, following an extended period where short term rates were held close to zero percent. During this period of historically low market interest rates, the yield on our investment and loan portfolios was compressed when compared to our cost of funding. More recently, both short- and long-term rates have risen, reflecting an outlook for stable to gradually improving macro-economic conditions. This has resulted in increased competition among banks to secure new loans and deposits. We continue to adhere to our prudent underwriting standards and are committed to originating quality loans. Additionally, as the economy has improved, we have experienced lower levels of non-performing assets, past due loans and charge-offs.

We believe that our strong capital profile positions us to advance our growth strategy by working with our customers to help them save and use credit wisely. It also allows us to continue to dedicate financial and human capital to support charitable organizations that benefit the communities we serve.

~~Business Strategy~~

Our business strategy is to continue to operate and grow a profitable community-oriented financial institution and to continue to shift our focus to more business-oriented commercial banking. We plan to achieve this by:

~~Increasing earnings through the growth of our balance sheet.~~

We intend to continue to grow our balance sheet through organic growth of loans and securities, funded by growth of deposits and borrowings. We expect that this growth will increase revenue faster than the growth of expenses, resulting in increased earnings over time.

As part of our growth strategy, we will seek to grow our loan portfolio and deposit base at consistent rates of growth. We have a diversified loan portfolio, which includes multifamily and commercial real estate loans, residential mortgage loans, residential and commercial construction loans, commercial business loans and consumer loans (primarily home equity loans and advances). While we intend to continue our focus on originations of one-to-four family residential mortgage loans as we grow our loan portfolio, we expect to shift the mix of our loans over time, from residential mortgage loans, toward commercial loans and, correspondingly, shift our deposit mix toward commercial deposits, particularly non-interest-bearing checking accounts. These strategies are expected to enhance our net interest margin, under the current rate environment, with the potential for margin expansion as interest rates rise.

~~Expanding our commercial business relationships.~~

Historically, our commercial loan products have consisted primarily of loans secured by multifamily and commercial real estate and construction loans. As part of our growth strategy, we intend to continue our increased focus on commercial business lending, which offers shorter terms and variable rates, helps to manage interest rate risk exposure, and provides us with an opportunity to offer a full range of our products and services, including cash management, and deposit products to commercial customers. In 2018, our commercial business loans increased 20.1% from the year ended December 31, 2017. To better capitalize on these opportunities, we have hired additional commercial lenders with significant experience in our market area and expect to hire more commercial lenders and, if possible, commercial lending teams. Historically, we have focused on lending in New Jersey with only a minimal volume from neighboring states, but anticipate that we will increase the amount of loans originated outside New Jersey as we continue to grow our commercial loan business. We anticipate that any such expansion of our commercial lending to market areas outside New Jersey will increase lending and deposit opportunities in those areas and provide geographic diversification within our portfolio.

~~Continuing to emphasize the origination of one- to four-family residential mortgage loans.~~

At December 31, 2018, $1.8 billion, or 36.8%, of our total loan portfolio consisted of one-to-four family residential mortgage loans. Although we expect to shift the mix of our loans over time, from residential mortgage loans, toward commercial loans, we intend to continue to emphasize the origination of one-to-four family residential mortgage loans in the future. We believe there are opportunities to maintain and increase our residential mortgage lending in our market area, and we have made efforts to take advantage of these opportunities by increasing our origination channels.

We originate one-to-four family residential mortgage loans for our own portfolio but periodically sell these loans to third party investors with servicing retained. We offer fixed-rate and adjustable-rate residential mortgage loans, which totaled $1.6 billion and $271.6 million, respectively, at December 31, 2018. To increase the origination of adjustable-rate loans, we intend to continue originating loans that bear a fixed interest rate for a period of up to seven years after which they convert to one-year adjustable-rate loans.

~~Increasing fee income through continued growth of fee-based activities.~~

We intend to focus on growing our existing title insurance business, expanding the scope of the wealth management services we provide, and increasing our revenues from loan servicing activities to increase the amount of fees earned from our fee-based businesses. Presently, the majority of Columbia Bank’s revenue comes from net interest income and less than 20% from other sources, including loan and deposit fees.

We currently offer title insurance services through our title insurance agency and offer wealth management services through a third-party networking arrangement. In order to expand both of these services and to grow our wealth management business, we have considered the acquisition of title insurance agencies and wealth management businesses in recent years and expect to actively pursue the acquisition of such fee-based businesses, as well as considering the acquisition of other fee-based businesses such as insurance agencies and specialty lending companies. We continue to explore and evaluate acquisition opportunities of fee-based businesses, but we currently have no understandings or agreements with respect to any such acquisitions.

We also intend to grow our servicing revenue by continuing to periodically sell one-to-four family residential mortgage loans that we originate to third party investors, including other financial institutions, while retaining the servicing of such loans.

~~Expanding our franchise through de novo branching, branch acquisitions and the possible acquisition of other financial institutions and/or financial services companies.~~

We believe there are branch expansion opportunities within our market area and adjacent markets, including other states, and will seek to grow our deposit base by adding branches to our existing 50 branch network. In addition to deposit generation, our branch network also generates one-to -four family loans, home equity loans and advances and other consumer loans. While we are aware of the industry branch consolidation trends, we believe that in order to attract new customers, we need to selectively expand our network to fill in gaps in the existing footprint and into adjacent markets. We believe that new smaller branch designs, which are more cost-efficient, are more appropriately sized and staffed for the expected transaction volumes.

Our growth strategy also includes the acquisition of other financial institutions within our market area as well as in neighboring states. We intend to actively pursue the acquisition of banks and thrifts, including thrifts in the mutual and mutual holding company structure. In the past, we have relied upon organic growth rather than acquisitions to grow our franchise, and there is no guarantee that we will be successful in pursuing our acquisition strategy.

~~Maintaining asset quality through the application of a prudent, disciplined approach to credit risk as part of an overall risk management program.~~

We employ a conservative, analytical approach to the assets we acquire that we have tested over many different business and interest rate cycles. This applies to our securities portfolio, which is comprised primarily of liquid, low credit-risk, government agency-backed securities, as well as, our loan portfolio. Residential loans are underwritten to secondary market standards and our commercial lending policies are designed to be consistent with industry best practices. We subject our loan portfolio to independent internal and external reviews to validate conformance to policies and stress tests to identify areas of potential risk. We have management information systems that provide regular insight into the quantity and direction of credit risk in our loan portfolio segments, including borrower and industry-specific concentrations. We employ limits on concentration risks, including the ratios of commercial real estate and construction loan portfolios to capital. While we remain under the current regulatory guidelines for commercial real estate concentration risk, we have already developed the reporting, analytics and stress testing that we believe provide effective oversight of these portfolios at higher concentration levels.

We employ tools to ensure we are being appropriately compensated for the risks inherent in the lending products we offer, and in the specific transactions. Our commercial loan pricing model quantifies the credit and interest rate risk embedded in our new loan originations and provides a target return hurdle.

We operate with Risk Committees, at both the management and board levels, that review changes in the quantity and direction of risk. These committees review our key risk indicators, loan portfolio and liquidity stress tests and operational and cyber risk assessments, which draw from our Asset/Liability Committee data, our loan portfolio credit metrics and treasury risk (investment/funding) metrics.

As a result of these efforts, coupled with the sale of $1.5 million of non-performing one-to-four family and fixed rate home equity loans in November 2018, we have significantly reduced our non-performing assets and improved our asset quality. At December 31, 2018, non-performing assets totaled $2.9 million or 0.04% of total assets.

~~Enhancing our technology infrastructure to broaden our product capabilities and improve product delivery and efficiency.~~

We have embraced the latest technological developments in the banking industry, which we believe allows us to better leverage our employees by enabling them to focus on developing customer relationships, generate retail deposits in an efficient manner, expand the suite of products that we can offer to customers and allow us to compete more efficiently and effectively as we grow. In October 2015, Columbia Bank converted its core system to a state-of-the-art banking platform to facilitate “real time” transaction processing, improve our customer experience and gain efficiencies. During 2017, we implemented a new residential and consumer loan origination system to improve employee productivity and expedite the loan origination process. In 2018, we implemented a new treasury management platform to match the commercial products and services offered to businesses by the regional and money center banks in our market area. We continue to enhance our consumer delivery channels, both online and mobile, to meet our customers’ needs. Currently, we are in the process of implementing a new commercial loan underwriting and relationship monitoring system to better support and manage our commercial customer base. We expect to continue to enhance our digital technology platforms to provide appealing products and services to our customers and support our sales and marketing initiatives.

~~Focusing on an enhanced customer experience and continued customer satisfaction.~~

We believe that customer satisfaction is a key to generating sustainable growth and profitability. While continually striving to ensure that our products and services meet our customers’ needs, we also encourage our officers and employees to focus on providing personal service and attentiveness to our customers in a proactive manner.

In recent years, we have enhanced our image and brand recognition within our marketplace for banking services. Our strategy continues to be focused on providing quality customer service through our convenient branch network, supported by our Call Center, where customers can speak with a Bank representative to answer questions and resolve issues during business and extended hours. We believe that our ability to close transactions and deliver our services in a timely manner is attractive to our customers and distinguishes us from other financial institutions that operate in our marketplace. Our customers enjoy access to senior executives and decision makers and the value it brings to their businesses. We also offer convenient online and mobile banking tools for customers to transact business anytime and anywhere.

We believe that many opportunities remain to deliver what our customers want in the form of exceptional service and convenience and we intend to continue to focus our operating strategy on taking advantage of these opportunities.

~~Employing a stockholder-focused management of capital.~~

We intend to manage our capital position through the growth of assets, as well as the utilization of appropriate capital management tools, consistent with applicable regulations and policies, and subject to market conditions. Under current federal regulations, subject to limited exceptions, we may not repurchase shares of our common stock during the first year following the completion of our minority stock offering.

Our board of directors has the authority to declare dividends on our shares of common stock, and may determine to pay dividends in the future, subject to statutory and regulatory requirements and other considerations such as the ability of Columbia Bank MHC to receive permission from the Federal Reserve Board to waive receipt of any dividends we may determine to declare in the future. If Columbia Financial pays dividends to its stockholders, it also will be required to pay dividends to Columbia Bank MHC, unless Columbia Bank MHC is permitted by the Federal Reserve Board to waive the receipt of dividends. The Federal Reserve Board’s current position is to not permit a non-grandfathered mutual holding company to waive dividends declared by its subsidiary. Columbia Bank MHC may determine to apply to the Federal Reserve Board for approval to waive dividends if we determine to pay dividends to our stockholders. Given the Federal Reserve Board’s current position on this issue, there is no assurance that any request by Columbia Bank MHC to waive dividends from Columbia Financial would be permitted. The denial by the Federal Reserve Board of any such dividend waiver request, if sought, could determine whether the board of directors of Columbia Financial determines to declare a dividend, or if so declared, could significantly limit the amount of dividends Columbia Financial would pay in the future, if any.

~~Critical Accounting Policies~~

In the preparation of our consolidated financial statements, we have adopted various accounting policies that govern the application of U.S. generally accepted accounting principles (“GAAP”) and general practices within the banking industry. Our significant accounting policies are described in note 2 to the consolidated financial statements.

Certain accounting policies involve significant judgments and assumptions by us that have a material impact on the carrying value of certain assets and liabilities. We consider these accounting policies, which are discussed below, to be critical accounting policies. The judgments and assumptions we use are based on historical experience and other factors, which we believe to be reasonable under the circumstances. Actual results could differ from these judgments and estimates under different conditions, resulting in a change that could have a material impact on the carrying values of our assets and liabilities and our results of operations.

~~Allowance for Loan Losses.~~ The methodology for determining the allowance for loan losses is considered a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the economic environment that could result in changes to the amount of the recorded allowance for loan losses. The allowance for loan losses is maintained at a level that management considers adequate to provide for estimated losses and impairment based upon an evaluation of known and inherent risk in the loan portfolio. The allowance consists of two components: (1) identification of loans that must be reviewed individually for impairment and (2) establishment of a general valuation allowance on the remainder of the loan portfolio. We maintain a loan review system that provides a periodic review of the loan portfolio and the identification of impaired loans. The allowance for loans individually evaluated for impairment is based on the fair value of collateral or cash flows. While management uses the best information available to make such evaluations, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used in making the evaluations. A general allowance is established for loans collectively evaluated for impairment which is established for estimated losses inherent in the remaining portfolio . The evaluation of the general allowance is performed on a segregated portfolio basis and excludes impaired loans. Loans are assessed based on similar types and risk characteristics. An estimated loss factor for each segregated loan portfolio is determined and applied to the portfolio to derive the general allowance. The loss factor applied to each portfolio is based on a combination of the Company's average historical loss experience typically for loans categorized as "pass" and migration analysis for loans which are not categorized as "pass" loans. The loss factors use an appropriate look-back and loss emergence period and may be adjusted for management's qualitative assessment of relevant changes related to: underwriting standards; delinquency trends; and other relevant factors considered appropriate by management. The loss emergence period is the estimated time from the date of the loss event to the actual recognition of the loss (typically the first charge-off), and is determined based upon a study of the Company's past loss experience by loan segments. This evaluation is inherently subjective, as it requires material estimates that may be susceptible to significant revisions based upon changes in the economic and real estate market conditions.

The allowance for loan losses is established through a provision for loan losses charged to expense, which is based upon past loan loss experience and an evaluation of estimated losses in the current loan portfolio, including the evaluation of impaired loans. Although we believe that we use the best information available to establish the allowance for loan losses, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used in making the evaluation. In addition, our banking regulators, as an integral part of their examination process, periodically review our allowance for loan losses. Our banking

~~regulators may require us to recognize adjustments to the allowance based on judgments about information available to them at the time of its examination.~~

Our financial results are affected by the changes in and the level of the allowance for loan losses. This process involves our analysis of internal and external variables, and it requires that we exercise judgment to estimate an appropriate allowance for loan losses. As a result of the uncertainty associated with this subjectivity, we cannot assure the precision of the amount reserved, should we experience sizable loan losses in any particular period. For example, changes in the financial condition of individual borrowers, economic conditions, or the condition of various markets in which collateral may be sold could require us to significantly decrease or increase the level of the allowance for loan losses. Such an adjustment could materially affect net income as a result of the change in provision for loan losses.

Most of our non-performing assets are collateral dependent loans which are written down to their current appraised value less estimated costs to sell. We continue to assess the collateral of these loans and update our appraisals on these loans on an annual basis. To the extent the property values decline, there could be additional losses on these non-performing assets, which may be material. Since its peak in 2013, we have experienced a continued decline in levels of delinquencies, net charge-offs and non-performing assets. Management considered these market conditions in deriving the estimated allowance for loan losses. Should economic difficulties occur, the ultimate amount of loss could vary from that estimate. For additional discussion related to the determination of the allowance for loan losses, see ~~"Risk Management- Analysis and Determination of the Allowance for Loan Losses”~~ ~~and the notes to the consolidated financial statements.~~

~~Income Taxes.~~ We are subject to the income tax laws of the various jurisdictions where we conduct business and estimate income tax expense based on amounts expected to be owed to these various tax jurisdictions. The estimated income tax expense (benefit) is reported in the Consolidated Statements of Income. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax assets and liabilities. These judgments require us to make projections of future taxable income. The judgments and estimates we make in determining our deferred tax assets are inherently subjective and are reviewed on a continual basis as regulatory and business factors change.

Accrued or prepaid taxes represent the net estimated amount due to or to be received from tax jurisdictions either currently or in the future and are reported in other assets or other liabilities on our consolidated financial statements. We assess the appropriate tax treatment of transactions and filing positions after considering statutes, regulations, judicial precedent and other pertinent information and maintain tax accruals consistent with our evaluation. Changes in the estimate of accrued taxes occur periodically due to changes in tax rates, interpretations of tax laws, the status of examinations by the tax authorities and newly enacted statutory, judicial and regulatory guidance that could impact the relative merits of tax positions. These changes, when they occur, impact accrued taxes and can materially affect our operating results. The Company identified no significant income tax uncertainties through the evaluation of its income tax positions as of December 31, 2018 and 2017. Therefore, the Company has no unrecognized income tax benefits as of those dates.

As of December 31, 2018, we had net deferred tax assets totaling $16.2 million. In accordance with Accounting Standards Codification (“ASC”) Topic 740 “Income Taxes,” we use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. If currently available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax assets and liabilities. These judgments require us to make projections of future taxable income. The judgments and estimates we make in determining our deferred tax assets are inherently subjective and are reviewed on a regular basis as regulatory or business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets. A valuation allowance that results in additional income tax expense in the period in which it is recognized would negatively affect earnings. Management believes, based upon current facts, that it is more likely than not that there will be sufficient taxable income in future years to realize the federal deferred tax assets and that it is more likely than not that the benefits from certain state temporary differences will not be realized. In recognition of this risk, we have provided a valuation allowance of $2.4 million as of December 31, 2018 on the deferred tax assets related to the Bank's state net operating losses and temporary differences.

~~Post-retirement Benefits.~~ We provide certain health care and life insurance benefits, along with a split-dollar BOLI death benefit, to eligible retired employees. We accrue the cost of retiree health care and other benefits during the employees’ period of active service. We account for benefits in accordance with ASC Topic 715 “Pension and Other Post-retirement Benefits.” The guidance requires an employer to: (a) recognize in its statement of financial position the over funded or underfunded status of a defined benefit post-retirement plan measured as the difference between the fair value of plan assets and the benefit obligation; (b) measure a plan’s assets and its obligations that determine its funded status as of the end of the employer’s fiscal year (with limited exceptions); and (c) recognize as a component of other comprehensive income(loss), net of tax, the actuarial gains and losses and the prior service costs and credits that arise during the period. These assets and liabilities and expenses are based upon actuarial assumptions including interest rates, rates of

increase in compensation, expected rate of return on plan assets and the length of time we will have to provide those benefits. Actual results may differ from these assumptions. These assumptions are reviewed and updated at least annually and management believes the estimates are reasonable.

~~Comparison of Financial Condition at December 31, 2018 and 2017 and at September 30, 2017 and 2016~~

~~General~~

Total assets increased $925.1 million, or 16.0%, to $6.7 billion at December 31, 2018 from $5.8 billion at December 31, 2017. The increase in total assets was primarily attributed to increases in loans receivable, net, and securities. Loans receivable, net increased$516.4 million, or 11.7%, during 2018, to $4.9 billion, while securities, both available for sale and held to maturity, increased $346.7 million, or 36.5%. These increases were funded primarily by $492.4 million of net proceeds from the minority stock offering in April 2018, and increase in borrowings and deposits. Total liabilities increased $425.1 million, or 8.0%, to $5.7 billion at December 31, 2018 from $5.3 billion at December 31, 2017. The increase is primarily attributable to an increase in borrowing of $260.1 million, or 28.0%, and deposits of $150.6 million, or 3.5%. Stockholders' equity increased~~$500.0 million in 2018 to $972.1 million from $472.1 million in 2017, primarily due to the proceeds from the completion of the minority stock offering and earnings for the period.~~

~~Securities~~

~~2018 vs. 2017.Total securitiesincreased $346.7 million, or 36.5%, to $1.3 billion at December 31, 2018 from $950.2~~$8.9 million at December 31, ~~2017. The increase in securities during 2018 was primarily the result~~2021. As of ~~the redeployment of proceeds from the minority stock offering into higher yielding assets. We continue to focus on maintaining a high quality securities portfolio~~ that ~~provides consistent cash flows in changing interest rate environments. At December 31, 2018, our total securities portfolio was 19.4% of total assets, as compared to 16.5% at December 31, 2017 .~~

At December 31, 2018, 88.9% of the available for sale portfolio was comprised of mortgage-backed securities and CMOs issued by Freddie Mac, Fannie Mae and Ginnie Mae. These securities are guaranteed by the issuing agency and backed by residential and multifamily mortgages. These securities are comprised of fixed rate, adjustable-rate and hybrid securities that bear a fixed rate for a specific term and thereafter, to the extent they are not prepaid, adjust periodically. At December 31, 2018, corporate debt securities comprised the next largest segment of the available for sale portfolio, totaling 5.2%. At December 31, 2018, the remainder of our available for sale securities portfolio consisted of U.S. Government and agency obligations, trust preferred securities, equities and municipal obligations, which comprised 5.2%, 0.4%, 0.2% and 0.1%, respectively.

At December 31, 2018, 91.1% of the held to maturity securities portfolio was comprised of mortgage-backed securities and CMOs issued by Freddie Mac, Fannie Mae and Ginnie Mae. These securities are guaranteed by the issuing agency and backed by residential and multifamily mortgages. These securities are comprised of fixed rate, adjustable-rate and hybrid securities that bear a fixed rate for a specific term and thereafter, to the extent they are not prepaid, adjust periodically. At December 31, 2018, the remainder of our held to maturity securities portfolio consisted of U.S. Government and agency obligations which comprised 8.9% of the portfolio.

During 2017, we transferred certain available for sale securities with an amortized cost of $103.7 million and a fair value of $103.3 million to our held to maturity portfolio, largely because of the nature an longer duration of the securities, whichdate, these loans were ~~community investment related mortgage-backed securities issued by government agencies, or due~~performing according to their ~~longer durations. An additional $30.5 million of held to maturity securities were purchased during 2017.~~

~~To mitigate the credit risk related to our securities portfolio, we primarily invest~~original terms.

Item 14.

Principal Accounting Fees and Services

Fees Billed by Independent Registered Public Accounting Firm in ~~agency~~2021 and highly-rated securities. As of December 31, 2018, approximately 95.3% of the total portfolio consisted of direct government obligations or government sponsored enterprise obligations, approximately 4.1% of the portfolio was rated at least investment grade and approximately 0.6% of the portfolio was not rated. Securities not rated consist primarily of short term municipal bond anticipation notes, private placement municipal notes issued and guaranteed by local municipal authorities, one subordinated debt issued by a financial institution holding company and equity securities.

~~Fiscal 2017 vs. Fiscal 2016.~~Total securities decreased $81.7 million, or 10.6%, to $690.1 million at September 30, 2017 from $771.8 million at September 30, 2016. The decrease in securities during fiscal 2017 was primarily driven by securities sales, which were used to fund loan growth. We continue to focus on maintaining a high quality securities portfolio that provides consistent cash flows both in the current interest rate environment as well as in a rising interest rate environment. At September 30, 2017, our securities portfolio was 12.7% of total assets.

At September 30, 2017, 85.0% of the available for sale securities portfolio was comprised of mortgage-backed securities and CMOs issued by Freddie Mac, Fannie Mae and Ginnie Mae. These securities are guaranteed by the issuing agency and backed by residential and multifamily mortgages. These securities are comprised of fixed rate, adjustable-rate and hybrid securities that bear a fixed

rate for a specific term and thereafter, to the extent they are not prepaid, adjust periodically. At September 30, 2017, corporate debt securities comprised the next largest segment of the available for sale portfolio, totaling $49.5 million, or 8.9% of the portfolio. At September 30, 2017, the remainder of our available for sale portfolio consisted of U.S. Government and agency obligations, trust preferred securities, equities and municipal obligations, which comprised 4.5%, 0.8%, 0.6% and 0.2%, respectively.

2020

The following table sets forth the ~~amortized cost and fair value of securities at~~fees billed to the Company for the years ending December 31, ~~2018~~2021 and ~~2017 and at September 30, 2017 and 2016.~~

At December 31, At September 30,
2018 2017 2017 2016
Amortized cost Fair value Amortized cost Fair value Amortized cost Fair value Amortized cost Fair value
(In thousands)
Securities available for sale:
U.S. government and agency obligations $ 54,821
$ 54,157
$ 39,909
$ 39,644
$ 24,954
$ 24,873
$ 60,375
$ 60,879
Mortgage-backed securities and collateralized mortgage obligations 934,631
920,007
615,924
606,612
479,927
473,491
609,970
619,976
Municipal obligations 987
987
1,957
1,957
1,357
1,357
16,500
16,500
Corporate debt securities 54,493
53,467
54,489
54,514
49,489
49,493
63,982
64,651
Trust preferred securities 5,000
4,250
5,000
4,656
5,000
4,708
9,672
6,779
Equity securities 1,196
1,890
2,328
3,187
2,482
3,254
2,482
2,994
Total securities available for sale $ 1,051,128
$ 1,034,758
$ 719,607
$ 710,570
$ 563,209
$ 557,176
$ 762,981
$ 771,779

Securities held to maturity:
U.S. government and agency obligations $ 23,404
$ 23,241
$ 8,402
$ 8,344
$ 3,407
$ 3,400
$ —
$ —
Mortgage-backed securities and collateralized mortgage obligations 238,739
231,600
231,216
227,781
129,532
128,422
—
—
Total securities held to maturity $ 262,143
$ 254,841
$ 239,618
$ 236,125
$ 132,939
$ 131,822
$ —
$ —

Total securities $ 1,313,271
$ 1,289,599
$ 959,225
$ 946,695
$ 696,148
$ 688,998
$ 762,981
$ 771,779

~~2018 vs. 2017.~~At December 31, ~~2018~~2020 for services provided by KPMG LLP.

	2021		2020
Audit Fees⁽¹⁾	$	1,040,000	$	905,000
Audit-Related Fees		—		107,000
Tax Fees		—		—
All Other Fees		—		—

(1)

Includes fees for performance of the audit and review of consolidated financial statements and fees relating to the review of public filings.

Pre-Approval Policies and ~~2017, securities with carrying values of $1.1 billion~~Procedures

Our Audit Committee pre-approves all audit and $844.3 million, respectively were in a net unrealized loss positions that totaled $27.4 million and $14.3 million, respectively. The increase in unrealized losses on securities in 2018 was primarily due to current interest rate levels relative topermissible non-audit services provided by our cost, and not due to credit quality. When evaluating for impairment, we consider the duration and extent to which fair value is less than cost, the creditworthiness and near-term prospects of the issuer, the likelihood of recovering our investment, whether we have the intent to sell the security, or whether it is more likely than not that we will be required to sell the security before recovery,independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other ~~available information to determine the nature of the decline in the fair value of the securities.~~

At December 31, 2018, the unrealized losses in the portfolio were mainly attributed to GSE mortgage-backed securities and GSE CMOs. The unrealized losses are due to current interest rate levels relative to our cost, and not due to credit quality. As we do not intend to sell the securities, and it is not likely we willservices. Pre-approval may be required to sell the securities before recovery, we do not consider the securities to be other than temporarily impaired at December 31, 2018. During the years ended December 31, 2018 and 2017, we did not record any impairment charges on securities.

At December 31, 2018 and 2017, we had no securities in a single company or entity (other than United States Government and United States GSE securities) that had an aggregate book value in excess of 5% of our equity.

~~Fiscal 2017 vs. Fiscal 2016.~~At September 30, 2017 and 2016, securities with carrying values of $548.9 million and $146.8 million, respectively, were in a net unrealized loss positions that totaled $9.2 million and $4.3 million, respectively. The increase in unrealized losses on securities in fiscal 2017 was primarily due to an increase in intermediate and long-term interest rates. When evaluating for impairment, we consider the duration and extent to which fair value is less than cost, the creditworthiness and near-term prospects of the issuer, the likelihood of recovering our investment, whether we have the intent to sell the security, or whether it is more likely than not that we will be required to sell the security before recovery, and other available information to determine the nature of the decline in the fair value of the securities.

At September 30, 2017, the unrealized losses in the portfolio were mainly attributed to GSE mortgage-backed securities and GSE CMOs. The unrealized losses are due to higher current market interest rates compared to September 30, 2016 and not due to credit quality issues. As we do not intend to sell the securities, and it is not likely we will be required to sell the investment securities before recovery, we do not consider the securities to be other than temporarily impaired at September 30, 2017. During the years ended September 30, 2017 and 2016, we did not record any impairment charges on securities.

During the quarter ended September 30, 2017, we sold $129.3 million of securities and reinvested the proceeds in securities with higher expected yields. We recognized a $2.1 million total net loss on the sale. One of the securities sold was a $4.7 million pooled trust preferred security that resulted in a loss of $1.3 million. We did not own any other pooled trust preferred securities at September 30, 2017.

At September 30, 2017 and September 30, 2016, we had no securities in a single company or entity (other than United States Government and United States GSE securities) that had an aggregate book value in excess of 5% of our equity.

The following tables set forth the stated maturities and weighted average yields of securities at December 31, 2018. Certain securities have adjustable interest rates and will reprice monthly, quarterly, semi-annually or annually within the various maturity ranges. Trust preferred and equity securities are not included in the table based on lack of a maturity date. The table presents contractual maturities for mortgage-backed securities and does not reflect repricing or the effect of prepayments.

At December 31, 2018
One Year or Less More Than One Year to Five Years More Than Five Years to Ten Years After Ten Years Total
Carrying value Weighted average yield Carrying value Weighted average yield Carrying value Weighted average yield Carrying value Weighted average yield Carrying value Weighted average yield
(Dollars in thousands)
Securities available for sale:
U.S. government and agency obligations $ —
— % $ 34,945
1.88 % $ 19,876
2.48 % $ —
— % $ 54,821
2.10 %
Mortgage-backed securities and collateralized mortgage obligations —
—
34,784
2.73
326,109
3.61
573,738
2.84
934,631
3.11
Municipal obligations 797
2.04
190
2.40
—
—
—
—
987
2.11
Corporate debt securities —
—
14,994
2.91
34,499
4.75
5,000
3.15
54,493
4.10
Total $ 797
2.04 % $ 84,913
2.41 % $ 380,484
3.04 % $ 578,738
2.85 % $ 1,044,932
2.90 %

At December 31, 2018
More Than One Year to Five Years More Than Five Years to Ten Years After Ten Years Total
Carrying value Weighted average yield Carrying value Weighted average yield Carrying value Weighted average yield Carrying value Weighted average yield

Securities held to maturity:
U.S. government and agency obligations $ 5,000
3.00 % $ 8,404
2.92 % $ 10,000
4.00 % $ 23,404
3.40 %
Mortgage-backed securities and collateralized mortgage obligations 4,851
2.29
106,765
2.75
127,123
3.12
238,739
2.93
Total $ 9,851
2.65 % $ 115,169
2.76 % $ 137,123
318 % $ 262,143
2.98 %

~~Loans~~

~~2018 vs. 2017.~~Total gross loans increased $520.5 million, or 11.7%, to $5.0 billion at December 31, 2018 from $4.5 billion at December 31, 2017. The multifamily and commercial real estate portfolio increased 14.5%, or $271.7 million, during 2018 due to an increased focus on originating these products to improve our profitability, to manage interest rate risk exposure and increase our deposit base by developing relationships with these customers. Commercial business loans also increased 20.1%, or $55.9 million, during 2018, to $333.9 million from $278.0 million at December 31, 2017.

Construction loans increased 11.9%, or $27.8 million, during 2018 to $261.5 million from $233.7 million at December 31, 2017. One-to-four family real estate loans increased 13.3%, or $215.2 million, during 2018, to $1.8 billion from $1.6 billion at December 31, 2017. One-to-four family real estate lending increased as we continued to offer competitive pricing on our products and hired additional mortgage lenders to focus on increasing volume in New Jersey as well as to continue to expand into the New York market.

Our consumer loan originations, which are primarily comprised of home equity loans and advances, continue to be impacted by weak demand. The reduction in volume was influenced by the low interest rate environment, additional tightening of underwriting on these types of loans, and newly enacted restrictions on the tax deductibility of home mortgage interest. As a result of these factors, consumer loans decreased 12.2%, or $54.4 million, during 2018.

~~Fiscal 2017 vs. Fiscal 2016.~~Total gross loans increased $375.5 million, or 9.4%, to $4.4 billion at September 30, 2017 from $4.0 billion at September 30, 2016. The multifamily and commercial real estate portfolio increased 16.9%, or $263.0 million, during fiscal 2017 due to increased origination volume by our lenders. Commercial business loans increased 50.6%, to $267.7 million during the year from $177.7 million at September 30, 2016.

Construction loans increased 15.9%, from $188.5 million at September 30, 2016, to $218.4 million at September 30, 2017. One-to-four family real estate loans increased $25.5 million, or 1.6%, between September 30, 2017 and September 30, 2016. One-to-four family real estate loan balances were also impacted by loan sales aggregating $88.8 million to Freddie Mac and to other local community banks, as well as the sale of $11.9 million in one-to-four family residential loans with higher perceived credit risk to an investor during fiscal 2017.

~~Consumer loans decreased $32.9 million, or 6.6%, during fiscal 2017.~~

~~The following tables present the loan portfolio for the periods indicated:~~

At December 31,
2018 2017
Amount Percent Amount Percent
(Dollars in thousands)
Real estate loans:
One-to-four family $ 1,830,186
36.9 % $ 1,615,000
36.3 %
Multifamily and commercial 2,142,154
43.2
1,870,475
42.1
Construction 261,473
5.3
233,652
5.3
Total real estate loans 4,233,813
85.3
3,719,127
83.7
Commercial business loans 333,876
6.7
277,970
6.3
Consumer loans:

Home equity loans and advances 393,492
7.9
447,920
10.1
Other consumer loans 1,108
—
998
—
Total consumer loans 394,600
8.0
448,918
10.1
Total loans 4,962,289
100.0 % 4,446,015
100.0 %
Net deferred loan costs, fees and purchased premiums and discounts 16,893
12,633

Allowance for loan losses (62,342 )

(58,178 )
Loans receivable, net $ 4,916,840
$ 4,400,470

At September 30,
2017 2016 2015 2014
Amount Percent Amount Percent Amount Percent Amount Percent
(Dollars in thousands)
Real estate loans:
One-to-four family $ 1,578,835
36.3 % $ 1,553,345
39.1 % $ 1,492,852
39.1 % $ 1,515,535
42.8 %
Multifamily and commercial 1,821,982
41.9
1,558,939
39.2
1,499,305
39.3
1,253,703
35.4
Construction 218,408
5.0
188,480
4.7
132,933
3.5
133,110
3.8
Total real estate loans 3,619,225
83.1
3,300,764
83.0
3,125,090
81.9
2,902,348
81.9

Commercial business loans 267,664
6.1
177,742
4.5
173,034
4.5
118,255
3.3

Consumer loans:
Home equity loans and advances 464,962
10.7
497,797
12.5
517,352
13.6
522,759
14.7
Other consumer loans 1,270
—
1,331
—
913
—
1,174
—
Total consumer loans 466,232
10.7
499,128
12.5
518,265
13.6
523,933
14.8
Total loans 4,353,121
100.0 % 3,977,634
100.0 % 3,816,389
100.0 % 3,544,536
100.0 %

Net deferred loan costs, fees and purchased premiums and discounts 9,135
6,475
4,779
3,263

Allowance for loan losses (54,633 ) (51,867 ) (56,948 ) (57,904 )

Loans receivable, net $ 4,307,623
$ 3,932,242
$ 3,764,220
$ 3,489,895

~~Loan Maturity~~

The following table sets forth certain information at December 31, 2018 regarding the dollar amount of loan principal repayments becoming due during the periods indicated. The tables do not include any estimate of prepayments that significantly shorten the average life of all loans and may cause our actual repayment experience to differ from that shown below. Demand loans having no stated schedule of repayments or maturity are reported as due in one year or less.

December 31, 2018
Real Estate
One-to-four family Multifamily and commercial Construction Commercial business Home equity loans and advances Other consumer loans Total
(In thousands)
Amounts due in:
One year or less $ 372
$ 86,291
$ 157,678
$ 175,148
$ 611
$ 979
$ 421,079
More than one year to five years 31,301
525,390
85,655
78,555
22,836
129
743,866
More than five years to ten years 232,520
1,292,257
4,874
67,497
79,864
—
1,677,012
More than ten years 1,565,993
238,216
13,266
12,676
290,181
—
2,120,332
Total $ 1,830,186
$ 2,142,154
$ 261,473
$ 333,876
$ 393,492
$ 1,108
$ 4,962,289

~~The following table sets forth all loans at December 31, 2018 that are due after December 31, 2019 and have either fixed interest rates or floating or adjustable interest rates:~~

Due After December 31, 2019
Fixed rates Floating or adjustable rates Total
(In thousands)
Real estate loans:
One-to-four family $ 1,558,174
$ 271,640
$ 1,829,814
Multifamily and commercial 983,156
1,072,707
2,055,863
Construction 13,483
90,312
103,795
Commercial business loans 82,149
76,579
158,728
Consumer loans:
Home equity loans and advances 239,030
153,851
392,881
Other consumer loans 129
—
129
Total loans $ 2,876,121
$ 1,665,089
$ 4,541,210

~~Loan Originations and Sales~~

~~The following table shows loans originated, purchased, sold and other reductions in loans during the periods indicated:~~

Years Ended December 31, Years Ended September 30,
2018 2017 2017 2016
(In thousands)

Total loans at beginning of period $ 4,458,648
$ 4,091,862
$ 3,977,634
$ 3,816,389

Originations:
Real estate loans:
One-to-four family 430,548
321,784
336,492
344,121
Multifamily and commercial 320,845
263,110
469,552
236,908
Construction 186,726
231,017
114,958
165,063
Total real estate loans 938,119
815,911
921,002
746,092

Commercial business loans 130,542
128,931
273,168
196,679

Consumer loans:
Home equity loans and advances 68,721
93,235
110,328
115,457
Other consumer loans 113
—
3,166
3,770
Total consumer loans 68,834
93,235
113,494
119,227

Total loans originated 1,137,495
1,038,077
1,307,664
1,061,998

Purchases 32,251
67,154
20,473
21,149

Less:
Principal payments and repayments (601,611 ) (664,137 ) (880,593 ) (867,356 )
Loan sales (35,654 ) (73,204 ) (62,407 ) (28,624 )
Securitization of loans —
—
—
(17,169 )
Transfer of loans receivable to loans held-for-sale (11,696 ) —
—
—
Transfer to real estate owned (251 ) (1,104 ) (515 ) (2,278 )
Total loans at end of period $ 4,979,182
$ 4,458,648
$ 4,362,256
$ 3,984,109

~~Deposits~~

Our primary source of funds is our deposits, which are comprised of non-interest bearing and interest-bearing transaction accounts, money market deposit accounts, savings and club accounts and certificates of deposit.

~~2018 vs. 2017.~~ Deposits increased $150.6 million, or 3.5%, to $4.4 billion at December 31, 2018 from $4.3 billion at December 31, 2017. The increase in deposits was primarily the result of a $296.4 million increase in certificates of deposit, partially offset by a $112.9 million decrease in interest-bearing demand accounts. The increase in certificates of deposit related to offering special promotions on various products throughout the year, as well as the opening of one new branch in June 2018. The decrease in interest-bearing transaction accounts was primarily due to a decrease in municipal deposits of $109.5 million, or 23.0%, primarily attributable to the loss of one large municipal relationship. Municipal deposits totaled $367.9 million at December 31, 2018 compared to $477.5 million at December 31, 2017. We continue our efforts to emphasize deposit taking though various channels.

During 2018, non-interest bearing demand accounts increased $4.5 million, or 0.6%, primarily as a result of continued growth in our commercial deposit customer base, consistent with our strategy of increasing our commercial banking relationships.

~~Fiscal 2017 vs. Fiscal 2016.~~Deposits increased $300.6 million, or 7.9%, to $4.1 billion at September 30, 2017 from $3.8 billion at September 30, 2016. The increase in deposits was primarily the result of a $122.3 million increase in certificates of deposit and a $110.1 million increase in interest bearing transaction accounts, and to a lesser extent, was attributable to the opening of two new branches in fiscal 2017. The increase in certificates of deposit related to higher pricing, coupled with an increase in new accounts opened as a result of a disruption in one of our markets stemming from the merger of a local financial institution. The increase in interest-bearing transaction accounts was primarily due to growth in the balances of our municipal deposit accounts and the addition of one new municipal deposit relationships. Municipal deposits increased to $436.4 million at September 30, 2017 from $382.1 million at September 30, 2016.

During fiscal 2017, non-interest bearing transaction accounts increased $43.3 million, or 6.4%, primarily as a result of growth in our commercial deposit customer base, consistent with our strategy of increasing our commercial banking relationships.

~~The following table sets forth the deposit balances as of the periods indicated:~~

At December 31, At September 30,
2018 2017 2017 2016
Amount Percent of Total Deposits Amount Percent of Total Deposits Amount Percent of Total Deposits Amount Percent of Total Deposits
(Dollars in thousands)

Non-interest-bearing demand $ 723,794
16.4 % $ 719,339
16.9 % $ 676,067
16.4 % $ 625,304
16.4 %
Interest-bearing demand 1,219,381
27.6
1,332,297
31.3
1,268,833
30.8
1,156,529
30.3
Money market accounts 259,694
5.9
262,396
6.2
273,605
6.6
270,662
7.1
Savings and club deposits 510,688
11.6
545,401
12.8
546,449
13.3
534,148
14.0
Certificates of deposit 1,700,316
38.5
1,403,882
32.9
1,358,474
32.9
1,236,172
32.3
Total deposits $ 4,413,873
100.0 % $ 4,263,315
100.0 % $ 4,123,428
100.0 % $ 3,822,815
100.0 %

We are required to pledge securities to secure municipal deposits. At December 31, 2018 and 2017, we had pledged securities totaling $438.9 million and $392.8 million, respectively, to secure these deposits.

~~The following table sets forth the deposit activity for the periods indicated:~~

Years Ended December 31, Years Ended September 30,
2018 2017 2017 2016
(In thousands)

Beginning balance $ 4,263,315
$ 3,871,497
$ 3,822,815
$ 3,572,624
Increase before interest credited 111,035
364,819
275,032
266,129
Interest credited 39,523
26,999
25,581
24,062
Net increase in deposits 150,558
391,818
300,613
290,191
Ending balance $ 4,413,873
$ 4,263,315

$ 4,123,428
$ 3,862,815

~~The following table sets forth the time remaining until maturity for certificates of deposit of $100,000 or more at December 31, 2018.~~

Balance
(In thousands)
Maturity Period:
Three months or less $ 124,544
Over three through six months 136,359
Over six through twelve months 335,076
Over twelve months 289,365
Total $ 885,344

~~The following table sets forth all of our certificates of deposit classified by interest rate as of the dates indicated.~~

At December 31, At September 30,
2018 2017 2017 2016
(In thousands)

Less than 0.50% $ 35,706
$ 63,686
$ 79,849
$ 138,547
0.50% to 0.99% 21,856
169,935
148,661
176,768
1.00% to 1.49% 260,444
635,367
647,851
540,743
1.50% to 1.99% 709,778
379,516
325,256
219,445
2.00% to 2.99% 672,532
155,378
156,857
160,669
Total $ 1,700,316
$ 1,403,882
$ 1,358,474
$ 1,236,172

~~The following table sets forth the amount and maturities of our certificates of deposit by interest rate at December 31, 2018.~~

Period to Maturity
Less than one year More than one year to two years More than two years to three years More than three years to four years More than four years Total Percentage of certificate accounts
(In thousands)

Less than 0.50% $ 34,373
$ 1,333
$ —
$ —
$ —
$ 35,706
2.10 %
0.50% to 0.99% 20,043
1,724
32
57
—
21,856
1.29
1.00% to 1.49% 218,049
37,056
5,149
185
5
260,444
15.32
1.50% to 1.99% 534,660
108,439
42,590
19,628
4,461
709,778
41.74
2.00% to 2.99% 300,542
178,248
182,697
5,069
5,976
672,532
39.55
Total $ 1,107,667
$ 326,800
$ 230,468
$ 24,939
$ 10,442
$ 1,700,316
100.00 %

~~The following table sets forth the average balances and weighted average rates of our deposit products at the dates indicated:~~

At December 31,
2018 2017
Average Balance Percent Weighted Average Rate Average Balance Percent Weighted Average Rate
(Dollars in thousands)

Non-interest-bearing demand $ 704,155
15.75 % — % $ 627,999
15.48 % — %
Interest-bearing demand 1,323,766
29.61
0.86
1,305,412
32.17
0.62
Money market accounts 299,389
6.70
0.51
272,230
6.71
0.28
Savings and club deposits 628,746
14.06
0.16
545,640
13.45
0.15
Certificates of deposit 1,514,843
33.88
1.69
1,306,365
32.20
1.33
Total $ 4,470,899
100.00 % 0.88 % $ 4,057,646
100.00 % 0.67 %

At September 30,
2017 2016
Average Balance Percent Weighted Average Rate Average Balance Percent Weighted Average Rate
(Dollars in thousands)

Non-interest-bearing demand $ 607,836
15.3 % — % $ 543,943
14.7 % — %
Interest-bearing demand 1,284,418
32.3
0.59
1,140,460
30.8
0.59
Money market accounts 270,919
6.8
0.28
272,575
7.4
0.28
Savings and club deposits 543,070
13.7
0.15
523,601
14.1
0.15
Certificates of deposit 1,266,717
31.9
1.29
1,225,833
33.1
1.28
Total $ 3,972,960
100.0 % 0.64 % $ 3,706,412
100.0 % 0.65 %

~~Borrowings~~

We have the ability to utilize advances and overnight lines of credit from the FHLB to supplement our liquidity. As a member, we are required to own capital stock in the FHLB and are authorized to apply for advances on the security of such stock and certain mortgage loans and other assets, provided certain standards related to creditworthiness have been met. Advances are made under several different programs, each having its own interest rate and range of maturities. We also utilize securities sold under agreements to repurchase to provide funding. We maintain access to the Federal Reserve Bank’s discount window and Federal Funds lines with correspondent banks for additional contingency funding. To secure our borrowings, we generally pledge securities and/or loans. The types of securities pledged for borrowings include, but are not limited to, agency, mortgage-backed securities and CMOs. The types of loans pledged for borrowings include, but are not limited to, one-to-four family, multifamily and commercial real estate loans.

~~The following table sets forth the outstanding borrowings and weighted averages at the dates or for the periods indicated:~~

Years Ended December 31, Years Ended September 30,
2018 2017 2017 2016
(Dollars in thousands)
Maximum amount outstanding at any month-end during the year:
Lines of credit $ 195,200
$ 66,700
$ 66,700
$ 47,400
FHLB advances 1,029,580
822,400
645,200
569,000
Junior subordinated debt 51,258
50,657
50,643
50,590
Securities sold under repurchase agreements 10,000
10,000
40,000
60,000

Average outstanding balance during the year:
Lines of credit $ 95,193
$ 22,762
$ 24,324
$ 7,989
FHLB advances 816,839
631,799
603,641
557,006
Junior subordinated debt 31,422
50,628
50,614
50,561
Securities sold under repurchase agreements 82
35,452
40,685
59,481

Weighted average interest rate during the year:
Lines of credit 2.27 % 1.15 % 0.96 % 0.52 %
FHLB advances 2.09
2.08
2.13
2.38
Junior subordinated debt 11.04
8.25
8.00
8.00
Securities sold under repurchase agreements 3.66
3.90
3.95
4.12

Balance outstanding at end of the year:
Lines of credit $ 159,600
$ 46,000
$ —
$ 47,400
FHLB advances 1,029,580
822,400
642,400
534,000
Junior subordinated debt —
50,657
50,643
50,590
Securities sold under repurchase agreements —
10,000
40,000
50,000

Weighted average interest rate at end of year:
Lines of credit 2.60 % 1.53 % — % 0.53 %
FHLB advances 2.40
1.92
2.10
2.27
Junior subordinated debt —
8.00
8.00
8.00
Securities sold under repurchase agreements —
3.23
3.88
4.00

~~Comparison of Financial Condition at December 31, 2017 and September 30, 2017~~

~~Total Assets.~~ Total assets increased $337.2 million, or 6.2%, to $5.8 billion at December 31, 2017 from $5.4 billion at September 30, 2017. The increase was primarily the result of growth in securities and loans, which was primarily funded by short-term borrowings and to a lesser extent deposits.

~~Total Cash and Cash Equivalents.~~ Total cash and cash equivalents decreased $35.5 million, or 35.1%, to $65.5 million at December 31, 2017 from $101.0 million at September 30, 2017, as excess funds were redeployed principally to fund the purchase of securities.

~~Securities.~~ Total securities increased $260.1 million, or 37.7%, to $950.2 million at December 31, 2017 from $690.1 million at September 30, 2017. Consistent with our anticipated use of proceeds and to take advantage of then-existing investment opportunities in the securities market, we increased our position in securities utilizing short-term borrowings originated during the quarter ended December 31, 2017, with the intent to repay the borrowings with proceeds from the offering. At December 31, 2017, our total securities portfolio consisted of 74.8% of available for sale securities and 25.2% of securities held to maturity as compared to 80.7% and 19.3%, respectively, at September 30, 2017. At December 31, 2017, our securities portfolio comprised 16.5% of total assets.

~~Loans Receivable.~~ Loans receivable, net, increased $92.8 million, or 2.2%, to $4.4 billion at December 31, 2017 from $4.3 billion at September 30, 2017. The increase was primarily the result of purchasing $49.8 million of multifamily and commercial real estate loans combined with a net increase in one-to-four family real estate loans of $37.4 million. The purchased loans were re-underwritten by Columbia Bank using its own underwriting standards.

~~Non-Performing Assets.~~ ~~Non-performing assets increased $696,000 to $7.5 million, or 0.13%, of total assets at December 31, 2017 from $6.8 million, or 0.12%, of total assets at September 30, 2017.~~

~~Deposits.~~ Deposits increased $139.9 million, or 3.4%, to $4.3 billion at December 31, 2017 from $4.1 billion at September 30, 2017. The increase was primarily the result of growth in non-interest-bearing and interest-bearing transaction accounts, as well as certificates of deposit.

~~Borrowings.~~ Borrowings increased $196.0 million, or 26.7%, to $929.1 million at December 31, 2017 from $733.0 million at September 30, 2017, primarily due to increases in short-term FHLB advances used to purchase securitiesgiven as part of ~~our leverage strategy noted above.~~

~~Stockholder’s Equity.~~ ~~Total stockholder’s equity decreased $3.8 million,~~the Audit Committee’s approval of the scope of the engagement of the independent registered public accounting firm or 0.8%, to $472.1 million at December 31, 2017 from $475.9 million at September 30, 2017. The decrease was the result of a $7.5 million increase in accumulated other comprehensive loss primarily attributable to a decline in the discount rate used to present value our benefit obligations, which was partially offset by net income of $3.7 million for the three months ended December 31, 2017.

~~Results of Operations for the Year Ended December 31, 2018~~

~~Financial Highlights~~

~~Net income was $22.7 million for~~on an individual explicit case-by-case basis. During the year ended December 31, ~~2018 as compared to $24.8 million for the year ended December 31, 2017, a decrease of $2.0 million, or 8.2%. Increases~~2021, all services were approved, in net interest income of $20.7 million, or 14.5%, and non-interest income of $4.9 million, or 29.0%, and a decrease in our provision for loan losses of $3.1 million, or 32.0% in 2018 were more than offset by an increase in non-interest expense of $40.0 million, or 37.9%. In 2018, non-interest income included increases in demand deposit account fees, income from bank-owned life insurance, title insurance fees and loan fees and service charges. In addition, the 2018 period included $734,000 in gains on sales of securities and loans, while the 2017 period included $2.9 million in losses from the sale of securities and loans. The increase in non-interest expense was primarily attributable to an increase of $31.3 million in charitable contributions to the Columbia Bank Foundation in connection with our minority stock offering. For additional information related to this charitable contribution see Item I. ~~"Business-General."~~ ~~The overall decrease in our pre-tax income was partially offset by a decrease of $9.2 million, or 45.7%, in income tax expense due to tax law changes.~~

~~Summary Income Statements~~

~~The following table sets forth the income summary for the periods indicated:~~

Years Ended December 31,
Change 2018/2017
2018 2017 $ %
(Dollars in thousands)
Net interest income $ 164,034
$ 143,309
$ 20,725
14.5 %
Provision for loan losses 6,677
9,826
(3,149 ) (32.0 )%
Non-interest income 21,688
16,818
4,870
29.0 %
Non-interest expense 145,386
105,421
39,965
37.9 %
Income tax expense 10,923
20,123
(9,200 ) (45.7 )%
Net income $ 22,736
$ 24,757
$ (2,021 ) (8.2 )%

Return on average assets 0.36 % 0.46 %
Return on average equity 2.87 % 5.37 %

~~Net Interest Income~~

For the year ended December 31, 2018, net interest income increased $20.7 million, or 14.5%, to $164.0 million from $143.3 million for the year ended December 31, 2017. For the year ended December 31, 2018, total interest income increased $37.0 million, or 19.6%, to $226.3 million from $189.3 million for the year ended December 31, 2017. The increasein net interest income was primarily attributable to increases in average balances and yields on both the loan and securities portfolios. The yield on the loan portfolio for the year ended December 31, 2018 was 12 basis points higher than the yield for the year ended December 31, 2017, while the yield on the securities portfolio was 17 basis points higher for the 2018 period.

The average rate of our interest-bearing liabilities increased to 1.32% for the year ended December 31, 2018, from 1.10% for the year ended December 31, 2017, primarily as a result of increases in rates on both deposits and FHLB advances. For the year ended December 31, 2018, total interest expense increased $16.3 million, or 35.4%, to $62.3 million from $46.0 million for the year ended December 31, 2018 due to an increase in both the volume and rate of interest-bearing liabilities. During 2018, the average balance of our borrowings increased $203.0 million while the total cost of borrowings decreased 15 basis points. The cost of interest-bearing deposits increased 26 basis points in 2018 as a result of an increase in overall interest rates, coupled with an increase in the average balance of $337.1 million, primarily in higher yielding certificates of deposits.

~~Provision for Loan Losses~~

A provision for loan losses of $6.7 million was recorded for the year ended December 31, 2018 compared to a provision of $9.8 million for the year ended December 31, 2017. The provision for loan losses decreased in 2018 as compared to 2017 as a result of a continued decline in non-performing loans and improvements in credit metrics. Contributing to the decline in non-performing loans was the sale of $1.7 million of one-to-four family and fixed rate home equity loans. Net charge-offs for the year ended December 31, 2018 were $2.5 million, compared to $3.5 million for the year ended December 31, 2017. We charge-off any collateral or cash flow deficiency on all classified loans once they are 90 days delinquent or earlier if management believes the collectability of the loan is unlikely. The provision for loan losses was determined by management to be an amount necessary to maintain a balance of allowance for loan losses at a level that considers all known and current losses in the loan portfolio as well as potential losses due to unknown factors such as the economic environment. Changes in the provision were based on management’s analysis of various factors such as: estimated fair value of underlying collateral, recent loss experience in particular segments of the portfolio, levels and trends in delinquent loans, and changes in general economic and business conditions.

At December 31, 2018, the allowance for loan losses totaled $62.3 million, or 1.26% of total loans outstanding, compared to $58.2 million, or 1.31% of total loans outstanding, as of December 31, 2017. An analysis of the changes in the allowance for loan losses is presented under “~~Risk Management-Analysis and Determination of the Allowance for Loan Losses”~~ ~~below.~~

~~Non-Interest Income~~

~~The following table sets forth a summary of non-interest income for the periods indicated:~~

Years Ended December 31,
2018 2017
(In thousands)

Demand deposit account fees $ 3,987
$ 3,778
Bank-owned life insurance 5,208
4,938
Title insurance fees 4,297
3,844
Loan fees and service charges 2,519
2,143
Gain (loss) on securities transactions, net 116
(2,159 )
Gain (loss) on sale of loans 618
(788 )
(Loss) gain on sale of real estate owned (56 ) 245
Other non-interest income 4,999
4,817
Total $ 21,688
$ 16,818

For the year ended December 31, 2018, non-interest income increased $4.9 million, or 29.0%, to $21.7 million from $16.8 million for the year ended December 31, 2017. We recognized gains on the sale of securities and loans of $116,000 and $618,000, respectively, for the year ended December 31, 2018, as compared to losses of $2.2 million, and $788,000, respectively, for the year ended December 31, 2017. The overall increase in non-interest income also included increases in demand deposit account fees of $209,000,

or 5.5%, income from bank-owned life insurance of $270,000, or 5.5%, title insurance fees of $453,000, or 11.8%, and loan fees and service charges of $376,000, or 17.5%. These increases were mainly the result of increased activity of transactions in the corresponding deposit, loan and other assets that give rise to such fees.

~~Non-Interest Expense~~

~~The following table sets forth an analysis of non-interest expense for the periods indicated:~~

Years Ended December 31,
2018 2017
(In thousands)

Compensation and employee benefits $ 69,907
$ 63,605
Occupancy 14,547
13,475
Federal deposit insurance premiums 1,893
1,654
Advertising 4,137
4,775
Professional fees 1,432
1,533
Data processing 2,600
2,309
Charitable contribution to foundation 34,767
3,509
Other non-interest expense 16,103
14,561
Total $ 145,386
$ 105,421

For the year ended December 31, 2018, non-interest expense increased $40.0 million, or 37.9%, to $145.4 million from $105.4 million for the year ended December 31, 2017. The increase in non-interest expense included a $6.3 million increase in compensation and benefits expense resulting from costs for additional staff and other performance-based compensation as well as normal annual increases in employee benefit related expenses such as medical insurance and payroll taxes. Charitable contributions increased as a result of a $34.8 million contribution to the Columbia Bank Foundation during 2018 in connection with the Company's minority public offering. Occupancy expense increased $1.1 million due to an increase in depreciation expense associated with continued renovations at the corporate office as well as other operating locations, and typical annual increases in repairs and maintenance and property tax expenses. For the year ended December 31, 2018, our core efficiency ratio was 59.6% compared to 62.8% for the year ended December 31, 2017. Core efficiency ratio is a non-GAAP measure derived from our efficiency ratio, which is calculated by dividing our GAAP non-interest expenses by our GAAP revenue, and is adjusted for unusual or one-time charges or non-core events. Management believes that the presentation of core efficiency ratio assists investors in understanding the impact of these non-recurring items on our efficiency ratio. For a reconciliation of our core efficiency ratio, see page 30 of this report.

~~Income Tax Expense~~

We recorded income tax expense of $10.9 million for 2018, reflecting an effective tax rate of 32.5%, compared to income tax expense of $20.1 million for 2017, reflecting an effective tax rate of 44.8%. The decrease in the overall tax expense from 2017 to 2018 was primarily due to the impact of the tax law changes recorded in 2017 which resulted in a re-measurement of our net deferred tax assets, a decrease in the federal tax rate from 35% to 21% in 2018, and lower net income in 2018, which was mainly attributed to the one- time contribution of our common stock to the Columbia Bank Foundation.

As of December 31, 2018, we had net deferred tax assets totaling $16.2 million. These deferred tax assets can only be realized if we generate taxable income in the future. We regularly evaluate the realizability of deferred tax asset positions. In determining whether a valuation allowance is necessary, we consider the level of taxable income in prior years to the extent that carrybacks are permitted under current tax laws, as well as estimates of future pre-tax and taxable income and tax planning strategies that would, if necessary, be implemented. We have provided a valuation allowance of $2.4 million as of December 31, 2018 on the deferred tax assets related to the Bank's state net operating losses and temporary differences.

~~Results of Operations for the Fiscal Year Ended September 30, 2017~~

Net income was $31.1 million for the year ended September 30, 2017 compared to net income of $33.0 million for the year ended September 30, 2016. An increase in net interest income of $14.8 million, or 11.8%, was more than offsetadvance, by the combination of an increase in our provision for loan losses of $6.0 million and an increase in non-interest expenses of $9.7 million. Non-interest income also declined by $1.8 million, primarily reflecting losses incurred on the sale of certain securities and loans. The overall decline in our pre-tax income was partially offset by a decline in income tax expense, reflecting our lower income for the period.

~~Summary Income Statements~~

~~The following table sets forth the income summary for the periods indicated:~~

Years Ended September 30,
Change Fiscal 2017/2016
2017 2016 $ %
(Dollars in thousands)

Net interest income $ 139,780
$ 125,015
$ 14,765
11.8 %
Provision for loan losses 6,426
417
6,009
1,441.0 %
Non-interest income 17,172
18,927
(1,755 ) (9.3 )%
Non-interest expense 103,446
93,769
9,677
10.3 %
Income tax expense 16,008
16,803
(795 ) (4.7 )%
Net income $ 31,072
$ 32,953
(1,881 ) (5.7 )%

Return on average assets 0.60 % 0.67 %
Return on average equity 6.86 % 7.52 %

~~Net Interest Income~~

For the year ended September 30, 2017, net interest income increased $14.8 million, or 11.8%, to $139.8 million from $125.0 million for the year ended September 30, 2016. For the year ended September 30, 2017, total interest income increased $15.2 million, or 9.0%, to $184.2 million from $169.0 million for the year ended September 30, 2016. The growth of net interest income was primarily attributable to an increased volume in loans complemented by a 33 basis point increase in yield on the securities portfolio. The rate on the loan portfolio for the year ended September 30, 2017 was two basis points lower than the yield for the year ended September 30, 2016. This change was a result of loans with higher yields repaying and being replaced with loans at lower yields particularly in the multifamily and commercial real estate loan portfolio, which was partially offset by higher rates on construction loans and commercial business loans.

We were able to reduce the cost of our interest-bearing liabilities in fiscal 2017 with average rates decreasing to 1.09% for the year ended September 30, 2017 from 1.15% for the year ended September 30, 2016, primarily due to the maturity of higher cost borrowings which were repriced at lower rates. For the year ended September 30, 2017, total interest expense increased $484,000, or 1.1%, to $44.4 million from $44.0 million for the year ended September 30, 2016 due to an increase in the volume of interest-bearing liabilities. During fiscal 2017, the average balance of our borrowings increased $44.2 million while the cost of borrowings decreased 33 basis points. The decline was attributable to the maturity of high cost borrowings along with increased use of the overnight line of credit from the FHLB which was at a lower cost than term borrowings.

~~Provision for Loan Losses~~

A provision for loan losses of $6.4 million was recorded for the year ended September 30, 2017 compared to a provision of $417,000 for the year ended September 30, 2016. The provision for loan losses increased in fiscal 2017 as compared to fiscal 2016 as a result of additions to the provision to reflect the overall growth of the loan portfolio and the growth in loans with higher credit risk, as well as our decision to take a more aggressive approach to sell or work-out classified loans. Net charge-offs for the year ended September 30, 2017 were $3.7 million, compared to $5.5 million for the year ended September 30, 2016. We charge-off any collateral or cash flow deficiency on all classified loans once they are 90 days delinquent or earlier if management believes the collectability of the loan is unlikely. The provision for loan losses was determined by management to be an amount necessary to maintain a balance of allowance for loan losses at a level that considers all known and current losses in the loan portfolio as well as potential losses due to unknown factors such as the economic environment.

Changes in the provision were based on management’s analysis of various factors such as: estimated fair value of underlying collateral, recent loss experience in particular segments of the portfolio, levels and trends in delinquent loans, and changes in general economic and business conditions.

At September 30, 2017, the allowance for loan losses totaled $54.6 million, or 1.26% of total loans outstanding, compared to $51.9 million, or 1.30% of total loans outstanding, as of September 30, 2016.

~~Non-Interest Income~~

~~The following table sets forth a summary of non-interest income for the periods indicated:~~

Years Ended September 30,
2017 2016
(In thousands)

Demand deposit account fees $ 3,669
$ 3,271
Bank-owned life insurance 4,936
4,370
Title insurance fees 4,163
4,198
Loan fees and service charges 1,976
1,971
(Loss) gain on securities transactions, net (1,689 ) 355
Gain (loss) on sale of loans (380 ) 655
Other non-interest income 4,497
4,107
Total $ 17,172
$ 18,927

For the year ended September 30, 2017, non-interest income decreased $1.8 million, or 9.3%, to $17.2 million from $18.9 million for the year ended September 30, 2016. The decrease was primarily due to a loss on the sale of securities. During the fourth quarter of fiscal 2017, we sold $129.3 million of securities with a resulting net loss of $2.1 million. The largest component of the loss resulted from the sale of our only remaining investment in pooled trust preferred securities. The proceeds of the sale were reinvested at higher yields. We recognized a loss on sale of loans of $380,000 for the year ended September 30, 2017 due primarily to the sale of certain residential and home equity loans that had higher perceived credit risk based on payment history, but were not classified. The loss on sale of these problem loans was $1.2 million, which was partially offset by gains on other loan sales. Demand deposit account fees increased $398,000, or 12.2% from $3.3 million for the year ended September 30, 2016, to $3.7 million for the year ended September 30, 2017 due to an increase in transactional accounts. Income on bank-owned life insurance increased $566,000 in fiscal 2017 from fiscal 2016 due to the recognition of insurance proceeds coupled with the purchase of additional policies during fiscal 2017.

~~Non-Interest Expense~~

~~The following table sets forth an analysis of non-interest expense for the periods indicated:~~

Years Ended September 30,
2017 2016
(In thousands)

Compensation and employee benefits $ 62,993
$ 58,115
Occupancy 13,315
12,798
Federal deposit insurance premiums 1,652
2,381
Advertising 4,078
2,938
Professional fees 1,354
1,061
Data processing 2,244
2,143
Charitable contribution to foundation 3,910
594
Other non-interest expense 13,900
13,739
Total $ 103,446
$ 93,769

For the year ended September 30, 2017, non-interest expense increased $9.7 million, or 10.3%, to $103.4 million from $93.8 million for the year ended September 30, 2016. The increase in non-interest expense was primarily due to a $4.9 million increase in compensation and benefits expense resulting from additional staff, a higher incentive compensation accrual and higher costs of employee benefits. Charitable contributions increased to $3.9 million for the year ended September 30, 2017 from $594,000 for the year ended September 30, 2016. Advertising expenses increased to $1.1 million for promotions related to the new corporate logo and additional product advertising. Occupancy expense increased $517,000 due to two additional branch locations as well as branch renovation costs and other customary increases in occupancy expense. Professional fees for the year ended September 30, 2017 increased $293,000 which was entirely attributable to professional expenses incurred to prepare for public financial reporting and corporate governance. For the year ended September 30, 2017, our core efficiency ratio was 62.94% compared to 65.06% for the year ended September 30, 2016.

Core efficiency ratio is a non-GAAP measure derived from our efficiency ratio, which is calculated by dividing our GAAP non-interest expenses by our GAAP revenue, and is adjusted for unusual or one-time charges or non-core events. Management believes that the presentation of core efficiency ratio assists investors and analysts in understanding the impact of these non-recurring items on our efficiency ratio. For a reconciliation of our core efficiency ratio, see page 30 of this report.

~~Income Tax Expense~~

We recorded income tax expense of $16.0 million for fiscal 2017, reflecting an effective tax rate of 34.0%, compared to income tax expense of $16.8 million for fiscal 2016, reflecting an effective tax rate of 33.8%. The change from fiscal 2016 to fiscal 2017 was primarily due to the full utilization of net operating losses during the first half of fiscal 2017. The tax rates differ from the statutory rate of 35% principally because of non-taxable income related to bank-owned life insurance and tax-exempt securities.

As of September 30, 2017, we had net deferred tax assets totaling $13.2 million. These deferred tax assets can only be realized if we generate taxable income in the future. We regularly evaluate the realizability of deferred tax asset positions. In determining whether a valuation allowance is necessary, we consider the level of taxable income in prior years to the extent that carrybacks are permitted under current tax laws, as well as estimates of future pre-tax and taxable income and tax planning strategies that would, if necessary, be implemented. We have provided a valuation allowance of $4.3 million as of September 30, 2017 on the deferred tax assets related to state net operating losses and temporary differences. (See note 12 in the notes to the consolidated financial statements for a discussion of the revaluation of the net deferred tax assets and the impact to income tax expense during the period ended December 31, 2017.)

~~Average Balances and Yields~~

The following tables present information regarding average balances of assets and liabilities, as well as the total dollar amounts of interest income and dividends from average interest-earning assets, and interest expense on average interest-bearing liabilities, and the resulting annualized average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average daily balances of assets or liabilities, respectively, for the periods presented. Loan (fees) costs, including prepayment fees, are included in interest income on loans and are not material. Non-accrual loans are included in the average balances. Yields are not presented on a tax-equivalent basis. Any adjustments necessary to present yields on a tax-equivalent basis are insignificant.

Years Ended December 31,
2018 2017
Average Balance Interest Yield / Cost Average Balance Interest Yield / Cost
(Dollars in thousands)
Interest earning assets:
Loans (1) $ 4,711,915
$ 189,869
4.03 % $ 4,312,887
$ 168,523
3.91 %
Securities (2) 1,171,617
32,485
2.77 % 707,427
18,381
2.60 %
Other interest-earning assets 111,218
3,936
3.54 % 67,578
2,370
3.51 %
Total interest-earning assets 5,994,750
226,290
3.77 % 5,087,892
189,274
3.72 %
Non-interest earning assets 324,499
266,061

Total assets $ 6,319,249
$ 5,353,953

Interest-bearing liabilities:
Interest-bearing demand $ 1,323,766
$ 11,395
0.86 % $ 1,305,412
$ 8,048
0.62 %
Money market accounts 299,389
1,538
0.51 % 272,230
770
0.28 %
Savings and club deposits 628,746
993
0.16 % 545,640
841
0.15 %
Certificates of deposit 1,514,843
25,597
1.69 % 1,306,365
17,340
1.33 %
Total interest-bearing deposits 3,766,744
39,523
1.05 % 3,429,647
26,999
0.79 %
FHLB advances 912,032
19,263
2.11 % 654,561
13,408
2.05 %
Junior subordinated debt 31,422
3,467
11.03 % 50,628
4,177
8.25 %
Other borrowings 222
3
1.35 % 35,452
1,381
3.90 %
Total borrowings 943,676
22,733
2.41 % 740,641
18,966
2.56 %
Total interest-bearing liabilities 4,710,420
62,256
1.32 % 4,170,288
45,965
1.10 %

Non-interest-bearing liabilities:
Non-interest-bearing deposits 704,155
627,999

Other non-interest-bearing liabilities 112,785
94,754

Total liabilities 5,527,360
4,893,041

Total equity 791,889
460,912

Total liabilities and equity $ 6,319,249
$ 5,353,953

Net interest income 164,034
143,309

Interest rate spread (3) 2.45 % 2.62 %
Net interest-earning assets (4) $ 1,284,330
$ 917,604

Net interest margin (5) 2.74 % 2.82 %
Ratio of interest-earning assets to interest-bearing liabilities 127.27 % 122.00 %

(1) Includes loans held for sale and non-accrual loan balances.

(2) Includes securities available for sale, held to maturity and FHLB stock.

(3) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(4) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(5) Net interest margin represents net interest income divided by average total interest-earning assets.

Years Ended September 30,
2017 2016
Average Balance Interest Yield / Cost Average Balance Interest Yield / Cost
(Dollars in thousands)
Interest earning assets:
Loans (1) $ 4,236,825
$ 164,849
3.89 % $ 3,888,992
$ 152,110
3.91 %
Securities (2) 723,398
19,069
2.64
721,941
16,662
2.31
Other interest-earning assets 29,306
308
1.05
44,544
205
0.46
Total interest-earning assets 4,989,529
184,226
3.69
4,655,477
168,977
3.63
Non-interest earning assets 229,655
253,741

Total assets 5,219,184
184,226
4,909,218
168,977

Interest-bearing liabilities:
Interest-bearing demand 1,284,418
7,590
0.59
1,140,460
6,776
0.59
Money market accounts 270,919
760
0.28
272,575
763
0.28
Savings and club deposits 543,070
837
0.15
523,601
811
0.15
Certificates of deposit 1,266,717
16,394
1.29
1,225,833
15,712
1.28
Total interest-bearing deposits 3,365,124
25,581
0.76
3,162,469
24,062
0.76
FHLB advances 627,965
13,082
2.08
564,995
13,274
2.35
Junior subordinated debt 50,614
4,177
8.25
50,561
4,177
8.26
Other borrowings 40,685
1,606
3.95
59,481
2,449
4.12
Total borrowings 719,264
18,865
2.62
675,037
19,900
2.95
Total interest-bearing liabilities 4,084,388
44,446
1.09
3,837,506
43,962
1.15

Non-interest-bearing liabilities:
Non-interest-bearing deposits 607,836
543,943

Other non-interest bearing liabilities 73,744
89,835

Total liabilities 4,765,968
4,471,284

Total equity 453,216
437,934

Total liabilities and equity $ 5,219,184
$ 4,909,218

Net interest income $ 139,780
$ 125,015

Interest rate spread (3) 2.60 % 2.48 %
Net interest-earning assets (4) $ 905,141
$ 817,971

Net interest margin (5) 2.80 % 2.69 %
Ratio of interest-earning assets to interest-bearing liabilities 122.16 % 121.32 %

(1) Includes loans held for sale and non-accrual loan balances.
(2) Includes securities available for sale, held to maturity and FHLB stock.
(3) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.

~~Rate/Volume Analysis~~

The following table sets forth the effects of changing rates and volumes on our net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns.

Year Ended 12/31/2018 Compared to Year Ended 12/31/2017 Year Ended 9/30/2017 Compared to Year Ended 9/30/2016
Increase (Decrease) Due to Increase (Decrease) Due to
Volume Rate Total Volume Rate Total
(Dollars in thousands)
Interest income:
Loans $ 15,592
$ 5,754
$ 21,346
$ 13,605
$ (866 ) $ 12,739
Investment securities 12,061
2,043
14,104
34
2,373
2,407
Other interest-earning assets 1,530
36
1,566
(70 ) 173
103
Total interest-earning assets 29,183
7,833
$ 37,016
$ 13,569
$ 1,680
$ 15,249
Interest expense:
Interest bearing transactions 113
3,234
3,347
$ 855
$ (41 ) $ 814
Money market deposit accounts 77
691
768
(5 ) 2
(3 )
Savings deposit accounts 128
24
152
30
(4 ) 26
Certificates of deposit 2,767
5,490
8,257
524
158
682
Total interest-bearing deposits 3,085
9,439
12,524
1,404
115
1,519
FHLB advances 5,274
581
5,855
1,479
(1,671 ) (192 )
Junior subordinated debt (1,585 ) 875
(710 ) 5
(5 ) —
Other borrowings (1,372 ) (6 ) (1,378 ) (774 ) (69 ) (843 )
Total interest-bearing liabilities 5,402
10,889
16,291
2,114
(1,630 ) 484
Net change in net interest income $ 23,781
$ (3,056 ) $ 20,725
$ 11,455
$ 3,310
$ 14,765

~~Risk Management~~

~~Overview.~~ Managing risk is an essential part of successfully managing a financial institution. Our most prominent risk exposures are credit risk, interest rate risk and market risk. Credit risk is the risk of not collecting the interest and/or the principal balance of a loan or investment when it is due. Interest rate risk is the potential reduction of interest income as a result of changes in interest rates. Market risk arises from fluctuations in interest rates that may result in changes in the values of financial instruments, such as available for sale securities that are accounted for at fair value. Other risks that we face are operational risk, liquidity risk and reputation risk. Operational risk includes risks related to fraud, regulatory compliance, processing errors, cyber-attacks, and disaster recovery. Liquidity risk is the possible inability to fund obligations to depositors, lenders or borrowers. Reputation risk is the risk that negative publicity or press, whether true or not, could cause a decline in our customer base or revenue.

We maintain a Risk Management Division comprised of our Risk Management, Compliance, Internal Loan Review, Appraisal and Security Departments. Our Risk Management Division is led by our Executive Vice President and Chief Risk Officer, who reports quarterly to Columbia Bank’s RiskAudit Committee which is comprised of the full board of directors. The current structure of our Risk Management Division is designed to monitor and address, among other things, financial, credit, collateral, consumer compliance, operational, Bank Secrecy Act, fraud, cyber security, vendor and insurable risks. The Risk Management Division utilizes a number of enterprise risk assessment tools, including stress testing, credit concentration reviews, peer analyses, industry considerations and individual risk assessments, to identify and report potential risks that we face in connection with our business operations.

~~Credit Risk Management.~~ The objective of our credit risk management strategy is to quantify and manage credit risk and to limit the risk of loss resulting from an individual customer default. Our credit risk management strategy focuses on conservatism, diversification within the loan portfolio and monitoring. Our lending practices include conservative exposure limits and underwriting, documentation and collection standards. Our credit risk management strategy also emphasizes diversification on an industry and customer level as well as regular credit examinations and monthly management reviews of large credit exposures and loans experiencing deterioration in credit quality. Our credit risk review function provides objective assessments of the quality of underwriting and documentation, the accuracy of risk ratings and the charge-off, non-accrual and reserve analysis process. Our credit review process and overall assessment

of required allowances is based on quarterly assessments of the probable estimated losses inherent in the loan portfolio. We use these assessments to identify potential problem loans within the portfolio, maintain an adequate reserve and take any necessary charge-offs.

When a borrower fails to make a required payment, we take a number of steps to have the borrower cure the delinquency and restore the loan to current status. Generally, our collection department follows the guidelines for servicing loans as prescribed by applicable law or the appropriate investor. Collection activities include, but are not limited to, phone calls to borrowers and collection letters, which include a late charge notice based on the contractual requirements of the specific loan. Additional calls and notices are mailed in compliance with state and federal regulations including, but not limited to, the Fair Debt Collection Practices Act. After the 90th day of delinquency for a residential mortgage or consumer loan, or on a different date as allowable by law or contract, the collection department will forward the account to counsel and begin the collection litigation which typically includes foreclosure proceedings. If a foreclosure action is instituted and the loan is not in at least the early stages of a workout by the scheduled sale date, the real property securing the loan generally is sold at a sheriff sale. If we determine that there is a possibility of a settlement, pay-off or reinstatement, the sheriff sale may be postponed.these procedures.

We charge off the collateral or cash flow deficiency on all consumer loans once they become 180 days delinquent and all commercial loans once they become 90 days delinquent or earlier if management believes the collectability of the loan is unlikely. In addition to the individual review of larger commercial loans that exhibit probable or observed credit weaknesses, the commercial credit review process includes the use of an enhanced risk rating system. Historical portfolio performance metrics, current economic conditions and delinquency monitoring are factors used to assess the credit risk in our homogeneous commercial, residential and consumer loan portfolios.

~~Analysis of Non-Performing, Troubled Debt Restructurings and Classified Assets.~~ We consider repossessed assets and loans to be non-performing assets if they are 90 days or more past due or earlier if management believes the collectability of the loan is unlikely. Generally, all loans are placed on non-accrual status when they become 90 days delinquent, at which time the accrual of interest ceases. Typically, payments received on a non-accrual loan are applied to the outstanding principal balance of the loan.

Real estate that we acquire as a result of foreclosure or by deed-in-lieu of foreclosure is classified as other real estate owned until it is sold. When property is acquired, it is recorded at the lower of its cost or fair market value less estimated costs to sell. Holding costs and declines in fair value after acquisition of the property result in charges against income.

We consider a loan a troubled debt restructuring, or “TDR,” when the borrower is experiencing financial difficulty and we grant a concession that we would not otherwise consider but for the borrower’s financial difficulties. A TDR includes a modification of debt terms or assets received in satisfaction of the debt (which may include foreclosure or deed in lieu of foreclosure) or a combination of the foregoing. We evaluate selective criteria to determine if a borrower is experiencing financial difficulty including the ability of the borrower to obtain funds from third party sources at market rates. We consider all TDRs to be impaired loans even if they are performing. We will not consider the loan a TDR if the loan modification was made for customer retention purposes and the modification is consistent with prevailing market conditions.

Once a loan has been classified as a TDR and has been put on non-accrual status, it will only be put back on accruing status when certain criteria are met. Our policy for returning a loan to accruing status requires the preparation of a well-documented credit evaluation, which includes the following:

A review of the borrower’s current financial condition in which the borrower must demonstrate sufficient cash flow to support the repayment of all principal and interest including any amounts previously charged-off;

•~~An updated appraisal or home valuation, which must demonstrate sufficient collateral value to support the debt;~~

•~~Sustained performance based on the restructured terms for at least six consecutive months; and~~

~~Approval by the Asset Classification Committee, which consists of senior management including the Chief Credit Officer and the Chief Accounting Officer.~~

We had one TDR totaling $102,000 on non-accrual status at December 31, 2018 as compared to two TDRs totaling $425,000 at December 31, 2017 and six TDRs totaling $1.0 million at September 30, 2017. We had 69 TDRs totaling $15.9 million and 74 TDRs totaling $17.2 million that were on accrual status and in compliance with their modified terms as of December 31, 2018 and 2017, respectively.

~~The following table sets forth information with respect to our non-performing assets at the dates indicated. We did not have any accruing loans past due 90 days or more at any of the dates indicated.~~

At December 31, At September 30,
2018 2017 2017 2016 2015 2014
(In thousands)
Non-accrual loans:
Real estate loans:
One-to-four family $ 819
$ 3,360
$ 3,496
$ 4,688
$ 11,770
$ 24,975
Multifamily and commercial 154
1,329
1,510
4,257
4,538
11,499
Construction —
—
—
—
639
2,931
Total real estate loans 973
4,689
5,006
8,945
16,947
39,405

Commercial business loans 911
1,263
1,038
1,608
1,996
3,623

Consumer loans:
Home equity loans and advances 905
573
351
1,667
2,251
9,215
Other consumer loans —
—
—
—
—
—
Total consumer loans 905
573
351
1,667
2,251
9,215
Total non-accrual loans (1) 2,789
6,525
6,395
12,220
21,194
52,243

Total non-performing loans 2,789
6,525
6,395
12,220
21,194
52,243

Real estate owned 92
959
393
1,260
3,042
2,683

Total non-performing assets $ 2,881
$ 7,484
$ 6,788
$ 13,480
$ 24,236
$ 54,926

Total non-performing loans to total loans 0.06 % 0.15 % 0.15 % 0.31 % 0.56 % 1.47 %

Total non-performing assets total assets 0.04 % 0.13 % 0.13 % 0.27 % 0.51 % 1.19 %

(1) Includes $102,000, $425,000, $1.0 million, $1.0 million, $4.4 million and $10.7 million of TDRs on non-accrual status as of December 31, 2018 and 2017 and as of September 30, 2017, 2016, 2015 and 2014, respectively.

Non-performing assets decreased $4.6 million to $2.9 million, or 0.04% of total assets, at December 31, 2018 from $7.5 million, or 0.13% of total assets, at December 31, 2017. The decrease in non-performing one-to-four family and home equity loans was partially attributable to the sale of $1.7 million in non-performing loans executed in 2018. Net charge-offs for the year ended December 31, 2018 were $2.5 million compared to $3.5 million for the year ended December 31, 2017. We charge-off the collateral or cash flow deficiency on all loans meeting our definition of an impaired loan, which we define as a loan for which it is probable, based on current information, that we will not collect all amounts due under the contractual terms of the loan agreement. We consider the population of loans in our impairment analysis to include all multifamily and commercial real estate, construction, and commercial business loans with outstanding balances greater than $500,000 and not accruing, loans modified in a troubled debt restructuring, and other loans if management has specific information of a collateral shortfall. We continue to rigorously review our loan portfolio to ensure that the collateral values remain sufficient to support the outstanding balances.

Non-performing assets decreased $6.7 million to $6.8 million, or 0.13% of total assets, at September 30, 2017 from $13.5 million, or 0.27% of total assets, at September 30, 2016. The decline in our non-performing multifamily and commercial real estate loans was the result of full repayment, short repayment, charge-offs and non-performing loans returning to accruing status.

The decline in non-performing one-to four-family mortgages and home equity loans was partially attributable to a loan sale executed in fiscal 2017. Net charge-offs for the year ended September 30, 2017 were $3.7 million compared to $5.5 million for the year ended September 30, 2016.

Federal regulations require us to review and classify our assets on a regular basis. In addition, our banking regulators have the authority to identify problem assets and, if appropriate, require them to be classified. Our credit review process includes a risk classification of all commercial and residential loans that includes four levels of pass, special mention, substandard, doubtful and loss. A loan is classified as pass when payments are current and it is performing under the original contractual terms. A loan is classified as special mention when the borrower exhibits potential credit weakness or a downward trend which, if not checked or corrected, will weaken the asset or inadequately protect our position. While potentially weak, the borrower is currently marginally acceptable; no loss of principal or interest is envisioned. A loan is classified as substandard when the borrower has a well-defined weakness or weaknesses that jeopardize the orderly liquidation of the debt. A substandard loan is inadequately protected by the current net worth and paying capacity of the obligor, normal repayment from this borrower is in jeopardy, and there is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. A loan is classified as doubtful when a borrower has all weaknesses inherent in a substandard loan with the added provision that: (1) the weaknesses make collection of debt in full on the basis of currently existing facts, conditions and values highly questionable and improbable; (2) serious problems exist to the point where a partial loss of principal is likely; and (3) the possibility of loss is extremely high, but because of certain important, reasonably specific pending factors that may work to the advantage and strengthening of the assets, its classification as an estimated loss is deferred until its more exact status may be determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens and additional refinancing plans. A loan is classified as loss when all or a portion of the loan is considered uncollectible and of such little value that its continuance on our books without establishment of a specific valuation allowance or charge off is not warranted. This classification does not necessarily mean that the loan has no recovery or salvage value. Rather, it indicates that there is significant doubt about whether, how much or when recovery will occur. Accordingly, it is not practical or desirable to defer a write-off on the loan. In all cases, loans are placed on non-accrual when 90 days past due or earlier if collection of principal or interest is considered doubtful.

At December 31, At September 30,
2018 2017 2017
Days Past Due Days Past Due Days Past Due
30-59 60-89 90 or more 30-59 60-89 90 or more 30-59 60-89 90 or more
(In thousands)
Real estate loans:
One-to-four family $ 8,384
$ 1,518
$ 819
$ 7,080
$ 1,229
$ 3,360
$ 3,924
$ 932
$ 3,496
Multifamily and commercial 1,870
1,425
154
138
380
1,329
—
123
1,510
Construction —
—
—
—
—
—
—
—
—

Commercial business loans 208
279
911
89
730
1,263
—
388
1,038

Consumer loans:
Home equity loans and advances 1,550
173
905
1,421
26
573
1,437
187
351
Other consumer loans —
—
—
—
—
—
1
—
—
Total $ 12,012
$ 3,395
$ 2,789
$ 8,728
$ 2,365
$ 6,525
$ 5,362
$ 1,630
$ 6,395

At September 30,
2016 2015 2014
Days Past Due Days Past Due Days Past Due
30-59 60-89 90 or more 30-59 60-89 90 or more 30-59 60-89 90 or more
(In thousands)
Real estate loans:
One-to four-family $ 9,401
$ 1,338
$ 4,538
$ 14,015
$ 3,707
$ 10,106
$ 11,085
$ 4,196
$ 22,600
Commercial and multifamily 1,030
275
4,257
3,758
1,232
3,306
4,669
1,552
10,236
Construction —
—
—
—
—
639
—
420
2,931

Commercial business loans 60
—
1,608
350
464
1,729
337
131
3,018

Consumer loans:
Home equity loans and advances 2,855
436
1,667
3,189
648
2,110
2,587
694
8,537
Other consumer loans 1
—
—
8
—
—
6
—
—
Total $ 13,347
$ 2,049
$ 12,070
$ 21,320
$ 6,051
$ 17,890
$ 18,684
$ 6,993
$ 47,322

~~The following table summarizes classified and criticized assets of all portfolio types at the dates indicated:~~

At December 31, At September 30,
2018 2017 2017 2016 2015 2014
(In thousands)
Classified loans:
Substandard $ 23,345
$ 31,836
$ 30,935
$ 44,885
$ 45,131
$ 86,646
Doubtful —
—
—
—
49
1,434
Total classified loans 23,345
31,836
30,935
44,885
45,180
88,080
Special mention 9,074
8,460
14,947
11,509
19,957
29,789
Total criticized loans $ 32,419
$ 40,296
$ 45,882
$ 56,394
$ 65,137
$ 117,869

~~All impaired loans classified as substandard and doubtful are written down to the fair value of their collateral if the loan is collateral dependent.~~

~~Analysis and Determination of the Allowance for Loan Losses~~

The allowance for loan losses is a valuation allowance for probable losses inherent in the loan portfolio. We evaluate the need to establish allowances against losses on loans on a quarterly basis. When additional allowances are necessary, a provision for loan losses is charged to earnings. Our methodology for assessing the appropriateness of the allowance for loan losses consists of: (1) a specific valuation allowance for loans individually evaluated for impairment and (2) a general valuation allowance for loans collectively evaluated for impairment.

~~Specific Allowance (Individually Evaluated for Impairment).~~ Management regularly monitors the condition of borrowers and assesses both internal and external factors in determining whether any relationships have deteriorated, considering factors such as historical loss experience, trends in delinquency and non-performing loans, changes in risk composition and underwriting standards, the experience and ability of staff and regional and national economic conditions and trends.

Our loan officers and loan servicing staff identify and manage potential problem loans within our commercial loan portfolio. Non-performing assets within the commercial loan portfolio are transferred to the Special Assets Department for workout or litigation. The Special Assets Department reports directly to the Chief Credit Officer. Changes in management, financial or operating performance, company behavior, industry factors and external events and circumstances are evaluated on an ongoing basis to determine whether potential impairment is evident and additional analysis is needed. For our commercial loan portfolio, risk ratings are assigned to each individual loan to differentiate risk within the portfolio and are reviewed on an ongoing basis by credit management and the Internal Loan Review Department and revised, if needed, to reflect the borrower’s current risk profiles and the related collateral positions.

The risk ratings consider factors such as financial condition, debt capacity and coverage ratios, market presence and quality of management. When a credit’s risk rating is downgraded to a certain level, the relationship must be reviewed and detailed reports completed that document risk management strategies for the credit going forward, and the appropriate accounting actions to take in accordance with generally accepted accounting principles in the United States. When credits are downgraded beyond a certain level, our Special Assets and Loan Servicing Departments become responsible for managing the credit risk.

The Asset Classification Committee reviews risk rating actions (specifically downgrades or upgrades between pass and the criticized and classified categories) recommended by Lending, Loan Servicing, Commercial Credit, Internal Loan Review and/or Special Assets Departments on a quarterly basis. Our Commercial Credit, Internal Loan Review, Lending, and Loan Servicing Departments monitor our commercial, residential and consumer loan portfolios for credit risk and deterioration considering factors such as delinquency, loan to value ratios and credit scores.

When problem loans are identified that are secured with collateral, management examines the loan files to evaluate the nature and type of collateral supporting the loans. Management documents the collateral type, date of the most recent valuation, and whether any liens exist, to determine the value to compare against the committed loan amount. If a loan is identified as impaired and is collateral dependent, an updated appraisal is obtained to provide a baseline in determining the property’s fair value. A collateral dependent impaired loan is written down to its appraised value and a specific allowance is established to cover potential selling costs. If the collateral value is subject to significant volatility (due to location of asset, obsolescence, etc.) an appraisal is obtained more frequently. In-house revaluations are typically performed on a quarterly basis and updated appraisals are obtained annually, if determined necessary.

When we determine that the value of an impaired loan is less than its carrying amount, we recognize impairment through a charge-off to the allowance. We perform these assessments on at least a quarterly basis. For commercial loans, a charge-off is recorded when management determines we will not collect 100% of a loan based on the fair value of the collateral or the net present value of expected future cash flows. The collateral deficiency on consumer loans and residential loans are generally charged-off when deemed to be uncollectible or delinquent 180 days, whichever comes first, unless it can be clearly demonstrated that repayment will occur regardless of the delinquency status. Examples that would demonstrate repayment include a loan that is secured by adequate collateral and is in the process of collection, a loan supported by a valid guarantee or insurance, or a loan supported by a valid claim against a solvent estate.

~~General Allowance (Collectively Evaluated for Impairment).~~Additionally, we reserve for certain inherent, but undetected, losses that are probable within the loan portfolio. This is due to several factors, such as, but not limited to, inherent delays in obtaining information regarding a customer’s financial condition or changes in their unique business conditions and the interpretation of economic trends. While this analysis is conducted at least quarterly, we have the ability to revise the allowance factors whenever necessary to address improving or deteriorating credit quality trends or specific risks associated with a given loan pool classification.

A comprehensive analysis of the allowance for loan losses is performed on a quarterly basis. The entire allowance for loan losses is available to absorb losses in the loan portfolio irrespective of the amount of each separate element of the allowance. Our principal focus, therefore, is on the adequacy of the total allowance for loan losses.

The allowance for loan losses is maintained at levels that management considers appropriate to provide for losses based upon an evaluation of known and inherent risks in the loan portfolio. Management’s evaluation takes into consideration the risks inherent in the loan portfolio, past loan loss experience, specific loans with loss potential, geographic and industry concentrations, delinquency trends, economic conditions, the level of originations and other relevant factors. While management uses the best information available to make such evaluations, future adjustments to the allowance for credit losses may be necessary if conditions differ substantially from the assumptions used in making the evaluations. In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, the existing allowance for loan losses may not be sufficient should the quality of loans deteriorate as a result of the factors described above. Any material increase in the allowance for loan losses may adversely affect our financial condition and results of operations. The allowance for loan losses is subject to review by our banking regulators. On an annual basis our primary bank regulator conducts an examination of the allowance for loan losses and makes an assessment regarding its adequacy and the methodology employed in its determination. Our regulators may require the allowance for loan losses to be increased based on their review of information available to them at the time of their examination.

At December 31, At September 30,
2018 2017 2017
Amount % of Allowance to Total Allowance % of Allowance to Loans in Category Amount % of Allowance to Total Allowance % of Allowance to Loans in Category Amount % of Allowance to Total Allowance % of Allowance to Loans in Category
(Dollars in thousands)
Real estate loans:

One-to-four family $ 15,232
24.4 % 0.8 % $ 19,991
34.4 % 1.2 % $ 18,533
33.9 % 1.2 %
Multifamily and commercial 23,251
37.3
1.1
19,933
34.3
1.1
18,029
33.0 % 1.0
Construction 7,217
11.6
2.8
5,217
9.0
2.2
5,299
9.7 % 2.4
Commercial business 14,176
22.7
4.2
8,275
14.2
3.0
8,480
15.5 % 3.2
Consumer loans:

Home equity loans and advances 2,458
3.9
0.6
4,576
7.9
1.0
4,190
7.7 % 0.9
Other consumer loans 8
—
0.7
8
—
0.8
8
— % 0.6
Total allocated allowance 62,342
100.0 % 1.3 % 58,000
99.7 % 1.3 % 54,539
99.8 % 1.3 %
Unallocated —
— % 178
0.3 % 94
0.2 %
Total allowance for loan losses $ 62,342
100.0 % 1.3 % $ 58,178
100.0 % 1.3 % $ 54,633
100.0 % 1.3 %

At September 30,
2016 2015 2014
Amount % of Allowance to Total Allowance % of Allowance to Loans in Category Amount % of Allowance to Total Allowance % of Allowance to Loans in Category Amount % of Allowance to Total Allowance % of Allowance to Loans in Category
(Dollars in thousands)
Real estate loans:
One-to-four family $ 18,638
35.9 % 1.2 % $ 16,442
28.9 % 1.1 % $ 12,194
21.1 % 0.8 %
Multifamily and commercial 17,390
33.5 % 1.1
20,352
35.7 % 1.4 % 21,888
37.8 % 1.7
Construction 5,960
11.5 % 3.2
6,248
11.0 % 4.7 % 6,108
10.5 % 4.6
Commercial business loans 5,721
11.0 % 3.2
7,094
12.5 % 4.1 % 7,297
12.6 % 6.2
Consumer loans:

Home equity loans and advances 4,052
7.8 % 0.8
6,111
10.7 % 1.2 % 5,891
10.2 % 1.1
Other consumer loans 11
— % 0.8
4
— % 0.4 % 81
0.1 % 6.9
Total allocated allowance 51,772
99.8
1.3
56,251
98.8
1.5 % 53,459
92.3
1.5
Unallocated 95
0.2
697
1.2
4,445
7.7

Total allowance for loan losses $ 51,867
100.0 % 1.3 % $ 56,948
100.0 % 1.5 % $ 57,904
100.0 % 1.6 %

~~One-to-Four Family Loan Portfolio.~~ The allowance for the one-to-four family loan portfolio was $15.2 million, or 0.8% of one-to-four family loans, at December 31, 2018, compared to $20.0 million, or 1.2% of one-to-four family loans, at December 31, 2017. Our one-to-four family loan delinquencies decreased $948,000, or 8.1%, to $10.7 million at December 31, 2018 from $11.7 million at December 31, 2017 and net charge-offs were $256,000 for the year ended December 31, 2018 compared to $1.1 million for the year ended December 31, 2017. A portion of the charge-offs recognized during 2018 and 2017 related to sales of classified one-to-four family loans to third parties. Management’s decision to sell certain classified one-to-four family loans rather than foreclose on the properties was due to the extended period of time it takes for foreclosures and evictions to be completed in the State of New Jersey. We believe the balance of one-to-four family reserves is appropriate given the decrease in delinquencies, continued low charge-off levels, and improved credit metrics, even though there was an increase in the portfolio balance year over year.

~~Multifamily and Commercial Real Estate Loan Portfolio.~~ The portion of the allowance for loan losses related to the multifamily and commercial real estate loan portfolio totaled $23.3 million or 1.1% of commercial loans at December 31, 2018, as compared to $19.9 million or 1.1% of multifamily and commercial real estate loans at December 31, 2017. We experienced a $6.0 million decrease in criticized and classified loans to $13.5 million at December 31, 2018 compared to $19.4 million at December 31, 2017. Multifamily and commercial real estate loan delinquencies increased to $3.4 million at December 31, 2018 from $1.8 million at December 31, 2017. Net charge-offs were $127,000 for the year ended December 31, 2018 compared to $1.0 million for the year ended December 31, 2017. We continue to charge-off any cash flow or collateral deficiency for non-performing loans once a loan is 90 days past due. We believe the multifamily and commercial reserve ratio is appropriate given the increase in the balance of the portfolio and delinquencies year over year, which was partially mitigated by improved credit metrics.

~~Construction Loan Portfolio.~~The portion of the allowance for loan losses related to the construction portfolio totaled $7.2 million or 2.8% of construction loans at December 31, 2018, as compared to $5.2 million or 2.2% at December 31, 2017. At December 31, 2018 and 2017, we had no classified or criticized construction loans. At December 31, 2018 and 2017, we had no construction loans that

were non-performing and recorded a $3,000 recovery on a construction loan during 2018. We believe the increase in the construction reserve was appropriate due to the increase in the balance of these loans along with the increased credit risk associated with this portfolio.

~~Commercial Business Loan Portfolio.~~ The portion of the allowance for loan losses related to the commercial business loan portfolio totaled $14.2 million or 4.2% of commercial business loans at December 31, 2018, which increased from $8.3 million or 3.0% of commercial business loans at December 31, 2017. We experienced a $3.8 million increase in criticized and classified commercial business loans to $13.4 million at December 31, 2018 as compared to $9.6 million at December 31, 2017. Commercial business loan delinquencies decreased $684,000 to $1.4 million at December 31, 2018 from $2.1 million at December 31, 2017. Net charge-offs were $2.0 million for the year ended December 31, 2018 compared to $250,000 for the year ended December 31, 2017. We continue to charge-off any cash flow or collateral deficiency for non-performing loans once a loan is 90 days past due. We believe the reserve was appropriate given the inherent credit risk of commercial business loans.

~~Home Equity Loans and Advances.~~ The allowance for the home equity loan portfolio decreased to $2.5 million, or 0.6% of consumer loans, at December 31, 2018 compared to $4.6 million, or 1.0% of consumer loans, at December 31, 2017. Home equity delinquencies increased $608,000 to $2.6 million at December 31, 2018 from $2.0 million at December 31, 2017. Net charge-offs were $169,000 for the year ending December 31, 2018 compared to $1.1 million for the year ending December 31, 2017. As discussed previously, management elected to sell select home equity loans during 2018 and 2017 due to the slow foreclosure and eviction process in the State of New Jersey. We believe the increase in the consumer reserve was appropriate based upon the increase in net charge-offs year over year and a change in management of the consumer loan department.

~~The following table sets forth an analysis of the activity in the allowance for loan losses for the periods indicated:~~

At or For the Years Ended December 31, At or For the Years Ended September 30,
2018 2017 2017 2016 2015 2014
(Dollars in thousands)
Allowance at beginning of period $ 58,178
$ 51,849
$ 51,867
$ 56,948
$ 57,904
$ 61,292

Provision for loan losses 6,677
9,826
6,426
417
5,099
8,741
Charge-offs:
Real estate loans:
One-to-four family (590 ) (1,412 ) (1,402 ) (3,496 ) (4,280 ) (10,614 )
Multifamily and commercial (129 ) (1,082 ) (1,080 ) (879 ) (310 ) (174 )
Construction —
—
—
(321 ) (334 ) (1,295 )
Total real estate loans (719 ) (2,494 ) (2,482 ) (4,696 ) (4,924 ) (12,083 )

Commercial business loans (2,199 ) (586 ) (606 ) (458 ) (1,246 ) (366 )

Consumer loans:
Home equity loans and advances (291 ) (1,144 ) (1,140 ) (1,053 ) (2,777 ) (912 )
Other consumer loans (11 ) (19 ) (16 ) (12 ) (1 ) (14 )
Total consumer loans (302 ) (1,163 ) (1,156 ) (1,065 ) (2,778 ) (926 )
Total charge-offs (3,220 ) (4,243 ) (4,244 ) (6,219 ) (8,948 ) (13,375 )

Recoveries:
Real estate loans:
One-to-four family 334
274
268
158
557
780
Multifamily and commercial 2
75
75
23
55
55
Construction 3
—
—
76
1,222
94
Total real estate loans 339
349
343
257
1,834
929

Commercial business loans 240
336
182
408
1,020
199

Consumer loans:
Home equity loans and advances 122
59
59
55
36
118
Other consumer loans 6
2
—
1
3
—
Total consumer loans 128
61
59
56
39
118
Total recoveries 707
746
584
721
2,893
1,246
Net charge-offs (2,513 ) (3,497 ) (3,660 ) (5,498 ) (6,055 ) (12,129 )
Allowance at end of period: $ 62,342
$ 58,178
$ 54,633
$ 51,867
$ 56,948
$ 57,904

Total loans outstanding $ 4,962,289
$ 4,446,015
$ 4,353,121
$ 3,977,634
$ 3,816,389
$ 3,544,536
Average loans outstanding $ 4,711,915
$ 4,312,887
$ 4,236,825
$ 3,888,992
$ 3,715,533
$ 3,404,031
Allowance to non-performing loans 2,235.28 % 891.62 % 854.31 % 424.44 % 268.70 % 110.84 %
Allowance to total gross loans at end of period 1.26 % 1.31 % 1.26 % 1.30 % 1.49 % 1.63 %
Net charge-offs to average loans outstanding during the period 0.05 % 0.08 % 0.09 % 0.14 % 0.16 % 0.36 %

~~Interest Rate Risk Management~~

Interest rate risk is defined as the exposure to current and future earnings and capital that arises from adverse movements in interest rates. Depending on a bank’s asset/liability structure, adverse movements in interest rates could be either rising or falling interest rates. For example, a bank with predominantly long-term fixed-rate assets and short-term liabilities could have an adverse earnings exposure to a rising rate environment. Conversely, a short-term or variable-rate asset base funded by longer-term liabilities could be negatively affected by falling rates. This is referred to as re-pricing or maturity mismatch risk.

Interest rate risk also arises from changes in the slope of the yield curve (yield curve risk), from imperfect correlations in the adjustment of rates earned and paid on different instruments with otherwise similar re-pricing characteristics (basis risk), and from interest rate related options embedded in our assets and liabilities (option risk).

Our objective is to manage our interest rate risk by determining whether a given movement in interest rates affects our net interest income and the market value of our portfolio equity in a positive or negative way and to execute strategies to maintain interest rate risk within established limits. The results at December 31, 2018 indicate a level of risk within the parameters of our model. Our management believes that the December 31, 2018 results indicate a profile that reflects interest rate risk exposures in both rising and declining rate environments for both net interest income and economic value.

~~Model Simulation Analysis.~~ We view interest rate risk from two different perspectives. The traditional accounting perspective, which defines and measures interest rate risk as the change in net interest income and earnings caused by a change in interest rates, provides the best view of short-term interest rate risk exposure. We also view interest rate risk from an economic perspective, which defines and measures interest rate risk as the change in the market value of portfolio equity caused by changes in the values of assets and liabilities, which fluctuate due to changes in interest rates. The market value of portfolio equity, also referred to as the economic value of equity, is defined as the present value of future cash flows from existing assets, minus the present value of future cash flows from existing liabilities.

These two perspectives give rise to income simulation and economic value simulation, each of which presents a unique picture of our risk of any movement in interest rates. Income simulation identifies the timing and magnitude of changes in income resulting from changes in prevailing interest rates over a short-term time horizon (usually one or two years). Economic value simulation reflects the interest rate sensitivity of assets and liabilities in a more comprehensive fashion, reflecting all future time periods. It can identify the quantity of interest rate risk as a function of the changes in the economic values of assets and liabilities, and the corresponding change in the economic value of equity of Columbia Bank. Both types of simulation assist in identifying, measuring, monitoring and controlling interest rate risk and are employed by management to ensure that variations in interest rate risk exposure will be maintained within policy guidelines.

We produce these simulation reports and review them with our management Asset / Liability Committee and Board Risk Committee on at least a quarterly basis. The simulation reports compare baseline (no interest rate change) to the results of an interest rate shock, to illustrate the specific impact of the interest rate scenario tested on income and equity. The model, which incorporates all asset and liability rate information, simulates the effect of various interest rate movements on income and equity value. The reports identify and measure our interest rate risk exposure present in our current asset/liability structure. Management considers both a static (current position) and dynamic (forecast changes in volume) analysis as well as non-parallel and gradual changes in interest rates and the yield curve in assessing interest rate exposures.

If the results produce quantifiable interest rate risk exposure beyond our limits, then the testing will have served as a monitoring mechanism to allow us to initiate asset/liability strategies designed to reduce and therefore mitigate interest rate risk.

The table below sets forth an approximation of our interest rate risk exposure. The simulation uses projected repricing of assets and liabilities at December 31, 2018. The income simulation analysis presented represents a one year impact of the interest scenario assuming a static balance sheet. Various assumptions are made regarding the prepayment speed and optionality of loans, investment securities and deposits, which are based on analysis and market information. The assumptions regarding optionality, such as prepayments of loans and the effective lives and repricing of non-maturity deposit products, are documented periodically through evaluation of current market conditions and historical correlations to our specific asset and liability products under varying interest rate scenarios.

Because the prospective effects of hypothetical interest rate changes are based on a number of assumptions, these computations should not be relied upon as indicative of actual results. While we believe such assumptions to be reasonable, assumed prepayment rates may not approximate actual future prepayment activity on mortgage-backed securities or agency issued collateralized obligations (secured by one- to four-family loans and multifamily loans). Further, the computation does not reflect any actions that management may undertake in response to changes in interest rates and assumes a constant asset base. Management periodically reviews the rate assumptions based on existing and projected economic conditions and consults with industry experts to validate our model and simulation results.

The table below sets forth, as of December 31, 2018, Columbia Bank’s net portfolio value, the estimated changes in our net portfolio value and net interest income that would result from the designated instantaneous parallel changes in market interest rates. This data is for Columbia Bank and its subsidiaries only and does not include any assets of Columbia Financial, Inc.

Twelve Month Net Interest Income Net Portfolio Value
Change in Interest Rates (Basis Points) Amount Dollar change Percent of change Estimated NPV Present value ratio Percent change
(Dollars in thousands)

+200 $ 159,254
$ (168 ) (0.11 )% $ 866,359
14.10 % (17.2 )%
+100 160,150
728
0.46
964,477
15.16
(7.8 )
Base 159,422
—
—
1,046,450
15.91
—
-100 158,835
(587 ) (0.37 ) 1,087,060
16.05
3.9

As of December 31, 2018, based on the scenarios above, net interest income would increase by approximately 0.46% if rates were to rise 100 basis points, but would decrease by 0.11% if rates were to rise 200 basis points over a one-year time horizon. One-year net interest income would decrease by approximately 0.37% in a declining interest rate environment over the same period.

Economic value at risk would be negatively impacted by any rise in interest rates. We have established an interest rate floor of zero percent for measuring interest rate risk. The results reflect the relatively long terms of a portion of our assets which is captured by the economic value at risk but has less impact on the one year net interest income sensitivity.

Overall, our December 31, 2018 results indicate that we are adequately positioned with an acceptable net interest income and economic value at risk in all scenarios and that all interest rate risk results continue to be within our policy guidelines.

~~Liquidity Management~~

Liquidity risk is the risk of being unable to meet future financial obligations as they come due at a reasonable funding cost. We mitigate this risk by attempting to structure our balance sheet prudently and by maintaining diverse borrowing resources to fund potential cash needs. For example, we structure our balance sheet so that we fund less liquid assets, such as loans, with stable funding sources, such as retail deposits, long-term debt, wholesale deposits, and capital. We assess liquidity needs arising from asset growth, maturing obligations, and deposit withdrawals, taking into account operations in both the normal course of business and times of unusual events. In addition, we consider our off-balance sheet arrangements and commitments that may impact liquidity in certain business environments.

Our Asset and Liability Committee measures liquidity risks, sets policies to manage these risks, and reviews adherence to those policies at its quarterly meetings. For example, we manage the use of short-term unsecured borrowings as well as total wholesale funding through policies established and reviewed by our Asset and Liability Committee. In addition, the risk committee of our board of directors reviews liquidity limits and reviews current and forecasted liquidity positions at each of its regularly scheduled meetings.

We have contingency funding plans that assess liquidity needs that may arise from certain stress events such as rapid asset growth or financial market disruptions. Our contingency plans also provide for continuous monitoring of net borrowed funds and dependence and available sources of contingent liquidity. These sources of contingent liquidity include cash and cash equivalents, capacity to borrow at the Federal Reserve discount window and through the Federal Home Loan Bank system, fed funds purchased from other banks and the ability to sell, pledge or borrow against unencumbered securities in our securities portfolio. As of December 31, 2018, the potential liquidity from these sources is an amount we believe currently exceeds any contingent liquidity need.

~~Uses of Funds.~~Our primary uses of funds include the extension of loans and credit, the purchase of securities, working capital, and debt and capital management. In addition, contingent uses of funds may arise from events such as financial market disruptions.

We regularly adjust our investments in liquid assets based upon our assessment of: (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest-earning deposits and securities, (4) repayment of borrowings, and (5) the objectives of our asset/liability management program. Excess liquid assets are generally invested in fed funds.

~~Sources of Funds.~~Our most liquid assets are cash and cash equivalents. The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. At December 31, 2018, total cash and cash equivalents totaled $42.2 million. Securities classified as available for sale, which provide additional sources of liquidity, totaled $1.0 billion at December 31, 2018. At December 31, 2018, we had $1.2 billion in Federal Home Loan Bank advances outstanding. In addition, if

Columbia Bank requires funds beyond its ability to generate them internally, it can borrow funds under an overnight advance program up to Columbia Bank’s maximum borrowing capacity based on its ability to collateralize such borrowings.

Our primary sources of funds include a large, stable deposit base. Core deposits (consisting of demand, savings and money market accounts), primarily generated from our retail branch network, are our largest and most cost-effective source of funding. Core deposits totaled $2.7 billion at December 31, 2018, representing a decrease of $145.9 million, from $2.9 billion at December 31, 2017. The decrease in core deposits was primarily driven by a $151.0 million decrease in interest-bearing transaction accounts, mostly comprised of a $109.5 million decreasein municipal deposits. We also maintain access to a diversified base of wholesale funding sources. These uncommitted sources include federal funds purchased from other banks, securities sold under agreements to repurchase, and Federal Home Loan Bank advances. Aggregate wholesale funding totaled $1.2 billion at December 31, 2018, compared to $929.1 million as of December 31, 2017. In addition, at December 31, 2018, we had availability to borrow additional funds, subject to our ability to collateralize such borrowings from the Federal Home Loan Bank of New York and the Federal Reserve Bank of New York.

A significant use of our liquidity is the funding of loan originations. At December 31, 2018, Columbia Bank had $195.2 million in loan commitments outstanding, which primarily consisted of commitments to fund loans of $29.6 million, $73.2 million, and $71.1 million, in one-to-four family real estate, multifamily and commercial real estate and construction loans respectively. There was also $714.6 million in unused commercial business and consumer lines of credit, and $7.0 million in commercial letters of credit. Another significant use of Columbia Bank’s liquidity is the funding of deposit withdrawals. Certificates of deposit due within one year of December 31, 2018 totaled $1.1 billion, or 65.1% of total certificates of deposit. The large percentage of certificates of deposit that mature within one year reflects customers’ hesitancy to invest their funds for long periods. Management believes, however, based on past experience that a significant portion of our certificates of deposit will be renewed. If these maturing deposits do not remain with us, we will be required to seek other sources of funds, including other certificates of deposit and borrowings. Depending on market conditions, we may be required to pay higher rates on such deposits and borrowings than we currently pay on the certificates of deposit due on or before December 31, 2019. We have the ability to attract and retain deposits by adjusting the interest rates offered.

~~The following table presents certain of our contractual obligations at December 31, 2018:~~

Payments due by period
Total One year or less Over one year to three years Over three years to five years More than five years
(In thousands)
Borrowed funds $ 1,189,180
$ 761,900
$ 384,055
$ 43,225
$ —
Commitments to fund loans 195,229
195,229
—
—
—
Unused lines of credit 714,610
436,868
55,951
46,975
174,816
Standby letters of credit 7,005
5,018
—
—
1,987
Operating lease obligations 21,115
3,596
6,799
5,511
5,209
Total $ 2,127,139
$ 1,402,611
$ 446,805
$ 95,711
$ 182,012

Our primary investing activities are the origination of loans and the purchase of securities. Our primary financing activities consist of activity in deposit accounts and borrowings. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by us, local competitors and other factors. We generally manage the pricing of our deposits to be competitive. Occasionally, we offer promotional rates on certain deposit products to attract deposits.

Columbia Financial is a separate legal entity from Columbia Bank and must provide for its own liquidity in addition to its operating expenses. Columbia Financial’s primary source of income is dividends received from Columbia Bank. The amount of dividends that Columbia Bank may declare and pay to Columbia Financial is generally restricted under federal regulations to the retained earnings of Columbia Bank. At December 31, 2018, on a stand-alone basis, Columbia Financial had liquid assets of $153.8 million.

~~Capital Management.~~ We are subject to various regulatory capital requirements administered by our federal banking regulators, including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. At December 31, 2018, we exceeded all of our regulatory capital requirements. We are considered “well capitalized” under regulatory guidelines. See ~~"Item 1: Business - Regulation and Supervision - Federal Banking Regulations - Capital Requirements"~~ ~~and note 10 in the notes to the consolidated financial statements included in this report.~~

~~Off-Balance Sheet Arrangements.~~ In the normal course of operations, we engage in a variety of financial transactions that, in accordance with generally accepted accounting principles, are not recorded in our consolidated financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments and lines of credit. For information about our loan commitments, see note 13 to the consolidated financial statements included in this report.

For the years ended December 31, 2018 and 2017, we did not engage in any off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.

~~Derivative Financial Instruments.~~ Columbia Bank executes interest rate swaps with third parties in order to hedge the interest expense of short-term Federal Home Loan Bank advances. Those interest rate swaps are simultaneous with entering into the short-term borrowing with the Federal Home Loan Bank. These derivatives are designated as cash flow hedges and are not speculative. As these interest rate swaps meet the hedge accounting requirements, the effective portion of changes in the fair value are recognized in accumulated other comprehensive income. As of December 31, 2018, Columbia Bank had twenty-four interest rate swaps with an aggregate notional amount of $320.0 million.

Columbia Bank presently offers interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that Columbia Bank executes with a third party, such that Columbia Bank would minimize its net risk exposure resulting from such transactions. These derivatives are not designated as hedges and are not speculative. Rather, these derivatives result from a service Columbia Bank offers to certain customers. As the interest rate swaps would not meet the hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting third party swap contracts are recognized directly in earnings. At December 31, 2018, we had interest rate swaps in place with three commercial banking customers hedged by offsetting interest rate swaps with third parties at a notional amount of $36.6 million.

Columbia Bank offers currency forward contracts to certain commercial banking customers to facilitate international trade. Those forward contracts are simultaneously hedged by offsetting forward contracts that Columbia Bank would execute with a third party, such that Columbia Bank would minimize its net risk exposure resulting from such transactions. These derivatives are not designated as hedges and are not speculative. Rather, these derivatives result from a service Columbia Bank offers to certain commercial customers. As the currency forward contract does not meet the hedge accounting requirements, changes in the fair value of both the customer forward contract and the offsetting forward contract is recognized directly in earnings. At December 31, 2018 Columbia Bank had no currency forward contracts in place.

~~Recent Accounting Pronouncements~~

~~For a discussion of the impact of recent accounting pronouncements, see note 2 in the notes to the consolidated financial statements included in this report.~~

~~Effect of Inflation and Changing Prices~~

The consolidated financial statements and related consolidated financial data presented in this report have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies, virtually all the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates generally have a more significant impact on a financial institution’s performance than do general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services because such prices are affected by inflation to a larger extent than interest rates.

~~Item 7A.~~ ~~Quantitative and Qualitative Disclosures About Market Risk~~

~~The information required by this item is incorporated herein by reference to the section captioned~~ ~~“Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations.”~~

~~Item 8.~~ ~~Financial Statements and Supplementary Data~~

~~The information required by this item is included beginning on page 76 of this report.~~

PART IV


Item 15.
~~The following are included in this item:~~
~~(A)~~	~~Report of Independent Registered Public Accounting Firm~~
~~(B)~~	~~Consolidated~~Exhibits and Financial ~~Statements:~~
	~~(1)~~	~~Consolidated Statements of Financial Condition as of December 31, 2018 and 2017~~
	~~(2)~~	~~Consolidated~~ Statement ~~of Income for the years ended December 31, 2018, September 30, 2017 and 2016 and the three months ended December 31, 2017~~
	~~(3)~~	~~Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2018, September 30, 2017 and 2016 and the three months ended December 31, 2017~~
	~~(4)~~	~~Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2018, September 30, 2017 and 2016 and the three months ended December 31, 2017~~
	~~(5)~~	~~Consolidated Statements of Cash Flows for the years ended December 31, 2018, September 30, 2017 and 2016 and the three months ended December 31, 2017~~
	~~(6)~~	~~Notes to the Consolidated Financial Statements~~
~~(C)~~	~~Columbia Financial, Inc. Condensed Financial Statements~~
	~~(1)~~	~~Statements of Financial Condition as of December 31, 2018 and 2017~~
	~~(2)~~	~~Statements of Income and Comprehensive Income (Loss) for the years ended December 31, 2018, September 30, 2017 and 2016 and the three months ended December 31, 2017~~
	~~(3)~~	~~Statements of Cash Flows for the years ended December 31, 2018, September 30, 2017 and 2016 and the three months ended December 31, 2017~~Schedules

~~Item 9.~~ ~~Change in and Disagreements With Accountants on Accounting and Financial Disclosure~~

~~None.~~

~~Item 9A.~~ ~~Controls and Procedures~~

~~Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures~~

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Exchange Act) as of December 31, 2018. In designing and evaluating the Company’s disclosure controls and procedures, the Company and its management recognize that any controls and procedures, no matter how well-designed and operated, can provide only a reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating and implementing possible controls and procedures. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported as of the end of the period covered by this annual report.

~~Changes in Internal Control over Financial Reporting~~

There were no changes in our internal control over financial reporting that occurred during the fourth quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~Management’s Report on Internal Control Over Financial Reporting~~

This annual report does not include management’s report regarding internal control over financial reporting due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.

~~Item 9B.~~ ~~Other Information~~

~~None.~~

~~PART III~~

~~Item 10.~~ ~~Directors, Executive Officers and Corporate Governance~~

~~Board of Directors~~

~~For information relating to the directors of the Company, the section captioned~~ ~~“Proposal 1-Election of Directors”~~ ~~in the Company’s Proxy Statement for the 2019 Annual Meeting of Stockholders is incorporated herein by reference.~~

~~Executive Officers~~

~~For information relating to officers of the Company, see Part I, Item 1,~~ ~~“Business-Executive Officers”~~ ~~to this Annual Report on Form 10-K.~~

~~Compliance with Section 16(a) of the Securities Exchange Act of 1934~~

~~For information regarding compliance with Section 16(a) of the Securities Exchange Act of 1934, the cover page to this Annual Report on Form 10-K and the section captioned~~ ~~“Stock Ownership-Section 16(a) Beneficial Ownership Reporting Compliance”~~ ~~in the Company’s Proxy Statement for the 2019 Annual Meeting of Stockholders are incorporated herein by reference.~~

~~Disclosure of Code of Ethics~~

~~For information concerning the Company’s Code of Ethics, the information contained under the section captioned~~ ~~“Corporate Governance-Code of Ethics and Business Conduct”~~ in the Company’s Proxy Statement for the 2019 Annual Meeting of Stockholders is incorporated by reference. A copy of the Code of Ethics and Business Conduct is available to stockholders on the Company’s website at www.columbiabankonline.com.

~~Corporate Governance~~

~~For information regarding the Audit Committee and its composition and the audit committee financial expert, the section captioned~~ ~~“Corporate Governance-Meetings and Committees of the Board of Directors-Audit Committee”~~ ~~in the Company’s Proxy Statement for the 2019 Annual Meeting of Stockholders is incorporated herein by reference.~~

~~Item 11.~~ ~~Executive Compensation~~

~~Executive Compensation~~

~~For information regarding executive compensation, the sections captioned~~ ~~“Executive Compensation”~~ ~~and~~ ~~“Proposal 1-Election of Directors-Director Compensation”~~ ~~in the Company’s Proxy Statement for the 2019 Annual Meeting of Stockholders are incorporated herein by reference.~~

~~Item 12.~~ ~~Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters~~

~~(a)Security Ownership of Certain Beneficial Owners~~

~~Information required by this item is incorporated herein by reference to the section captioned~~ ~~“Stock Ownership”~~ ~~in the Company’s Proxy Statement for the 2019 Annual Meeting of Stockholders.~~

~~(b)Security Ownership of Management~~

~~Information required by this item is incorporated herein by reference to the section captioned~~ ~~“Stock Ownership”~~ ~~in in the Company’s Proxy Statement for the 2019 Annual Meeting of Stockholders.~~

~~(c)Changes in Control~~

Management of the Company knows of no arrangements, including any pledge by any person or securities of the Company, the operation of which may, at a subsequent date, result in a change in control of the registrant.

~~(d)Equity Compensation Plan Information~~

The following table sets forth information about the Company's common stock that may be issued upon the exercise of stock options, warrants and rights under all of the Company’s equity compensation plans as of December 31, 2018.


(1)
~~Plan~~	~~Number of securities to be issued upon exercise of outstanding options~~	~~Weighted-average exercise price of outstanding options~~		~~Number of securities remaining available for issuance under equity compensation plans (excluding securities reflected in column~~
~~Equity compensation plans approved by stockholders~~	—	$	—	—
~~Equity compensation plans not yet approved by stockholders~~	—	—		—
~~Total~~	—	$	—	—

~~Item 13.~~ ~~Certain Relationships and Related Transactions and Director Independence~~

~~Certain Relationships and Related Transactions~~

~~For information regarding certain relationships and related transactions, the section captioned “Other Information-Transactions with Related Persons”~~ ~~in the Company’s Proxy Statement for the 2019 Annual Meeting of Stockholders is incorporated herein by reference.~~

~~Corporate Governance~~

~~For information regarding director independence, the section captioned~~ ~~“Proposal 1-Election of Directors”~~ ~~in the Company’s Proxy Statement for the 2019 Annual Meeting of Stockholders is incorporated herein by reference.~~

~~Item 14.~~ ~~Principal Accountant Fees and Services~~

~~For information regarding the principal accountant fees and expenses, the section captioned~~ ~~“Items to Be Voted on By Stockholders-Proposal 3-Ratification of Independent Registered Public Accounting Firm”~~ ~~in the Company’s Proxy Statement for the 2019 Annual Meeting of Stockholders is incorporated herein by reference.~~

~~PART IV~~

~~Item 15.~~ ~~Exhibits and Financial Statement Schedules~~



~~(1)~~	The financial statements required in response to this item are incorporated herein by reference from Item 8 of this Annual Report on Form ~~10-K.~~ 10-K, initially filed on March 1, 2022.

(2)

~~(2)~~

All financial statement schedules are omitted because they are not required or applicable, or the required information is shown in the consolidated financial statements or the notes thereto.

(3)	Exhibits

~~(3)~~	~~Exhibits~~

	No.	Description	Location

	3.1	Second Amended and Restated Certificate of Incorporation of Columbia Financial, Inc.	Incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 (File No. 333-221912), initially filed on December 5, 2017

	3.2	Amended Bylaws of Columbia Financial, Inc.	Incorporated herein by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 (File No. 333-221912), initially filed on December 5, 2017

	4.0	Specimen Stock Certificate of Columbia Financial, Inc.	Incorporated herein by reference to Exhibit 4.0 to the Company’s Registration Statement on Form S-1 (File No. 333-221912), initially filed on December 5, 2017

	~~10.1~~4.1	Description of Columbia Financial, Inc.’s Common Stock Registered Under Section 12 of the Securities Exchange Act of 1934	Incorporated herein by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2019 (File No. 001-38456), filed on March 2, 2020

	10.1	Employment Agreement between Columbia Financial, Inc., Columbia Bank and Thomas J. Kemly+	Incorporated herein by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (File No. 333-221912), initially filed on December 5, 2017

	10.2	Employment Agreement between Columbia Financial, Inc., Columbia Bank and Dennis E. Gibney+	Incorporated herein by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-1 (File No. 333-221912), initially filed on December 5, 2017

	10.3	Employment Agreement between Columbia Financial, Inc., Columbia Bank and Thomas Allen, Jr.+	Incorporated herein by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-1 (File No. 333-221912), initially filed on December 5, 2017

	10.4	Employment Agreement between Columbia Financial, Inc., Columbia Bank and Geri M. Kelly+	Incorporated herein by reference to Exhibit 10.4 to the Company’s Registration Statement on Form S-1 (File No. 333-221912), initially filed on December 5, 2017

10.5
~~10.5~~	Employment Agreement between Columbia Financial, Inc., Columbia Bank and John Klimowich+	Incorporated herein by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1 (File No. 333-221912), initially filed on December 5, 2017



10.6	Employment Agreement between Columbia Financial, Inc., Columbia Bank and Mark S. Krukar+	Incorporated herein by reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-1 (File No. 333-221912), initially filed on December 5, 2017

10.7	Employment Agreement between Columbia Financial, Inc., Columbia Bank and Brian W. Murphy+	Incorporated herein by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-1 (File No. 333-221912), initially filed on December 5, 2017

10.8	Employment Agreement between Columbia Financial, Inc., Columbia Bank and Allyson Schlesinger+	~~Filed herewith~~Incorporated herein by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K (File No. 001-38456), for the Year Ended December 31, 2018, filed on March 29, 2019

10.9	Employment Agreement between Columbia Financial, Inc., Columbia Bank and ~~Joseph F. Dempsey+~~ Damodaram Bashyam+	~~Filed herewith~~Incorporated herein by reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2019 (File No. 001-38456), filed on March 2, 2020

10.10	Employment Agreement between Columbia Financial, Inc., Columbia Bank and Oliver Lewis+	Incorporated herein by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K (File No. 001-38456), for the Year Ended December 31, 2020, filed on March 1, 2021

10.11	Employment Agreement between Columbia Financial, Inc., Columbia Bank and W. Justin Jennings+	Incorporated herein by reference to Exhibit 10.11 to this Annual Report on Form 10-K (File No. 001-38456), for the Year Ended December 31, 2021, initially filed on March 1, 2022

10.12	Form of Columbia Bank Supplemental Executive Retirement Plan+	Incorporated herein by reference to Exhibit 10.9 to the Company’s Registration Statement on Form S-1 (File No. 333-221912), initially filed on December 5, 2017

~~10.11~~10.13	Columbia Bank Stock-Based Deferral Plan+	Incorporated herein by reference to Exhibit 10.10 to the Company’s Registration Statement on Form S-1 (File No. 333-221912), initially filed on December 5, 2017

~~10.12~~10.14	Columbia Bank Director Deferred Compensation Plan, as amended+	Incorporated herein by reference to Exhibit 10.11 to the Company’s Registration Statement on Form S-1 (File No. 333-221912), initially filed on December 5, 2017

~~10.13~~10.15	Columbia Bank Retirement Income Maintenance Plan+	Incorporated herein by reference to Exhibit 10.12 to the Company’s Registration Statement on Form S-1 (File No. 333-221912), initially filed on December 5, 2017

~~10.14~~10.16	Columbia Bank Non-Qualified Savings Income Maintenance Plan, as amended+	Incorporated herein by reference to Exhibit 10.13 to the Company’s Registration Statement on Form S-1 (File No. 333-221912), initially filed on December 5, 2017

10.17	Columbia Financial, Inc. 2019 Equity Incentive Plan	Incorporated by reference to Annex 1 to the Company's Definitive Proxy Materials on Schedule 14A (File No. 001-38456), filed on April 22, 2019

21.0	Subsidiaries	~~Filed herewith~~Incorporated herein by reference to Exhibit 21.0 to this Annual Report on Form 10-K (File No. 001-38456), initially filed on March 1, 2022

23.1	Consent of KPMG LLP	~~Filed herewith~~Incorporated herein by reference to Exhibit 23.1 to this Annual Report on Form 10-K (File No. 001-38456), initially filed on March 1, 2022

31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer	~~Filed herewith~~Incorporated herein by reference to Exhibit 31.1 to this Annual Report on Form 10-K (File No. 001-38456), for the Year Ended December 31, 2021, initially filed on March 1, 2022

31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer	~~Filed herewith~~Incorporated herein by reference to Exhibit 31.2 to this Annual Report on Form 10-K (File No. 001-38456), for the Year Ended December 31, 2021, initially filed on March 1, 2022

3231.3	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer	Filed herewith

31.4	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer	Filed herewith

32	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer	~~Filed herewith~~Incorporated herein by reference to Exhibit 32 to this Annual Report on Form 10-K (File No. 001-38456), for the Year Ended December 31, 2021, initially filed on March 1, 2022



101.0	The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2020, formatted in inline XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statement of Changes in Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to the Consolidated Financial ~~Statements~~ Statements.	~~Filed herewith~~	Previously filed in this Annual Report on Form 10-K (File No. 001-38456), for the Year Ended December 31, 2021, initially filed on March 1, 2022

~~+ Management contract or compensatory plan, contract or arrangement.~~ 104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

~~Item 16. Form 10-K Summary~~

~~Not applicable.~~

~~Report of Independent Registered Public Accounting Firm~~

~~To the Stockholders and Board of Directors~~

~~Columbia Financial, Inc.:~~

~~Opinion on the Consolidated Financial Statements~~

We have audited the accompanying consolidated statements of financial condition of Columbia Financial, Inc. and subsidiaries (the Company) as of December 31, 2018 and 2017, the related consolidated statements of income, comprehensive income (loss), changes in stockholders’ equity, and cash flows for the year ended December 31, 2018, the three-months ended December 31, 2017, and the years ended September 30, 2017 and 2016, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the year ended December 31, 2018, the three months ended December 31, 2017 and the years ended September 30, 2017 and 2016 in conformity with U.S. generally accepted accounting principles.

~~Basis for Opinion~~

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

~~We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we~~

+ Management contract or compensatory plan, ~~and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error~~contract or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

~~/s/ KPMG LLP~~

~~We have not been able to determine the specific year that we began serving as the Company’s auditor; however, we are aware that we have served as the Company’s auditor since at least 1972.~~

~~Short Hills, New Jersey~~

~~March 29, 2019~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Consolidated Statements of Financial Condition~~

~~(In thousands, except share and per share data)~~

December 31,
2018 2017
Assets
Cash and due from banks $ 42,065
$ 65,334
Short-term investments 136
164
Total cash and cash equivalents 42,201
65,498

Securities available for sale, at fair value 1,034,758
710,570
Securities held to maturity, at amortized cost (fair value of $254,841, and $236,125 at December 31, 2018 and 2017, respectively) 262,143
239,618
Federal Home Loan Bank stock 58,938
44,664
Loans held-for-sale, at fair value 8,081
—

Loans receivable 4,979,182
4,458,648
Less: allowance for loan losses 62,342
58,178
Loans receivable, net 4,916,840
4,400,470

Accrued interest receivable 18,894
15,915
Real estate owned 92
959
Office properties and equipment, net 52,050
42,620
Bank-owned life insurance 184,488
150,521
Goodwill and intangible assets 6,085
5,997
Other assets 107,048
89,668
Total assets $ 6,691,618
$ 5,766,500

Liabilities and Stockholders' Equity
Liabilities:
Deposits $ 4,413,873
$ 4,263,315
Borrowings 1,189,180
929,057
Advance payments by borrowers for taxes and insurance 32,030
25,563
Accrued expenses and other liabilities 84,475
76,495
Total liabilities 5,719,558
5,294,430

Stockholders' equity:

Preferred stock, $0.01 par value. 10,000,000 shares authorized; none issued and outstanding at December 31, 2018 and 2017 —
—
Common stock, $0.01 par value. 500,000,000 shares authorized; 115,889,175 shares issued and outstanding at December 31, 2018 and none at December 31, 2017 1,159
—
Additional paid-in capital 527,037
—
Retained earnings 560,216
537,480
Accumulated other comprehensive loss (71,897 ) (65,410 )
Common stock held by the Employee Stock Ownership Plan (43,835 ) —
Stock held by Rabbi Trust (1,259 ) —
Deferred compensation obligations 639
—
Total stockholders' equity 972,060
472,070
Total liabilities and stockholders' equity $ 6,691,618
$ 5,766,500

See notes to consolidated financial statements.

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Consolidated Statements of Income~~

~~(In thousands, except share and per share data)~~

Year Ended December 31, Three Months Ended December 31, Years Ended September 30,
2018 2017 2017 2016
Interest income:
Loans receivable $ 189,869
$ 43,043
$ 164,849
$ 152,110
Securities available for sale 25,338
5,074
17,163
15,145
Securities held to maturity 7,147
382
68
—
Federal funds and interest earning deposits 1,175
103
308
205
Federal Home Loan Bank stock dividends 2,761
567
1,838
1,517
Total interest income 226,290
49,169
184,226
168,977
Interest expense:
Deposits 39,523
7,631
25,581
24,062
Borrowings 22,733
4,609
18,865
19,900
Total interest expense 62,256
12,240
44,446
43,962

Net interest income 164,034
36,929
139,780
125,015

Provision for loan losses 6,677
3,400
6,426
417

Net interest income after provision for loan losses 157,357
33,529
133,354
124,598

Non-interest income:
Demand deposit account fees 3,987
960
3,669
3,271
Bank-owned life insurance 5,208
1,089
4,936
4,370
Title insurance fees 4,297
1,017
4,163
4,198
Loan fees and service charges 2,519
565
1,976
1,971
Gain (loss) on securities transactions, net 116
(60 ) (1,689 ) 355
Gain (loss) on sale of loans 618
—
(380 ) 655
(Loss) gain on sale of real estate owned (56 ) —
233
(441 )
Other non-interest income 4,999
1,162
4,264
4,548
Total non-interest income 21,688
4,733
17,172
18,927

Non-interest expense:
Compensation and employee benefits 69,907
15,624
62,993
58,115
Occupancy 14,547
3,382
13,315
12,798
Federal deposit insurance premiums 1,893
414
1,652
2,381
Advertising 4,137
1,408
4,078
2,938
Professional fees 1,432
398
1,354
1,061
Data processing 2,600
595
2,244
2,143
Charitable contribution to foundation 34,767
—
3,603
347
Other non-interest expense 16,103
3,780
14,207
13,986
Total non-interest expense 145,386
25,601
103,446
93,769

Income before income tax expense 33,659
12,661
47,080
49,756

Income tax expense 10,923
8,983
16,008
16,803

Net income $ 22,736
$ 3,678
$ 31,072
$ 32,953

Basic and diluted earnings per share $ 0.20
N/A
N/A
N/A
Weighted average shares outstanding 111,395,723
N/A
N/A
N/A

See notes to consolidated financial statements.

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Consolidated Statements of Comprehensive Income (Loss)~~

~~(In thousands)~~

Year Ended December 31, Three Months Ended December 31, Years Ended September 30,

2018 2017 2017 2016

Net income $ 22,736
$ 3,678
$ 31,072
$ 32,953

Other comprehensive (loss) income, net of tax:
Unrealized (losses) gains on securities available for sale (5,778 ) (3,131 ) (11,498 ) 4,674
Accretion of unrealized gain on securities reclassified as held to maturity (13 ) (58 ) 8
—
Reclassification adjustment for gain (loss) included in net income (92 ) 47
1,689
(355 )
(5,883 ) (3,142 ) (9,801 ) 4,319

Derivatives, net of tax:

Unrealized (loss) on swap contracts (2,230 ) 162
62
—

Employee benefit plans, net of tax:
Amortization of prior service cost included in net income (491 ) (43 ) (73 ) (73 )
Reclassification adjustment of actuarial net loss included in net income 1,996
(103 ) 7,593
5,864
Change in funded status of retirement obligations 121
(5,670 ) 7,397
(21,397 )
Tax effects resulting from the adoption of ASU No. 2018-02 —
(10,434 ) —
—
1,626
(16,250 ) 14,917
(15,606 )

Total other comprehensive (loss) income (6,487 ) (19,230 ) 5,178
(11,287 )

Total comprehensive income (loss), net of tax $ 16,249
$ (15,552 ) $ 36,250
$ 21,666

See notes to consolidated financial statements.

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Consolidated Statements of Changes in Stockholders' Equity~~

~~(In thousands)~~

Common stock Additional paid-in-capital Retained earnings Accumulated other comprehensive loss, net of tax Common stock held by the employee stock ownership plan Stock held by Rabbi Trust Deferred compensation obligations Total stockholders' equity
Balance at September 30, 2015 $ —
$ —
$ 458,069
$ (40,071 ) $ —
$ —
$ —
$ 417,998
Net income —
—
32,953
—
—
—
—
32,953
Other comprehensive loss —
—
—
(11,287 ) —
—
—
(11,287 )
Balance at September 30, 2016 —
—
491,022
(51,358 ) —
—
—
439,664

Net income —
—
31,072
—
—

31,072
Other comprehensive income —
—
—
5,178
—
—
—
5,178
Balance at September 30,2017 —
—
522,094
(46,180 ) —
—
—
475,914

Net income —
—
3,678
—
—
—
—
3,678
Other comprehensive loss —
—
—
(7,522 ) —

(7,522 )
Reclassification of tax effects resulting from the adoption of ASU No. 2018-02

11,708
(11,708 ) —
—
—
—
Balance at December 31, 2017 —
—
537,480
(65,410 ) —
—
—
472,070

Net income —
—
22,736
—
—
—
—
22,736
Other comprehensive loss —
—
—
(6,487 ) —
—
—
(6,487 )
Issuance of common stock to Columbia Bank, MHC 626
—
—
—
—
—
—
626
Issuance of common stock in initial public offering 498
491,304
—
—
—
—
—
491,802
Issuance of shares to Columbia Bank Foundation 35
34,732
—
—
—
—
—
34,767
Purchase of Employee Stock Ownership Plan shares —
—
—
—
(45,428 ) —
—
(45,428 )
Employee Stock Ownership Plan shares committed to be released —
1,001
—
—
1,593
—
—
2,594
Funding of deferred compensation obligations

(1,259 ) 639
(620 )
Balance at December 31, 2018 $ 1,159
$ 527,037
$ 560,216
$ (71,897 ) $ (43,835 ) $ (1,259 )
$ 639
$ 972,060

See notes to consolidated financial statements.

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Consolidated Statements of Cash Flows~~

~~(In thousands)~~

Year Ended December 31, Three Months Ended December 31,
Years Ended September 30,
2018 2017
2017
2016
Cash flows from operating activities:
Net income $ 22,736
$ 3,678
$ 31,072
$ 32,953
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred loan fees and costs, premiums and discounts 1,965
439
1,006
745
Net amortization of premiums and discounts on securities 1,212
328
1,460
2,013
Net amortization of mortgage servicing rights (88 ) 22
105
105
Amortization of debt issuance costs 890
14
53
53
Depreciation and amortization of office properties and equipment 3,839
863
3,364
3,178
Provision for loan losses 6,677
3,400
6,426
417
(Gain) loss on securities available for sale (116 ) 60
1,689
(355 )
Proceeds from sales of loans held-for-sale —
—
40,564
42,411
Origination of loans held-for-sale —
—
(40,280 ) (23,812 )
(Gain) loss on sale of loans receivable, net (618 ) —
380
(655 )
Loss (gain) on real estate owned, net 56
—
(233 ) 441
Loss on write-down of real estate owned 55
—
—
—
(Gain) loss on disposal of office properties and equipment (5 ) —
169
38
Deferred tax (benefit) expense (5,490 ) 7,491
(1,426 ) 2,930
Increase in accrued interest receivable (2,979 ) (1,228 ) (1,531 ) (1,864 )
Increase in other assets (11,053 ) (15,557 ) (11,681 ) (269 )
Increase in accrued expenses and other liabilities 7,980
3,905
9,840
5,033
Income on bank-owned life insurance (5,208 ) (1,089 ) (4,936 ) (4,370 )
Contribution of common stock to Columbia Bank Foundation 34,767
—
—
—
Employee stock ownership plan expense 2,594
—
—
—
Increase in deferred compensation obligations under Rabbi Trust (620 ) —
—
—
Net cash provided by operating activities 56,594
2,326
36,041
58,992

Cash flows from investing activities:
Proceeds from sales of securities available for sale 11,513
92
187,376
164,203
Proceeds from paydowns / maturities / calls of securities available for sale 69,977
7,009
68,409
96,956
Proceeds from paydowns / maturities / calls of securities held to maturity 8,820
1,845
769
—
Purchases of securities available for sale (413,804 ) (163,721 ) (162,788 ) (357,477 )
Purchases of securities held to maturity (31,639 ) (108,640 ) (30,484 ) —
Proceeds from sales of loans held-for-sale 3,615
—
—
—
Proceeds from sales of loans receivable 32,039
—
62,407
28,624
Purchases of loans receivable (32,251 ) (56,095 ) (20,473 ) (21,149 )
Net increase in loans receivable (536,129 ) (41,157 ) (425,926 ) �� (196,106 )

See notes to consolidated financial statements.

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Consolidated Statements of Cash Flows (continued)~~

~~(In thousands)~~

Year Ended December 31, Three Months Ended December 31, Years Ended September 30,
2018 2017 2017 2016

Purchase of bank-owned life insurance $ (30,000 ) $ —
$ (4,500 ) $ (6,000 )
Death benefit proceeds from bank-owned life insurance 1,241
—
1,631
—
Proceeds from redemptions of Federal Home Loan Bank stock 67,035
6,476
33,193
16,560
Purchases of Federal Home Loan Bank stock (81,309 ) (15,296 ) (35,035 ) (16,138 )
Proceeds from sales of office properties and equipment 8
—
17
—
Additions to office properties and equipment (13,272 ) (2,648 ) (6,527 ) (3,665 )
Proceeds from sales of real estate owned 1,007
—
1,614
3,620
Net cash used in investing activities (943.149 ) (372,135 ) (330,317 ) (290,572 )

Cash flows from financing activities:
Net increase in deposits 150,558
139,887
300,613
250,191
Proceeds from long-term borrowings 220,980
—
168,400
10,000
Payments on long-term borrowings (210,000 ) (90,000 ) (90,000 ) (55,000 )
Net increase (decrease) in short-term borrowings 299,800
286,000
(27,400 ) 24,400
Payment for trust preferred securities (51,547 ) —
—
—
Increase (decrease) in advance payments by borrowers for taxes and insurance 6,467
(1,555 ) (2,056 ) 4,505
Issuance of common stock 492,428
—
—
—
Purchase of employee stock ownership plan shares (45,428 ) —
—
—
Net cash provided by financing activities 863,258
334,332
349,557
234,096

Net (decrease) increase in cash and cash equivalents (23,297 ) (35,477 ) 55,281
2,516

Cash and cash equivalents at beginning of period 65,498
100,975
45,694
43,178
Cash and cash equivalents at end of period $ 42,201
$ 65,498
$ 100,975
$ 45,694

Cash paid during the period for:
Interest on deposits and borrowings $ 61,987
$ 11,484
$ 44,397
$ 44,545
Income tax payments, net 21,325
1,393
27,784
8,038

Non-cash investing and financing activities:

Transfer of loans receivable to real estate owned $ 251
$ 566
$ 515
$ 2,278
Transfer of loans receivable to loans held-for-sale 11,696
—
—
—
Transfer of securities from available for sale to held to maturity —
—
103,680
—
Securitization of loans —
—
—
17,169

See notes to consolidated financial statements.

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(1) Business~~

On April 19, 2018, Columbia Financial, Inc. completed its minority stock offering, after receiving all regulatory approvals. In connection with the closing, 62,580,155 shares of its common stock was issued to Columbia Bank, MHC (the "MHC"), the mutual holding company of Columbia Financial, Inc., 3,476,675 shares to the Columbia Bank Foundation, Columbia Bank's charitable foundation, and 49,832,345 shares to depositors who subscribed for and were allocated shares in the minority stock offering, as well as the Columbia Bank Employee Stock Ownership Plan (the "ESOP"). The accounts of the MHC are not consolidated in the consolidated financial statements of the Company.

On May 22, 2018, the Board of Directors of the Company adopted a resolution to change the Company’s fiscal year end from September 30 to December 31, effective immediately as of the date of the Board resolution. In addition, on May 22, 2018, the Boards of Directors of the MHC and the Bank also adopted resolutions to change the MHC’s and the Bank’s fiscal year ends from September 30 to December 31, effective immediately as of the date of the Board resolutions.

~~(2) Summary of Significant Accounting Policies~~

~~Principles of Consolidation~~

The accompanying consolidated financial statements include the accounts of Columbia Financial, Inc., its wholly-owned subsidiary, Columbia Bank (the "Bank") and the Bank's wholly-owned subsidiaries, Columbia Investment Services, Inc., 2500 Broadway Corp. 1901 Residential Management Co. LLC, Plaza Financial Services, Inc., First Jersey Title Services, Inc., Real Estate Management Corp. LLC, 1901 Commercial Management Co. LLC, and CSB Realty Corp. (collectively, the “Company”). In consolidation, all intercompany accounts and transactions are eliminated. Certain reclassifications have been made in the consolidated financial statements to conform with current year classifications.

The Company also owns 100% of the common stock of Columbia Financial Capital Trust I (the "Trust"). The Trust was used to issue trust preferred securities. In accordance with Accounting Standards Codification ("ASC") Topic 810, ~~Consolidation~~, the Trust was classified as a variable interest entity and did not satisfy the conditions for consolidation. Accordingly, the Trust was treated as an unconsolidated subsidiary. In August 2018, the Company redeemed, in full $51.5 million of junior subordinated debt securities, which represented 100% of the assets of the Trust.

~~Basis of Financial Statement Presentation~~

The consolidated financial statements of the Company have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). In preparing the consolidated financial statements, management is required to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the reported amounts of assets and liabilities and disclosures about contingent assets and liabilities as of the dates of the consolidated statements of financial condition, and revenues and expenses for the periods then ended. Such estimates are used in connection with the determination of the adequacy of the allowance for loan losses, evaluation of goodwill for impairment, evaluation of other-than-temporary impairment on securities, evaluation of the need for valuation allowances on deferred tax assets, and determination of liabilities related to retirement and other post-retirement benefits, among others. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Such estimates and assumptions are adjusted when facts and circumstances dictate. Illiquid credit markets, volatile securities markets, and declines in the housing market and the economy generally have combined to increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods.

~~Cash and Cash Equivalents~~

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and interest-bearing deposits at other financial institutions. The Company is required by the Federal Reserve Bank System to maintain cash reserves equal to a percentage of certain deposits. At December 31, 2018 and 2017, the reserve requirement totaled $5.9 million and $4.1 million, respectively.

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(2) Summary of Significant Accounting Policies (continued)~~

~~Securities~~

Securities include investment securities classified as available for sale and held to maturity. Management determines the appropriate classification of securities at the time of purchase. If the Company does not have the intent to hold securities until maturity, these securities are classified as available for sale. The available for sale securities portfolio is carried at estimated fair value, with any unrealized holding gains or losses, net of taxes, reported as a separate component of accumulated other comprehensive income or loss in Stockholders' Equity. The fair values of these securities are based on market quotations or matrix pricing as discussed in Note 3. Management conducts a periodic review and evaluation of the securities portfolio to determine if any declines in the fair value of securities are other-than-temporary. In this evaluation, if such decline were deemed other-than temporary, management would measure the total credit-related component of the unrealized loss, and recognize that portion of the loss as a charge to current period earnings. The remaining portion of the unrealized loss would be recognized as an adjustment to accumulated other comprehensive income. The fair value of the securities portfolio is significantly affected by changes in interest rates. In general, as interest rates rise, the fair value of fixed-rate securities decreases and as interest rates fall, the fair value of fixed-rate securities increases. The Company determines if it has the intent to sell these securities or if it more likely than not that the Company would be required to sell the securities before the anticipated recovery. If either exists, the decline in value is considered other-than-temporary and would be recognized as an expense in the current period.

Premiums and discounts on securities are amortized and accreted to income over the contractual lives of the securities using the level-yield method. Dividend and interest income are recognized when earned. Realized gains and losses are recognized when securities are sold or called based on the specific identification method.

~~In the ordinary course of business, securities are pledged as collateral in conjunction with the Company’s borrowings and lines of credit.~~

~~Federal Home Loan Bank Stock~~

The Bank, as a member of the Federal Home Loan Bank of New York (the "FHLB"), is required to hold shares of capital stock of the FHLB at cost based on its activities, primarily its outstanding borrowings. The Bank carries the investment at cost, which approximates fair value.

~~Loans Held-for-Sale~~

Loans held-for-sale consist of conforming loans originated and intended for sale in the secondary market. These loans are carried at the lower of cost or estimated fair value, less costs to sell, as determined on an individual loan basis. Net unrealized losses, if any, are recognized in a valuation allowance through charges to earnings. Origination fees and costs on loans held-for-sale are deferred and recognized as a component of the gain or loss on sale. Loans held-for-sale are generally sold with loan servicing rights retained by the Bank.

~~Loans Receivable~~

Loans receivable are carried at unpaid principal balances adjusted by unamortized premiums and unearned discounts, net deferred origination fees and costs less the allowance for loan losses. The Bank defers loan origination fees and certain direct loan origination costs and accretes such amounts as an adjustment to the yield over the expected lives of the related loans using the level-yield method. Interest income on loans is accrued and credited to income as earned. Premiums and discounts on loans purchased are amortized or accreted as an adjustment to yield over the contractual lives of the related loans using methodologies which approximate the level-yield method.

A loan is considered delinquent when payment has not been received within 30 days of its contractual due date. The accrual of income on loans is discontinued when they are past due 90 days or more as to contractual obligations, or other circumstances indicate that collection is questionable. When a loan is placed on non-accrual status, any interest accrued but not received is reversed against interest income. Payments received on a non-accrual loan are either applied to the outstanding principal balance or recorded as interest income, depending on an assessment of the ability to collect the loan. A loan is returned to accrual status when all amounts due have been received and the remaining principal is deemed collectible. Loans are generally charged off after an analysis is completed which indicates that collectability of the full principal balance is in doubt.

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(2) Summary of Significant Accounting Policies (continued)~~

~~Loans Receivable (continued)~~

An impaired loan is defined as a loan for which it is probable, based on current information, that the Bank will not collect all amounts due under the contractual terms of the loan agreement. The Bank considers the population of loans in its impairment analysis to include all multifamily and commercial real estate, construction, and commercial business loans with an outstanding balance greater than $500,000 and not accruing, and loans modified in a troubled debt restructuring. The Company also considers residential real estate, and home equity loans and advances that are not accruing or modified in a troubled debt restructuring for impairment. Other loans may be included in the population of loans in its impairment analysis if management has specific information of a collateral shortfall. Loan impairment is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. Payments received on impaired loans are recognized on a cash basis.

~~Allowance for Loan Losses~~

Losses on loans are charged to the allowance for loan losses. Additions to this allowance are made by recoveries of loans previously charged off and by a provision charged to expense. The determination of the balance of the allowance for loan losses is based on an analysis of the loan portfolio, economic conditions, historical loan loss experience and other factors that warrant recognition in providing an adequate allowance. Estimates and judgments required to establish the allowance include: overall economic conditions; value of collateral; strength of guarantors; loss exposure at default; the amount and timing of future cash flows on impaired loans; and determination of loss factors to be applied to the various elements of the portfolio. All of these estimates are susceptible to significant change. Management regularly reviews the level of loss experience, current economic conditions and other factors related to the collectability of the loan portfolio. While management uses available information, future additions to the allowance may be necessary based on changes in economic conditions in the Bank's market area. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank's allowance for loan losses and they may require the Bank to recognize additions to the allowance or additional write-downs based on judgments about information available to them at the time of their examination.

~~Troubled Debt Restructuring~~

Troubled debt restructured loans are those loans where the Company has granted a concession it would not otherwise consider because of economic or legal reasons pertaining to a debtor’s financial difficulties. A concession could include a reduced interest rate below a market rate, an extension of the term of the loan, or a combination of the two methods, but generally does not result in the forgiveness of principal or accrued interest. Not all concessions granted by the Company constitute a troubled debt restructuring. Once an obligation has been restructured and designated as a troubled debt restructuring, it continues to be designed as a restructured loan until paid in full. The Company records an impairment charge equal to the difference between the present value of expected future cash flows under the restructured terms discounted at the loan’s original effective interest rate, and the loan’s carrying value. Changes in the calculated impairment due to the passage of time are recorded as an adjustment to the allowance for loan losses.

Restructured loans that were accruing prior to the restructuring, where income was reasonably assured subsequent to the restructuring, maintain their accrual status. Restructured loans for which collectability was not reasonably assured are placed on non-accrual status, interest accruals cease, and uncollected accrued interest is reversed and charged against current income. A non-accrual restructured loan would be returned to an accrual status when there is a sustained period of repayment performance, generally six consecutive months, and both principal and interest are deemed collectible.

~~Loans Sold and Serviced~~

The Company periodically enters into Guarantor Swaps with Freddie Mac. In these types of transactions, the Company sells mortgage loans in exchange for Freddie Mac Mortgage Participation Certificates backed exclusively by the mortgages sold. The Company retains the servicing of the loans in these transactions. The Company also periodically sells loans to investors and continues to service such loans for a fee. Gains or losses on the sale of loans are recorded on the trade date using the specific-identification method.

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(2) Summary of Significant Accounting Policies (continued)~~

~~Real Estate Owned~~

Real estate acquired through foreclosure or deed in lieu of foreclosure is carried at the lower of the recorded investment in the loan at the time of foreclosure or fair value, less estimated costs to sell. Fair value is generally based on recent appraisals. The excess, if any, of the loan amount over the fair value of the asset acquired is charged off against the allowance for loan losses at the date the

~~property is acquired. Subsequent write-downs in the value of real estate owned, as well as holding costs, and any gains or losses realized upon sale of the property are recorded as as incurred.~~

~~Office Properties and Equipment~~

Land is carried at cost. Office properties, land and building improvements, furniture and equipment, and leasehold improvements are carried at cost, less accumulated depreciation and amortization. Depreciation and amortization of office properties and equipment is computed on a straight-line basis over their estimated useful lives (generally 40 years for buildings, 10 to 20 years for land and building improvements, 5 to 10 years for furniture and equipment). Leasehold improvements, carried at cost, net of accumulated depreciation, are amortized over the terms of the related leases or the estimated useful lives of the assets, whichever is shorter. Major improvements are capitalized, while repairs and maintenance costs are charged to expense as incurred. Upon retirement or sale, any gain or loss is recognized as incurred.

~~Bank-owned Life Insurance~~

Bank-owned life insurance is accounted for using the cash surrender value method and is recorded at its net realizable value. The change in the net asset value is recorded as a component of non-interest income. A deferred liability has been recorded for the estimated cost of post-retirement life insurance benefits accruing to applicable employees and directors covered by an endorsement split-dollar life insurance arrangement.

~~Goodwill and Intangible Assets~~

Intangible assets of the Bank consist of goodwill and mortgage servicing rights. Goodwill represents the excess of the purchase price over the estimated fair value of identifiable net assets acquired through purchase acquisitions. In accordance with GAAP, goodwill with an indefinite useful life is not amortized, but is evaluated for impairment on an annual basis, or more frequently if events or changes in circumstances indicate potential impairment between annual measurement dates. As permitted by GAAP, the Company prepares a qualitative assessment in determining whether goodwill may be impaired, annually. The factors considered in the assessment include macroeconomic conditions, industry and market conditions and overall financial performance of the Company, among others. The Company completed its annual goodwill impairment test as of December 31, 2018 based upon its qualitative assessment of goodwill and concluded that goodwill was not impaired and no further quantitative analysis was warranted.

Mortgage servicing rights are recorded when purchased or when originated mortgage loans are sold, with servicing rights retained. Mortgage servicing rights are amortized on an accelerated method based upon the estimated lives of the related loans, adjusted for prepayments. Mortgage servicing rights are carried at the lower of amortized cost or fair value.

~~Post-retirement Benefits~~

The Company provides certain health care and life insurance benefits to eligible retired employees, along with a split-dollar BOLI death benefit. The Company accrues the cost of retiree health care and other benefits during the employees’ period of active service.

~~The Company accounts for benefits in accordance with Accounting Standard Update ("ASU") Topic 715,~~ ~~Pension and Other Post-retirement Benefits~~. The guidance requires an employer to: (a) recognize in its statement of financial position the overfunded or underfunded status of a defined benefit post-retirement plan measured as the difference between the fair value of plan assets and the benefit obligation; (b) measure a plan’s assets and its obligations that determine its funded status as of the end of the employer’s fiscal year (with limited exceptions); and (c) recognize as a component of other comprehensive income (loss), net of tax, the actuarial gains and losses and the prior service costs and credits that arise during the period.

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(2) Summary of Significant Accounting Policies (continued)~~

~~Employee Benefit Plans~~

The Company maintains a tax-qualified defined benefit pension plan ( the "Pension Plan") which covers full-time employees that satisfy the plan eligibility requirements. During 2018, the pension plan was amended. Effective October 1, 2018, employees hired

~~by the Bank are not eligible to participate in the Company's pension plan as the plan has been closed to new employees as of the effective date.~~

The Company's policy is to fund at least the minimum contribution required by the Employee Retirement Income Security Act of 1974. GAAP requires an employer to: (a) recognize in its statement of financial position the over-funded or under-funded status of a defined benefit post-retirement plan measured as the difference between the fair value of plan assets and the benefit obligation; (b) measure a plan’s assets and its obligations that determine its funded status at the end of the employer’s fiscal year (with limited exceptions); and (c) recognize as a component of other comprehensive income (loss), net of tax, the actuarial gains and losses and the prior service costs and credits that arise during the period. The assets of the plan are primarily invested in fixed debt and equity.

The Company has a retirement income maintenance plan (the "RIM Plan"). The RIM Plan is a non-qualified defined benefit plan which provides benefits to all employees of the Company if their benefits under the Pension Plan are limited by the Internal Revenue Code.

The Company has a 401(k) plan covering substantially all employees of the Company. The Company may match a percentage of the first 3.00% to 4.50% contributed by participants. The Company's matching contribution, if any, is determined by the Board of Directors in its sole discretion.

The Company has an Employee Stock Ownership Plan ("ESOP"). The funds borrowed by the ESOP from the Company to purchase the Company's common stock are being repaid from the Bank's contributions over a period of 20 years. The Company's common stock not allocated to participants is recorded as a reduction of stockholders' equity at cost. Compensation expense for the ESOP is based on the average price of the Company's stock and the amount of shares committed to be allocated during each period.

The Company has a Supplemental Executive Retirement Plan ("SERP"). The SERP is a non-qualified plan which provides supplemental retirement benefits to eligible officers (those designated by the Board of Directors) of the Company who are prevented from receiving the full benefits contemplated by the ESOP's benefit formulas under tax law limits for tax-qualified plans. In addition, the Company maintains a stock based deferral plan (the "Stock Based Deferral Plan") for certain executives and directors. The Company records a deferred compensation equity account and corresponding contra-equity account for the cost of the shares held by the Stock Based Deferral and SERP Plans.

The Company also maintains a non-qualified savings income maintenance deferred compensation plan (the "SIM Plan") that provides supplemental benefits to certain executives who are prevented from receiving the full benefits contemplated by the 401(k) Plan under tax law limits for tax-qualified plans, and a Deferred Compensation Plan for directors.

~~Derivatives~~

The Company records all derivatives on the consolidated statements of financial condition at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Interest rate swaps are designated as a cash flow hedge and satisfies hedge accounting requirements involving the receipt of variable amounts from a counter-party in exchange for the Company making fixed-rate payments over the life of the agreements without the exchange of the underlying notional amount. For derivatives which are designed as cash flow hedges and satisfy hedge accounting requirements, the effective portion of changes in the fair value of these derivatives are recorded in accumulated other comprehensive income (loss), and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of a change in the fair value of these derivatives are recognized directly in earnings.

~~The fair value of the Company’s derivatives are determined using discounted cash flow analysis using observable market- based inputs.~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(2) Summary of Significant Accounting Policies (continued)~~

~~Income Taxes~~

The Company and its subsidiaries file consolidated federal income tax returns. Federal income taxes are allocated to each entity based on their respective contributions to taxable income of the consolidated income tax returns. Separate state income tax returns are filed for the Company and each of its subsidiaries. For the three months ended December 31, 2017, income tax expense included the impact of the enactment of the Tax Cuts and Jobs Act ("Tax Act"), which was enacted in December 2017, and reduced the maximum statutory federal income tax rate from 35% to 21%. This resulted in a charge to reduce the carrying value of the Company's net deferred income tax assets, which are included in the consolidated statements of financial condition. As a result, for the year ended December 31, 2018, the federal income tax rate applicable to the Company was 21%.

~~The Company records income taxes in accordance with ASC Topic 740,~~ ~~Income Taxes~~, using the asset and liability method. The amounts reflected on the Company's federal and state income tax returns differ from these provisions due principally to temporary differences in the reporting of certain items for consolidated financial statement reporting and income tax reporting purposes. Accordingly, deferred tax assets and liabilities: (i) are recognized for the expected future tax consequences of events that have been recognized in the financial statements or tax returns; (ii) are attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases; and (iii) are measured using enacted tax rates expected to apply in the years when those temporary differences are expected to be recovered or settled. Where applicable, deferred tax assets are reduced by a valuation allowance for any portions determined not likely to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date. The valuation allowance is adjusted, by a charge or credit to income tax expense, as changes in facts and circumstances warrant.

Income taxes are allocated to the individual entities within the consolidated group based on the effective tax rate of the entity. The Company did not have any liabilities for uncertain tax positions or any known unrecognized tax benefits at December 31, 2018 and 2017. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense in the Consolidated Statements of Income. The Company did not recognize any interest and penalties during the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017.

On July 1, 2018, New Jersey enacted legislation which adds to the state’s 9.0% Corporation Business Tax rate (i) a 2.5% surtax for periods beginning in 2018 and 2019 and (ii) a 1.5% surtax for periods beginning in 2020 and 2021. These surtaxes apply to corporations with more than $41.0 million of net income allocated to New Jersey and expire beginning in 2022. Also, for periods beginning in 2017, New Jersey has reduced the dividends-received deduction from 100% to 95% for certain dividend income received by a corporation from a subsidiary that is at least 80% owned by the corporation. In addition, for periods beginning in 2019, New Jersey has adopted combined income tax reporting for certain members of a commonly-controlled unitary business group.

~~Comprehensive Income (Loss)~~

Comprehensive income (loss) consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized holding gains and losses on securities available-for-sale, the noncredit component of other than temporary impairment losses on debt securities, unrealized gains and losses on derivatives, and the unfunded status of employee benefit plans. Comprehensive income is presented in a separate Consolidated Statements of Comprehensive Income (Loss).

~~Securities Sold Under Agreements to Repurchase and Other Borrowings~~

The Company enters into sales of securities under agreement to repurchase and collateral pledge agreements with selected dealers and banks. Such agreements are accounted for as secured financing transactions since the Company maintains effective control over the transferred or pledged securities. Obligations under these agreements are recorded as liabilities in the Consolidated Statements of Financial Condition.

~~Segment Reporting~~

The Company’s operations are solely in the financial services industry and include providing traditional banking and other financial services to its customers. The Company operates primarily in New Jersey. Management makes operating decisions and assesses performance based on an ongoing review of the Company’s consolidated financial results. Therefore, the Company has a single operating segment for financial reporting purposes.

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(2) Summary of Significant Accounting Policies (continued)~~

~~Earnings Per Share (EPS)~~

Basic EPS is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. For purposes of calculating basic EPS, weighted average common shares outstanding excludes unallocated employee stock ownership plan shares that have not been committed for release and deferred compensation obligations required to be settled in shares of Company stock. Diluted EPS reflects the potential dilution which could occur if securities or other contracts to issue common stock (such as stock options) were exercised and or resulted in the issuance of common stock. These potentially dilutive shares would then be included in the weighted average number of shares outstanding for the period using the treasury stock method. Shares issued and reacquired during any period are weighted for the portion of the period that they were outstanding.

~~During the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017, the Company did not have any stock options outstanding.~~

~~Recent Accounting Pronouncements~~

As an “emerging growth company” as defined in Title 1 of the Jumpstart Our Business Startups (JOBS) Act, the Company has elected to use the extended transition period to delay the adoption of new or reissued accounting pronouncements applicable to public

~~companies until such pronouncements are made applicable to private companies.~~

~~Accounting Pronouncements Adopted~~

~~In February 2018, the Financial Accounting Standards Board ("FASB") issued ASU No. 2018-02,~~ ~~Income Statement - ReportingComprehensive Income(Topic 220)~~. The updated guidance allows a reclassification from accumulated other comprehensive income to retained earnings for the stranded tax effects resulting from the Tax Cuts and Jobs Act disclosed in Note 12. The purpose of the guidance is to improve the usefulness of the information reported to the financial statement users. The guidance is effective for all entities for fiscal years beginning after December 31, 2018 and interim periods within those fiscal years. Early adoption is permitted. The Company early adopted ASU No. 2018-02 for the period ended December 31, 2017 and the impact of the adoption resulted in a reclassification adjustment between accumulated other comprehensive income and retained earnings of $11.7 million.

~~Accounting Pronouncements Not Yet Adopted~~

~~In October 2018, the FASB issued ASU No. 2018-16,~~ ~~Derivatives and Hedging (Topic 815)- Inclusion of the Secured Overnight Financing Rate ("SOFR") Overnight Index Swap ("OSI") Rate as a Benchmark Interest Tate for Hedge Accounting Purposes.~~ This ASU permits the use of the OIS rate based upon SOFR as a U.S. benchmark interest rate for purposes of applying hedge accounting under Topic 815. This is the fifth U.S. benchmark interest rate eligible for use in hedge accounting in addition to the direct Treasury obligations of the U.S. Government, the LIBOR swap rate, the OIS rate based on the Fed Funds Effective Rate, and the Securities Industry and Financial Markets Association Municipal Swap Rate. The amendments in this ASU are required to be adopted concurrently with the amendments in ASU No. 2017-12, ~~Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities,~~ which was issued in August 2017. The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. The effective date for this ASU for the Company is for fiscal years beginning after December 15, 2019, with early adoption, including adoption in an interim period, permitted. ASU 2017-12 requires a modified retrospective transition method in which the company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the date of adoption. The Company does not expect the adoption of this guidance to have a significant impact on its consolidated financial statements.

~~In August 2018, the FASB issued ASU No. 2018-13,~~ ~~Fair Value Measurement (Topic 820):Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.~~ ~~The purpose of this updated guidance is to improve the effectiveness and disclosures in the notes to the financial statements~~. The ASU removes the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; removes the policy for timing of transfers between levels and removes the disclosure related to the valuation process for Level 3 fair value measurements. The ASU also modifies existing disclosure requirements which relate to the disclosure for investments in certain entities which calculate net asset value and clarifies the disclosure about uncertainty in the measurements as of the reporting date. For all entities, the effective date for this guidance is fiscal years beginning after December

15, 2019, including interim periods within the reporting period, with early adoption permitted. Entities are also allowed to elect early adoption of the eliminated or modified disclosure requirements and delay adoption of the new disclosure requirements until their effective date. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(2) Summary of Significant Accounting Policies (continued)~~

~~Accounting Pronouncements Not Yet Adopted (continued)~~

~~In March 2017, the FASB issued ASU No. 2017-08,~~ ~~Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20):Premium Amortization on Purchased Callable Debt Securities.~~ This guidance shortens the amortization period for premiums on callable debt securities by requiring that premiums be amortized to the first (or earliest) call date instead of as an adjustment to the yield over the contractual life. This change more closely aligns the accounting with the economics of a callable debt security and the amortization period with expectations that already are included in market pricing on callable debt securities. This guidance does not change the accounting for discounts on callable debt securities, which will continue to be amortized to the maturity date. This guidance includes only instruments that are held at a premium and have explicit call features.

It does not include instruments that contain prepayment features, such as mortgage backed securities; nor does it include call options that are contingent upon future events or in which the timing or amount to be paid is not fixed. The effective date for this ASU for the Company is fiscal years beginning after December 15, 2019, including interim periods within the reporting period, with early adoption permitted. Transition is on a modified retrospective basis with an adjustment to retained earnings as of the beginning of the period of adoption. If early adopted in an interim period, adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company does not expect the adoption of this ASU to have a significant impact on the its consolidated financial statements.

~~In March 2017, the FASB issued ASU No. 2017-07,~~ ~~Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost,~~ which requires that companies disaggregate the service cost component from other components of net benefit cost. This update calls for companies that offer post-retirement benefits to present the service cost, which is the amount an employer has to set aside each quarter or fiscal year to cover the benefits, in the same line item with other current employee compensation costs. Other components of net benefit cost will be presented in the income statement separately from service costs component and outside the subtotal of income from operations, if one is presented. The effective date for this ASU for the Company is fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The adoption of this standard, effective January 1, 2019, did not have a significant impact on the Company's consolidated financial statements.

~~In January 2017, the FASB issued ASU No. 2017-04,~~ ~~Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.~~ The main objective of this guidance is to simplify the accounting for goodwill impairment by requiring that impairment charges be based upon the first step in the current two-step impairment test under ASC 350. Currently, if the fair value of a reporting unit is lower than its carrying amount (Step 1), an entity calculates any impairment charge by comparing the implied fair value of goodwill with its carrying amount (Step 2). The implied fair value of goodwill is calculated by deducting the fair value of all assets and liabilities of the reporting unit from the reporting unit’s fair value as determined in Step 1. To determine the implied fair value of goodwill, entities estimate the fair value of any unrecognized intangible assets and any corporate-level assets or liabilities that were included in the determination of the carrying amount and fair value of the reporting unit in Step 1. Under this guidance, if a reporting unit’s carrying amount exceeds its fair value, an entity will record an impairment charge based on that difference. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. This guidance eliminates the requirement to calculate a goodwill impairment charge using Step 2. This guidance does not change the guidance on completing Step 1 of the goodwill impairment test. Under this guidance, an entity will still be able to perform the current optional qualitative goodwill impairment assessment before determining whether to proceed to Step 1. The guidance in the ASU will be applied prospectively and is effective for the Company for annual and interim impairment tests performed in periods beginning after December 15, 2019. The Company does not expect the adoption of this ASU to have a significant impact on the its consolidated financial statements.

~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,~~ a new standard which addresses diversity in practice related to eight specific cash flow issues: debt prepayment or extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that

are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies), distributions received from equity method investees, beneficial interests in securitization

transactions and separately identifiable cash flows and application of the predominance principle. This guidance in the ASU is effective for the Company for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Entities will apply the standard’s provisions using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(2) Summary of Significant Accounting Policies (continued)~~

~~Accounting Pronouncements Not Yet Adopted (continued)~~

~~date practicable. The adoption of this standard, effective January 1, 2019, did not have a significant impact on the Company's consolidated financial statements.~~

~~In June 2016, the FASB issued ASU No. 2016-13,~~ ~~Measurement of Credit Losses on Financial Instruments.~~ This guidance provides financial statement users with more decision-useful information about expected credit losses on financial instruments by a reporting entity at each reporting date. The amendments of this guidance require financial assets measured at amortized cost to be presented at the net amount expected to be collected.

The allowance for credit losses would represent a valuation account that would be deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The income statement would reflect the measurement of credit losses that have taken place during the period. The measurement of expected credit losses would be based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. An entity would be required to use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. The guidance in the ASU is effective for the Company for fiscal years beginning after December 15, 2019, including interim periods within that reporting period. Early adoption is permitted. The Company is currently evaluating its existing systems and data to support the new standard as well as assessing the impact that the guidance will have on the Company's consolidated financial statements. The Company has formed a working group under the direction of the Chief Accounting Officer that is primarily comprised of individuals from various functional areas including finance, credit, risk management, and operations, among others. A detailed implementation plan was developed which includes an assessment of the processes, portfolio segmentation, model development and validation, and system requirements and resources needed. The Company has engaged a third-party vendor to assist with model development, data governance and operational controls to support the adoption of this ASU. Furthermore, this ASU will necessitate establishing an allowance for expected credit losses on debt securities. The Company has begun its evaluation of the guidance including the potential impact on its consolidated financial statements. The extent of the change is indeterminable at this time as it will be dependent upon portfolio composition and credit quality at the adoption date, as well as economic conditions and forecasts at that time. Upon adoption, any impact to the allowance for credit losses will have an impact on retained earnings.

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842).~~ This guidance requires all lessees to recognize a lease liability and a right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date for leases classified as operating leases as well as finance leases. The update also requires new quantitative disclosures related to leases in the Company's consolidated financial statements. There are also practical expedients in this update related to leases that commenced before the effective date, initial direct costs and the use of hindsight to extend or terminate a lease or purchase a leased asset. Lessor accounting remains largely unchanged under this new guidance. In January 2018, the FASB issued ASU 2018-01, ~~Leases (Topic 842)-Land Easement Practical Expedient for Transition to Topic 842~~, which provides an optional practical expedient to not evaluate land easements which were existing or expired before the adoption of Topic 842 that were not accounted for as leases under Topic 840. In July 2018, the FASB issued ASU 2018-10, ~~Codification Improvements to Topic 842, Leases~~ ~~and ASU 2018-11,~~ ~~Leases (Topic 842) -Targeted Improvements~~ which provides entities with an optional transition method under which comparative periods presented in the financial statements will continue to be in accordance with current Topic 840, Leases, and a practical expedient to not separate non-lease components from the associated lease component. The guidance is effective for the Company for annual periods beginning after December 15, 2019, including interim periods within that reporting period. The Company is currently in the process of identifying and evaluating the impact of this guidance and, as such, no conclusions have yet been reached regarding the potential impact on adoption on the Company's consolidated financial statements, however, the Company does not expect the adoption to have a material impact on its results of operations.

~~In January 2016, the FASB issued ASU No. 2016-01,~~ ~~Financial Instruments- Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.~~ This guidance requires an entity to: i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in other comprehensive income the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation

allowance on deferred tax assets related to unrealized losses on available-for-sale debt securities in combination with other deferred tax assets. This guidance provides an election to subsequently measure certain non-marketable equity investments at cost less any impairment and adjusted for certain observable price changes. The guidance also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. The guidance in the ASU is effective for the Company for annual

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(2) Summary of Significant Accounting Policies (continued)~~

~~Accounting Pronouncements Not Yet Adopted (continued)~~

periods beginning after December 15, 2018. Upon adoption of this standard, effective January 1, 2019, the Company recorded a cumulative adjustment of $548,000 from other comprehensive income (loss) to retained earnings.

~~In May 2014, the FASB issued ASU No. 2014-09,~~ ~~"Revenue from Contracts with Customers."~~ The objective of this amendment is to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP. This update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets unless those contracts are in the scope of other standards. The guidance in the ASU is effective for the Company for fiscal years beginning after December 15, 2018, and early adoption is permitted.

Subsequently, the FASB issued the following standards related to ASU No. 2014-09: ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations;” ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing;” ASU No. 2016-11, “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of ASU No. 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting;” and ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”. These amendments are intended to improve and clarify the implementation guidance of ASU No. 2014-09 and have the same effective date as the original guidance. The Company's revenue is primarily comprised of net interest income on interest earning assets and liabilities and non-interest income. The scope of guidance explicitly excludes net interest income as well as other revenues associated with financial assets and liabilities, including loans, leases, securities and derivatives. The Company adopted the guidance effective January 1, 2019, and concluded that there are no material changes related to the timing or amount of revenue recognition. The Company will disaggregate significant categories of revenue within the scope of the guidance and provide the required disclosures starting in the first quarter of 2019.

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(3) Securities Available for Sale~~

S~~ecurities available for sale at December 31, 2018 and 2017 are summarized as follows:~~

December 31, 2018
Amortized cost Gross unrealized gains Gross unrealized (losses) Fair value
(In thousands)

U.S. government and agency obligations $ 54,821
$ 53
$ (717 ) $ 54,157
Mortgage-backed securities and collateralized mortgage obligations 934,631
2,812
(17,436 ) 920,007
Municipal obligations 987
—
—
987
Corporate debt securities 54,493
129
(1,155 ) 53,467
Trust preferred securities 5,000
—
(750 ) 4,250
Equity securities 1,196
694
—
1,890
$ 1,051,128
$ 3,688
$ (20,058 ) $ 1,034,758

December 31, 2017
Amortized cost Gross unrealized gains Gross unrealized (losses) Fair value
(In thousands)

U.S. government and agency obligations $ 39,909
$ 17
$ (282 ) $ 39,644
Mortgage-backed securities and collateralized mortgage obligations 615,924
383
(9,695 ) 606,612
Municipal obligations 1,957
—
—
1,957
Corporate debt securities 54,489
536
(511 ) 54,514
Trust preferred securities 5,000
—
(344 ) 4,656
Equity securities 2,328
859
—
3,187
$ 719,607
$ 1,795
$ (10,832 ) $ 710,570

The amortized cost and fair value of debt securities available for sale at December 31, 2018, by contractual final maturity, excluding equity securities is shown below. Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.

December 31, 2018
Amortized cost Fair value
(In thousands)

One year or less $ 797
$ 797
More than one year to five years 50,131
49,613
More than five years to ten years 59,373
57,971
More than ten years 5,000
4,480
115,301
112,861
Mortgage-backed securities and collateralized mortgage obligations 934,631
920,007
$ 1,049,932
$ 1,032,868

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(3) Securities Available for Sale (continued)~~

Mortgage-backed securities and collateralized mortgage obligations totaling $934.6 million at amortized cost, and $920.0 million at fair value, are excluded from the table above as their expected lives are likely to be shorter than the contractual maturity date due to principal prepayments.

During the year ended December 31, 2018, proceeds from calls of securities available for sale totaled $11.5 million, resulting in gross realized gains of $116,000 and no gross unrealized losses. Proceeds from maturities of securities available for sale totaled $2.4 million.

During the three months ended December 31, 2017, proceeds from sales of securities available for sale totaled $92,000, resulting in no gross unrealized gains and gross realized losses of $60,000. There were no calls or maturities of securities available for sale during the period.

During the year ended September 30, 2017, proceeds from sales of securities available for sale totaled $187.4 million, resulting in gross realized gains of $1.5 million and gross realized losses of $3.2 million. Proceeds from calls and maturities of securities available for sale totaled $17.2 million.

During the year ended September 31, 2016, proceeds from sales of securities available for sale totaled $164.2 million, resulting in gross realized gains of $1.1 million and gross realized losses of $743,000. Proceeds from calls and maturities of securities available for sale totaled $5.4 million.

Securities available for sale having a carrying value of $232.7 million and $301.1 million, respectively, at December 31, 2018 and 2017, respectively, are pledged to secure securities sold under repurchase agreements or for public funds on deposit at the Bank as required and permitted by law.

The following table summarizes the fair value and gross unrealized losses of those securities that reported an unrealized loss at December 31, 2018 and 2017 and if the unrealized loss position was continuous for the twelve months prior to those respective dates:

December 31, 2018
Less than 12 months 12 months or longer Total
Fair value Gross unrealized (losses) Fair value Gross unrealized (losses) Fair value Gross unrealized (losses)
(In thousands)

U.S. government and agency obligations $ 14,668
$ (202 ) $ 29,437
$ (515 ) $ 44,105
$ (717 )
Mortgage-backed securities and collateralized mortgage obligations 176,614
(1,034 ) 509,397
(16,402 ) 686,011
(17,436 )
Corporate debt securities 26,480
(512 ) 9,358
(643 ) 35,838
(1,155 )
Trust preferred securities —
—
4,250
(750 ) 4,250
(750 )
$ 217,762
$ (1,748 ) $ 552,442
$ (18,310 ) $ 770,204
$ (20,058 )

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(3) Securities Available for Sale (continued)~~

December 31, 2017
Less than 12 months 12 months or longer Total
Fair value Gross unrealized (losses) Fair value Gross unrealized (losses) Fair value Gross unrealized (losses)
(In thousands)

U.S. government and agency obligations $ 29,654
$ (282 ) $ —
$ —
$ 29,654
$ (282 )
Mortgage-backed securities and collateralized mortgage obligations 514,283
(8,037 ) 48,788
(1,658 ) 563,071
(9,695 )
Corporate debt securities 4,866
(135 ) 4,624
(376 ) 9,490
(511 )
Trust preferred securities —
—
4,656
(344 ) 4,656
(344 )
$ 548,803
$ (8,454 ) $ 58,068
$ (2,378 ) $ 606,871
$ (10,832 )

The Company evaluates securities for other-than-temporary impairment at each reporting period and more frequently when economic or market conditions warrant such evaluation. The temporary loss position associated with securities available for sale was the result of changes in market interest rates relative to the coupon of the individual security and changes in credit spreads. The Company does not have the intent to sell securities in a temporary loss position at December 31, 2018, nor is it more likely than not that the Company will be required to sell the securities before the anticipated recovery.

The number of securities in an unrealized loss position as of December 31, 2018 totaled 151, compared with 111 at December 31, 2017. All temporarily impaired securities were investment grade as of December 31, 2018 and 2017.

The Company did not record an other-than-temporary impairment charge on securities available for sale for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017.

~~(4) Securities Held to Maturity~~

~~Securities held to maturity at December 31, 2018 and 2017 are summarized as follows:~~

December 31, 2018
Amortized cost Gross unrealized gains Gross unrealized (losses) Fair value
(In thousands)

U.S. government and agency obligations $ 23,404
$ 45
$ (208 ) $ 23,241
Mortgage-backed securities and collateralized mortgage obligations 238,739
28
(7,167 ) 231,600
$ 262,143
$ 73
$ (7,375 ) $ 254,841

December 31, 2017
Amortized cost Gross unrealized gains Gross unrealized (losses) Fair value
(In thousands)

U.S. government and agency obligations $ 8,402
$ —
$ (58 ) $ 8,344
Mortgage-backed securities and collateralized mortgage obligations 231,216
—
(3,435 ) 227,781
$ 239,618
$ —
$ (3,493 ) $ 236,125

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(4) Securities Held to Maturity (continued)~~

The amortized cost and fair value of debt securities held to maturity at December 31, 2018, by contractual final maturity, are shown below. Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.

December 31, 2018
Amortized cost Fair value
(In thousands)

More than one year to five years $ 5,000
$ 5,000
More than five years to ten years 8,404
8,196
More than ten years 10,000
10,045
23,404
23,241
Mortgage-backed securities and collateralized mortgage obligations 238,739
231,600
$ 262,143
$ 254,841

Mortgage-backed securities and collateralized mortgage obligations totaling $238.7 million at amortized cost, and $231.6 million at fair value, are excluded from the table above as their expected lives are likely to be shorter than the contractual maturity date due to principal prepayments.

There were no sales of securities from the held to maturity portfolio for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017. Proceeds from calls and maturities of securities held to maturity for the years ended December 31, 2018 and September 30, 2017, totaled $5.4 million and $769,000, respectively. There were no calls or maturities of securities held to maturity for the year ended September 30, 2016 and the three months ended December 31, 2017.

Securities held to maturity having a carrying value of $187.0 million and $141.0 million, at December 31, 2018 and December 31, 2017, respectively, were pledged to secure public funds on deposit at the Bank as required and permitted by law.

December 31, 2018
Less than 12 months 12 months or longer Total
Fair value Gross unrealized (losses) Fair value Gross unrealized (losses) Fair value Gross unrealized (losses)
(In thousands)

U.S. government and agency obligations $ —
$ —
$ 8,197
$ (208 ) $ 8,197
$ (208 )
Mortgage-backed securities and collateralized mortgage obligations 11,265
(69 ) 213,246
(7,098 ) 224,511
(7,167 )

$ 11,265
$ (69 ) $ 221,443
$ (7,306 ) $ 232,708
$ (7,375 )

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(4) Securities Held to Maturity (continued)~~

December 31, 2017
Less than 12 months 12 months or longer Total
Fair value Gross unrealized (losses) Fair value Gross unrealized (losses) Fair value Gross unrealized (losses)
(In thousands)

U.S. government and agency obligations $ 8,344
$ (58 ) $ —
$ —
$ 8,344
$ (58 )
Mortgage-backed securities and collateralized mortgage obligations 196,049
(2,920 ) 29,531
(515 ) 225,580
(3,435 )
$ 204,393
$ (2,978 ) $ 29,531
$ (515 ) $ 233,924
$ (3,493 )

The Company evaluates securities for other-than-temporary impairment at each reporting period and more frequently when economic or market conditions warrant such evaluation. The temporary loss position associated with securities held to maturity was the result of changes in market interest rates relative to the coupon of the individual security and changes in credit spreads. The Company does not have the intent to sell securities in a temporary loss position at December 31, 2018, nor is it more likely than not that the Company will be required to sell the securities before the anticipated recovery.

The number of securities in an unrealized loss position as of December 31, 2018 totaled 88, compared with 84 at December 31, 2017. All temporarily impaired securities were investment grade as of December 31, 2018 and 2017.

The Company did not record an other-than-temporary impairment charge on securities held to maturity for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017.

During the year ended September 30, 2017, the Company transferred certain available for sale securities with an amortized cost of $103.7 million and a fair value of $103.3 million to the held to maturity portfolio, largely because of the nature of the securities, which were community investment related mortgage-backed securities issued by government agencies, or due to their longer durations.

~~(5) Loans Receivable and Allowance for Loan Losses~~

~~Loans receivable at December 31, 2018 and 2017 are summarized as follows:~~

December 31,
2018 2017
(In thousands)
Real estate loans:
One-to-four family $ 1,830,186
$ 1,615,000
Multifamily and commercial 2,142,154
1,870,475
Construction 261,473
233,652
Commercial business loans 333,876
277,970
Consumer loans:
Home equity loans and advances 393,492
447,920
Other consumer loans 1,108
998
Total gross loans 4,962,289
4,446,015
Net deferred loan costs, fees and purchased premiums and discounts 16,893
12,633
Loans receivable $ 4,979,182
$ 4,458,648

~~The Company had $8.1 million of fixed rate one-to-four family real estate loans held-for-sale at December 31, 2018. There were no loans held-for-sale at December 31, 2017.~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(5) Loans Receivable and Allowance for Loan Losses (continued)~~

The Company sold $32.0 million of one-to-four family and fixed rate home equity loans to third parties during the year ended December 31, 2018. The Company sold $62.4 million and $28.6 million, of one-to-four family, fixed rate home equity and multifamily loans to third parties during the years ended September 30, 2017 and 2016, respectively. These loans were previously included in loans receivable. No loans were sold by the Company during the three months ended December 31, 2017.

The Company purchased $32.3 million, $20.5 million and $21.1 million, respectively, of one-to-four family and multifamily and commercial real estate loans during the years ended December 31, 2018, September 30, 2017 and 2016. The Company purchased $56.1 million of multifamily and commercial real estate loans during the three months ended December 31, 2017.

At December 31, 2018 and 2017, the carrying value of one-to four family real estate loans serviced by the Company for investors totaled $462.7 million and $478.8 million, respectively. These loans are not included in the Consolidated Statements of Financial Condition. Servicing income totaled $1.1 million for the year ended December 31, 2018, and $1.2 million for both the years ended September 30, 2017 and 2016. For the three months ended December 31, 2017 servicing income totaled $298,000.

The Company periodically enters into Guarantor Swaps with Freddie Mac which results in improved liquidity. The Company did not sell any loans to Freddie Mac in exchange for Freddie Mac Mortgage Participation Certificates during the years ended December 31, 2018 and September 30, 2017, or the three months ended December 31, 2017. For the year ended September 30, 2016, the Company sold $17.2 million of loans in exchange for Freddie Mac Mortgage Participation Certificates. The Company retained the servicing of these loans.

The Company has granted loans to certain officers and directors of the Company and its subsidiaries and to their associates. As of December 31, 2018 and 2017 such loans totaled approximately $1.4 million and $1.5 million, respectively. During the year ended December 31, 2018 and the three months ended December 31, 2017, the Bank granted no new loans to related parties. During the years ended September 30, 2017 and 2016, new loans totaling $390,000, and $115,000, respectively, were granted to related parties. These loans are performing in accordance with their original terms.

~~The following tables summarize the aging of loans receivable by portfolio segment at December 31, 2018 and 2017:~~

December 31, 2018
30-59 days 60-89 days 90 Days or more Total past due Current Total
(In thousands)
Real estate loans:
One-to-four family $ 8,384
$ 1,518
$ 819
$ 10,721
$ 1,819,465
$ 1,830,186
Multifamily and commercial 1,870
1,425
154
3,449
2,138,705
2,142,154
Construction —
—
—
—
261,473
261,473
Commercial business loans 208
279
911
1,398
332,478
333,876
Consumer loans:
Home equity loans and advances 1,550
173
905
2,628
390,864
393,492
Other consumer loans —
—
—
—
1,108
1,108
Total gross loans $ 12,012
$ 3,395
$ 2,789
$ 18,196
$ 4,944,093
$ 4,962,289

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(5) Loans Receivable and Allowance for Loan Losses (continued)~~

December 31, 2017
30-59 days 60-89 days 90 Days or more Total past due Current Total
(In thousands)
Real estate loans:
One-to-four family $ 7,080
$ 1,229
$ 3,360
$ 11,669
$ 1,603,331
$ 1,615,000
Multifamily and commercial 138
380
1,329
1,847
1,868,628
1,870,475
Construction —
—
—
—
233,652
233,652
Commercial business loans 89
730
1,263
2,082
275,888
277,970
Consumer loans:
Home equity loans and advances 1,421
26
573
2,020
445,900
447,920
Other consumer loans —
—
—
—
998
998
Total gross loans $ 8,728
$ 2,365
$ 6,525
$ 17,618
$ 4,428,397
$ 4,446,015

The Company considers a loan to be delinquent when we have not received a payment within 30 days of its contractual due date. Generally, a loan is designated as a non-accrual loan when the payment of interest is 90 days or more in arrears of its contractual due date. The accrual of income on a non-accrual loan is reversed and discontinued until the outstanding payments in arrears have been collected and there is a sustained period of performance. The Company identifies loans that may need to be charged-off as a loss, by reviewing all delinquent loans, classified loans and other loans that management may have concerns about collectability. At December 31, 2018 and 2017, non-accrual loans totaled $2.8 million and $6.5 million, respectively.

~~At December 31, 2018 and 2017, there were no loans past due 90 days or more and still accruing interest.~~

~~The following table provides information with respect to our non-accrual loans at December 31, 2018 and 2017:~~

December 31,

2018 2017

(In thousands)
Non-accrual loans:
Real estate loans:
One-to-four family $ 819
$ 3,360
Multifamily and commercial 154
1,329
Commercial business loans 911
1,263
Consumer loans:
Home equity loans and advances 905
573
Total non-accrual loans $ 2,789
$ 6,525

If the non-accrual loans had performed in accordance with their original terms, interest income would have increased by $126,000, $295,000, $713,000, and $61,000 for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017, respectively. The amount of cash basis interest income that was recognized on these loans during the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017 was $89,000, $104,000, $472,000, and $121,000, respectively.

We may obtain physical possession of real estate collateralizing a residential mortgage loan via foreclosure or through an in-substance repossession. As of December 31, 2018, we held one single-family property in real estate owned with a carrying value of $92,000 that was acquired through foreclosure on a residential mortgage loan. As of December 31, 2018 and 2017, we had 14 and

~~15 residential mortgage loans with carrying values of $1.6 million and $2.7 million, respectively, collateralized by residential real estate which were in the process of foreclosure.~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(5) Loans Receivable and Allowance for Loan Losses (continued)~~

The Company maintains the allowance for loan losses through provisions for loan losses which are charged to income. Charge-offs against the allowance for loan losses are taken on loans where management determines that the collection of loan principal is unlikely. Recoveries made on loans that have been charged-off are credited to the allowance for loan losses.

As part of the evaluation of the adequacy of the allowance for loan losses, management prepares an analysis each quarter that categorizes the entire loan portfolio by certain risk characteristics such as loan type (residential mortgage, commercial mortgage, construction, commercial, etc.) and loan risk rating.

When assigning a risk rating to a loan, management utilizes an eight-point risk rating system to summarize its loan portfolio into categories with similar risk characteristics. Loans deemed to be “acceptable quality” are rated 1 through 4 (Pass), with a rating of 1 established for loans with minimal risk. Loans that are deemed to be of “questionable quality” are rated 5 (Special Mention) or 6 (Substandard). Loans with adverse classifications are rated 7 (Doubtful) or 8 (Loss). The risk ratings are also confirmed through periodic loan review examinations, which are currently performed by both an independent third-party and the Company's internal loan review department. The Company requires an annual review be performed above certain dollar thresholds, depending on loan type, to help determine the appropriate risk rating. The risk ratings are also confirmed through periodic loan review examinations which are currently performed by both an independent third-party and the Company's internal loan review department. Results from examinations are presented to the Audit Committee of the Board of Directors.

Management estimates the amount of loan losses for loans collectively evaluated for impairment by applying quantitative loss factors to the loan segments at the risk rating level and applying qualitative adjustments to each loan segment at the portfolio level. Quantitative loss factors give consideration to historical loss experience and migration experience by loan type based upon an appropriate look-back period, adjusted for a loss emergence period. Qualitative adjustments give consideration to other qualitative or environmental factors such as trends and levels of delinquencies, impaired loans, charge-offs, recoveries and loan volumes, as well as national and local economic trends and conditions.

Qualitative adjustments reflect risks in the loan portfolio not captured by the quantitative loss factors and, as such, are evaluated from a risk level perspective relative to the risk levels present over the look-back period. The reserves resulting from the application of both the quantitative experience and qualitative factors are combined to arrive at the allowance for loan losses.

Management believes the primary risks inherent in the portfolio are a general decline in the economy, a decline in real estate market values, rising or elevated unemployment, increasing vacancy rates, and increases in interest rates in the absence of economic improvement. Any one or a combination of these events may adversely affect a borrowers’ ability to repay their loan, resulting in increased delinquencies and loan losses. Accordingly, the Company has recorded loan losses at a level which is estimated to represent the current risk in its loan portfolio. Management considers it important to maintain the ratio of the allowance for loan losses to total loans at an acceptable level considering the current composition of the loan portfolio.

Although management believes that the Company has established and maintains the allowance for loan losses at appropriate levels, additional reserves may be necessary if future economic and other conditions differ substantially from the current operating environment. Management evaluates its estimates and assumptions on an ongoing basis and the estimates and assumptions are adjusted when facts and circumstances necessitate a re-valuation of the estimate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. In addition, regulatory agencies periodically review the adequacy of the Company’s allowance for loan losses as an integral part of their examination process. Such agencies may require the Company to recognize additions to the allowance or additional write-downs based on their judgments about information available to them at the time of their examination. Although management uses the best information available, the level of the allowance for loan losses remains an estimate that is subject to significant judgment.

The Bank defines a loan as impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due under the contractual terms of the loan agreement. All multifamily and commercial real estate, construction, and commercial business loans with an outstanding balance of greater than $500,000 and not accruing, loans modified in a troubled debt restructuring (TDR), and other loans if there is specific information of a collateral shortfall are individually evaluated for impairment. Impairment is measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral less estimated selling costs.

~~The following table summarizes loans receivable and allowance for loan losses by portfolio segment and impairment method at December 31, 2018 and 2017:~~

~~100~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(5) Loans Receivable and Allowance for Loan Losses (continued)~~

December 31, 2018
One-to-four family Multifamily and commercial Construction Commercial business Home equity loans and advances Other consumer loans Unallocated Total
(In thousands)
Allowance for loan losses:
Individually evaluated for impairment $ 537
$ —
$ —
$ 366
$ 12
$ —
$ —
$ 915
Collectively evaluated for impairment 14,695
23,251
7,217
13,810
2,446
8
—
61,427
Total $ 15,232
$ 23,251
$ 7,217
$ 14,176
$ 2,458
$ 8
$ —
$ 62,342

Total loans:
Individually evaluated for impairment $ 9,048
$ 2,695
$ —
$ 2,944
$ 3,100
$ —
$ —
$ 17,787
Collectively evaluated for impairment 1,821,138
2,139,459
261,473
330,932
390,392
1,108
—
4,944,502
Total gross loans $ 1,830,186
$ 2,142,154
$ 261,473
$ 333,876
$ 393,492
$ 1,108
$ —
$ 4,962,289

~~101~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(5) Loans Receivable and Allowance for Loan Losses (continued)~~

December 31, 2017
One-to-four family Multifamily and commercial Construction Commercial business Home equity loans and advances Other consumer loans Unallocated Total
(In thousands)
Allowance for loan losses:
Individually evaluated for impairment $ 423
$ 28
$ —
$ 80
$ 15
$ —
$ —
$ 546
Collectively evaluated for impairment 19,568
19,905
5,217
8,195
4,561
8
178
57,632
Total $ 19,991
$ 19,933
$ 5,217
$ 8,275
$ 4,576
$ 8
$ 178
$ 58,178

Total loans:
Individually evaluated for impairment $ 11,644
$ 3,693
$ —
$ 4,263
$ 2,591
$ —
$ —
$ 22,191
Collectively evaluated for impairment 1,603,356
1,866,782
233,652
273,707
445,329
998
—
4,423,824
Total gross loans $ 1,615,000
$ 1,870,475
$ 233,652
$ 277,970
$ 447,920
$ 998
$ —
$ 4,446,015

Loan modifications to borrowers experiencing financial difficulties that are considered troubled debt restructurings ("TDRs") primarily involve the lowering of the monthly payments on such loans through either a reduction in interest rate below a market rate, an extension of the term of the loan without a corresponding adjustment to the risk premium reflected in the interest rate, or a combination of these two methods. These modifications generally do not result in the forgiveness of principal or accrued interest. In addition, the Company attempts to obtain additional collateral or guarantor support when modifying such loans. Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible.

~~102~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(5) Loans Receivable and Allowance for Loan Losses (continued)~~

The following tables present the number of loans modified as TDRs for the years ended December 31, 2018 , September 30, 2017 and 2016, and the three months ended December 31, 2017, along with their balances immediately prior to the modification date and post-modification. Post-modification recorded investment represents the net book balance immediately following modification.

For the Year Ended December 31, For the Three Months Ended December 31,
2018 2017
No. of Loans Pre-modification recorded investment Post-modification recorded investment No. of Loans Pre-modification recorded investment Post-modification recorded investment
( Dollars in thousands)
Troubled Debt Restructurings
Real estate loans:
One-to-four family 5
$ 801
$ 801
—
$ —
$ —
Multifamily and commercial 1
65
65
—
—
—
Commercial business loans —
—
—
—
—
—
Consumer loans:
Home equity loans and advances 1
588
588
—
—
—
Total restructured loans 7
$ 1,454
$ 1,454
—
$ —
$ —

For the Years Ended September 30,
2017 2016
No. of Loans Pre-modification recorded investment Post-modification recorded investment No. of Loans Pre-modification recorded investment Post-modification recorded investment
(Dollars in thousands)
Troubled Debt Restructurings
Real estate loans:
One-to-four family 3
$ 548
$ 548
—
$ —
$ —
Multifamily and commercial 1
3,964
3,964
—
—
—
Commercial business loans 1
18
18
3
255
255
Consumer loans:
Home equity loans and advances 2
248
248
1
103
103
Total restructured loans 7
$ 4,778
$ 4,778
4
$ 358
$ 358

~~The activity in the allowance for loan losses for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017 are as follows:~~

~~103~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(5) Loans Receivable and Allowance for Loan Losses (continued)~~

Year Ended December 31, Three Months Ended December 31, Years Ended September 30,
2018 2017 2017 2016
(In thousands)

Balance at beginning of period $ 58,178
$ 54,633
$ 51,867
$ 56,948
Provision charged 6,677
3,400
6,426
417
Recoveries 707
188
584
721
Charge-offs (3,220 ) (43 ) (4,244 ) (6,219 )
Balance at end of period $ 62,342
$ 58,178
$ 54,633
$ 51,867

~~The activity in the allowance for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017 are as follows:~~

For the Year Ended December 31, 2018
One-to-four family Multifamily and commercial Construction Commercial business Home equity loans and advances Other consumer loans Unallocated Total
(In thousands)

Balance at beginning of period $ 19,991
$ 19,933
$ 5,217
$ 8,275
$ 4,576
$ 8
$ 178
$ 58,178
Provision charged (credited) (4,503 ) 3,445
1,997
7,860
(1,949 ) 5
(178 ) 6,677
Recoveries 334
2
3
240
122
6
—
707
Charge-offs (590 ) (129 ) —
(2,199 ) (291 ) (11 ) —
(3,220 )
Balance at end of period $ 15,232
$ 23,251
$ 7,217
$ 14,176
$ 2,458
$ 8
$ —
$ 62,342

For the Three Months Ended December 31, 2017
One-to-four family Multifamily and commercial Construction Commercial business Home equity loans and advances Other consumer loans Unallocated Total
(In thousands)

Balance at beginning of period $ 18,533
$ 18,029
$ 5,299
$ 8,480
$ 4,190
$ 8
$ 94
$ 54,633
Provision charged (credited) 1,473
1,906
(82 ) (373 ) 389
3
84
3,400
Recoveries 9
—
—
171
6
2
—
188
Charge-offs (24 ) (2 ) —
(3 ) (9 ) (5 ) —
(43 )
Balance at end of period $ 19,991
$ 19,933
$ 5,217
$ 8,275
$ 4,576
$ 8
$ 178
$ 58,178

~~104~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(5) Loans Receivable and Allowance for Loan Losses (continued)~~

For the Year Ended September 30, 2017
One-to-four family Multifamily and commercial Construction Commercial business Home equity loans and advances Other consumer loans Unallocated Total
(In thousands)

Balance at beginning of period $ 18,638
$ 17,390
$ 5,960
$ 5,721
$ 4,052
$ 11
$ 95
$ 51,867
Provision charged (credited) 1,029
1,644
(661 ) 3,183
1,219
13
(1 ) 6,426
Recoveries 268
75
—
182
59
—
—
584
Charge-offs (1,402 ) (1,080 ) —
(606 ) (1,140 ) (16 ) —
(4,244 )
Balance at end of period $ 18,533
$ 18,029
$ 5,299
$ 8,480
$ 4,190
$ 8
$ 94
$ 54,633

For the Year Ended September 30, 2016
One-to-four family Multifamily and commercial Construction Commercial business Home equity loans and advances Other consumer loans Unallocated Total
(In thousands)

Balance at beginning of period $ 16,442
$ 20,352
$ 6,248
$ 7,094
$ 6,111
$ 4
$ 697
$ 56,948
Provision charged (credited) 5,534
(2,106 ) (43 ) (1,323 ) (1,061 ) 18
(602 ) 417
Recoveries 158
23
76
408
55
1
—
721
Charge-offs (3,496 ) (879 ) (321 ) (458 ) (1,053 ) (12 ) —
(6,219 )
Balance at end of period $ 18,638
$ 17,390
$ 5,960
$ 5,721
$ 4,052
$ 11
$ 95
$ 51,867

~~105~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(5) Loans Receivable and Allowance for Loan Losses (continued)~~

~~The following table presents loans individually evaluated for impairment by loan segment:~~

At December 31, 2018
Recorded investment Unpaid principal balance Specific allowance
(In thousands)
With no allowance recorded:
Real estate loans:
One-to-four family $ 4,156
$ 5,307
$ —
Multifamily and commercial 2,695
3,482
—
Commercial business loans 2,285
2,374
—
Consumer loans:
Home equity loans and advances 2,511
2,866
—
11,647
14,029
—
With a specific allowance recorded:
Real estate loans:
One-to-four family 4,892
4,939
537
Commercial business loans 659
768
366
Consumer loans:
Home equity loans and advances 589
589
12
6,140
6,296
915
Total:
Real estate loans:
One-to-four family 9,048
10,246
537
Multifamily and commercial 2,695
3,482
—
Commercial business loans 2,944
3,142
366
Consumer loans:
Home equity loans and advances 3,100
3,455
12
Total loans $ 17,787
$ 20,325
$ 915

~~106~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(5) Loans Receivable and Allowance for Loan Losses (continued)~~

December 31, 2017
Recorded investment
Unpaid principal balance
Specific allowance
(In thousands)
With no allowance recorded:
Real estate loans:
One-to-four family $ 8,870
$ 9,704
$ —
Multifamily and commercial 2,058
2,933
—
Commercial business loans 1,522
2,015
—
Consumer loans:
Home equity loans and advances 2,161
2,601
—
14,611
17,253
—
With a specific allowance recorded:
Real estate loans:
One-to-four family 2,774
2,788
423
Multifamily and commercial 1,635
2,208
28
Commercial business loans 2,741
2,741
80
Consumer loans:

Home equity loans and advances 430
430
15
7,580
8,167
546
Total:
Real estate loans:
One-to-four family $ 11,644
$ 12,492
$ 423
Multifamily and commercial 3,693
5,141
28
Commercial business loans 4,263
4,756
80
Consumer loans:
Home equity loans and advances 2,591
3,031
15
Total loans $ 22,191
$ 25,420
$ 546

Specific allocations of the allowance for loan losses attributable to impaired loans totaled $915,000 and $546,000 at December 31, 2018 and December 31, 2017, respectively. At December 31, 2018 and December 31, 2017, impaired loans for which there was no related allowance for loan losses totaled $11.6 million and $14.6 million, respectively.

~~107~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(5) Loans Receivable and Allowance for Loan Losses (continued)~~

The following table presents interest income recognized for loans individually evaluated for impairment at December 31, 2018 and 2017, by loan segment, for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017:

For the Year Ended December 31, For the Three Months Ended December 31,
2018 2017
Average recorded investment Interest income recognized Average recorded investment Interest income recognized
(In thousands)
Real estate loans:
One-to-four family $ 10,224
$ 445
$ 14,015
$ 110
Multifamily and commercial 2,712
155
4,087
39
Commercial business loans 3,060
118
3,870
46
Consumer loans:
Home equity loans and advances 3,361
173
3,618
35
Totals $ 19,357
$ 891
$ 25,590
$ 230

For the Years Ended September 30,
2017 2016
Average recorded investment Interest income recognized Average recorded investment Interest income recognized
(In thousands)
Real estate loans:
One-to-four family $ 15,027
$ 469
$ 18,119
$ 565
Multifamily and commercial 4,328
279
9,344
57
Construction —
—
505
—
Commercial business loans 3,796
195
4,514
110
Consumer loans:
Home equity loans and advances 3,903
136
3,446
157
Totals $ 27,054
$ 1,079
$ 35,928
$ 889

The recorded investment in TDRs totaled $16.0 million at December 31, 2018, of which one loan totaling $101,000 was over 90 days past due, and seven loans totaling $1.0 million were 30-59 days past due. The remaining loans modified were current at the time of restructuring and have complied with the terms of their restructure agreement at December 31, 2018. The recorded investment in TDRs totaled $17.6 million at December 31, 2017, of which two loans totaling $425,000 were over 90 days past due. The remaining loans modified were current at the time of restructuring and have complied with the terms of their restructure agreement at December 31, 2017. The recorded investment in TDRs totaled $21.1 million at September 30, 2017, of which seven loans totaling $1.0 million were over 90 days past due. The remaining loans modified were current at the time of restructuring and have complied with the terms of their restructure agreement at September 30, 2017.

~~108~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(5) Loans Receivable and Allowance for Loan Losses (continued)~~

~~The following table presents loans receivable by credit quality risk indicator and by loan segment at December 31, 2018 and 2017:~~

December 31, 2018
One-to-four family Multifamily and commercial Construction Commercial business Home equity loans and advances Other consumer loans Total
(In thousands)

Pass $ 1,826,066
$ 2,128,680
$ 261,473
$ 320,451
$ 392,092
$ 1,108
$ 4,929,870
Special mention —
—
—
9,074
—
—
9,074
Substandard 4,120
13,474
—
4,351
1,400
—
23,345
Doubtful —
—
—
—
—
—
—
Total $ 1,830,186
$ 2,142,154
$ 261,473
$ 333,876
$ 393,492
$ 1,108
$ 4,962,289

December 31, 2017
One-to-four family Multifamily and commercial Construction Commercial business Home equity loans and advances Other consumer loans Total
(In thousands)

Pass $ 1,605,413
$ 1,851,037
$ 233,652
$ 268,355
$ 446,264
$ 998
$ 4,405,719
Special mention —
4,782
—
3,678
—
—
8,460
Substandard 9,587
14,656
—
5,937
1,656
—
31,836
Doubtful —
—
—
—
—
—
—
Total $ 1,615,000
$ 1,870,475
$ 233,652
$ 277,970
$ 447,920
$ 998
$ 4,446,015

~~(6) Office Properties and Equipment, net~~

~~Office properties and equipment less accumulated depreciation at December 31, 2018 and December 31, 2017 are summarized as follows:~~

December 31,
2018 2017
(In thousands)

Land $ 7,829
$ 7,829
Buildings 24,018
24,018
Land and building improvements 24,864
15,583
Leasehold improvements 21,279
19,821
Furniture and equipment 28,538
26,036
106,528
93,287
Less accumulated depreciation and amortization 54,478
50,667
Total office properties and equipment, net $ 52,050
$ 42,620

~~109~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(6) Office Properties and Equipment, net (continued)~~

Land and building improvements at December 31, 2018 and 2017 included $8.9 million and $5.5 million, respectively, in construction in progress for the renovation of the Bank's corporate headquarters and various other facilities. Depreciation and amortization expense for the years ended December 31, 2018, September 30, 2017 and 2016, the three months ended December 31, 2017, amounted to $3.8 million, $3.4 million, $3.2 million, and $863,000 respectively.

~~(7) Goodwill and Intangible Assets~~

~~Intangible assets at December 31, 2018 and 2017 are summarized as follows:~~

December 31,
2018 2017
(In thousands)

Goodwill $ 5,716
$ 5,716
Mortgage servicing rights 369
281

$ 6,085
$ 5,997

Mortgage servicing rights' amortization expense for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017 amounted to $73,000, $105,000, $105,000, and $22,000 respectively. During the year ended December 31, 2018, $161,000 in additional mortgage servicing rights were recorded. There were no additional mortgage servicing rights recorded during the years ended September 30, 2017 and 2016, and the three months ended December 31, 2017.

~~(8) Deposits~~

~~Deposits at December 31, 2018 and 2017 are summarized as follows:~~

December 31,
2018 2017
Balance Weighted average rate Balance Weighted average rate
(Dollars in thousands)

Non-interest-bearing demand $ 723,794
— % $ 719,339
— %
Interest-bearing demand 1,219,381
0.95
1,332,297
0.66
Money market accounts 259,694
0.67
262,396
0.29
Savings and club deposits 510,688
0.16
545,401
0.16
Certificates of deposit 1,700,316
2.01
1,403,882
1.43
Total deposits $ 4,413,873
1.09 % $ 4,263,315
0.72 %

~~The aggregate amount of certificates of deposit that meet or exceed $100,000 totaled approximately $885.3 million and $640.1 million as of December 31, 2018 and 2017, respectively.~~

~~110~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(8) Deposits (continued)~~

~~Scheduled maturities of certificates of deposit accounts at December 31, 2018 and 2017 are summarized as follows:~~

December 31,
2018 2017
(In thousands)

One year or less $ 1,107,667
$ 669,610
After one year to two years 326,800
474,475
After two years to three years 230,468
169,069
After three years to four years 24,939
68,184
After four years 10,442
22,544

$ 1,700,316
$ 1,403,882

~~Interest expense on deposits for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017 are summarized as follows:~~

Year Ended December 31, Three Months Ended December 31, Years Ended September 30,
2018 2017 2017 2016
(In thousands)

Demand (including money market accounts) $ 12,933
$ 2,509
$ 8,556
$ 7,735
Savings and club deposits 993
210
630
613
Certificates of deposit 25,597
4,912
16,395
15,714
$ 39,523
$ 7,631
$ 25,581
$ 24,062

~~(9) Borrowings~~

~~Borrowed funds at December 31, 2018 and 2017 are summarized as follows:~~

December 31,
2018 2017 2018 2017
Balance Weighted average interest rate
(In thousands)

Overnight lines of credit $ 159,600
$ 46,000
2.60 % 1.53 %
Federal Home Loan Bank advances 1,029,580
822,400
2.40
1.92
Junior subordinated debt —
50,657
—
8.00
Securities sold under agreements to repurchase —
10,000
—
3.23
$ 1,189,180
$ 929,057
2.43 % 2.25 %

At December 31, 2018 and 2017, the Company had outstanding overnight lines of credit with the Federal Home Loan Bank of $159.6 million and $46.0 million, respectively. Interest expense on the overnight advances for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017, were $2.2 million, $233,000, $42,000, and $70,000 respectively.

~~111~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(9) Borrowings (continued)~~

At December 31, 2018, the Bank could borrow funds from the FHLB under an overnight advance program up to the Bank's maximum borrowing capacity based on its ability to collateralize such borrowings. Members in good standing can borrow up to 50% of their asset size as long as they have qualifying collateral to support the advance and purchase of FHLB capital. Additionally, at both December 31, 2018 and 2017, the Bank had unused correspondent bank lines of credit with an aggregate overnight borrowing capacity of $225.0 million.

At December 31, 2018 FHLB advances were at fixed rates with maturities between January 2019 and December 2022, and at December 31, 2017, FHLB advances were at fixed rates with maturities between January 2018 and September 2021. At December 31, 2018 and 2017, FHLB advances were collateralized by FHLB capital stock owned by the Bank and loans with carrying values totaling $1.7 billion and $1.6 billion, respectively. Loans securing advances consists of one-to-four family, multifamily, commercial and home equity real estate loans. Interest expense on FHLB advances for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017 were $17.1 million, $12.8 million, $13.2 million, and $3.3 million respectively.

At December 31, 2018 and 2017, FHLB advances totaling $320.0 million and $20.0 million, respectively, were outstanding in association with an interest rate swap program. See note 19 for information regarding these transactions.

~~Scheduled maturities of FHLB advances including lines of credit at December 31, 2018 are summarized as follows:~~

Year Ended December 31,
2018
(In thousands)

One year or less $ 761,900
After one year to two years 229,045
After two years to three years 155,010
After three years to four years 43,225
After four years —
Total FHLB advances $ 1,189,180

At December 31, 2018 and 2017, the junior subordinated debt balances were $0 and $50.7 million, respectively. In August 2018, the Company redeemed all junior subordinated debt securities. The carrying value as of December 31, 2017 included deferred issuance costs of $890,000. Interest expense for the year ended December 31, 2018 was $3.5 million. Interest expense for both the years ended September 30, 2017 and 2016 was $4.2 million, while interest expense for the three months ended December 31, 2017 was $1.0 million.

At December 31, 2018 and 2017, the balance of securities sold under agreements to repurchase were $0 and $10.0 million, respectively. Interest expense on securities sold under agreements to repurchase for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017 were $3,000, $1.6 million, $2.4 million, and $203,000 respectively. As of December 31, 2018 and 2017, securities available for sale with a carrying value of $0 and $12.9 million, respectively, were pledged to secure these borrowings.

~~(10) Regulatory Capital~~

The Company and its subsidiary Bank are subject to regulatory capital requirements promulgated by the federal banking agencies. The Federal Reserve establishes capital requirements, including well capitalized standards, for the consolidated financial holding company, and the OCC has similar requirements for the Company's subsidiary bank. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's consolidated statements of financial condition.

Federal regulators require federally insured depository institutions to meet several minimum capital standards: (1) total capital to risk-weighted assets of 8.0%; (2) tier 1 capital to risk-weighted assets of 6.0%; (3) common equity tier 1 capital to risk-weighted assets of 4.5%; and (4) tier 1 capital to adjusted total assets of 4.0%. In addition to establishing the minimum regulatory capital requirements,

~~112~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(10) Regulatory Capital~~

the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a "capital conservation buffer" consisting of 2.5% of common equity tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements. The capital conservation buffer requirement was phased in beginning January 1, 2016, at 0.625% of risk-weighted assets and increased each year until it was fully implemented at 2.5% on January 1, 2019. The regulators established a framework for the classification of savings institutions into five categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. Generally, an institution is considered well capitalized if it has: a total capital to risk-weighted assets ratio of at least 10.0%, a tier 1 capital to risk-weighted assets ratio of at least 8.0%, a common tier 1 capital to risk-weighted assets ratio of at least 6.5%, and a tier 1 capital to adjusted total assets ratio of at least 5.0%. As of December 31, 2018 and 2017, the Company and the Bank exceeded all capital adequacy requirements to which it is subject.

Based upon most recent notification from federal banking regulators, the Bank was categorized as well capitalized as of September 30, 2018, under the regulatory framework for prompt corrective action. There are no conditions existing or events which have occurred since notification that management believes have changed the Bank's category.

The following table presents the Company's and the Bank's actual capital amounts and ratios as of December 31, 2018 and 2017 as compared to the Federal Reserve Bank minimum capital adequacy requirements and the Federal Reserve Bank requirements for classification as a well-capitalized institution:

~~113~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(10) Regulatory Capital (continued)~~

Actual Minimum capital adequacy requirements Minimum capital adequacy requirements with capital conservation buffer To be well capitalized under prompt corrective action provisions
Amount Ratio Amount Ratio Amount Ratio Amount Ratio
Company (In thousands, except ratio data)
At December 31, 2018:
Total capital (to risk-weighted assets) $ 1,094,062
23.45 % $ 373,276
8.00 % $ 460,763
9.88 % N/A
N/A
Tier 1 capital (to risk-weighted assets) 1,035,477
22.19
279,957
6.00
367,444
7.88
N/A
N/A
Common equity tier 1 capital (to risk-weighted assets) 1,035,477
22.19
209,968
4.50
297,455
6.38
N/A
N/A
Tier 1 capital (to adjusted total assets) 1,035,477
15.75
263,037
4.00
263,037
4.00
N/A
N/A

At December 31, 2017:
Total capital (to risk-weighted assets) $ 631,952
15.01 % $ 336,730
8.00 % $ 389,244
9.25 % N/A
N/A
Tier 1 capital (to risk-weighted assets) 579,080
13.76
252,547
6.00
305,161
7.25
N/A
N/A
Common equity tier 1 capital (to risk-weighted assets) 528,080
12.55
189,410
4.50
242,025
5.75
N/A
N/A
Tier 1 capital (to adjusted total assets) 579,080
10.54
219,833
4.00
219,833
4.00
N/A
N/A

Bank
At December 31, 2018:
Total capital (to risk-weighted assets) $ 886,728
19.04 % $ 372,550
8.00 % $ 459,866
9.88 % $ 465,687
10.00 %
Tier 1 capital (to risk-weighted assets) 828,257
17.79
279,412
6.00
366,729
7.88
372,550
8.00
Common equity tier 1 capital (to risk-weighted assets) 828,257
17.79
209,559
4.50
296,875
6.38
302,697
6.50
Tier 1 capital (to adjusted total assets) 828,257
12.60
263,025
4.00
263,025
4.00
328,781
5.00

At December 31, 2017:
Total capital (to risk-weighted assets) $ 625,336
14.90 % $ 335,736
8.00 % $ 388,196
9.25 % $ 419,671
10.00 %
Tier 1 capital (to risk-weighted assets) 572,617
13.64
251,802
6.00
304,262
7.25
335,736
8.00
Common equity tier 1 capital (to risk-weighted assets) 572,617
13.64
188,852
4.50
241,311
5.75
272,786
6.50
Tier 1 capital (to adjusted total assets) 572,617
10.44
221,257
4.00
221,257
4.00
276,571
5.00

~~114~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(11) Employee Benefit Plans~~

~~Pension Plan, Retirement Income Maintenance Plan (the "RIM Plan") and Post-retirement Plan~~

The Company maintains a single employer, tax-qualified defined benefit pension plan ( the "Pension Plan") which covers full-time employees that satisfy the plan eligibility requirements. The benefits are based on years of service and the employee's compensation during the last five years of employment. During the year ended December 31, 2018, the pension plan was amended. Effective October 1, 2018, employees hired by the Bank are not eligible to participate in the Bank's pension plan as the plan has been closed to new employees as of that date, and effective January 1, 2019, the Post-retirement Plan has also been closed to new hires.

The Company also has a RIM Plan, which is a non-qualified defined benefit plan which provides benefits to all employees of the Company if their benefits under the Pension Plan are limited by Internal Revenue Code 415 and 401(a)(17).

In addition, the Company provides certain health care and life insurance benefits to eligible retired employees under a Post-retirement Plan. The Company accrues the cost of retiree health care and other benefits during the employees’ period of active service.

~~The following table sets forth information regarding the Pension, RIM and Post-retirement Plans at December 31, 2018 and 2017:~~

December 31,
2018 2017 2018 2017 2018 2017
Pension RIM Post-retirement
(In thousands)
Change in benefit obligation:
Benefit obligation at beginning of year $ 229,156
$ 216,992
$ 12,243
$ 11,032
$ 22,078
$ 22,133
Service cost 7,805
7,496
282
238
417
445
Interest cost 8,489
8,461
443
433
796
762
Actuarial (gain) loss (30,703 ) 4,543
(1,355 ) 874
(1,845 ) (726 )
Benefits paid (5,542 ) (8,336 ) (328 ) (334 ) (482 ) (536 )
Benefit obligation at end of year 209,205
229,156
11,285
12,243
20,964
22,078

Change in plan assets:

Fair value of plan assets at beginning of year 289,390
257,513
—
—
—
—
Actuarial return on plan assets (10,874 ) 27,213
—
—
—
—
Employer contributions —
13,000
328
334
482
536
Benefits paid (5,542 ) (8,336 ) (328 ) (334 ) (482 ) (536 )
Fair value of plan assets at end of year 272,974
289,390
—
—
—
—
Funded status at end of year $ 63,769

$ 60,234

$ (11,285 )
$ (12,243 )
$ (20,964 )
$ (22,078 )

~~115~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(11) Employee Benefit Plans (continued)~~

At December 31, 2018 and 2017, the unfunded liability for the RIM and Post-retirement Plans of $11.3 million and $21.0 million, and $12.2 million and $22.1 million, respectively, were included in other liabilities in the Consolidated Statements of Financial Condition, and the over-funded pension benefits associated with the Pension Plan totaling $63.8 million and $60.2 million, respectively, were included in other assets.

The components of accumulated other comprehensive income (loss) related to the Pension, RIM , and Post-retirement Plans on a pre-tax basis, at December 31, 2018 and 2017, and September 30, 2017 and 2016 are summarized in the following table:

At December 31, At December 31,
2018 2017
Pension RIM Post-retirement Pension RIM Post-retirement
(In thousands)

Unrecognized prior service costs $ —
$ —
$ —
$ —
$ —
$ (106 )
Unrecognized net actuarial income 59,579
3,748
4,226
61,731
5,515
6,395
Total accumulated other comprehensive income $ 59,579
$ 3,748
$ 4,226
$ 61,731
$ 5,515
$ 6,289

At September 30,
2017 2016 2017 2016 2017 2016
Pension RIM Post-retirement
(In thousands)

Unrecognized prior service costs $ —
$ —
$ —
$ —
$ (140 ) $ (276 )
Unrecognized net actuarial income 55,438
74,768
4,725
5,154
4,611
8,374
Total accumulated other comprehensive income $ 55,438
$ 74,768
$ 4,725
$ 5,154
$ 4,471
$ 8,098

Net periodic benefit (income) cost for Pension, RIM and Post-retirement plans for the years ended December 31, 2018, September 30, 2017 and 2016 and the three months ended December 31, 2017, includes the following components:

For the Year Ended December 31, For the Three Months Ended December 31,
2018 2017
Pension RIM Post-retirement Pension RIM Post-retirement
(In thousands)

Service cost $ 7,805
$ 282
$ 417
$ 1,780
$ 60
$ 92
Interest cost 8,489
443
796
2,128
111
205
Expected return on plan assets (20,794 ) —
—
(4,814 ) —
—
Amortization:
Prior service credit —
—
(106 ) —
—
(34 )
Net loss 3,117
413
323
707
103
70
Net periodic (income) cost $ (1,383 ) $ 1,138
$ 1,430
$ (199 ) $ 274
$ 333

~~116~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(11) Employee Benefit Plans (continued)~~

For the Years Ended September 30,
2017 2016 2017 2016 2017 2016
Pension RIM Post-retirement
(In thousands)
Service cost $ 7,621
$ 6,188
$ 237
$ 140
$ 471
$ 447
Interest cost 8,444
8,096
429
385
742
854
Expected return on plan assets (24,809 ) (22,706 ) —
—
—
—
Amortization:
Prior service credit —
—
—
—
(136 ) (136 )
Net loss 10,998
8,490
453
283
325
339
Net periodic cost $ 2,254
$ 68
$ 1,119
$ 808
$ 1,402
$ 1,504

The weighted average actuarial assumptions used in the plan determinations at and for the years ended December 31, 2018, September 30, 2017 and 2016 and the three months ended December 31, 2017 were as follows:

At and For the Year Ended December 31, At and For the Three Months Ended December 31,
2018 2017
Pension RIM Post-retirement Pension RIM Post-retirement
Weighted average assumptions used to determine benefit obligation:
Discount rate 4.570 % 4.470 % 4.410 % 3.750 % 3.625 % 3.625 %
Rate of compensation increase 3.500 % 3.500 % N/A
3.500 % 3.500 % N/A
Weighted average assumptions used to determine net periodic benefit cost:
Discount rate 3.750 % 4.470 % 3.625 % 4.000 % 3.875 % 3.875 %
Expected rate of return on plan assets 7.250 % N/A
N/A
7.250 % N/A
N/A
Rate of compensation increase 3.500 % 3.500 % N/A
3.500 % 3.500 % N/A

At and For the Years Ended September 30,
2018 2017 2018 2017 2018 2017
Pension RIM Post-retirement
Weighted average assumptions used to determine benefit obligation:
Discount rate 4.000 % 3.875 % 3.875 % 3.625 % 3.875 % 3.625 %
Rate of compensation increase 3.500
3.500
3.500
3.500
N/A
N/A
Weighted average assumptions used to determine net periodic benefit cost:
Discount rate 3.875 % 4.500 % 3.625 % 4.375 % 3.625 % 4.375 %
Expected rate of return on plan assets 7.500
7.500
N/A
N/A
N/A
N/A
Rate of compensation increase 3.500
3.500
3.500
3.500
N/A
N/A

The Company provides its actuaries with certain rate assumptions used in measuring the respective benefit obligations. The most significant of these is the discount rate used to calculate the period-end present value of the benefit obligations, and the expense to be included in the following year's financial statements. A lower discount rate will result in a higher benefit obligation and expense, while a higher discount rate will result in a lower benefit obligation and expense. The discount rate assumption was determined based on a cash flow-yield curve model specific to the Company's pension and post-retirement plans.

~~117~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(11) Employee Benefit Plans (continued)~~

The Company compares this rate to certain market indices, such as long-term treasury bonds, or pension liability indices, for reasonableness. The Company's expected return on plan assets assumption is based on historical investment return rate experience and evaluation of input from the trustee managing the pension plan's assets and the Bank's Pension Committee which has responsibility for managing these assets. The expected return on pension plan assets is also impacted by the target allocation of assets, which is based on the Company's goal of earning the highest rate of return while maintaining risk at acceptable levels.

Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans. A 1% change in the assumed health care cost trend rate would have the following effects on post-retirement benefits at December 31, 2018:

1% increase 1% decrease
(In thousands)

Effect on total service cost and interest cost $ 14
$ (12 )
Effect on post-retirement benefit obligations 130
(120 )

~~Estimated future benefit payments, which reflect expected future service, as appropriate for the next five years are as follows:~~

Pension RIM Post-retirement
(In thousands)

2019 $ 5,791
$ 329
$ 1,079
2020 6,301
341
1,114
2021 6,892
377
1,171
2022 7,471
416
1,212
2023 8,167
458
1,249
Years 2024 - 2028 52,675
3,318
6,840

~~The Company does not anticipate making a discretionary cash contribution to the pension plan for the year ended December 31, 2019.~~

~~The weighted average asset allocation of pension assets at December 31, 2018 and 2017 were as follows:~~

December 31,
2018 2017
(In thousands)

Domestic equities 35.20 % 38.10 %
Foreign equities 10.80
13.90
Fixed income 42.30
36.90
Real estate 10.50
9.30
Cash 1.20
1.80
Total 100.00 % 100.00 %

Management, under the direction of the Pension Committee, strives to have pension assets sufficiently diversified so that adverse or unexpected results from one security class will not have a significant detrimental impact on the entire portfolio. The target allocation of assets and acceptable ranges around the targets are as follows:

~~118~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(11) Employee Benefit Plans (continued)~~


Item 16.
	~~Allowable Range~~

~~Equities~~	~~40-60%~~
~~Fixed income~~	~~40-60%~~
~~Real estate~~	~~0-10%~~
~~Cash~~	~~0-15%~~Form 10-K Summary

Not applicable.

The Pension Committee engages an investment management advisory firm to regularly monitor the performance of the asset managers and ensure they are within compliance with policy. The maximum and minimum of the range for each class is based on the fair value of the assets in the fund. If changes in fair value should lead to allocations outside these boundaries, management shall adjust exposure back to the established guidelines within 90 days or reevaluate the guidelines.

The following tables present the assets that are measured at fair value on a recurring basis by level within the U.S. GAAP fair value hierarchy as reported on the Statements of Net Assets Available for Plan benefits at December 31, 2018 and 2017, respectively. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

December 31, 2018

Fair value measurements
Fair value Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3)
(In thousands)

Money market mutual funds $ 3,459
$ 3,459
$ —
$ —
Mutual funds - value stock fund 22,533
22,533
—
—
Mutual funds - fixed income 115,500
115,500
—
—
Mutual funds - international stock 29,441
29,441
—
—
Mutual funds - institutional stock index 73,450
73,450
—
—
Commingled real estate funds 28,591
—
28,591
—

$ 272,974
$ 244,383
$ 28,591
$ —

~~119~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(11) Employee Benefit Plans (continued)~~

December 31, 2017

Fair value measurements
Fair value Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3)
(In thousands)

Money market mutual funds $ 5,236
$ 5,236
$ —
$ —
Mutual funds - value stock fund 27,364
27,364
—
—
Mutual funds - fixed income 106,726
106,726
—
—
Mutual funds - international stock 40,388
40,388
—
—
Mutual funds - institutional stock index 82,831
82,831
—
—
Commingled real estate funds 26,845
—
26,845
—

$ 289,390
$ 262,545
$ 26,845
$ —

Money market and other mutual funds are reported at fair value in the table above utilizing exchange quoted prices in active markets for identical instruments (Level 1 inputs). The commingled trust funds are reported at their respective net asset values (Level 2).

~~BOLI and Split-Dollar Life Insurance~~

The Company has Bank-owned life insurance ("BOLI") which is a tax-advantaged transaction that is used to partially fund obligations associated with employee compensation and benefit programs. Policies are purchased insuring officers of the Company using a single premium method of payment. BOLI is accounted for using the cash surrender value and the increase in cash surrender value is included in non-interest income in the Company's Statements of Income. At December 31, 2018 and 2017, the Company had $184.5 million and $150.5 million, respectively, in BOLI. BOLI income for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017, was $5.2 million, $4.9 million, $4.4 million, and $1.1 million, respectively.

The Company also provides life insurance benefits to eligible employees under an endorsement split-dollar life insurance program. The Company recognizes a liability for future benefits applicable to endorsement split-dollar life insurance arrangements that provide death benefits post-retirement. At December 31, 2018 and 2017, $10.5 million and $5.9 million, respectively, related to the liability under this program was recognized in other liabilities in the Company's Consolidated Statements of Financial Condition. The BOLI expense related to the split-dollar benefit for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017, was $1.3 million, $395,000, $356,000 and $159,000, respectively.

~~Savings Income Maintenance Deferred Compensation Plan (the "SIM Plan")~~

The Company also maintains a non-qualified defined contribution plan that provides supplemental benefits to certain executives who are prevented from receiving the full benefits contemplated by the 401(k) Plan under tax law limits for tax-qualified plans. The expense for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017, was approximately $86,000, $14,000, $47,000 and $1,000, respectively.

~~401(k) Plan~~

The Company has a 401(k) plan covering substantially all employees of the Bank. The Bank may match a percentage of the first 3.00% to 4.50% contributed by participants. The Bank’s matching contribution, if any, is determined by the Board of Directors in its sole discretion. The expense for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017, was approximately $1.3 million, $1.2 million, $1.1 million and $289,000, respectively.

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~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(11) Employee Benefit Plans (continued)~~

~~Employee Stock Ownership Plan ("ESOP")~~

Effective upon the consummation of the Company's reorganization in April 2018, an ESOP was established for all eligible employees. The ESOP used $45.4 million in proceeds from a twenty year term loan obtained from the Company to purchase 4,542,855 shares of Company common stock. The term loan principal is payable in installments through April 2038. Interest on the term loan is fixed at a rate of 4.75%.

Each year, the Bank makes discretionary contributions to the ESOP, which are equal to principal and interest payments required on the term loan. Shares purchased with the loan proceeds were initially pledged as collateral for the term loan and is held in a suspense account for future allocation among participants. Contributions to the ESOP and shares released form the suspense account are allocated among the participants on the basis of compensation, as described by the ESOP, in the year of allocation.

The ESOP shares pledged as collateral are reported as unearned ESOP shares in the Consolidated Statements of Financial Condition. As shares are committed to be released from collateral, the Bank reports compensation expense equal to the average market price of the shares during the year, and the shares become outstanding for basic net income per common share computations. ESOP compensation expense was $2.6 million for the year ended December 31, 2018. There was no ESOP expense recorded for the years ended September 30, 2017 and 2016, or the three months ended December 31, 2017.

~~The ESOP shares were as follows:~~

December 31,
2018
(In thousands)

Allocated shares 159
Unearned shares 4,384
Total ESOP shares 4,543
Fair value of unearned shares $ 67,025

~~Supplemental Executive Retirement Plan ("SERP")~~

The Company has a SERP, which is a non-qualified plan which provides supplemental retirement benefits to eligible officers (those designated by the Board of Directors) of the Company who are prevented from receiving the full benefits contemplated by the ESOP's benefit formulas under tax law limits for tax-qualified plans. SERP compensation expense was $165,000 for the year ended December 31, 2018. There was no SERP expense recorded for the years ended September 30, 2017 and 2016, and the three months ended December 31, 2017.

~~Stock Based Deferral Plan and Directors Deferred Compensation Plan~~

In addition, the Bank maintains a stock based deferral plan for certain executives and directors, and a cash based deferred compensation plan for directors. The Company records a deferred compensation equity instrument and corresponding contra-equity account for the cost of the shares held by the Stock Based Deferral Plan. Periodic adjustments to market are not required as participants do not have the option to take the distribution in cash. The Company records a liability for the amount deferred under the Directors Deferred Compensation Plan. There were no expenses recorded under these plans.

~~(12) Income Taxes~~

On December 22, 2017, the President signed into law the Tax Act. The new law reduces the federal corporate income tax rate from 35% to 21% effective January 1, 2018. Under ASC 740, "Income Taxes", companies are required to recognize the effect of tax law changes in the period of enactment; therefore, the Company re-measured its deferred tax assets and liabilities at the enacted tax rate expected to apply when its temporary differences are expected to be realized or settled. As a result of the enactment of the Act, the

Company recognized an additional tax expense of $11.7 million in December 2017. In 2017, the Company estimated the accounting for the effects of the 2017 Act. In 2018, under Staff Accounting Bulletin No. 118 ("SAB 118”), we finalized the accounting for the Act and our financial statements for the year ended December 31, 2018 and the three months ended December 31, 2017 reflect these changes.

~~121~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(12) Income Taxes (continued)~~

~~The current and deferred amounts of income tax expense (benefit) for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017 are as follows:~~

Year ended December 31, Three Months Ended December 31, Years Ended September 30,
2018 2017 2017 2016
(In thousands)
Current:
Federal $ 11,284
$ 630
$ 16,198
$ 13,209
State 5,129
862
1,236
664
Total current 16,413
1,492
17,434
13,873

Deferred:
Federal (4,901 ) 7,530
(1,454 ) 2,743
State (589 ) (39 ) 28
187
Total deferred (5,490 ) 7,491
(1,426 ) 2,930
$ 10,923
$ 8,983
$ 16,008
$ 16,803

The Company reported deferred tax expense (benefit) of $1.4 million, $6.4 million, $(2.6) million and $(119,000) for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017, respectively, related to the unrealized gains (losses) on securities available for sale, which is reported in accumulated other comprehensive income (loss), net of tax. Additionally, the Company recorded a deferred tax (benefit) expense of $(530,000), $(4.2) million, $(3.3) million and $(94,000), respectively, related to the amortization of post-retirement benefit obligations, which is reported in accumulated other comprehensive income, net of tax.

A reconciliation between the amount of reported total income tax expense and the amount computed by multiplying the applicable statutory income tax rate (35% for the 2017 and 2016 periods presented below, and 21% for the 2018 period) is as follows:

Year ended December 31, Three Months Ended December 31, September 30,
2018 2017 2017 2016
(In thousands)

Tax expense at applicable statutory rate $ 7,067
$ 4,431
$ 16,478

$ 17,415
Increase (decrease) in taxes resulting from:
State tax, net of federal income tax benefit 3,587
535
822
553
ESOP fair market value adjustment 202
—
—
—
Tax exempt interest income (4 ) (2 ) (50 ) (28 )
Income from Bank-owned life insurance (812 ) (381 ) (1,589 ) (1,405 )
Dividend received deduction (16 ) (10 ) (40 ) (39 )
Impact of tax reform —
4,700
—
—
Other, net 899
(290 ) 387
307
$ 10,923
$ 8,983
$ 16,008
$ 16,803

The net deferred tax asset is included in other assets in the Consolidated Statements of Financial Condition. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2018 and 2017 are as follows:

~~122~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(12) Income Taxes (continued)~~

At December 31,
2018 2017
(In thousands)
Deferred tax assets:
Allowance for loan losses $ 13,251
$ 12,584
Post retirement benefit 3,720
3,414
Deferred compensation 2,228
1,939
Depreciation 1,042
949
Retirement income maintenance plan 1,602
1,455
ESOP 128
—
Stock-based compensation 35
—
Reserve for uncollected interest 24
62
Net unrealized losses on securities and defined benefit plans 19,060
18,221
State NOL 2,063
2,476
Alternative minimum assessment carryforwards 2,156
2,156
Charitable contribution carryforward 6,085
—
Other items 670
1,595
Gross deferred tax assets 52,064
44,851
Valuation allowance (2,388 ) (2,786 )
49,676
42,065
Deferred tax liabilities:
Pension expense 26,071
26,234
Deferred loan costs 5,736
4,257
Intangible assets 1,621
1,642
Other items 34
48
Total gross deferred tax liabilities 33,462
32,181
Net deferred tax asset $ 16,214
$ 9,884

Retained earnings at December 31, 2018 and 2017 includes approximately $21.5 million for which no provision for income tax has been made. This amount represents an allocation of income to bad debt deductions for tax purposes only. Events that would result in taxation of these reserves include the failure to qualify as a bank for tax purposes, distributions in complete or partial liquidation, stock redemptions and excess distributions to stockholders.

Management believes that not all existing net deductible temporary differences that comprise the net deferred tax asset will reverse during periods in which the Company generates sufficient net taxable income. Accordingly, management has established a valuation allowance. Significant changes in the Company's operations and or economic conditions could affect the benefits of the recognized net deferred tax asset. Based on all available evidence, a valuation allowance was established for the portion of the state tax benefit that is not more likely than not to be realized. At December 31, 2018 and 2017, the Company's valuation allowance totaled $2.4 million and $2.8 million, respectively. Based upon projections of future taxable income and the ability to carryforward net operating losses indefinitely, management believes it is more likely than not the Company will realize the remaining deferred tax asset.

The Company had New Jersey net operating loss carryforwards of $2.1 million and $2.5 million, respectively, available to offset future taxable income as of December 31, 2018 and 2017, respectively. If not utilized, these carryforwards will expire periodically through 2038.

The Company files income tax returns in the United States federal jurisdiction and in the states of New Jersey, New York and Pennsylvania. As of December 31, 2018, the Company is no longer subject to federal income tax examination for the years prior to 2014. Columbia Bank MHC and its subsidiaries' federal return is currently under audit for the tax year 2014. The Company is open for examination by the State of New Jersey for 2014, 2015, 2016 and 2017 and the States of New York and Pennsylvania for 2016 and 2017.

~~123~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(13) Financial Transactions with Off-Balance-Sheet Risk and Concentrations of Credit Risk~~

The Company is a party to transactions with off-balance-sheet risk in the normal course of business in order to meet the financing needs of its customers. These transactions consist of commitments to extend credit and involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in the consolidated statements of financial condition.

~~At December 31, 2018 and 2017, the following commitments existed which are not reflected in the consolidated statements of financial condition:~~

December 31,
2018 2017
(In thousands)
Loan commitments:
Residential real estate $ 29,622
$ 58,860
Commercial real estate 73,201
17,994
Commercial business 13,000
14,796
Construction loans 71,062
20,715
Consumer home equity loans and lines of credit 8,344
5,858
Total loan commitments $ 195,229
$ 118,223

Unused lines of credit consisting of home equity lines, and undisbursed business and construction lines totaled approximately $714.6 million and $679.4 million as of December 31, 2018 and 2017, respectively. Amounts drawn on the unused lines of credit are predominantly assessed interest at rates that fluctuate with the base rate.

The Company uses the same credit policies and collateral requirements in making commitments and conditional obligations as it does for on-balance-sheet loans. Commitments to extend credit are agreements to lend customers as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management's credit evaluation of the borrower.

The Company principally grants residential, multifamily and commercial real estate loans, construction loans, commercial and industrial loans, home equity loans and advances and other consumer loans to borrowers primarily throughout New Jersey, in New York and Pennsylvania, and to a much lesser extent in a few other east coast states. Its borrowers' abilities to repay their obligations are dependent upon various factors, including the borrowers' income and net worth, cash flows generated by the underlying collateral, if any, or from business operations, value of the underlying collateral and priority of the Company's lien on the property. These factors are dependent on various economic conditions and circumstances beyond the Company's control , and as a result, the Company is subject to the risk of loss. The Company believes that its lending policies and procedures adequately minimize the potential exposure to such risks and adequate provisions for loan losses are provided for all probable and estimable losses.

In the normal course of business, the Company sells residential real estate loans to third parties. These loan sales are subject to customary representations and warranties. In the event that the Company is found to be in breach of these representations and warranties, it may be obligated to repurchase certain of these loans.

The Company has entered into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company's derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company's known or expected

cash receipts and its know or expected cash payments principally related to the Company's borrowings. These derivatives were used to hedge the variability in cash flows associated with certain short-term funding transactions. The fair value of the derivatives as of December 31, 2018 was a net liability of $2.6 million, inclusive of accrued interest and variation margin posted in accordance with the Chicago Mercantile Exchange.

~~124~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(13) Financial Transactions with Off-Balance-Sheet Risk and Concentrations of Credit Risk (continued)~~

~~In connection with its mortgage banking activities, the Company at December 31, 2018, had commitments of approximately~~

~~$8.1 million to sell loans, with serving retained by the Bank.~~

In addition to the commitments noted above, the Company is party to standby letters of credit which are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. The guarantees generally extend for a term of up to one year and may be secured or unsecured. Outstanding letters of credit totaled $7.0 million and $11.6 million at December 31, 2018 and 2017, respectively.

Certain bank facilities are occupied under non-cancelable operating leases on buildings and land used for office space and banking purposes, which expire at various dates through February 2030. Certain lease agreements provide for renewal options and increases in rental payments based upon increases in the consumer price index or the lessor's cost of operating the facility. Minimum aggregate lease payments for the remainder of the lease terms are as follows:

December 31,
2018
(In thousands)

2019 $ 3,596
2020 3,511
2021 3,288
2022 2,921
2023 2,590
Thereafter 5,209
Total lease commitments $ 21,115

Net occupancy expense, which represents rental expenses for Bank facilities, for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017, totaled $4.6 million, $4.3 million, $4.0 million, and $1.1 million, respectively.

In the normal course of business, there are outstanding various legal proceedings, claims, and contingent liabilities which are not included in the consolidated financial statements. In the opinion of management, the financial position of the Company will not be materially affected by the outcome of such legal proceedings and claims.

~~(14) Fair Value Measurements~~

The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The determination of fair values of financial instruments often requires the use of estimates. Where quoted market values in an active market are not readily available, the Company utilizes various valuation techniques to estimate fair value.

Fair value is an estimate of the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. However, in many instances, fair value estimates may not be substantiated by comparison to independent markets and may not be realized in an immediate sale of the financial instrument.

~~GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of fair value hierarchy are as follows:~~

~~Level 1: Unadjusted quoted market prices in active markets that are accessible at the measurement date for identical,~~

~~unrestricted assets or liabilities;~~

Level 2: Quoted prices for identical or similar instruments in markets that are active or not active, or inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability; and

~~125~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(14) Fair Value Measurements (continued)~~

Level 3: Prices or valuation techniques that require unobservable inputs that are both significant to the fair value measurement and unobservable (i.e., supported by minimal or no market activity). Valuation techniques include the use of option pricing models, discounted cash flow models and similar techniques.

~~A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.~~

The valuation techniques are based upon the unpaid principal balance only and exclude any accrued interest or dividends at the measurement date. Interest income and expense and dividend income are recorded within the Consolidated Statements of Income depending on the nature of the instrument using the effective interest method based on the discount or premium.

~~Assets and Liabilities Measured at Fair Value on a Recurring Basis~~

~~The valuation techniques described below were used to measure fair value of financial instruments as reflected in the accompanying tables below on a recurring basis as of December 31, 2018 and 2017.~~

~~Securities Available for Sale~~

For securities available for sale, fair value was estimated using a market approach. The majority of the Company’s securities are fixed income instruments that are not quoted on an exchange, but are traded in active markets. Prices for these instruments are obtained through third-party data service providers or dealer market participants with which the Company has historically transacted both purchases and sales of securities. Prices obtained from these sources include market quotations and matrix pricing. Matrix pricing, a Level 2 input, is a mathematical technique used principally to value certain securities to benchmark or to comparable securities. The Company evaluates the quality of Level 2 matrix pricing through comparison to similar assets with greater liquidity and evaluation of projected cash flows. As the Company is responsible for the determination of fair value, it performs quarterly analysis on the prices received from the pricing service to determine whether the prices are reasonable estimates of fair value. Specifically, the Company compares the prices received from the pricing service to a secondary pricing source. Additionally, the Company compares changes in the reported market values and returns to relevant market indices to assess the reasonableness of the reported prices. The Company’s internal price verification procedures and review of fair value methodology documentation provided by independent pricing services has not historically resulted in an adjustment in the prices obtained from the pricing service. The Company may hold equity securities and debt instruments issued by the U.S. government and U.S. government-sponsored agencies that are traded in active markets with readily accessible quoted market prices that are considered Level 1 inputs.

~~Derivatives~~

The Company records all derivatives on the Consolidated Statements of Financial Condition at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. The Company has interest rate derivatives resulting from a service provided to certain qualified borrowers in a loan related transaction and, therefore, are not used to manage interest rate risk in the Company's assets or liabilities. As such, all changes in fair value of the Company's derivatives are recognized directly in earnings.

~~The fair value of the Company's derivatives are determined using discounted cash flow analysis using observable market-based inputs, which are considered Level 2 inputs.~~

~~126~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(14) Fair Value Measurements (continued)~~

The following tables present the assets and liabilities reported on the Consolidated Statements of Financial Condition at their fair values as of December 31, 2018 and 2017, by level within the fair value hierarchy:

December 31, 2018
Fair Value Measurements
Fair value Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3)
(In thousands)
Securities available for sale:
       U.S. government and agency obligations $ 54,157
$ 54,157
$ —
$ —
Mortgage-backed securities and collateralized mortgage obligations 920,007
—
920,007
—
       Municipal obligations 987
—
987
—
       Corporate debt securities 53,467
—
53,467
—
       Trust preferred securities 4,250
—
4,250
—
       Equity securities 1,890
1,890
—
—
            Total securities available for sale 1,034,758
56,047
978,711
—
Derivative assets 865
—
865
—
$ 1,035,623
$ 56,047
$ 979,576
$ —

Derivative liabilities $ 3,467
$ —
$ 3,467
$ —

December 31, 2017
Fair Value Measurements
Fair value Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3)
(In thousands)
Securities available for sale:
       U.S. government and agency obligations $ 39,644
$ 39,644
$ —
$ —
Mortgage-backed securities and collateralized mortgage obligations 606,612
—
606,612
—
       Municipal obligations 1,957
—
1,957
—
       Corporate debt securities 54,514
—
54,514
—
       Trust preferred securities 4,656
—
4,656
—
       Equity securities 3,187
3,187
—
—
            Total securities available for sale 710,570
42,831
667,739
—
Derivative assets 490
—
490
—
$ 711,060
$ 42,831
$ 668,229
$ —

Derivative liabilities $ 203
$ —
$ 203
$ —

There were no transfers between Level 1, Level 2, and Level 3 during the years ended December 31, 2018, September 30, 2016 and the three months ended December 31, 2017. During the year ended September 30, 2017, U.S. Government and agency obligations with a carrying value of $20.4 million were transferred from Level 2 to Level 1.

~~127~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(14) Fair Value Measurements (continued)~~

~~There were no Level 3 assets measured at fair value on a recurring basis at December 31, 2018 and 2017.~~

~~Assets Measured at Fair Value on a Non-Recurring Basis~~

~~The valuation techniques described below were used to estimate fair value of financial instruments measured on a non-recurring basis as of December 31, 2018 and 2017.~~

~~Collateral Dependent Impaired Loans~~

Loans which meet certain criteria are evaluated individually for impairment. For loans measured for impairment based on the fair value of the underlying collateral, fair value was estimated using a market approach. The Company measures the fair value of collateral underlying impaired loans primarily through obtaining independent appraisals that rely upon quoted market prices for similar assets in active markets. These appraisals include adjustments, on an individual case-by-case basis, to comparable assets based on the appraisers’ market knowledge and experience, as well as adjustments for estimated costs to sell between 6% and 8%. The Company classifies these loans as Level 3 within the fair value hierarchy.

~~Real Estate Owned~~

Assets acquired through foreclosure or deed in lieu of foreclosure are carried at fair value, less estimated costs to sell between 6% and 8%. Fair value is generally based on independent appraisals that rely upon quoted market prices for similar assets in active markets. These appraisals include adjustments, on an individual case basis, to comparable assets based on the appraiser's market knowledge and experience, and are classified as Level 3. When an asset is acquired, the excess of the loan balance over fair value less estimated selling costs is charged to the allowance for loan losses. Operating results from real estate owned, including rental income, operating expenses, and gains and losses realized from the sales of real estate owned, are recorded as incurred.

~~Mortgage Servicing Rights, Net~~

Mortgage servicing rights are carried at the lower of cost or estimated fair value. The estimated fair value of MSRs is obtained through an analysis of future cash flows, incorporating assumptions that market participants would use in determining fair value including market discount rates, prepayments speeds, servicing income, servicing costs, default rates and other market driven data, including the market's perception of future interest rate movements. The prepayment speed and the discount rate are considered two of the most significant inputs in the model. A significant degree of judgment is involved in valuing the mortgage servicing rights using Level 3 inputs. The use of different assumptions could have a significant effect on this fair value estimate.

December 31, 2018
Fair Value Measurements
Fair value Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3)
(In thousands)

Impaired loans $ 1,525
$ —
$ —
$ 1,525
Real estate owned 92
—
—
92
Mortgage servicing rights 442
—
—
442
$ 2,059
$ —
$ —
$ 2,059

~~128~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(14) Fair Value Measurements (continued)~~

December 31, 2017
Fair Value Measurements
Fair value Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3)
(In thousands)

Impaired loans $ 10,251
$ —
$ —
$ 10,251
Real estate owned 959
—
—
959
Mortgage servicing rights 316
—
—
316
$ 11,526
$ —
$ —
23
$ 11,526

~~The following table presents qualitative information for Level 3 assets measured at fair value on a non-recurring basis as of December 31, 2018 and 2017:~~

December 31, 2018
Fair value Valuation methodology Unobservable inputs Range Weighted average
(In thousands)
Impaired loans $ 1,525

Appraised value ⁽²⁾

Discount for cost to sell ⁽³⁾
6.0% - 8.0% 7.5%
Real estate owned 92

Contract sales price ⁽¹⁾

Discount for cost to sell ⁽³⁾
6.0% 6.0%
Mortgage servicing rights 442
Estimated cash flow Prepayment speeds 3.3% - 26.8% 12%

December 31, 2017
Fair value Valuation methodology Unobservable inputs Range of inputs Weighted average
(In thousands)
Impaired loans $ 10,251

Appraised value ⁽²⁾

Discount for cost to sell ⁽³⁾
6.0% - 8.0% 7.2%
Real estate owned 959

Appraised value ⁽²⁾

Discount for cost to sell ⁽³⁾
6.0% 6.0%
Mortgage servicing rights 316
Estimated cash flow Prepayment speeds 3.6% -11.0% 3.9%

(1) Value is based on signed contract for sale.
(2) Value is based on an independent appraisal of the market or fair value of the loan's underlying collateral.
(3) Includes commissions, fees and other costs.

~~Other Fair Value Disclosures~~

The Company is required to disclose estimated fair value of financial instruments, both assets and liabilities on and off the balance sheet, for which it is practicable to estimate fair value. A description of the valuation methodologies used for those assets and liabilities not recorded at fair value on a recurring or non-recurring basis are set forth below.

~~129~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(14) Fair Value Measurements (continued)~~

~~Cash and Cash Equivalents~~

~~For cash and due from banks, federal funds sold and short-term investments, the carrying amount approximates fair value due to their nature and short-term maturities.~~

~~Securities Held to Maturity~~

For securities held to maturity, fair value was estimated using a market approach. The majority of the Company’s securities are fixed income instruments that are not quoted on an exchange, but are traded in active markets. Prices for these instruments are obtained through third party data service providers or dealer market participants with which the Company has historically transacted both purchases and sales of securities. Prices obtained from these sources include market quotations and matrix pricing. Matrix pricing, a Level 2 input, is a mathematical technique used principally to value certain securities to benchmark or to compare securities. The Company evaluates the quality of Level 2 matrix pricing through comparison to similar assets with greater liquidity and evaluation of projected cash flows. As the Company is responsible for the determination of fair value, it performs quarterly analysis on the prices received from the pricing service to determine whether the prices are reasonable estimates of fair value. Specifically, the Company compares the prices received from the pricing service to a secondary pricing source. Additionally, the Company compares changes in the reported market values and returns to relevant market indices to assess the reasonableness of the reported prices. The Company’s internal price verification procedures and review of fair value methodology documentation provided by independent pricing services has not historically resulted in an adjustment in the prices obtained from the pricing service. The Company also holds debt instruments issued by the U.S. government and U.S. government sponsored agencies that are traded in active markets with readily accessible quoted market prices that are considered Level 1 within the fair value hierarchy.

~~Federal Home Loan Bank Stock ("FHLB")~~

The carrying value of FHLB stock is its cost. The fair value of FHLB stock is based on redemption at par value. There is no active market for this stock. The Company classifies the estimated fair value as Level 2 within the fair value hierarchy.

~~Loans Receivable~~

Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial mortgage, residential mortgage, commercial, construction, and consumer and other. Each loan category is further segmented into fixed and adjustable rate interest terms and into performing and non-performing categories. The fair value of performing loans was estimated using a combination of techniques, including a discounted cash flow model that utilizes a discount rate that reflects the Company’s current pricing for loans with similar characteristics and remaining maturity, adjusted by an amount for estimated credit losses inherent in the portfolio at the balance sheet date. The rates take into account the expected yield curve, as well as an adjustment for prepayment risk, when applicable. The fair value estimated does not incorporate an exit value. The Company classifies the estimated fair value of its loan portfolio as Level 3.

The fair value for significant non-performing loans was based on recent external appraisals of collateral securing such loans, adjusted for the timing of anticipated cash flows. The Company classifies the estimated fair value of its non-performing loan portfolio as Level 3.

~~Deposits~~

The fair value of deposits with no stated maturity, such as demand, money market, savings and club deposits, was equal to the amount payable on demand and classified as Level 2. The estimated fair value of certificates of deposit was based on the discounted value of contractual cash flows. The discount rate was estimated using the Company’s current rates offered for deposits with similar remaining maturities. The Company classifies the estimated fair value of its certificates of deposit portfolio as Level 2.

~~Borrowings~~

The fair value of borrowings was estimated by discounting future cash flows using rates available for debt with similar terms and maturities and is classified by the Company as Level 2 within the fair value hierarchy.

~~130~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(14) Fair Value Measurements (continued)~~

~~Commitments to Extend Credit and Letters of Credit~~

The fair value of commitments to extend credit and letters of credit was estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates.

~~The fair value estimates of commitments to extend credit and letters of credit are deemed immaterial in comparison to their carrying value.~~

~~The following tables present the assets and liabilities reported on the Consolidated Statements of Financial Condition at their fair values as of December 31, 2018 and 2017:~~

December 31, 2018
Fair Value Measurements
Carrying value Total fair value Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3)
(In thousands)
Financial assets:
Cash and cash equivalents $ 42,201
$ 42,201
$ 42,201
$ —
$ —
Securities available for sale 1,034,758
1,034,758
56,047
978,711
—
Securities held to maturity 262,143
254,841
23,241
254,841
—
Federal Home Loan Bank stock 58,938
58,938
—
58,938
—
Loans held-for-sale 8,081
8,081

8,081
—
Loans receivable, net 4,979,182
4,841,830
—
—
4,841,830
Derivative assets 865
865
—
865
—

Financial liabilities: —

Deposits $ 4,413,873
$ 4,402,336
$ —
$ 4,402,336
$ —
Borrowings 1,189,180
1,185,007
—
1,185,007
—
Derivative liabilities 3,467
3,467
—
3,467
—

~~131~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(14) Fair Value Measurements (continued)~~

December 31, 2017
Fair Value Measurements
Carrying value Total fair value Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2)
(In thousands)
Financial assets:
Cash and cash equivalents $ 65,498
$ 65,498
$ 65,498
$ —
$ —
Securities available for sale 710,570
710,570
42,831
667,739
—
Securities held to maturity 239,618
236,125
8,344
227,781
—
Federal Home Loan Bank Stock 44,664
44,664
—
44,664
—
Loans receivable, net 4,400,470
4,367,945
—
—
4,367,945
Derivative assets 490
490
—
490
—

Financial liabilities:
—

Deposits $ 4,263,315
$ 3,959,460
$ —
$ 3,959,460
$ —
Borrowings 929,057
925,032
—
925,032
—
Derivative liabilities 203
203
—
203
—

~~Limitations~~

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because limited markets exist for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on and off balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial assets or liabilities include goodwill and other intangibles, deferred tax assets, office properties and equipment, and bank-owned life insurance. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

Finally, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates which must be made given the absence of active markets for many of these financial instruments. The lack of uniform methodologies introduces a greater degree of subjectivity to these estimates.

~~132~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(15) Selected Quarterly Financial Data (Unaudited)~~

~~The following tables are a summary of certain quarterly financial data for the years ended December 31, 2018, September 30, 2017 and 2016 and the three months ended December 31, 2017:~~

Quarters Ended December 31, 2018
March 31 June 30 September 30 December 31
(Dollars in thousands, except per share data)

Total interest income $ 51,791
$ 55,019
$ 57,695
$ 61,785
Total interest expense 12,730
14,004
17,112
18,410
Net interest income 39,061
41,015
40,583
43,375
Provision for loan losses 2,000
2,400
1,500
777
Net interest income after provision for loan losses 37,061
38,615
39,083
42,598
Total non-interest income 4,543
5,450
5,290
6,405
Total non-interest expense 26,015
61,768
26,590
31,013
Income (loss) before income tax expense 15,589
(17,703 ) 17,783
17,990
Income tax expense 3,805
(2,961 ) 6,956
3,123
Net income (loss) $ 11,784
$ (14,742 ) $ 10,827
$ 14,867
Basic and diluted earnings per share N/A
$ (0.13 ) $ 0.10
$ 0.13

~~133~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(15) Selected Quarterly Financial Data (Unaudited) (continued)~~

Quarter Ended December 31,
2017
(In thousands)

Total interest income $ 49,169
Total interest expense 12,240
Net interest income 36,929
Provision for loan losses 3,400
Net interest income after provision for loan losses 33,529
Total non-interest income 4,733
Total non-interest expense 25,601
Income before income tax expense 12,661
Income tax expense 8,983
Net income $ 3,678
Basic and diluted earnings per share N/A

Quarters Ended September 30, 2017
December 31 March 31 June 30 September 30
(Dollars in thousands, except per share data)

Total interest income $ 44,129
$ 45,428
$ 46,850
$ 47,820
Total interest expense 10,724
10,651
11,211
11,860
Net interest income 33,405
34,777
35,639
35,960
Provision for loan losses —
375
375
5,676
Net interest income after provision for loan losses 33,405
34,402
35,264
30,284
Total non-interest income 5,534
5,806
4,645
1,630
Total non-interest expense 24,078
24,903
24,703
30,206
Income before income tax expense 14,861
15,305
15,206
1,708
Income tax expense 4,868
5,012
5,934
194
Net income $ 9,993
$ 10,293
$ 9,272
$ 1,514
Basic and diluted earnings per share N/A
N/A
N/A
N/A

~~134~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(15) Selected Quarterly Financial Data (Unaudited) (continued)~~

Quarters Ended September 30, 2016
December 31 March 31 June 30 September 30
(Dollars in thousands, except per share data)

Total interest income $ 41,616
$ 41,929
$ 42,421
$ 43,011
Total interest expense 10,996
10,840
11,003
11,123
Net interest income 30,620
31,089
31,418
31,888
Provision for loan losses —
417
—
—
Net interest income after provision for loan losses 30,620
30,672
31,418
31,888
Total non-interest income 4,537
4,738
4,525
4,702
Total non-interest expense 23,388
22,816
23,658
23,482
Income before income tax expense 11,769
12,594
12,285
13,108
Income tax expense 3,859
4,281
4,052
4,611
Net income $ 7,910
$ 8,313
$ 8,233
$ 8,497
Basic and diluted earnings per share N/A
N/A
N/A
N/A

~~(16) Earnings per Share~~

Basic EPS is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. For purposes of calculating basic EPS, weighted average common shares outstanding excludes unallocated employee stock ownership plan shares that have not been committed for release and deferred compensation obligations required to be settled in shares of Company stock.

Diluted EPS is computed using the same method as basic EPS and reflects the potential dilution which could occur if stock options and unvested shares were exercised and converted into common stock. The potentially diluted shares would then be included in the weighted average number of shares outstanding for the period using the treasury stock method. For the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017, the Company did not have any stock options outstanding.

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017:

December 31, Three Months Ended December 31, September 30,
2018 2017 2017 2016
(Dollars in thousands, except per share data)
Net income $ 22,736
$ 3,678
$ 31,072
$ 32,953

Basic earnings per share:
Weighted average shares outstanding - basic 111,395,723
N/A
N/A
N/A
Basic earnings per share $ 0.20
N/A
N/A
N/A

Diluted earnings per share:
Weighted average shares outstanding - diluted 111,395,723
N/A
N/A
N/A
Diluted earnings per share $ 0.20
N/A
N/A
N/A

~~135~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(17) Parent-only Financial Information~~

~~The condensed financial statements of Columbia Financial, Inc. (parent company) are presented below:~~

Statements of Financial Condition

December 31,
2018 2017
(In thousands)
Assets
Cash and due from Bank $ 153,697
$ 1,537
Short-term investments 136
164
Total cash and cash equivalents 153,833
1,701

Securities available for sale, at fair value 1,420
2,783
Investment in subsidiaries 764,663
516,607
Loan receivable from Bank 44,439
—
Other assets 7,852
3,281
Total assets $ 972,207
$ 524,372

Liabilities and Stockholders' Equity
Liabilities:
Borrowings $ —
$ 50,657
Accrued expenses and other liabilities 147
1,645
Total liabilities 147
52,302

Total stockholders' equity 972,060
472,070
Total liabilities and stockholders' equity $ 972,207
$ 524,372

~~136~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(17) Parent-only Financial Information (continued)~~

Statements of Comprehensive Income (Loss)

Year Ended December 31, Three Months Ended December 31, Years Ended September 30,
2018 2017 2017 2016
(In thousands)
Income:
Dividend from subsidiary $ —
$ —
$ 2,000

$ 3,000
Securities available for sale 123
41
162
157
Interest earnings 2,384
—
1
—
Total income 2,507
41
2,163
3,157

Interest expense on borrowings 3,468
1,044
4,177
4,177

Net interest expense (961 ) (1,003 ) (2,014 ) (1,020 )

Equity earnings in subsidiary 51,401
4,288
32,230
32,743

Expense:

Loss on securities available for sale —
60
—
—
Charitable contribution to foundation 34,767
—
—
—
Other non-interest expense 425
2
460
355
Total expense 35,192
62
460
355

Income before income tax benefit 15,248
3,223
29,756
31,368

Income tax benefit 7,488
455
1,316
1,585

Net income 22,736
3,678
31,072
32,953
Other comprehensive (loss) income (6,487 ) (19,230 ) 5,178
(11,287 )
Comprehensive income (loss) $ 16,249
$ (15,552 ) $ 36,250
$ 21,666

~~137~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(17) Parent-only Financial Information (continued)~~

Statements of Cash Flows
Year Ended December 31, Three Months Ended December 31, Years Ended September 30,
2018 2017 2017 2016
(In thousands)
Cash flows from operating activities:
Net income $ 22,736
$ 3,678
$ 31,072
$ 32,953
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of debt issuance costs 890
14
53
53
Loss on securities available for sale —
60
—
—
Deferred tax (benefit) expense (6,086 ) 42
1
(2 )
Increase (decrease) in other assets 1,515
(494 ) 1,404
(1,600 )
(Decrease) increase in accrued expenses and other liabilities (1,498 ) 989
62
10
Contribution of common stock to Columbia Bank Foundation 34,767
—
—
—
Equity in undistributed earnings of subsidiary (51,401 ) (4,288 ) (32,295 ) (32,744 )
Net cash provided by (used in) operating activities 923
1
297
(1,330 )

Cash flows from financing activities:
Capital contribution to subsidiary (246,420 ) —
—
—
Proceeds from sales of securities available for sale —
92
—
—
Proceeds from call / paydowns of securities available for sale 1,601
10
—
—
Purchases of securities available for sale (414 ) —
—
—
Loan to ESOP (45,428 ) —
—
—
Repayment of loans receivable from Bank 989
—
—
—
Net cash (used in) provided by investing activities (289,672 ) 102
—
—

Cash flows from financing activities:
Payment for trust preferred securities (51,547 ) —

Issuance of common stock 492,428
—

Net cash provided by financing activities 440,881
—
—
—

Net increase (decrease) in cash and cash equivalents 152,132
103
297
(1,330 )

Cash and cash equivalents at beginning of period 1,701
1,598
1,301
2,631
Cash and cash equivalents at end of period $ 153,833
$ 1,701
$ 1,598
$ 1,301

~~138~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(18) Other Comprehensive Income (Loss)~~

The following tables present the components of other comprehensive income (loss), both gross and net of tax, for the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017:

For the Year Ended December 31, For the Three Months Ended December 31,
2018 2017
Before Tax Tax Effect After Tax Before Tax Tax Effect After Tax
(In thousands)
Components of Other Comprehensive (Loss) Income:
Unrealized gains and losses on securities available for sale:
Net (loss) gain arising during the period $ (7,224 ) $ 1,446
$ (5,778 ) $ (3,012 ) $ (119 ) $ (3,131 )
Accretion of unrealized loss on securities reclassified as held to maturity (13 ) —
(13 ) (2 ) (56 ) (58 )
Reclassification adjustment for (gain) loss included in net income (116 ) 24
(92 ) 60
(13 ) 47

(7,353 ) 1,470
(5,883 ) (2,954 ) (188 ) (3,142 )

Unrealized (loss) gain on swap contract (2,825 ) 595
(2,230 ) 192
(30 ) 162

Employee benefit plans:
Amortization of prior service cost included in net income (623 ) 132
(491 ) (24 ) (19 ) (43 )
Reclassification adjustment of actuarial net (loss) gain included in net income 2,526
(530 ) 1,996
(9 ) (94 ) (103 )
Change in funded status of retirement obligations 897
(776 ) 121
(9,024 ) 3,354
(5,670 )
Tax effects resulting from the adoption of ASU No. 2018-02 —
—
—
—
(10,434 ) (10,434 )

2,800
(1,174 ) 1,626
(9,057 ) (7,193 ) (16,250 )
Total other comprehensive (loss) $ (7,378 ) $ 891
$ (6,487 ) $ (11,819 ) $ (7,411 ) $ (19,230 )

The Company, in accordance with ASU No. 2018-02, elected to reclassify the income tax effects of the Tax Act from accumulated other comprehensive (loss) income to retained earnings for the year ended December 31, 2017.

~~139~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(18) Other Comprehensive Income (Loss) (continued)~~

For the Years Ended September 30,
2017 2016
Before Tax Tax Effect After Tax Before Tax Tax Effect After Tax
(In thousands)
Components of Other Comprehensive (Loss) Income:
Unrealized gains and losses on securities available for sale:
Net (loss) gain arising during the period $ (17,877 ) $ 6,379
$ (11,498 ) $ 7,271
$ (2,597 ) $ 4,674
Accretion of unrealized gain on securities reclassified as held to maturity 12
(4 ) 8
—
—
—
Reclassification adjustment for loss (gain) included in net income 2,626
(937 ) 1,689
(552 ) 197
(355 )
(15,239 ) 5,438
(9,801 ) 6,719
(2,400 ) 4,319

Unrealized gain on swap contract 95
(33 ) 62
—
—
—
95
(33 ) 62
—
—
—

Employee benefit plans:
Amortization of prior service cost included in net income (114 ) 41
(73 ) (114 ) 41
(73 )
Reclassification adjustment of actuarial net gains (losses) included in net income 11,806
(4,213 ) 7,593
9,123
(3,259 ) 5,864
Change in funded status of retirement obligations 11,503
(4,106 ) 7,397
(33,287 ) 11,890
(21,397 )
23,195
(8,278 ) 14,917
(24,278 ) 8,672
(15,606 )
Total other comprehensive income (loss) $ 8,051
$ (2,873 ) $ 5,178
$ (17,559 ) $ 6,272
$ (11,287 )

~~140~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(18) Other Comprehensive Income (Loss) (continued)~~

The following tables present the changes in the components of accumulated other comprehensive (loss) income, net of tax, for the years ended ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017:

For the Year Ended December 31, For the Three Months Ended December 31,
2018 2017
Unrealized (losses) gains on securities available for sale Unrealized gains (losses) on swaps Employee benefit plans Accumulated other comprehensive loss Unrealized (losses) gains on securities available for sale Unrealized gains (losses) on swaps Employee benefit plans Accumulated other comprehensive loss
(In thousands)

Balance at beginning of period $ (7,279 ) $ 224
$ (58,355 ) $ (65,410 ) $ (4,137 ) $ 62
$ (42,105 ) $ (46,180 )
Current period changes in other comprehensive (loss) income (5,883 ) (2,230 ) 1,626
(6,487 ) (1,828 ) 122
(5,816 ) (7,522 )
Reclassification of tax effects resulting from the adoption of ASU No. 2018-02 —
—
—
—
(1,314 ) 40
(10,434 ) (11,708 )
Total other comprehensive (loss) income $ (13,162 ) $ (2,006 ) $ (56,729 ) $ (71,897 ) $ (7,279 ) $ 224
$ (58,355 ) $ (65,410 )

~~141~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(18) Other Comprehensive Income (Loss) (continued)~~

For the Years Ended September 30,
2017 2016
Unrealized (losses) gains on securities available for sale Unrealized gains (losses) on swaps Employee benefit plans Accumulated other comprehensive loss Unrealized (losses) gains on securities available for sale Unrealized gains (losses) on swaps Employee benefit plans Accumulated other comprehensive loss
(In thousands)

Balance at beginning of period $ 5,664
$ —
$ (57,022 ) $ (51,358 ) $ 1,345
$ —
$ (41,416 ) $ (40,071 )
Current period changes in other comprehensive (loss) income (9,801 ) 62
14,917
5,178
4,319
—
(15,606 ) (11,287 )
Total other comprehensive (loss) income $ (4,137 ) $ 62
$ (42,105 ) $ (46,180 ) $ 5,664
$ —
$ (57,022 ) $ (51,358 )

The following table reflects amounts reclassified out of accumulated other comprehensive (loss) income to the Consolidated Statements of Income and the affected line item in the statement where net income is presented for the years ended ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017:

Accumulated other comprehensive (loss) income components
For the Year Ended December 31, For the Three Months Ended December 31, Affected line items in the Consolidated Statements of Income
2018 2017
(In thousands)

Reclassification adjustment for gains included in net income $ (116 ) $ 60
Gains on securities transactions, net
Reclassification adjustment of actuarial net gain included in net income 2,526
(9 ) Compensation and employee benefits expense
      Total before tax 2,410
51

      Income tax benefit (506 ) (107 )
      Net of tax $ 1,904
$ (56 )

~~142~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(18) Other Comprehensive Income (Loss) (continued)~~

Accumulated other comprehensive (loss) income components
For the Years Ended September 30, Affected line items in the Consolidated Statements of Income
2017 2016
(In thousands)

Reclassification adjustment for gains included in net income $ 2,626
$ (552 ) Gains on securities transactions, net
Reclassification adjustment of actuarial net gain included in net income 11,806
9,123
Compensation and employee benefits expense
      Total before tax 14,432
8,571

      Income tax (benefit) expense (5,150 ) (3,062 )
      Net of tax $ 9,282
$ 5,509

~~(19) Derivatives and Hedging Activities~~

The Company is a party to interest rate derivatives that may be designated as hedging instruments. The Company offers currency forward contracts and interest rate swap contracts to certain commercial banking customers to manage their risk of exposure and risk management strategies. These contracts are simultaneously hedged by offsetting contracts with a third party, such that the Company would minimize its net risk exposure resulting from these transactions. In addition, the Company executes interest rate swaps with third parties to in order to hedge the interest expense of short-term FHLB advances. These contracts are simultaneously hedged with short-term FHLB advances.

~~Currency Forward Contracts.~~ At December 31, 2018, the Company had no currency forward contracts in place with commercial banking customers. At December 31, 2017, the Company had a currency forward contract in place with a commercial banking customer with a notional amount of $1.6 million. An offsetting currency forward contract with a third party was also in place at December 31, 2017. This currency forward contract did not meet hedge accounting requirements. Changes in the fair value of both the customer currency forward contract and the offsetting third party contract are recognized directly in earnings. Derivatives not designated in qualifying hedging relationships are not speculative and result from a service the Company provides to certain qualified commercial banking customers and are not used to manage interest rate risk in the Company's assets or liabilities.

~~Interest Rate Swaps.~~ At December 31, 2018 the Company had interest rate swaps in place with three commercial banking customers hedged by offsetting interest rate swaps with third parties. The aggregated notional amount of the interest rate swaps at December 31, 2018 was $36.6 million. At December 31, 2017, the Company did not have any interest rate swaps with commercial banking customers. These derivatives are not designated as hedges and are not speculative. These interest rate swaps do not meet hedge accounting requirements. Changes in the fair value of both the customer swap and offsetting third party swaps are recognized directly in earnings.

The Company had 24 interest rate swaps at December 31, 2018 with a notional amount of $320.0 million hedging certain FHLB advances. At December 31, 2017, the Company had two interest rate swaps with a notional amount of $20.0 million hedging certain FHLB advances. These interest rate swaps meet the hedge accounting requirements. The effective portion of changes in the fair value of the derivatives designated that qualify as cash flow hedges are recorded in accumulated other comprehensive income (loss). The ineffective portion of changes in the fair value of the derivatives designated that qualify as cash flow hedges are recorded in earnings. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counter-party in exchange for the Company making fixed-rate payment payments over the life of the agreements without the exchange of the underlying notional amount.

~~For the years ended December 31, 2018, September 30, 2017 and 2016, and the three months ended December 31, 2017, the Company did not record any hedge ineffectiveness associated with these contracts.~~

~~143~~

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements~~

~~(19) Derivatives and Hedging Activities (continued)~~

The tables below present the fair value of the Company’s derivative financial instruments as well as their classification in the Consolidated Statements of Financial Condition at December 31, 2018 and 2017:

December 31, 2018
Asset Derivative Liability Derivative
Consolidated Statements of Financial Condition Fair value Consolidated Statements of Financial Condition Fair value
(In thousands) (In thousands)
Derivatives:
Interest rate products-designated Other Assets $ 865
Other Liabilities $ 3,467
Total derivative instruments $ 865
$ 3,467

December 31, 2017
Asset Derivative Liability Derivative
Consolidated Statements of Financial Condition Fair value Consolidated Statements of Financial Condition Fair value
(In thousands) (In thousands)
Derivatives:
Interest rate products-designated Other Assets $ 287
Other Liabilities $ —
Currency forward contract - non-designated hedge Other Assets $ 203
Other Liabilities $ 203
Total derivative instruments
$ 490

$ 203

For the year ended December 31, 2018, a loss of approximately $52,000 was recorded for changes in fair value of interest rate swaps with third parties. For the years ended September 30, 2017 and 2016, and the three months ended December 31, 2017, no gains or losses were recorded for these transactions.

~~At December 31, 2018 and 2017, accrued interest was $65,000 and $7,000, respectively.~~

The Company has agreements with counterparties that contain a provision that if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default of its derivative obligations.

At December 31, 2018, the termination value of derivatives in a net liability position, which includes accrued interest, was $2.6 million. The Company has minimum collateral posting thresholds with certain of its derivative counterparties, and has posted collateral of $2.6 million against its obligations under these agreements. If the Company had breached any of these provisions at December 31, 2018, it could have been required to settle its obligations under the agreements at the termination value.

~~(20) Subsequent Events~~

The Company has evaluated events subsequent to December 31, 2018 and through the financial statement issuance date of March 29, 2019. The Company has not identified any material subsequent events the would require adjustment or disclosure in the consolidated financial statements.

~~144~~

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

~~COLUMBIA FINANCIAL, INC.~~



~~Dated:~~	~~March 29, 2019~~	~~By:~~	~~/s/Thomas J. Kemly~~ COLUMBIA FINANCIAL, INC.

Dated:	May 2, 2022	By:	/s/ Thomas J. Kemly
			~~President and Chief Executive Officer~~Thomas J. Kemly
			~~(Principal Executive Officer)~~

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



~~Name~~	~~Title~~	~~Date~~
~~/s/Thomas J. Kemly~~
~~Thomas J. Kemly~~	President and Chief Executive Officer ~~and Director~~	~~March 29, 2019~~
	~~(Principal Executive Officer)~~
			(Principal Executive Officer)

Annex A

NON-GAAP FINANCIAL MEASURES

As discussed in the Compensation Discussion and Analysis included in Part III of this Form 10-K/A, the Compensation Committee uses non-GAAP financial measures to evaluate the company’s performance under the company’s incentive compensation plans. Typically, the Compensation Committee adjusts GAAP net income, or elements of net income, for non-core performance items so that participants are compensated for the company’s core performance and not penalized or rewarded for non-core charges or unusual gains.

Non-GAAP measures used in Part III of this Form 10-K/A consist of the following:

•	Core Net Income. Core income and the related measure of core return on average assets reflect net income at the Bank level less gains on securities transactions and expenses of voluntary early retirement plan plus merger-related expense, loss on extinguishment of debt and expenses of branch closure, and other items, all net of tax.
~~/s/Dennis E. Gibney~~
~~Dennis E. Gibney~~•	~~Executive Vice President~~Core Earnings Per Share. Core earnings per share reflect earnings per share at the consolidated Company level after giving effect to gains on securities transactions, voluntary early retirement plan expenses, merger-related expenses, loss on extinguishment of debt, and ~~Chief Financial Officer~~	~~March 29, 2019~~
	~~(Principal Financial and Accounting Officer)~~	branch closure expenses, all net of tax.

~~/s/Noel R. Holland~~•		Core Efficiency Ratio. The efficiency ratio is non-interest expense as a percentage of net interest income plus non-interest income. The non-GAAP efficiency ratio adjusts non-interest expense to exclude voluntary early retirement expenses, merger and acquisition expenses, loss on extinguishment of debt and branch closure expenses and adjusts non-interest income to exclude investment securities gains.
~~Noel R. Holland~~	~~Chairman of the Board~~	~~March 29, 2019~~

These non-GAAP financial measures should not be viewed as a substitute for financial results in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures with similar names that may be presented by other companies. The following tables present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP.


~~/s/Frank Czerwinski~~
~~Frank Czerwinski~~	~~Director~~	~~March 29, 2019~~

~~/s/Raymond G. Hallock~~
~~Raymond G. Hallock~~	~~Director~~	~~March 29, 2019~~

~~/s/Henry Kuiken~~
~~Henry Kuiken~~	~~Director~~	~~March 29, 2019~~

~~/s/Michael Massood, Jr.~~
~~Michael Massood, Jr.~~	~~Director~~	~~March 29, 2019~~

~~/s/Elizabeth E. Randall~~
~~Elizabeth E. Randall~~	~~Director~~	~~March 29, 2019~~

~~/s/Robert Van Dyk~~
~~Robert Van Dyk~~	~~Director~~	~~March 29, 2019~~

	A-1

Bank Core ROAA (Dollars in thousands)	Year Ended December 31, 2019			Year Ended December 31, 2020			Year Ended December 31, 2021			3 year Average
Bank Net income	$	55,858		$	58,027		$	92,229
Less/Add: (gain) loss on securities transactions, net of tax		(2,065	)		(717	)		-
Add: voluntary early retirement plan, net of tax		-			2,276			-
Add: merger-related expenses, net of tax		729			1,948			202
Add: loss on extinguishment of debt, net of tax		-			880			2,074
Add: branch closure expense, net of tax		385			1,206			400
Add: write-down of MSR, net of tax		-			57			-
Add: loss on sale/disposal of assets, net of tax		-			121			10
Core net income		54,907			63,798			94,915

Average Assets		7,093,352			8,761,953			9,094,388

Return on Average Assets		0.79	%		0.66	%		1.01	%		0.82	%
Core Return on Average Assets		0.77	%		0.73	%		1.04	%		0.85	%
								Target			0.63	%

Cumulative Core EPS
										Cumulative
	Year Ended			Year Ended			Year Ended			3 year
	12/31/2019			12/31/2020			12/31/2021			period
Consolidated Net income	$	54,717		$	57,603		$	92,049
Less: gain on securities transactions, net of tax		(2,006	)		(279	)		(1,481	)
Add; voluntary early retirement plan		-			2,255			-
Add: merger-related expenses, net of tax		2,162			1,500			974
Add; loss on extinguishment of debt, net of tax		-			879			2,079
Add: branch closure expense, net of tax		-			1,075			410
Core net income		54,873			63,033			94,031

Weighted average shares -basic		111,101,246			109,755,924			104,156,112
Roselle Entities - April 1, 2020		-			-			(4,759,048	)
Freehold Entities- December 1, 2021		-			-			-
Weighted average shares (w/o Roselle & Freehold)		111,101,246			109,755,924			99,397,064

Core EPS (ex- RSI and Freehold shares)	$	0.49		$	0.57		$	0.95		$	2.01
								Target		$	1.43

A-2

	For the Year
Bank Core Efficiency Ratio	Ended
(Dollars in thousands)	December 31, 2021

Net interest income	$	222,463
Non-interest income		40,907
Total Income	$	263,370

Non-interest expense	$	146,909

Efficiency Ratio		55.8	%

Non-interest Income	$	40,907
Less: Gain on Sale of Securities		(2,081	)
Less: Gain on Swaps		(115	)
Add: Loss on sale/disposal of assets		(355	)
Core Non-interest Income		38,356
Net interest income		222,463
Core Income	$	260,819

Non-interest expense	$	146,909
Less: Loss on Fair Value of Securities		(1,758	)
Less: Merger Expenses		(277	)
Less: Loss on Sale of Securities		(439	)
Less: Loss on Assets Held for Sale		(175	)
Less: Prepayment of Debt		(2,842	)
Less: Branch Closing		(548	)
Less: Loss on sale/disposal of assets		(194	)
Core Non-interest expense	$	140,676

Core Efficiency Ratio		53.9	%

~~145~~

A-3



Delaware (State or other jurisdiction of incorporation or organization)		22-3504946 (I.R.S. Employer Identification No)

19-01 Route 208 North, Fair Lawn, New Jersey (Address of principal executive offices)		07410 (Zip Code)

Title of each class	Trading Symbol(s)	Name of exchange on which registered

~~Securities Registered Pursuant to Section 12(b) of the Act:~~
Common ~~Stock,~~stock, par value $0.01 per share	CLBK	The ~~NASDAQ~~Nasdaq Stock Market LLC
~~Title of Class~~		~~Name of Exchange on Which Registered~~

~~Securities Registered Pursuant to Section 12(g) of the Act:~~ ~~None.~~

Director	Audit Committee	Compensation Committee	Nominating/ Corporate Governance Committee	Risk Committee
Noel R. Holland	✓	✓	✓	✓*
Frank Czerwinski		✓	✓	✓
Thomas J. Kemly				✓
James M. Kuiken	✓			✓
Michael Massood, Jr.	✓*			✓
Elizabeth E. Randall		✓*	✓	✓
Lucy Sorrentini		✓	✓	✓
Daria S. Torres	✓			✓
Robert Van Dyk		✓	✓*	✓
Paul Van Ostenbridge	✓		✓	✓

Objective	Compensation Design Criteria
Accountability for Business Performance	·	Tie compensation in large part to the Company’s financial and operating performance, so that executives are held accountable for the performance of the business for which they are responsible and for achieving the goals stated in the Company’s annual Business Plan.
Accountability for Long-Term Equity Performance	·	Include meaningful incentives to create long-term shareholder value while not promoting excessive risk taking.
Competition	·	Reflect the competitive marketplace so we can attract, retain, and motivate talented executives throughout the volatility of business cycles.



ý	~~ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~



¨	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

Audit Firm Id		Auditor Name:		Auditor Location:
185		KPMG LLP		Short Hills, New Jersey



Item Number		Page Number
	PART III
	~~PART I~~
~~Item 1.~~	~~Business~~	2
~~Item1A.~~	~~Risk Factors~~	19
~~Item 1B.~~	~~Unresolved Staff Comments~~	25
~~Item 2.~~	~~Properties~~	25
~~Item 3.~~	~~Legal Proceedings~~	25
~~Item 4.~~	~~Mine Safety Disclosures~~	25

	~~PART II~~
~~Item 5.~~	~~Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~	25
~~Item 6.~~	~~Selected Consolidated Financial and Other Data~~	28
~~Item 7.~~	~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~	31
~~Item 7A.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~	70
~~Item 8.~~	~~Financial Statements and Supplementary Data~~	70
~~Item 9.~~	~~Changes in and Disagreements with Accountants on Accounting and Financial Disclosure~~	70
~~Item 9A.~~	~~Controls and Procedures~~	70
~~Item 9B.~~	~~Other Information~~	71

	~~PART III~~
Item 10.	Directors, Executive Officers and Corporate Governance	714
Item 11.	Executive Compensation	7111
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	7238
Item 13.	Certain Relationships and Related Transactions, and Director Independence	7240
Item 14.	Principal ~~Accountant~~Accounting Fees and Services	7241

	PART IV
Item 15.	Exhibits, ~~and~~ Financial Statement Schedules	7342
Item 16.	Form 10-K Summary	7644

	Signatures	~~145~~45

	Annex A	A-1

Named Executive Officer		Title
Thomas J. Kemly		President and Chief Executive Officer
Dennis Gibney		Executive Vice President and Chief Financial Officer
E. Thomas Allen, Jr.		Senior Executive Vice President and Chief Operating Officer
John Klimowich		Executive Vice President and Chief Risk Officer
Allyson Schlesinger		Executive Vice President, Head of Consumer Banking
Oliver E. Lewis, Jr.		Executive Vice President, Head of Commercial Banking

Atlantic Union Bankshares Corp.	Independent Bank Group
Berkshire Hills Bancorp, Inc.	Kearney Financial Corp.
Brookline Bancorp, Inc.	Lakeland Bancorp, Inc.
Community Bank System, Inc.	Meridian Bancorp, Inc.
ConnectOne Bancorp, Inc.	NBT Bancorp, Inc.
Customers Bancorp, Inc.	OceanFirst Financial Corp.
Dime Community Bancshares, Inc.	Peapack-Gladstone Financial Corp.
Eagle Bancorp, Inc.	Provident Financial Services, Inc.
Flushing Financial, Inc.	Sandy Spring Bancorp, Inc.
Independent Bank Corp.	WSFS Financial Corp.

COMPENSATION ELEMENT	PURPOSE
Base Salary	·	Provide financial predictability and stability through fixed compensation;
	·	Provide a salary that is market competitive;
	·	Promote the retention of executives; and
	·	Provide fixed compensation that reflects the scope, scale and complexity of the executive’s role.
Short-Term Incentives	·	Align management and shareholder interests;
	·	Provide appropriate incentives to achieve our annual operating plan;
	·	Provide market competitive cash compensation when targeted performance objectives are met;
	·	Provide appropriate incentives to exceed targeted results; and
	·	Pay meaningful incremental cash awards when results exceed target and pay below market cash awards when results are below target.
Long-Term Equity Incentives	·	Align management and long-term shareholder interests;
	·	Balance the short-term nature of other compensation elements with long-term retention of executive talent;
	·	Focus our executives on the achievement of long-term strategies and results;
	·	Create and sustain shareholder value; and
	·	Support the growth and operational profitability of the Company.

NEO	2020 Base Pay(1)		2021 Base Pay(1)		% Change
		$		$
Thomas J. Kemly		795,000		818,900		3.01
Dennis Gibney		402,000		412,000		2.49
E. Thomas Allen		460,000		472,000		2.61
John Klimowich		350,000		370,000		5.71
Allyson Schlesinger		365,000		380,000		4.11
Oliver E. Lewis, Jr.⁽²⁾		—		350,000		—

2021 Performance Measures ⁽¹⁾	Threshold Parameter (Dollars in Millions)			Target Parameter (Dollars in Millions)			Stretch Parameter (Dollars in Millions)			2021 Actual Performance (Dollars in Millions)
Core Net Income of Columbia Bank ⁽²⁾	$	61.2		$	72.6		$	82.8		$	94.9
Efficiency Ratio of Columbia Bank⁽²⁾		60.9	%		57.9	%		54.9	%		53.9	%
Non-Performing Assets to Total Assets		0.50	%		0.25	%		0.10	%		0.04	%

2021 Performance Measures	Mr. Kemly			Mr. Gibney			Mr. Allen			Mr. Klimowich			Ms. Schlesinger			Mr. Lewis
Net Income of Columbia Bank		35.0	%		25.0	%		35.0	%		25.0	%		25.0	%		25.0	%
Efficiency Ratio of Columbia Bank		35.0	%		25.0	%		35.0	%		25.0	%		25.0	%		25.0	%
Non-Performing Assets to Total Assets		30.0	%		20.0	%		30.0	%		20.0	%		20.0	%		20.0	%
Other⁽¹⁾		0.0	%		30.0	%		0.0	%		30.0	%		30.0	%		30.0	%
Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

NEO	Target Opportunity ($)		Payout as a Percent of Target Opportunity (%)
Thomas J. Kemly		612,128		125
Dennis Gibney		284,280		117.5
E. Thomas Allen		352,820		125
John Klimowich		212,750		113
Allyson Schlesinger		218,500		134.9
Oliver E. Lewis, Jr.		201,250		130.5

		Stock Awards (Number of Shares)				Grant Date Fair Value of Stock Awards ($)⁽¹⁾				Option Awards (Number of Options)				Grant Date Fair Value of Option Awards ($)⁽¹⁾
Oliver E. Lewis, Jr.⁽²⁾			23,516			$	419,996				57,026				279,998

Corporate Goal	Threshold Performance Level (50% of Target Award)			Target Performance Level (100% of Target Award)			Actual Performance			Payment Level
Cumulative Earnings Per Share (“EPS”)	$	1.15		$	1.43		$	2.03	⁽¹⁾		100	%
Average Core Return on Average Assets (“ROAA”)		0.505	%		0.632	%		0.85	%⁽²⁾		100	%
Non-Performing Assets as a % of Total Assets⁽³⁾		—			0.27	%		0.04	%		100	%

Name	2019 Performance Shares Earned at 100.00% of Target ⁽¹⁾ (#)
Thomas J. Kemly		134,135
Dennis Gibney		49,038
E. Thomas Allen		57,692
John Klimowich		38,462
Allyson Schlesinger		31,731
Oliver E. Lewis, Jr.⁽²⁾		—

Title		Amount
President and Chief Executive Officer		5x base salary
Senior Executive Vice Presidents		3x base salary
Executive Vice Presidents		3x base salary
Non-Employee Directors		3x annual fees and retainers for service on the Board

Name	Year	Salary ($)⁽¹⁾	Bonus ($)⁽²⁾	Stock Awards ($)⁽³⁾	Option Awards ($)⁽⁴⁾	Non-Equity Incentive Plan Compensation ($)⁽⁵⁾	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)⁽⁶⁾	All Other Compensation ($)⁽⁷⁾	Total ($)⁽⁷⁾
Thomas J. Kemly President and Chief Executive Officer	2021 2020 2019	818,900 825,577 775,000	— — —	— — 4,184,996	— — 2,790,002	765,160 890,236 849,735	366,796 1,751,023 2,350,329	181,080 151,035 181,941	2,131,936 3,617,871 11,132,003

Dennis E. Gibney Executive Vice President and Chief Financial Officer	2021 2020 2019	412,000 417,462 392,000	— — 50,000	— — 1,530,001	— — 1,020,000	334,029 367,829 294,386	56,107 170,419 153,627	74,510 56,133 63,976	876,646 1,011,843 3,503,990

E. Thomas Allen, Jr. Senior Executive Vice President and Chief Operating Officer	2021 2020 2019	472,000 477,693 450,000	— — —	— — 1,800,006	— — 1,200,000	441,025 472,714 440,107	175,097 685,719 974,481	98,168 82,868 97,269	1,186,290 1,718,994 4,961,863

John Klimowich Executive Vice President and Chief Risk Officer	2021 2020 2019	370,000 363,462 330,000	— — —	— — 1,999,998	— — 799,999	240,408 272,602 255,760	238,927 757,071 869,887	63,452 47,683 50,500	912,878 1,440,818 3,176,145

Allyson Schlesinger Executive Vice President, Head of Consumer Banking	2021 2020 2019	380,000 379,039 365,000	— — 50,000	— — 990,008	— — 660,000	294,737 256,743 162,100	73,000 107,402 84,048	77,345 57,314 69,884	825,082 800,498 2,381,040

Oliver E. Lewis, Jr. Executive Vice President, Head of Commercial Banking	2021	350,000	—	419,996	279,998	262,719	—	60,851	1,373,564

	Columbia Bank Performance Achievement Incentive Plan^(a)
Mr. Kemly	$	765,160
Mr. Gibney		334,029
Mr. Allen		441,025
Mr. Klimowich		240,408
Ms. Schlesinger		294,737
Mr. Lewis		262,719

		Estimated Future Payments Under Non-Equity Incentive Plan Awards						Estimated Future Payouts Under Equity Incentive Plan Awards						All Other Stock Awards: Number of Shares		All Other Option Awards: Number of Securities		Exercise or Base Price of Option		Grant Date Fair Value of Stock and Options
Name	Grant Date	Threshold ($)		Target ($)		Maximum ($)		Threshold (#)		Target (#)		Maximum (#)		of Stock (#)⁽¹⁾⁽³⁾		Underlying Options		Awards ($/Sh)		Awards ($)⁽²⁾⁽³⁾
Oliver E. Lewis, Jr.	3/22/21		—		—		—		—		—		—		23,516		—		—		419,996
	3/22/21		—		—		—		—		—		—		—		57,026	$	17.86		279,998

	Option Awards							Stock Awards
Name	Grant Date	Number of Securities Underlying Unexercised Stock Options Exercisable⁽¹⁾		Number of Underlying Unexercised Options Unexercisable⁽¹⁾⁽⁴⁾		Option Exercise Price		Option Expiration Date		Number of Shares of Restricted Stock Not Vested⁽²⁾⁽⁴⁾		Market Value of Shares or Units of Restricted Stock Not Vested⁽³⁾			Number of Unearned Performance Shares		Market Value of Unearned Performance Shares
Thomas J. Kemly	07/23/2019		262,588		393,883	$	15.60		07/23/2029		—	$	—			—	$	—
	07/23/2019		—		—		—		—		214,616		4,476,890			—		—

Dennis E. Gibney	07/23/2019		96,000		144,000	$	15.60		07/23/2029		—		—			—		—
	07/23/2019		—		—		—		—		78,462		1,636,718			—		—

E. Thomas Allen, Jr.	07/23/2019		112,941		169,412	$	15.60		07/23/2029		—		—			—		—
	07/23/2019		—		—		—		—		92,308		1,925,545			—		—

John Klimowich	07/23/2019		75,294		112,941	$	15.60		07/23/2029		—		—	��		—		—
	07/23/2019		—		—		—		—		61,539		1,283,703			—		—

Allyson Schlesinger	07/23/2019		62,117		93,177	$	15.60		07/23/2029		—		—			—		—
	07/23/2019		—		—		—		—		50,770		1,059,063			—		—

Oliver E. Lewis, Jr.	12/16/2019		7,058		10,589	$	17.00		07/23/2029		—		—			—		—
	12/16/2019		—		—		—		—		5,718		119,278			—		—
	03/22/2021		—		57,026	$	17.86		03/22/2031		—		—			—		—
	03/22/2021		—		—		—		—		23,516		490,544			—		—



	Period Ending
Index	4/20/2018	4/30/2018	5/31/2018	06/30/2018	7/31/2018	8/31/2018	9/30/2018	10/31/2018	11/30/2018	12/31/2018
Columbia Financial, Inc.	100.00	100.52	110.12	107.33	108.88	109.79	108.30	97.80	102.20	99.16
NASDAQ Composite Index	100.00	98.89	104.33	105.35	107.66	113.96	113.16	102.79	103.29	93.59
SNL Thrift $5B-$10B Index	100.00	99.36	104.55	104.07	103.48	101.79	97.78	90.93	95.47	86.98
SNL Thrift MHCs Index	100.00	99.17	103.95	104.32	102.48	104.02	102.00	97.11	103.83	101.57

Source: S&P Global Market Intelligence



	At December 31,				At September 30,
	2018		2017		2017		2016		2015		2014
	(In thousands)
Financial Condition Data:
Total assets	$	6,691,618	$	5,766,500	$	5,429,328	$	5,037,412	$	4,771,153	$	4,612,645
Total cash and cash equivalents	42,201		65,498		100,975		45,694		43,178		41,652
Securities available for sale	1,034,758		710,570		557,176		771,779		653,283		777,537
Securities held to maturity	262,143		239,618		132,939		—		—		—
Loans receivable, net (1)	4,916,840		4,400,470		4,307,623		3,932,242		3,764,220		3,489,895
Deposits	4,413,873		4,263,315		4,123,428		3,822,815		3,572,624		3,386,714
Borrowings	1,189,180		929,057		733,043		681,990		702,536		775,283
Stockholder's equity	972,060		472,070		475,914		439,664		417,998		391,071

(1) Loans are shown net of allowance for loan losses, deferred costs and fees and purchased premiums and discounts.



	For the years ended December 31,				For the years ended September 30,
	2018		2017		2017		2016		2015		2014
	(In thousands)
Operating Data:
Interest income	$	226,290	$	189,274	$	184,226	$	168,977	$	163,165	$	157,250
Interest expense	62,256		45,965		44,446		43,962		45,744		47,568
Net interest income	164,034		143,309		139,780		125,015		117,421		109,682
Provision for loan losses	6,677		9,826		6,426		417		5,099		8,741
Net interest income after provision for loan losses	157,357		133,483		133,354		124,598		112,322		100,941
Non-interest income	21,688		16,818		17,172		18,927		21,066		15,578
Non-interest expense	145,386		105,421		103,446		93,769		88,699		82,687
Income before income tax expense	33,659		44,880		47,080		49,756		44,689		33,832
Income tax expense	10,923		20,123		16,008		16,803		14,821		11,255
Net income	$	22,736	$	24,757	$	31,072	$	32,953	$	29,868	$	22,577



	At or for the Years Ended December 31,					At or for the Years Ended September 30,
	2018			2017		2017		2016		2015		2014
Performance Ratios:
Return on average assets	0.36		%	0.46	%	0.60	%	0.67	%	0.63	%	0.50	%
Core return on average assets (1)	0.79			0.55		0.70		0.67		0.60		0.53
Return on average equity	2.87			5.37		6.86		7.52		7.18		5.72
Core return on average equity (2)	6.12			6.27		7.93		7.52		6.82		6.14
Interest rate spread (3)	2.45			2.62		2.60		2.48		2.41		2.32
Net interest margin (4)	2.74			2.82		2.80		2.69		2.61		2.53
Non-interest expense to average assets	2.30			1.97		1.98		1.91		1.87		1.82
Efficiency ratio	78.28			65.84		65.91		65.14		64.05		66.01
Core efficiency ratio (5)	59.60			62.80		62.94		65.06		64.70		65.05
Average interest-earning assets to average interest-bearing liabilities	127.27			122.00		122.16		121.32		119.47		119.07
Average equity to average assets	12.53			8.61		8.68		8.92		8.76		8.67
Basic and diluted earnings per share	$	0.20		N/A		N/A		N/A		N/A		N/A

Capital Ratios for Columbia Financial (6):
Total capital (to risk-weighted assets)	23.45		%	15.01	%	15.11	%	15.93	%	N/A		N/A
Tier 1 capital (to risk-weighted assets)	22.19			13.76		13.85		14.68		N/A		N/A
Common equity Tier 1 capital (to risk weighted assets)	22.19			12.55		12.60		13.29		N/A		N/A
Tier 1 capital (to adjusted total assets)	15.75			10.54		10.59		10.70		N/A		N/A

Capital Ratios for Columbia Bank:
Total capital (to risk-weighted assets)	19.04		%	14.90	%	14.95	%	15.67	%	15.53	%	16.15	%
Tier 1 capital (to risk-weighted assets)	17.79			13.64		13.69		14.42		14.27		14.90
Common equity Tier 1 capital (to risk weighted assets)	17.79			13.64		13.69		14.42		14.27		14.90
Tier 1 capital (to adjusted total assets)	12.60			10.44		10.47		10.56		10.29		10.15

Asset Quality Ratios:
Allowance for loan losses as a percent of total gross loans	1.26		%	1.31	%	1.26	%	1.30	%	1.49	%	1.63	%
Allowance for loan losses as a percent of non-performing loans	2,235.28			891.62		854.31		424.44		268.70		110.84
Net charge-offs to average outstanding loans during period	0.05			0.08		0.09		0.14		0.16		0.36
Non-performing loans as a percent of total gross loans	0.06			0.15		0.15		0.31		0.56		1.47
Non-performing assets as a percent of total assets	0.04			0.13		0.13		0.27		0.51		1.19

Other Data:
Number of offices	49			48		47		45		44		44

(1) Represents GAAP net income adjusted for unusual or one-time charges or non-core items as a percent of average assets.
(2) Represents GAAP net income adjusted for unusual or one-time charges or non-core items as a percent of average equity.
(3) Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost on average interest-bearing liabilities.
(4) Represents net interest income as a percent of average interest-earning assets.
(5) Core efficiency ratio represents our adjusted non-interest expense divided by our adjusted revenue. Core efficiency ratio is a non-GAAP measure derived from our efficiency ratio, which is calculated by dividing our total GAAP non-interest expense by our GAAP revenue, and is adjusted for unusual or one-time charges or non-core items as detailed below. Management believes that the presentation of core efficiency ratio assists investors and analysts in understanding the impact of these non-recurring items on our efficiency ratio.



	At December 31, 2018
	One Year or Less				More Than One Year to Five Years				More Than Five Years to Ten Years				After Ten Years				Total
	Carrying value		Weighted average yield		Carrying value		Weighted average yield		Carrying value		Weighted average yield		Carrying value		Weighted average yield		Carrying value		Weighted average yield
	(Dollars in thousands)
Securities available for sale:
U.S. government and agency obligations	$	—	—	%	$	34,945	1.88	%	$	19,876	2.48	%	$	—	—	%	$	54,821	2.10	%
Mortgage-backed securities and collateralized mortgage obligations	—		—		34,784		2.73		326,109		3.61		573,738		2.84		934,631		3.11
Municipal obligations	797		2.04		190		2.40		—		—		—		—		987		2.11
Corporate debt securities	—		—		14,994		2.91		34,499		4.75		5,000		3.15		54,493		4.10
Total	$	797	2.04	%	$	84,913	2.41	%	$	380,484	3.04	%	$	578,738	2.85	%	$	1,044,932	2.90	%



	December 31, 2018
	Real Estate
	One-to-four family		Multifamily and commercial		Construction		Commercial business		Home equity loans and advances		Other consumer loans		Total
	(In thousands)
Amounts due in:
One year or less	$	372	$	86,291	$	157,678	$	175,148	$	611	$	979	$	421,079
More than one year to five years	31,301		525,390		85,655		78,555		22,836		129		743,866
More than five years to ten years	232,520		1,292,257		4,874		67,497		79,864		—		1,677,012
More than ten years	1,565,993		238,216		13,266		12,676		290,181		—		2,120,332
Total	$	1,830,186	$	2,142,154	$	261,473	$	333,876	$	393,492	$	1,108	$	4,962,289



	Due After December 31, 2019
	Fixed rates		Floating or adjustable rates		Total
	(In thousands)
Real estate loans:
One-to-four family	$	1,558,174	$	271,640	$	1,829,814
Multifamily and commercial	983,156		1,072,707		2,055,863
Construction	13,483		90,312		103,795
Commercial business loans	82,149		76,579		158,728
Consumer loans:
Home equity loans and advances	239,030		153,851		392,881
Other consumer loans	129		—		129
Total loans	$	2,876,121	$	1,665,089	$	4,541,210



	Years Ended December 31,						Years Ended September 30,
	2018			2017			2017			2016
	(In thousands)

Total loans at beginning of period	$	4,458,648		$	4,091,862		$	3,977,634		$	3,816,389

Originations:
Real estate loans:
One-to-four family	430,548			321,784			336,492			344,121
Multifamily and commercial	320,845			263,110			469,552			236,908
Construction	186,726			231,017			114,958			165,063
Total real estate loans	938,119			815,911			921,002			746,092

Commercial business loans	130,542			128,931			273,168			196,679

Consumer loans:
Home equity loans and advances	68,721			93,235			110,328			115,457
Other consumer loans	113			—			3,166			3,770
Total consumer loans	68,834			93,235			113,494			119,227

Total loans originated	1,137,495			1,038,077			1,307,664			1,061,998

Purchases	32,251			67,154			20,473			21,149

Less:
Principal payments and repayments	(601,611		)	(664,137		)	(880,593		)	(867,356		)
Loan sales	(35,654		)	(73,204		)	(62,407		)	(28,624		)
Securitization of loans	—			—			—			(17,169		)
Transfer of loans receivable to loans held-for-sale	(11,696		)	—			—			—
Transfer to real estate owned	(251		)	(1,104		)	(515		)	(2,278		)
Total loans at end of period	$	4,979,182		$	4,458,648		$	4,362,256		$	3,984,109



	Balance
	(In thousands)
Maturity Period:
Three months or less	$	124,544
Over three through six months	136,359
Over six through twelve months	335,076
Over twelve months	289,365
Total	$	885,344



	Period to Maturity
	Less than one year		More than one year to two years		More than two years to three years		More than three years to four years		More than four years		Total		Percentage of certificate accounts
	(In thousands)

Less than 0.50%	$	34,373	$	1,333	$	—	$	—	$	—	$	35,706	2.10	%
0.50% to 0.99%	20,043		1,724		32		57		—		21,856		1.29
1.00% to 1.49%	218,049		37,056		5,149		185		5		260,444		15.32
1.50% to 1.99%	534,660		108,439		42,590		19,628		4,461		709,778		41.74
2.00% to 2.99%	300,542		178,248		182,697		5,069		5,976		672,532		39.55
Total	$	1,107,667	$	326,800	$	230,468	$	24,939	$	10,442	$	1,700,316	100.00	%



	Years Ended December 31,
							Change 2018/2017
	2018			2017			$			%
	(Dollars in thousands)
Net interest income	$	164,034		$	143,309		$	20,725		14.5	%
Provision for loan losses	6,677			9,826			(3,149		)	(32.0	)%
Non-interest income	21,688			16,818			4,870			29.0	%
Non-interest expense	145,386			105,421			39,965			37.9	%
Income tax expense	10,923			20,123			(9,200		)	(45.7	)%
Net income	$	22,736		$	24,757		$	(2,021	)	(8.2	)%

Return on average assets	0.36		%	0.46		%
Return on average equity	2.87		%	5.37		%

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller Reporting Company

Emerging growth company