UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~December 31, 2017~~September 30, 2019



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number ~~333-221912~~001-38456

Columbia Financial, Inc.

(Exact name of registrant as specified in its charter)



Delaware (State or other jurisdiction of incorporation or organization)		22-3504946 (I.R.S. Employer Identification Number)

19-01 Route 208 North, Fair Lawn, New Jersey (Address of principal executive offices)		07410 (Zip Code)

(800) 522-4167

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	CLBK	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

¨ý Yes ý¨ No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

ý Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:



Large accelerated filer	¨	Accelerated filer	¨	Smaller reporting company	¨
Non-accelerated filer	ý	Emerging growth company	ý

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

ý ~~Yes~~ ¨ No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨ Yes ý No

~~Ten~~As of November 7, 2019, there were 114,164,514 shares issued and outstanding of the Registrant's common stock, par value of $0.01 per ~~share, were issued and outstanding as of December 31, 2017.~~share.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~

Index to Form 10-Q



Item Number		Page Number

PART I.	Financial Information

Item 1.	Financial Statements
	Consolidated ~~Balance Sheets~~Statements of Financial Condition as of September 30, 2019 (Unaudited) and December 31, ~~2017 (unaudited) and September 30, 2017~~2018	2
	Consolidated Statements of Income for the ~~three months ended December 31, 2017~~Three and ~~2016 (unaudited)~~Nine Months Ended September 30, 2019 and 2018 (Unaudited)	3
	Consolidated Statements of Comprehensive Income (Loss) for the ~~three months~~Three and Nine Months ended ~~December 31, 2017~~September 30, 2019 and ~~2016 (unaudited)~~2018 (Unaudited)	4
	Consolidated Statements of Changes in Stockholder's Equity for the ~~three months ended December 31, 2017~~Three and ~~2016 (unaudited)~~Nine Months Ended September 30, 2019 and 2018 (Unaudited)	5
	Consolidated Statements of Cash Flows for the ~~three months ended December 31, 2017~~Nine Months Ended September 30, 2019 and ~~December 31, 2016 (unaudited)~~2018 (Unaudited)	67
	Notes to Unaudited Consolidated Financial Statements	89

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3447
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3753
Item 4.	Controls and Procedures	4257

PART II.	Other Information
	Item 1. Legal Proceedings	4358
	Item 1A. Risk Factors	4358
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	4358
	Item 3. Defaults Upon Senior Securities	4358
	Item 4. Mine Safety Disclosures	4358
	Item 5. Other Information	4358
	Item 6. Exhibit	4358

	Exhibit Index	4359

	SIGNATURES	4560

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

~~(A Wholly-owned Subsidiary~~Consolidated Statements of ~~Columbia Bank MHC)~~Financial Condition

~~Consolidated Balance Sheets~~

(In thousands, except share and per share data)


	(Unaudited)			(Audited)
	December 31,			September 30,
	2017			2017			September 30,			December 31,
	(In thousands)						2019			2018
Assets							(Unaudited)
Cash and cash equivalents	$	65,334		$	100,914

Cash and due from banks							$	57,644		$	42,065
Short-term investments	164			61			308			136
Total cash and cash equivalents	65,498			100,975			57,952			42,201

Securities available-for-sale, at fair value	710,570			557,176
Securities held-to-maturity, at amortized cost (fair value of $236,125 and $131,822 at December 31, 2017 and September 30, 2017, respectively)	239,618			132,939
Debt securities available for sale, at fair value							1,115,905			1,032,868
Debt securities held to maturity, at amortized cost (fair value of $296,325 and $254,841 at September 30, 2019 and December 31, 2018, respectively)							289,089			262,143
Equity securities, at fair value							1,765			1,890
Federal Home Loan Bank stock	44,664			35,844			57,077			58,938
Loans held-for-sale, at fair value							—			8,081

Loans receivable							5,186,097			4,979,182
Less: allowance for loan losses							62,629			62,342
Loans receivable, net	4,400,470			4,307,623			5,123,468			4,916,840

Accrued interest receivable	15,915			14,687			19,423			18,894
Real estate owned	959			393			—			92
Office properties and equipment, net	42,620			40,835			63,723			52,050
Bank-owned life insurance	150,521			149,432			187,922			184,488
Goodwill and intangible assets	5,997			6,019			6,163			6,085
Other assets	89,668			83,405			147,763			107,048
Total assets	$	5,766,500		$	5,429,328		$	7,070,250		$	6,691,618

Liabilities and Stockholder's Equity
Liabilities and Stockholders' Equity
Liabilities:
Deposits	$	4,263,315		$	4,123,428		$	4,783,322		$	4,413,873
Borrowings	929,057			733,043			1,129,117			1,189,180
Advance payments by borrowers for taxes and insurance	25,563			27,118			34,543			32,030
Accrued expenses and other liabilities	76,495			69,825			131,433			84,475
Total liabilities	5,294,430			4,953,414			6,078,415			5,719,558

Stockholder's equity:
Stockholders' equity:
Preferred stock, $0.01 par value. 10,000,000 shares authorized; none issued and outstanding at September 30, 2019 and December 31, 2018							—			—
Common stock, $0.01 par value. 500,000,000 shares authorized; 117,278,745 shares issued and 114,536,445 shares outstanding at September 30, 2019, and 115,889,175 shares issued and outstanding at December 31, 2018							1,173			1,159
Additional paid-in capital							529,588			527,037
Retained earnings	537,480			522,094			601,932			560,216
Accumulated other comprehensive loss, net of tax	(65,410		)	(46,180		)
Total stockholder's equity	472,070			475,914
Total liabilities and stockholder's equity	$	5,766,500		$	5,429,328
Accumulated other comprehensive loss							(55,972		)	(71,897		)
Treasury stock, at cost; 2,742,300 shares at September 30, 2019 and -0- at December 31, 2018							(42,084		)	—
Common stock held by the Employee Stock Ownership Plan							(42,137		)	(43,835		)
Stock held by Rabbi Trust							(1,467		)	(1,259		)
Deferred compensation obligations							802			639
Total stockholders' equity							991,835			972,060
Total liabilities and stockholders' equity							$	7,070,250		$	6,691,618

See accompanying notes to unaudited consolidated financial statements.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(In thousands, except share and per share data)



	Three Months Ended September 30,					Nine Months Ended September 30,
	2019			2018		2019		2018
Interest income:	(Unaudited)
Loans receivable	$	53,594		$	48,585	157,563		138,291
Debt securities available for sale and equity securities	7,736			6,651		23,295		17,987
Debt securities held to maturity	2,068			1,798		6,090		5,253
Federal funds and interest earning deposits	182			44		405		1,116
Federal Home Loan Bank stock dividends	858			617		2,704		1,861
Total interest income	64,438			57,695		190,057		164,508
Interest expense:
Deposits	16,055			10,420		44,984		27,713
Borrowings	6,667			6,692		20,130		16,134
Total interest expense	22,722			17,112		65,114		43,847

Net interest income	41,716			40,583		124,943		120,661

Provision for loan losses	1,157			1,500		1,705		5,900

Net interest income after provision for loan losses	40,559			39,083		123,238		114,761

Non-interest income:
Demand deposit account fees	1,106			1,000		3,116		2,920
Bank-owned life insurance	1,784			1,309		4,449		3,865
Title insurance fees	1,350			1,189		3,490		3,218
Loan fees and service charges	3,038			616		5,358		1,537
Gain on securities transactions	1,256			—		1,721		116
(Decrease)/increase in fair value of equity securities	(59		)	—		189		—
Gain on sale of loans	382			—		710		15
Other non-interest income	1,258			1,176		3,895		3,609
Total non-interest income	10,115			5,290		22,928		15,280

Non-interest expense:
Compensation and employee benefits	21,362			18,179		61,285		54,503
Occupancy	3,973			3,529		11,628		10,764
Federal deposit insurance premiums	40			503		927		1,404
Advertising	533			1,003		3,311		3,142
Professional fees	1,541			967		4,219		2,824
Data processing	658			630		1,965		1,944
Charitable contribution to foundation	—			—		—		34,767
Merger-related expenses	740			—		1,202		—
Other non-interest expense	2,217			1,779		7,927		5,024
Total non-interest expense	31,064			26,590		92,464		114,372

Income before income tax expense	19,610			17,783		53,702		15,669

Income tax expense	5,392			6,956		12,534		7,800

Net income	$	14,218		$	10,827	41,168		7,869

Earnings per share - basic and diluted	$	0.13		$	0.10	$	0.37	$	0.07
Weighted average shares outstanding -basic and diluted	111,371,754			111,389,951		111,486,179		111,380,218

See accompanying notes to unaudited consolidated financial statements.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

(In thousands)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(Unaudited)
Net income	$	14,218		$	10,827		$	41,168		$	7,869

Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on debt securities available for sale	4,915			(5,358		)	28,302			(18,186		)
Accretion of unrealized gain (loss) on debt securities reclassified as held to maturity	2			(11		)	10			(13		)
Reclassification adjustment for gains included in net income	965			3			1,325			90
	5,882			(5,366		)	29,637			(18,109		)

Derivatives, net of tax:
Unrealized (loss) gain on swap contracts accounted for as cash flow hedges	(1,279		)	1,240			(8,735		)	1,746
	(1,279		)	1,240			(8,735		)	1,746

Employee benefit plans, net of tax:
Amortization of prior service cost included in net income	(11		)	—			(33		)	98
Reclassification adjustment of actuarial net (loss) gain included in net income	(735		)	—			(2,196		)	520
Change in funded status of retirement obligations	1,490			(1,908		)	(2,200		)	(615		)
	744			(1,908		)	(4,429		)	3

Total other comprehensive income (loss)	5,347			(6,034		)	16,473			(16,360		)

Total comprehensive income (loss), net of tax	$	19,565		$	4,793		$	57,641		$	(8,491	)

See accompanying notes to unaudited consolidated financial statements.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

~~(A Wholly-owned Subsidiary of Columbia Bank, MHC)~~

~~Consolidated Statements of Income (Unaudited)~~

Three Months Ended
December 31,
2017 2016
(In thousands)

Interest and dividend income:

Loans receivable $ 43,043

$ 39,374
Securities available-for-sale 5,074

4,307
Securities held-to-maturity 381

—
Federal funds and interest earning deposits 103

34
Federal Home Loan Bank stock dividends 567

413
Total interest and dividend income 49,168

44,128
Interest expense:

Deposits 7,632

6,216
Borrowings 4,609

4,508
Total interest expense 12,241

10,724

Net interest income 36,927

33,404

Provision for loan losses 3,400

—

Net interest income after provision for loan losses 33,527

33,404

Non-interest income:

Demand deposit account fees 960

851
Bank-owned life insurance 1,089

1,087
Title insurance fees 1,018

1,337
Loan fees and service charges 542

452
(Loss) gain on securities transactions, net (60 )
411
Gain on sale of loans receivable, net —

409
Other non-interest income 1,125

960
Total non-interest income 4,674

5,507

Non-interest expense:

Compensation and employee benefits expense 15,621

15,010
Occupancy expense 3,386

3,222
Federal insurance premiums expense 414

412
Advertising expense 1,408

711
Professional fees expense 398

219
Data processing expense 595

531
Charitable contributions 60

120
Other non-interest expense 3,659

3,827
Total non-interest expense 25,541

24,052

Income before income tax expense 12,660

14,859

Income tax expense 8,982

4,866

Net income $ 3,678

$ 9,993

See accompanying notes to unaudited consolidated financial statements.

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~

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

Three Months Ended
December 31,

2017
2016

(In thousands)

Net income $ 3,678

$ 9,993

Other comprehensive (loss) income, net of tax:

Unrealized loss on securities available-for-sale (3,039 )
(15,207 )
Accretion of unrealized loss on securities reclassified as held-to-maturity (58 )
—
Reclassification adjustment for (loss) gain included in net income (47 )
264

(3,144 )
(14,943 )

Derivatives, net of tax

Unrealized gain on swap contracts 164

—

164

—

Employee benefit plans, net of tax:

Amortization of prior service cost included in net income (43 )
(18 )
Reclassification adjustment of actuarial net loss included in net income (103 )
5
Change in funded status of retirement obligations (16,104 )
152

(16,250 )
139

Total other comprehensive loss (19,230 )
(14,804 )

Total comprehensive loss, net of tax $ (15,552 )
$ (4,811 )

See accompanying notes to unaudited consolidated financial statements.

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~

Consolidated Statements of Changes in ~~Stockholder's~~Stockholders' Equity (Unaudited)

Three Months Ended September 30, 2018 and 2019

(In thousands)

Retained Earnings
Accumulated other comprehensive loss, net of tax
Total stockholder's equity

(In thousands)

Balance at September 30, 2016 $ 491,022

$ (51,358 )
$ 439,664
Net income 9,993

—

9,993
Other comprehensive loss —

(14,804 )
(14,804 )
Balance at December 31, 2016 501,015

(66,162 )
434,853

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

See accompanying notes to unaudited consolidated financial statements.



	Common Stock		Additional Paid-in-Capital		Retained Earnings		Accumulated Other Comprehensive (Loss)			Treasury Stock			Common Stock Held by the Employee Stock Ownership Plan			Stock Held by Rabbi Trust			Deferred Compensation Obligations		Total Stockholders' Equity

Balance at June 30, 2018	$	1,159	$	526,332	$	534,522	$	(75,736	)	$	—		$	(44,980	)	$	—		$	—	$	941,297
Net income	—		—		10,827		—			—			—			—			—		10,827
Other comprehensive (loss)	—		—		—		(6,034		)	—			—			—			—		(6,034		)
Employee Stock Ownership Plan shares committed to be released	—		384		—		—			—			572			—			—		956
Balance at September 30, 2018	$	1,159	$	526,716	$	545,349	$	(81,770	)	$	—		$	(44,408	)	$	—		$	—	$	947,046

Balance at June 30, 2019	$	1,159	$	527,650	$	587,714	$	(61,319	)	$	(3,867	)	$	(42,710	)	$	(1,407	)	$	689	$	1,007,909
Net income	—		—		14,218		—			—			—			—			—		14,218
Other comprehensive income	—		—		—		5,347			—			—			—			—		5,347
Issuance of common stock allocated to restricted stock award grants	14		—		—		—			—			—			—			—		14
Stock based compensation	—		1,630		—		—			—			—			—			—		1,630
Purchase of treasury stock	—		—		—		—			(38,217		)	—			—			—		(38,217		)
Employee Stock Ownership Plan shares committed to be released	—		308		—		—			—			573			—			—		881
Funding of deferred compensation obligations	—		—		—		—			—			—			(60		)	113		53
Balance at September 30, 2019	$	1,173	$	529,588	$	601,932	$	(55,972	)	$	(42,084	)	$	(42,137	)	$	(1,467	)	$	802	$	991,835

See accompanying notes to unaudited consolidated financial statements.

~~COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~

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

Three Months Ended
December 31,

2017
2016

(In thousands)

Cash flows from operating activities:

Net income $ 3,678

$ 9,993
Adjustments to reconcile net income to net cash provided by operating activities:

Amortization of deferred loan origination fees 439

168
Net amortization of premiums and discounts on securities 328

412
Net amortization on mortgage servicing rights 22

29
Amortization of debt issuance costs 14

13
Depreciation and amortization of office properties and equipment 863

862
Provision for loan losses 3,400

—
Loss (gain) on securities transactions, net 60

(411 )
Gain on sale of loans receivable, net —

(409 )
Loss on real estate owned, net —

12
Deferred tax expense 3,363

13,608
Increase in accrued interest receivable (1,228 )
(902 )
Increase in cash surrender value of bank-owned life insurance (1,089 )
(1,087 )
Increase in other assets (11,429 )
(13,251 )
Increase in accrued expenses and other liabilities 3,905

839
Net cash provided by operating activities 2,326

9,876

Cash flows from investing activities:

Proceeds from sales of securities available-for-sale 92

58,047
Proceeds from principal pay downs / maturities on securities available-for-sale 7,009

17,228
Proceeds from principal pay downs / maturities on securities held-to-maturity 1,845

—
Purchases of securities available-for-sale (163,721 )
(13,282 )
Purchases of securities held-to-maturity (108,640 )
—
Proceeds from sales of loans receivable —

27,333
Purchases of loans receivables (56,095 )
(9,414 )
Loan originations, net of principal payments (41,157 )
(177,257 )
Proceeds of Federal Home Loan Bank Stock 6,476

7,758
Purchases of Federal Home Loan Bank Stock (15,296 )
(10,089 )
Additions to office properties and equipment (2,648 )
(918 )
Proceeds from sales of real estate owned —

337
Net cash used in investing activities (372,135 )
(100,257 )

Cash flows from financing activities:

Net increase in deposits 139,887

48,683
Payments for maturities, calls, and payoffs on long-term borrowings (90,000 )
(40,000 )
Increase in short-term borrowings 286,000

81,800
Decrease in advance payments by borrowers for taxes and insurance (1,555 )
(5,235 )
Net cash provided by financing activities 334,332

85,248

Net decrease in cash and cash equivalents (35,477 )
(5,133 )

Cash and cash equivalents at beginning of year 100,975

45,694
Cash and cash equivalents at end of year $ 65,498

$ 40,561

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

~~(A Wholly-owned Subsidiary~~Consolidated Statements of ~~Columbia Bank MHC)~~Changes in Stockholders' Equity (Unaudited)

Nine Months Ended September 30, 2018 and 2019

(In thousands)



	Common Stock		Additional Paid-in-Capital		Retained Earnings		Accumulated Other Comprehensive (Loss)			Treasury Stock			Common Stock Held by the Employee Stock Ownership Plan			Stock Held by Rabbi Trust			Deferred Compensation Obligations		Total Stockholders' Equity

Balance at December 31, 2017	$	—	$	—	$	537,480	$	(65,410	)	$	—		$	—		$	—		$	—	$	472,070
Net income	—		—		7,869		—			—			—			—			—		7,869
Other comprehensive (loss)	—		—		—		(16,360		)	—			—			—			—		(16,360		)
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 common stock 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	—		680		—		—			—			1,020			—			—		1,700
Balance at September 30, 2018	$	1,159	$	526,716	$	545,349	$	(81,770	)	$	—		$	(44,408	)	$	—		$	—	$	947,046

Balance at December 31, 2018	$	1,159	$	527,037	$	560,216	$	(71,897	)	$	—		$	(43,835	)	$	(1,259	)	$	639	$	972,060
Effect of the adoption of Accounting Standards Update ("ASU") 2016-01	—		—		548		(548		)	—			—			—			—		—
Balance at January 1, 2019	1,159		527,037		560,764		(72,445		)	—			(43,835		)	(1,259		)	639		972,060
Net income	—		—		41,168		—			—			—			—			—		41,168
Other comprehensive income	—		—		—		16,473			—			—			—			—		16,473
Issuance of common stock allocated to restricted stock award grants	14		—		—		—			—			—			—			—		14
Stock based compensation	—		1,630		—		—			—			—			—			—		1,630
Purchase of treasury stock	—		—		—		—			(42,084		)	—			—			—		(42,084		)
Employee Stock Ownership Plan shares committed to be released	—		921		—		—			—			1,698			—			—		2,619
Funding of deferred compensation obligations	—		—		—		—			—			—			(208		)	163		(45		)
Balance at September 30, 2019	$	1,173	$	529,588	$	601,932	$	(55,972	)	$	(42,084	)	$	(42,137	)	$	(1,467	)	$	802	$	991,835

See accompanying notes to unaudited consolidated financial statements.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows



	Nine Months Ended September 30,
	2019			2018
Cash flows from operating activities:	(In thousands, unaudited)
Net income	$	41,168		$	7,869
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred loan fees and costs, premiums and discounts	1,055			1,420
Net amortization of premiums and discounts on securities	787			1,017
Net amortization on mortgage servicing rights	(78		)	57
Amortization of debt issuance costs	—			890
Depreciation and amortization of office properties and equipment	3,366			2,748
Provision for loan losses	1,705			5,900
Gain on securities transactions	(1,721		)	(116		)
Change in fair value of equity securities	(189		)	—
Gain on sales of loans	(710		)	(15		)
Loss on real estate owned	1			45
Deferred tax (benefit) expense	(7,160		)	6,764
Increase in accrued interest receivable	(529		)	(2,679		)
Increase in other assets	(44,037		)	(13,801		)
Increase in accrued expenses and other liabilities	36,367			3,505
Income on bank-owned life insurance	(4,449		)	(3,435		)
Contribution of common stock to Columbia Bank Foundation	—			34,767
Employee stock ownership plan expense	2,619			1,700
Stock based compensation	1,630			—
Increase in deferred compensation obligations under Rabbi Trust	(45		)	—
Net cash provided by operating activities	29,780			46,636
Cash flows from investing activities:
Proceeds from sales of debt securities available for sale	31,811			—
Proceeds from sales of equity securities	926			—
Proceeds from paydowns/maturities/calls of debt securities available for sale	88,504			60,959
Proceeds from paydowns/maturities/calls on debt securities held to maturity	37,968			6,846
Purchases of debt securities available for sale	(143,196		)	(361,263		)
Purchases of debt securities held to maturity	(65,171		)	(31,639		)
Purchase of equity securities	(416		)	—
Proceeds from sales of loans held-for-sale	94,834			—
Proceeds from sales of loans receivable	10,273			3,695
Purchases of loans receivable	(29,885		)	(4,715		)
Net increase in loans receivable	(297,434		)	(451,223		)
Purchase of bank-owned life insurance	—			(30,000		)
Proceeds from bank-owned life insurance death benefit	1,015			811
Proceeds from redemptions of Federal Home Loan Bank stock	47,860			51,676
Purchases of Federal Home Loan Bank stock	(45,999		)	(63,544		)
Additions to office properties and equipment	(15,039		)	(8,799		)
Proceeds from sales of real estate owned	91			914
Net cash (used in) investing activities	(283,858		)	(826,282		)
Cash flows from financing activities:
Net increase in deposits	369,449			109,030
Proceeds from long-term borrowings	127,337			168,930
Payments on long-term borrowings	(220,000		)	(170,000		)
Net increase in short-term borrowings	32,600			258,400
Payments on trust preferred securities	—			(51,547		)
Increase in advance payments by borrowers for taxes and insurance	2,513			7,169
Issuance of common stock	14			492,428
Purchase of treasury stock	(42,084		)	—
Purchase of employee stock ownership plan shares	—			(45,428		)
Net cash provided by financing activities	269,829			768,982

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

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



	Nine Months Ended September 30,
	2019			2018
	( In thousands, unaudited)

Net increase (decrease) in cash and cash equivalents	$	15,751		$	(10,664	)

Cash and cash equivalents at beginning of year	42,201			65,498
Cash and cash equivalents at end of period	$	57,952		$	54,834

Cash paid during the period for:
Interest on deposits and borrowings	$	64,892		$	45,306
Income tax payments, net of (refunds)	$	(4,293	)	$	13,435

Non-cash investing and financing activities:
Transfer of loans receivable to real estate owned	$	—		$	251
Transfer of loans receivable to loans held-for-sale	$	86,043		$	1,860
Securitization of loans	$	21,615		$	—

See accompanying notes to unaudited consolidated financial statements.

Three Months Ended
December 31,

2017
2016

(In thousands)

Cash paid during the period for:

Interest $ 11,484

$ 9,952
Income tax payments, net $ 1,393

$ 6,297

Noncash investing and financing activities:

Transfer of loans receivable to real estate owned $ 566

$ 23

See accompanying notes to unaudited consolidated financial statements.

COLUMBIA FINANCIAL, INC. AND ~~SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements


1.	~~Basis of Financial Statement Presentation~~

1.Basis of Financial Statement Presentation

The accompanying unaudited 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 (collectively, the “Company”). In consolidation, all ~~significant inter-company~~intercompany accounts and transactions are eliminated.

Columbia Financial, Inc. is a ~~wholly-owned~~majority-owned subsidiary of Columbia Bank, MHC ~~("MHC"~~(the "MHC"). The accounts of the MHC are not consolidated in the accompanying consolidated financial statements of the Company.

The Company owns 100% of the common stock of a Delaware statutory basis trust, Columbia Capital Trust I (the "Trust"). The trust is classified as a variable interest entity and is not consolidated as it does not satisfy the conditions for consolidation.

In preparing the interim unaudited consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the ~~date~~dates of the consolidated ~~balance sheets~~statements of financial condition and consolidated statements of income for the periods presented. Actual results could differ from these estimates. Material estimates that are particularly susceptible to change ~~are:~~are the determination of the adequacy of the allowance for loan losses, evaluation of the need for valuation ~~of securities, the valuation of post-retirement benefits and the valuation of~~allowances on deferred tax ~~assets. Estimates~~assets, and determination of liabilities related to retirement and other post-retirement benefits. These estimates and assumptions are ~~reviewed periodically~~evaluated on an ongoing basis and ~~the effects of revisions~~ are ~~reflected in the~~adjusted when facts and circumstances dictate.

The interim unaudited consolidated financial statements reflect all normal and recurring adjustments, which are, in the ~~period they~~opinion of management, considered necessary for a fair presentation of the financial condition and results of operations for the periods presented. The results of operation for the three and nine month periods ended September 30, 2019 are ~~deemed necessary. While management uses its best judgment, actual amounts~~not necessarily indicative of the results of operation that may be expected for the entire fiscal year or ~~results could differ significantly from those estimates.~~any other period. Certain reclassifications have been made in the consolidated financial statements to conform with current year ~~classification and presentation.~~classifications.

The interim unaudited consolidated financial statements of the Company presented herein have been prepared in accordance with the rules of the Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and U.S. generally accepted accounting principles ~~in the United States of America~~ (“GAAP”). Certain information and note disclosures ~~normally included in financial statements prepared in accordance with GAAP~~ have been condensed or omitted pursuant to the rules and regulations of the SEC.

In the opinion of management, all adjustments and disclosures considered necessary for the fair presentation of the accompanying unaudited consolidated financial statements have been included. Interim results are not necessarily reflective of the results of the entire year. The accompanyingThese unaudited consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2018 and the audited consolidated financial statements ~~for the years ended September 30, 2017 and 2016 and notes thereto, which are~~ included ~~in the Company’s Registration Statement on Form S-1.~~therein.


2.	~~Plan of Stock Issuance~~

2.Earnings per Share

~~On September 27, 2017,~~Basic earnings per share ("EPS") is computed by dividing net income available to common shareholders by the ~~Board~~weighted average number of ~~Directors~~common shares outstanding during the period. For purposes of ~~the Company adopted a~~calculating basic EPS, weighted average common shares outstanding excludes treasury stock, unallocated employee stock ownership plan ~~of stock issuance (the “Plan”), as amended on January 25, 2018 pursuant~~shares that have not been committed for release and deferred compensation obligations required to ~~which the Company will sell~~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, representing a minority ownership (approximately 43.0% of outstanding~~stock. The potentially diluted shares ~~of common stock) interest~~would then be included in the ~~Company. Shares will be offered to eligible depositors and borrowers and~~weighted average number of shares outstanding for the ~~tax qualified employee benefit plans of~~period using the Company in a subscription offering and, if necessary, to the general public in a community and/or syndicated community offering or firm commitment pubic offering. Columbia Bank, MHC, Columbia Financial Inc.'s holding company, will own 54.0% of the outstanding commontreasury stock following the offering. In connection with the Plan, subject to the approval of the MHC's members, the Company plans to contribute 3.0% of its then outstanding shares of common stock following the offering to the Columbia Bank Foundation.

Subsequent to the completion of the offering, the Board of Directors of the Company will have the authority to declare dividends on shares of common stock, subject to statutory and regulatory requirements and other considerations.

The direct costs of the Company’s stock offering will be deferred and deducted from the proceeds of the offering. At December 31, 2017, total deferred costs were $1.1 million. In the event that the offering is not completed, any deferred costs will be charged to operations.method.

COLUMBIA FINANCIAL, INC. AND ~~SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

2. Earnings per Share (continued)


3.	~~Recent Accounting Pronouncements~~

~~In February 2018,~~The following is a reconciliation of the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220). The updated guidance allows a reclassification from accumulated other comprehensive income to retainednumerators and denominators of the basic and diluted earnings per share calculations for the ~~stranded tax effects resulting~~three and nine months ended September 30, 2019 and 2018:



	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2019		2018		2019		2018
	(Dollars in thousands, except per share data)

Net income	$	14,218	$	10,827	$	41,168	$	7,869

Shares:
Weighted average shares outstanding - basic	111,371,754		111,389,951		111,486,179		111,380,218
Effect of dilutive common stock equivalents (1)	—		—		—		—
Weighted average shares outstanding - diluted	111,371,754		111,389,951		111,486,179		111,380,218

Earnings per share:
Basic	$	0.13	$	0.10	$	0.37	$	0.07
Diluted	$	0.13	$	0.10	$	0.37	$	0.07

(1) During the three and nine months ended September 30, 2019 the average number of stock options which were antidilutive and were not included in the computation of diluted earnings per share totaled approximately 790,000 and 310,000, respectively. There were no stock options outstanding for the three and nine months ended September 30, 2018.

3. Stock Repurchase Program

On June 11, 2019, the Company announced that its Board of Directors authorized the Company's first stock repurchase program since the completion of its minority public offering in April 2018. This program, which commenced on June 13, 2019, authorizes the purchase of up to 4,000,000 shares, or approximately 3.5%, of the Company's then issued and outstanding common stock. During the three and nine months ended September 30, 2019, the Company purchased 2,478,400 and 2,742,300 shares, respectively, at a cost of approximately $38.2 million, or $15.42 per share, and approximately $42.1 million, or $15.35 per share, respectively. Repurchased shares are held as treasury stock and will be available for general corporate purposes.

4. Summary of Significant Accounting Policies

Accounting Pronouncements Adopted in 2019

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 the ~~Tax Cuts~~service costs component and ~~Jobs Act further discussed~~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 Company adopted this guidance effective January 1, 2019. See note 11 for additional disclosure regarding the impact of adoption of this ASU on the Company's 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 ~~Note 11. The purpose~~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 ~~guidance is to improve~~borrowing, contingent consideration payments made after a business combination, proceeds from the ~~usefulness~~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 ~~information reported to to~~predominance principle. This guidance in the ~~financial statement users. The guidance~~ASU is effective for ~~all entities~~the Company for fiscal years beginning after December ~~31,~~15, 2018, ~~and~~including interim periods within those fiscal years. ~~Early adoption~~Entities will apply the standard’s provisions using a retrospective transition method to each period presented. If it is ~~permitted.~~impracticable to apply the

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

4. Summary of Significant Accounting Policies (continued)

Accounting Pronouncements Adopted in 2019 (continued)

amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company ~~has completed the analysis of remeasuring our gross deferred tax assets and liabilities utilizing the 21% corporate tax rate.~~adopted this guidance effective January 1, 2019. 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.

~~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. As of December 31, 2017, there are no significant differences inthis ASU did not have a material impact on the ~~guidance comparability of the~~Company's consolidated financial ~~statements as a result of this extended transition period.~~statements.

In ~~August 2017,~~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 periods beginning after December 15, 2018.

The Company adopted this guidance effective January 1, 2019. As a result, $1.9 million of equity securities, as of December 31, 2018, were reclassified from securities available for sale, and presented as a separate line item on the consolidated statements of financial condition. The $548,000 after tax unrealized gain on these securities, at time of adoption, was reclassified from other comprehensive income (loss) to retained earnings, and is reflected in the consolidated statements of changes in stockholders' equity. For financial instruments that are measured at amortized cost, the Company measures fair value utilizing an exit price methodology. See note 12 for additional disclosure regarding the impact of adoption of this ASU on the Company's consolidated financial statements.

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 was effective for the Company for fiscal years beginning after December 15, 2018. Subsequently, the FASB issued various amendments that were intended to improve and clarify the implementation guidance of ASU No. 2014-09 and had 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 this guidance effective January 1, 2019, after completing an evaluation of the Company's revenue streams and applicable revenue recognition, and concluded that there are no material changes related to the timing or amount of revenue recognition. The adoption of this guidance did not have a significant impact on the Company's consolidated financial statements, but resulted in additional footnote disclosures, including the disaggregation of certain categories of revenues. See note 15 for additional disclosure regarding the impact of adoption of this ASU on the Company's consolidated financial statements.

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 ("OIS") Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. This ASU permits the use of the OIS rate based upon SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815 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, ~~(ASU 2017-12).~~ which was issued in August 2017. 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. The amendments should be adopted on a prospective basis for qualifying new of redesignated hedging relationships entered into on or after date of adoption. The Company does not expect the adoption of this guidance to have a significant impact on its consolidated financial statements.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

4. Summary of Significant Accounting Policies (continued)

Accounting Pronouncements Not Yet Adopted (continued)

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 ~~better align a company’s~~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 ~~for hedging activities with~~date.

For all entities, the ~~economic objectives of those activities. The~~ effective date for this guidance is fiscal years beginning after December 15, ~~2018,~~2019, including interim periods within the reporting period, with early adoption ~~including~~permitted. Entities are also allowed to elect early 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~~eliminated or modified disclosure requirements and delay adoption of the ~~date of adoption.~~new disclosure requirements until their effective date. The Company is currently evaluating the impact of the new guidance on ~~the Company’s~~its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans. The amendments in this update modify the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans by removing disclosures that no longer are considered cost beneficial, clarifying the specific requirements of disclosures, and adding disclosure requirements identified as relevant. Among other changes, the ASU adds disclosure requirements to Topic 715-20 for the weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates and an explanation of the reasons for significant gains and losses related to changes in benefit obligation for the period. The amendments remove disclosure requirements for the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year, the amount and timing of plan assets expected to be returned to the employer, and the effects of a one-percentage-point change in assumed health care cost trend rates on the (a) aggregate of the service and interest cost components of net periodic benefit costs and (b) benefit obligation for post-retirement health care benefits. ASU 2018-14 is effective for fiscal years beginning after December 15, 2020, including interim reporting periods within that reporting period, with early adoption permitted. The update is to be applied on a retrospective basis. The Company is currently evaluating the effect of ASU 2018-14 on its disclosures in the Company's consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-08, ~~“Receivables~~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 ~~guidance~~ASU for the Company is fiscal years beginning after December 15, ~~2018,~~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 ~~is currently evaluating~~does not expect the adoption of this ASU to have a significant impact ~~of the new guidance~~ on ~~the Company’s~~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. This guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact of the new guidance on the Company’s consolidated financial statements and does not anticipate the new guidance to have a material impact.

In January 2017, the FASB issued ASU No. 2017-04, ~~“Simplifying~~ 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 ~~Accounting Standards Codification (ASC)~~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

~~COLUMBIA FINANCIAL, INC. AND SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~

~~Notes to Consolidated Financial Statements~~

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

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

4. Summary of Significant Accounting Policies (continued)

Accounting Pronouncements Not Yet Adopted (continued)

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. ~~Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017.~~ The Company ~~is currently evaluating~~does not expect the adoption of this ASU to have a significant impact ~~of the new guidance~~ on ~~the Company’s~~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 is effective for fiscal years beginning after December 15, 2017, 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 date practicable. The Company is currently evaluating the impact of the new guidance on the Company’s consolidated financial statements and does not anticipate the new guidance to have a material impact.

In June 2016, the FASB issued ASU No. 2016-13, ~~“Measurement~~Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial ~~Instruments”. This guidance provides~~Instruments. The main objective of this ASU is to provide 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~~period. Early adoption is permitted. The Company is currently ~~evaluating~~assessing the impact ofthat the ~~new~~ guidance will have on the Company's consolidated financial statements. The Company has formed a working group under the direction of the Chief Financial 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 third-party vendors 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 is continuing 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- currently the allowance for loan losses- will have an offsetting impact on retained earnings.

In February 2016, the FASB issued ASU No. 2016-02, ~~“Leases~~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.~~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 Company has selected a software platform which will support the recording, accounting and disclosure requirements of the new lease guidance. The guidance is effective for fiscal years beginning after December 15, 2018, including interim reporting periods within that reporting period, early adoption is permitted. A modified retrospective approach must be applied for leases existing at, or entered into after, the ~~beginning of the earliest comparative period present in the financial statements. The~~ Company ~~is currently evaluating the impact of the new guidance on the Company's consolidated financial statements.~~

In January 2016, the FASB issued ASU No. 2016-01, “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 nonmarketable 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 is effective for annual periods beginning after December 15, ~~2017.~~2019, including interim periods within that reporting period. In the evaluation of this guidance, the Company identified the inventory of leases and actively accumulated the requisite lease data necessary to apply the guidance. The Company expects to record a right of use asset and lease liability as of January 1, 2020. The Company is ~~currently evaluating~~continuing its efforts to evaluate the impact of this guidance and, as such, no conclusions have yet been reached regarding the ~~new guidance~~potential impact on adoption on the ~~Company’s~~Company's consolidated financial ~~statements and~~statements; however, the Company does not ~~anticipate~~expect the ~~new guidance~~adoption to have a material ~~impact.~~impact on its results of operations.

COLUMBIA FINANCIAL, INC. AND ~~SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

~~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~~5. Debt Securities Available for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS. 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 nonfinancial assets unless those contracts are in the scope of other standards. The guidance is effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2017, 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 is currently evaluating the impact of the new guidance on the Company’s consolidated financial statements and does not anticipate the new guidance to have a material impact.

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. The amendments require the premium to be amortized to the earliest call date. The Company adopted ASU No. 2017-08 for the period ended December 31, 2017 and the impact was immaterial to the Company's financial statements.


4.	~~Investment Securities~~

~~Securities Available-for-Sale~~Sale

~~The following tables present the amortized cost, gross unrealized gains, gross unrealized losses~~Debt securities available for sale at September 30, 2019 and ~~the fair value for securities available-for-sale at~~ December 31, ~~2017 and September 30, 2017:~~2018 are summarized as follows:


	December 31, 2017							September 30, 2019
	Amortized cost		Gross unrealized gains	Gross unrealized (losses)		Fair value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
			(In thousands)							(In thousands)

U.S. government and agency obligations	$	39,909	17	(282	)	$	39,644	$	44,532	$	621	$	(22	)	$	45,131
Mortgage-backed securities and collateralized mortgage obligations	615,924		383	(9,695	)	606,612		981,205		20,742		(504		)	1,001,443
Municipal obligations	1,957		—	—		1,957		190		—		—			190
Corporate debt securities	54,489		536	(511	)	54,514		64,495		774		(669		)	64,600
Trust preferred securities	5,000		—	(344	)	4,656		5,000		—		(459		)	4,541
Equity securities	2,328		859	—		3,187
	$	719,607	1,795	(10,832	)	$	710,570	$	1,095,422	$	22,137	$	(1,654	)	$	1,115,905

~~COLUMBIA FINANCIAL, INC. AND SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~

~~Notes to Consolidated Financial Statements~~


	September 30, 2017							December 31, 2018
	Amortized cost		Gross unrealized gains	Gross unrealized (losses)		Fair value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
			(In thousands)							(In thousands)

U.S. government and agency obligations	$	24,954	35	(116	)	$	24,873	$	54,821	$	53	$	(717	)	$	54,157
Mortgage-backed securities and collateralized mortgage obligations	479,927		652	(7,088	)	473,491		934,631		2,812		(17,436		)	920,007
Municipal obligations	1,357		—			1,357		987		—		—			987
Corporate debt securities	49,489		536	(532	)	49,493		54,493		129		(1,155		)	53,467
Trust preferred securities	5,000		—	(292	)	4,708		5,000		—		(750		)	4,250
Equity securities	2,482		826	(54	)	3,254
	$	563,209	2,049	(8,082	)	$	557,176	$	1,049,932	$	2,994	$	(20,058	)	$	1,032,868

The ~~table below presents the~~ amortized cost and fair value of debt securities ~~available-for-sale~~available for sale at ~~December 31, 2017~~September 30, 2019, by contractual ~~maturity.~~final maturity, is shown below. Expected maturities may differ from contractual maturities due to prepayment or early call ~~privileges of~~options exercised by the issuer.


	December 31, 2017				September 30, 2019
	Amortized cost		Fair value		Amortized Cost		Fair Value
	(In thousands)				(In thousands)

One year or less	$	1,957	$	1,957	$	15,098	$	15,110
More than one year to five years	34,954		34,934		40,046		40,467
More than five years to ten years	54,444		54,600		54,073		54,483
More than ten years	10,000		9,280		5,000		4,402
	$	101,355	$	100,771	$	114,217	$	114,462
Mortgage-backed securities and collateralized mortgage obligations	615,924		606,612		981,205		1,001,443
	$	717,279	$	707,383	$	1,095,422	$	1,115,905

Mortgage-backed securities and collateralized mortgage obligations totaling ~~$615.9~~$981.2 million at amortized cost, and ~~$606.6 million~~$1.0 billion at fair value, are ~~excluded from~~not classified by maturity in the ~~maturity~~ table above as their expected lives are likely to be shorter than the contractual maturity date due to principal prepayments.

~~For~~

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

5. Debt Securities Available for Sale (continued)

During the three months ended ~~December 31, 2017,~~September 30, 2019, proceeds from ~~sales~~the sale of debt securities ~~available-for-sale~~available for sale totaled ~~$92 thousand,~~$16.1 million, resulting in ~~zero~~$1.2 million of gross gains and ~~$60 thousand of~~no gross losses. ~~For~~During the three months ended ~~December 31, 2016,~~September 30, 2019, there were no maturities or calls of debt securities available for sale.

During the nine months ended September 30, 2019, proceeds from the ~~sales~~sale of debt securities ~~available-for-sale~~available for sale totaled ~~$58.0~~$31.8 million, resulting in $1.5 million of gross gains and no gross losses. During the nine months ended September 30, 2019, proceeds from one matured debt security available for sale totaled $767,000. There were no calls of ~~$500 thousand and gross losses of $89 thousand.~~debt securities available for sale.

~~Securities available-for-sale with~~During the three months ended September 30, 2018, proceeds from one called debt security available for sale totaled $1.5 million. No gross gains or losses were recognized on the security called during the quarter. There were no maturities of debt securities available for sale during the quarter.

During the nine months ended September 30, 2018, there were no sales or maturities of debt securities available for sale. During the nine months ended September 30, 2018, proceeds from called debt securities available for sale totaled $11.5 million, resulting in $116,000 in gross gains and no gross losses.

Debt securities available for sale having a ~~fair~~carrying value of ~~$282.6~~$203.4 million and ~~$302.9~~$232.7 million, respectively, at September 30, 2019 and December 31, ~~2017 and September 30, 2017, were sold under agreements to repurchase or~~2018, respectively, were pledged as security for ~~deposits of~~ public funds on deposit at the Bank as required and permitted by law.

The following tables summarize the fair value and gross unrealized losses of those securities that reported an unrealized loss at September 30, 2019 and December 31, ~~2017 and September 30, 2017~~2018 and if the unrealized loss position was continuous for the twelve months prior to ~~December 31, 2017 and September 30, 2017:~~those respective dates:



	September 30, 2019
	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	$	—	$	—		$	14,970	$	(22	)	$	14,970	$	(22	)
Mortgage-backed securities and collateralized mortgage obligations	70,393		(161		)	59,713		(343		)	130,106		(504		)
Corporate debt securities	4,961		(39		)	9,371		(630		)	14,332		(669		)
Trust preferred securities	—		—			4,541		(459		)	4,541		(459		)
	$	75,354	$	(200	)	$	88,595	$	(1,454	)	$	163,949	$	(1,654	)



	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 ~~SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

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 )

September 30, 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 $ 14,831

(116 )
—

—

14,831

$ (116 )
Mortgage-backed securities and collateralized mortgage obligations 329,554

(5,346 )
49,695

(1,742 )
379,249

(7,088 )
Corporate debt securities 9,824

(176 )
9,644

(356 )
19,468

(532 )
Trust preferred securities —

—

4,708

(292 )
4,708

(292 )
Equity securities 98

(54 )
—

—

98

(54 )

$ 354,307

(5,692 )
64,047

(2,390 )
418,354

$ (8,082 )
5. Debt Securities Available for Sale (continued)

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 debt securities ~~available-for-sale~~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, 2017,~~September 30, 2019, nor is it more likely than not that the Company will be required to sell the securities before ~~their prices recover.~~the anticipated recovery.

The number of securities in an unrealized loss position as of September 30, 2019 totaled 41, compared with 151 at December 31, 2018. All temporarily impaired securities were investment grade as of September 30, 2019 and December 31, 2018.

The Company did not record an other-than-temporary impairment charge on debt securities ~~in the available-for-sale portfolio~~available for sale during the three and nine months ended ~~December 31, 2017~~September 30, 2019 and 2018.

6. Debt Securities Held to Maturity

Debt securities held to maturity at September 30, 2019 and December 31, ~~2016.~~

~~Securities Held-to-Maturity~~

~~The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and the fair value for securities held-to-maturity at December 31, 2017 and September 30, 2017:~~

~~COLUMBIA FINANCIAL, INC. AND SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~

~~Notes to Consolidated Financial Statements~~

2018 are summarized as follows:


	December 31, 2017							September 30, 2019
	Amortized cost		Gross unrealized gains	Gross unrealized (losses)		Fair value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
	(In thousands)							(In thousands)

U.S. government and agency obligations	$	8,402	—	(58	)	$	8,344	$	25,000	$	70	$	(142	)	$	24,928
Mortgage-backed securities and collateralized mortgage obligations	231,216		—	(3,435	)	227,781		264,089		7,342		(34		)	271,397
	$	239,618	—	(3,493	)	$	236,125	$	289,089	$	7,412	$	(176	)	$	296,325

	September 30, 2017
	Amortized cost		Gross unrealized gains	Gross unrealized (losses)		Fair value
	(In thousands)

U.S. government and agency obligations	$	3,407	—	(7	)	$	3,400
Mortgage-backed securities and collateralized mortgage obligations	129,532		—	(1,110	)	128,422
	$	132,939	—	(1,117	)	$	131,822



	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

The ~~table below presents the~~ amortized cost and fair value of debt securities ~~held-to-maturity~~held to maturity at ~~December 31, 2017~~September 30, 2019, by contractual ~~maturity.~~final maturity, is shown below. Expected maturities may differ from contractual maturities due to prepayment or early call ~~privileges of~~options exercised by the issuer.


	December 31, 2017				September 30, 2019
	Amortized cost		Fair value		Amortized Cost		Fair Value
	(In Thousands)				(In thousands)

More than five years to ten years	$	8,402	$	8,344	$	5,000	$	5,002
More than ten years					20,000		19,926
	8,402		8,344		25,000		24,928
Mortgage-backed securities and collateralized mortgage obligations	231,216		227,781		264,089		271,397
	$	239,618	$	236,125	$	289,089	$	296,325

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

6. Debt Securities Held to Maturity (continued)

Mortgage-backed securities and collateralized mortgage obligations totaling ~~231.2~~$264.1 million at amortized cost, and ~~227.8~~$271.4 million at fair value, are ~~excluded from~~not classified by maturity in the ~~maturity~~ 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 investment portfolio for~~During the three months ended ~~December 31, 2017~~September 30, 2019, there were no sales or maturities of debt securities held to maturity. During the three months ended September 30, 2019, proceeds from calls of debt securities held to maturity totaled $23.4 million, resulting in $24,000 of gross gains and no gross losses.

During the nine months ended September 30, 2019, there were no sales or maturities of debt securities held to maturity. During the nine months ended September 30, 2019, proceeds from calls of debt securities held to maturity totaled $28.4 million, resulting in $24,000 of gross gains and no gross losses.

During the three and nine months ended September 30, 2018, there were no sales, calls or maturities of debt securities held for maturity.

Debt securities held to maturity having a carrying value of $180.4 million and $187.0 million, at September 30, 2019 and December 31, ~~2016.~~2018, respectively, were pledged as security for public funds on deposit at the Bank as required and permitted by law.

The following tables summarize the fair value and gross unrealized losses of those securities that reported an unrealized loss at September 30, 2019 and December 31, ~~2017 and September 30, 2017~~2018 and if the unrealized loss position was continuous for the twelve months prior to September 30, 2019 and December 31, ~~2017 and September 30, 2017:~~

~~COLUMBIA FINANCIAL, INC. AND SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~

~~Notes to Consolidated Financial Statements~~

2018:


	December 31, 2017											September 30, 2019
	Less than 12 months				12 months or longer			Total				Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Gross unrealized (losses)		Fair value	Gross unrealized (losses)		Fair value	Gross unrealized (losses)			Fair Value		Gross Unrealized (Losses)			Fair Value		Gross Unrealized (Losses)			Fair Value		Gross Unrealized (Losses)
	(In thousands)											(In thousands)

U.S. government and agency obligations	$	8,344	(58	)	—	—		8,344	$	(58	)	$	9,858	$	(142	)	$	—	$	—		$	9,858	$	(142	)
Mortgage-backed securities and collateralized mortgage obligations	196,049		(2,920	)	30,046	(515	)	226,095	(3,435		)	5,989		(30		)	941		(4		)	6,930		(34		)
	$	204,393	(2,978	)	30,046	(515	)	234,439	$	(3,493	)	$	15,847	$	(172	)	$	941	$	(4	)	$	16,788	$	(176	)

	September 30, 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	$	—	—		3,400	(7	)	3,400	$	(7	)
Mortgage-backed securities and collateralized mortgage obligations	29,965		(349	)	96,076	(761	)	126,041	(1,110		)
	$	29,965	(349	)	99,476	(768	)	129,441	$	(1,117	)



	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	)

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 debt securities ~~held-to-maturity~~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, 2017,~~September 30, 2019, nor is it more likely than not that the Company will be required to sell the securities before ~~their prices recover.~~the anticipated recovery.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

6. Debt Securities Held to Maturity (continued)

The number of securities in an unrealized loss position as of September 30, 2019 totaled 20, compared with 88 at December 31, 2018. All temporarily impaired securities were investment grade as of September 30, 2019 and December 31, 2018.

The Company did not record an other-than-temporary impairment charge on debt securities held to maturity during the three and nine months ended September 30, 2019 and 2018.

7. Equity Securities at Fair Value

The Company has an equity securities portfolio which consists of investments in other financial institutions and a payment technology company, which is reported at fair value on the Company's consolidated statements of financial condition. The fair value of the equities portfolio at September 30, 2019 and December 31, 2018 was $1.8 million and $1.9 million, respectively.

The Company adopted ASU 2016-01 on January 1, 2019, resulting in a $548,000 after tax cumulative-effect adjustment from other comprehensive income (loss) to retained earnings, as reflected in the ~~held-to-maturity portfolio for~~consolidated statements of changes in stockholders' equity. The Company recorded the net (decrease)/increase in the fair value of equity securities of $(59,000) and $189,000, during the three and nine months ended September 30, 2019, as a component of non-interest income.

During the three months ended ~~December 31, 2017~~September 30, 2019, proceeds from the sale of one equity security totaled $161,000, resulting in a gross gain of $70,000. During the nine months ended September 30, 2019, proceeds from sales of equity securities totaled $926,000, resulting in $196,000 of gross gains and ~~December 31, 2016.~~no gross losses. During the three and nine months ended September 30, 2018, there were no sales of equity securities.


5.	~~Loans Receivable and Allowance for Loan Losses~~

8. Loans Receivable and Allowance for Loan Losses

Loans receivable at September 30, 2019 and December 31, ~~2017 and September 30, 2017~~2018 are summarized as follows:

~~COLUMBIA FINANCIAL, INC. AND SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~

~~Notes to Consolidated Financial Statements~~


	December 31,			September 30,			September 30,		December 31,
	2017			2017			2019		2018
	(In thousands)						(In thousands)
Real estate loans:
One to four family	$	1,616,259		$	1,578,835
One-to-four family							$	1,844,507	$	1,830,186
Multifamily and commercial	1,871,210			1,821,982			2,316,922		2,142,154
Construction	233,652			218,408			268,522		261,473
Commercial business loans	277,970			267,664			375,412		333,876
Consumer loans:
Home equity loans and advances	448,020			464,962			362,432		393,492
Other consumer loans	998			1,270			1,681		1,108
Total loans	4,448,109			4,353,121
Net deferred loan costs	10,539			9,135
Allowance for loan losses	(58,178		)	(54,633		)
Loans receivable, net	$	4,400,470		$	4,307,623
Total gross loans							5,169,476		4,962,289
Net deferred loan costs, fees and purchased premiums and discounts							16,621		16,893
Loans receivable							$	5,186,097	$	4,979,182

The Company had no loans ~~held for sale~~held-for-sale at September 30, 2019, and $8.1 million of one-to-four family real estate loans held-for-sale at December 31, ~~2017~~2018. During the three and nine months ended September 30, ~~2017.~~2019, the Company sold one-to-four family real estate loans held-for-sale totaling $49.1 million and $94.1 million, respectively. These sales resulted in gross gains of $382,000 and $710,000, respectively, and no gross losses. No gross gains or losses were recognized on loans held-for-sale during the three and nine months ended September 30, 2018.

During the three and nine months ended September 30, 2019 the Company sold $2.3 million and $4.8 million, respectively of one-to-four family and home equity loans included in loans receivable. No gross gains or losses were recognized on the sale of these loans. For the three and nine months ended September 30, 2019, the Company sold $5.5 million of commercial real estate loans included in loans receivable. No gross gains or losses were recognized on the commercial real estate loans sold during the three and nine months ended September 30, 2019. During both the three and nine months ended September 30, 2018, the Company sold $3.7 million of loans receivable. These sales of one-to-four family real estate loans to a third party resulted in gross gains of $15,000 and no gross losses.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

8. Loans Receivable and Allowance for Loan Losses (continued)

During the three months ended September 30, 2019, there were no loans purchased by the Company. During the nine months ended September 30, 2019, the Company purchased $5.0 million, of one-to-four family real estate loans and $24.9 million of commercial real estate loans from third parties. There were no loans purchased by the Company during the three months ended September 30, 2018. The Company purchased $2.6 million of one-to-four family real estate loans and $2.1 million of commercial real estate ~~and multifamily~~ loans ~~with a carrying value of $49.8 million and residential loans with a carrying value of $6.2 million~~ from third parties during the ~~three~~nine months ended ~~December 31, 2017. The Company purchased $9.4 million of residential loans from third parties for the three months ended December 31, 2016.~~September 30, 2018.

At September 30, 2019 and December 31, ~~2017 and September 30, 2017,~~2018, the carrying value of ~~real estate~~ loans serviced by the Company for investors was ~~$478.8~~$538.2 million and ~~$493.2~~$462.7 million, respectively.

The Company periodically enters into Guarantor Swaps with Freddie Mac which results in improved liquidity. During the three months ended September 30, 2019, no loans were securitized. During the nine months ended September 30, 2019, the Company securitized $21.6 million of loans for a Freddie Mac Mortgage Participation Certificate. The Company retained the servicing of these loans. No loans were sold to Freddie Mac in exchange for Freddie Mac Mortgage Participation Certificates during the three and nine months ended September 30, 2018.

The following tables summarize the aging of loans receivable by portfolio segment at September 30, 2019 and December 31, ~~2017 and September 30, 2017:~~2018:


	December 31, 2017								September 30, 2019
	30-59 days		60-89 days	Greater than 90 days	Total past due	Current	Total		30-59 Days		60-89 Days		90 Days or More		Total Past Due		Current		Total
	(In Thousands)								(In thousands)
Real estate loans:
One to four family	$	7,080	1,229	3,360	11,669	1,604,590	$	1,616,259
One-to-four family									$	5,326	$	1,958	$	1,647	$	8,931	$	1,835,576	$	1,844,507
Multifamily and commercial	138		380	1,329	1,847	1,869,363	1,871,210		439		114		603		1,156		2,315,766		2,316,922
Construction	—		—	—	—	233,652	233,652		—		—		—		—		268,522		268,522
Commercial business loans	89		730	1,263	2,082	275,888	277,970		—		—		1,129		1,129		374,283		375,412
Consumer loans:
Home equity loans advances	1,421		26	573	2,020	446,000	448,020
Home equity loans and advances									740		537		485		1,762		360,670		362,432
Other consumer loans	—		—	—	—	998	998		—		—		—		—		1,681		1,681
Total loans	$	8,728	2,365	6,525	17,618	4,430,491	$	4,448,109	$	6,505	$	2,609	$	3,864	$	12,978	$	5,156,498	$	5,169,476



	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 loans	$	12,012	$	3,395	$	2,789	$	18,196	$	4,944,093	$	4,962,289

COLUMBIA FINANCIAL, INC. AND ~~SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

September 30, 2017
30-59 days
60-89 days
Greater than 90 days
Total past due
Current
Total
(In thousands)
Real estate loans:
One to four family $ 3,924

932

3,496

8,352

1,570,483

$ 1,578,835
Multifamily and commercial —

123

1,510

1,633

1,820,349

1,821,982
Construction —

—

—

—

218,408

218,408
Commercial business loans —

388

1,038

1,426

266,238

267,664
Consumer loans:

Home equity loans advances 1,437

187

351

1,975

462,987

464,962
Other consumer loans 1

—

—

1

1,269

1,270
Total loans $ 5,362

1,630

6,395

13,387

4,339,734

$ 4,353,121
8. Loans Receivable and Allowance for Loan Losses (continued)

The Company considers a loan to be delinquent when we have not received a payment within 30 days of its contractual due date. AGenerally, a loan is designated as a non-accrual loan when the payment of interest is 90 days or more ~~than three months~~ in arrears of its contractual due date. ~~The~~Non-accruing loans are returned to accrual status after there has been a sustained period of ~~income on a non-accrual loan is reversed~~repayment performance (generally

six consecutive months of payments) and ~~discontinued until the outstanding payments in arrears have been collected.~~both principal and interest are deemed collectible. 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 September 30, 2019 and December 31, 2018, non-accrual loans totaled $4.3 million and $2.8 million, respectively. Included in non-accrual loans at September 30, 2019, are seven loans totaling $433,000 which are less than 90 days in arrears. At December 31, 2018, no loans less than 90 days in arrears were included in non-accrual loans.

At September 30, 2019 and December 31, ~~2017 and September 30, 2017,~~2018, there were no loans past due 90 days or more and still accruing interest.

The following table ~~summarizes~~provides information with respect to our non-accrual loans at September 30, 2019 and December 31, 2018:



	September 30,		December 31,
	2019		2018
	(In thousands)
Non-accrual loans:
Real estate loans:
One-to-four family	$	1,799	$	819
Multifamily and commercial	603		154
Commercial business loans	1,195		911
Consumer loans:
Home equity loans and advances	700		905
Total non-accrual loans	$	4,297	$	2,789

We may obtain physical possession of real estate collateralizing a residential mortgage loan via foreclosure or through an in-substance repossession. At September 30, 2019, the Company had no real estate owned. At 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. At September 30, 2019 and December 31, 2018, we had 5 and 14 residential mortgage loans with carrying values of $866,000 and $1.6 million, respectively, collateralized by residential real estate which are in the process of foreclosure.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

8. Loans Receivable and Allowance for Loan Losses (continued)

The following tables summarize loans receivable and allowance for loan losses by portfolio segment and impairment ~~method:~~method at September 30, 2019 and December 31, 2018:


	December 31, 2017										September 30, 2019
	One to four family		Multifamily and commercial	Construction	Commercial Business	Home equity loans and advances	Other consumer	Unallocated	Total		One-to-Four Family		Multifamily and Commercial		Construction		Commercial Business		Home Equity Loans and Advances		Other Consumer Loans		Unallocated		Total
	(In thousands)										(In thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	423	28	—	80	15	—	—	$	546	$	507	$	2	$	—	$	607	$	14	$	—	$	—	$	1,130
Collectively evaluated for impairment	19,568		19,905	5,217	8,195	4,561	8	178	57,632		15,226		22,967		7,760		13,421		2,117		8		—		61,499
Total	$	19,991	19,933	5,217	8,275	4,576	8	178	$	58,178	$	15,733	$	22,969	$	7,760	$	14,028	$	2,131	$	8	$	—	$	62,629

Total loans:
Ending balance:
Individually evaluated for impairment	$	11,644	3,693	—	4,263	2,591	—	—	$	22,191	$	9,131	$	2,624	$	—	$	7,099	$	2,706	$	—	$	—	$	21,560
Collectively evaluated for impairment	1,604,615		1,867,517	233,652	273,707	445,429	998	—	4,425,918		1,835,376		2,314,298		268,522		368,313		359,726		1,681		—		5,147,916
Total	$	1,616,259	1,871,210	233,652	277,970	448,020	998	—	$	4,448,109
Total loans											$	1,844,507	$	2,316,922	$	268,522	$	375,412	$	362,432	$	1,681	$	—	$	5,169,476

COLUMBIA FINANCIAL, INC. AND ~~SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

8. Loans Receivable and Allowance for Loan Losses (continued)


	September 30, 2017										December 31, 2018
	One to four family		Multifamily and commercial	Construction	Commercial Business	Home equity loans and advances	Other consumer	Unallocated	Total		One-to-Four Family		Multifamily and Commercial		Construction		Commercial Business		Home Equity Loans and Advances		Other Consumer Loans		Unallocated		Total
	(In thousands)										(In thousands)
Allowance for loan losses:
Individually evaluated for impairment	407		35	—	84	14	—	—	540		$	537	$	—	$	—	$	366	$	12	$	—	$	—	$	915
Collectively evaluated for impairment	18,126		17,994	5,299	8,396	4,176	8	94	54,093		14,695		23,251		7,217		13,810		2,446		8		—		61,427
Total	18,533		18,029	5,299	8,480	4,190	8	94	54,633		$	15,232	$	23,251	$	7,217	$	14,176	$	2,458	$	8	$	—	$	62,342

Total loans:
Ending balance:
Individually evaluated for impairment	$	12,247	6,343	—	4,327	2,998	—	—	$	25,915	$	9,048	$	2,695	$	—	$	2,944	$	3,100	$	—	$	—	$	17,787
Collectively evaluated for impairment	1,566,588		1,815,639	218,408	263,337	461,964	1,270	—	4,327,206		1,821,138		2,139,459		261,473		330,932		390,392		1,108		—		4,944,502
Total	$	1,578,835	1,821,982	218,408	267,664	464,962	1,270	—	$	4,353,121
Total loans											$	1,830,186	$	2,142,154	$	261,473	$	333,876	$	393,492	$	1,108	$	—	$	4,962,289

Loan modifications to borrowers experiencing financial difficulties that are considered ~~Troubled Debt Restructurings~~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.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

8. Loans Receivable and Allowance for Loan Losses (continued)

There were no loans modified during the three months ended September 30, 2019 and 2018. The following ~~tables present~~table presents the number of loans modified as TDRs during the ~~three~~nine months ended ~~December 31, 2017~~September 30, 2019 and ~~December 31, 2016,~~2018, along with their balances immediately prior to the modification date and ~~post-modification as of December 31, 2017 and December 31, 2016.~~post-modification. Post-modification recorded investment represents the net book balance immediately following modification.


											For the Nine Months Ended September 30,
	December 31, 2017					December 31, 2016					2019					2018
	No of loans	Pre-modification recorded investment		Post-modification recorded investment		No of loans	Pre-modification recorded investment		Post-modification recorded investment		No. of Loans	Pre-modification Recorded Investment		Post-modification Recorded Investment		No. of Loans	Pre-modification Recorded Investment		Pre-modification Recorded Investment
		(In thousands)					(In thousands)				(Dollars in thousands)
Troubled Debt Restructurings
Real estate loans:
One to four family	—	$	—	$	—	2	$	257	$	257
One-to-four family											—	$	—	$	—	4	$	462	$	462
Commercial business loans											1	4,095		4,095		—	—		—
Consumer loans:
Home equity loans and advances	—	—		—		1	108		108		—	—		—		1	588		588
Total loans	—	$	—	$	—	3	$	365	$	365
Total restructured loans											1	$	4,095	$	4,095	5	$	1,050	$	1,050

The activity in the allowance for loan losses by portfolio segment ~~at December 31, 2017~~for the three and ~~2016 was~~nine months ended September 30, 2019 and 2018 are as follows:



	For the Three Months Ended September 30,
	One-to-Four Family			Multifamily and Commercial		Construction			Commercial Business			Home Equity Loans and Advances			Other Consumer Loans			Unallocated			Total
	(In thousands)
2019
Balance at beginning of period	$	15,610		$	22,679	$	8,806		$	12,718		$	2,583		$	7		$	—		$	62,403
Provision charged (credited)	347			290		(1,047		)	2,040			(474		)	1			—			1,157
Recoveries	4			—		1			8			22			—			—			35
Charge-offs	(228		)	—		—			(738		)	—			—			—			(966		)
Balance at end of period	$	15,733		$	22,969	$	7,760		$	14,028		$	2,131		$	8		$	—		$	62,629

2018
Balance at beginning of period	$	18,549		$	22,802	$	6,728		$	10,920		$	2,870		$	7		$	648		$	62,524
Provision charged (credited)	(809		)	965		420			1,118			202			1			(397		)	1,500
Recoveries	108			—		—			24			17			—			—			149
Charge-offs	(323		)	—		—			(197		)	(246		)	(1		)	—			(767		)
Balance at end of period	$	17,525		$	23,767	$	7,148		$	11,865		$	2,843		$	7		$	251		$	63,406

COLUMBIA FINANCIAL, INC. AND ~~SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

8. Loans Receivable and Allowance for Loan Losses (continued)


	One to four family			Multifamily and commercial			Construction		Commercial Business		Home equity loans and advances		Other consumer		Unallocated	Total			For the Nine Months Ended September 30,
	(In Thousands)																		One-to-Four Family			Multifamily and Commercial			Construction		Commercial Business			Home Equity Loans and Advances			Other Consumer Loans			Unallocated		Total
2017
																			(In thousands)
2019
Balance at beginning of period	$	18,533		$	18,029		5,299		8,480		4,190		8		94	$	54,633		$	15,232		$	23,251		$	7,217	$	14,176		$	2,458		$	8		$	—	$	62,342
Provision charged (credited)	1,473			1,906			(82	)	(373	)	389		3		84	3,400			1,215			(282		)	541		485			(255		)	1			—		1,705
Recoveries	9			—			—		171		6		2		—	188			29			—			2		374			29			—			—		434
Charge-offs	(24		)	(2		)	—		(3	)	(9	)	(5	)	—	(43		)	(743		)	—			—		(1,007		)	(101		)	(1		)	—		(1,852		)
Balance at end of period	$	19,991		19,933			5,217		8,275		4,576		8		178	$	58,178		$	15,733		$	22,969		$	7,760	$	14,028		$	2,131		$	8		$	—	$	62,629

2016
2018
Balance at beginning of period	$	18,638		17,390			5,960		5,721		4,052		11		95	$	51,867		$	19,991		$	19,933		$	5,217	$	8,275		$	4,577		$	8		$	177	$	58,178
Provision charged (credited)	(27		)	226			(1,362	)	641		177		4		341	—			(2,362		)	3,962			1,928		3,902			(1,607		)	3			74		5,900
Recoveries	3			—			—		19		6		—		—	28			280			—			3		111			119			5			—		518
Charge-offs	(15		)	$	—		—		(23	)	(4	)	(4	)	—	(46		)	(384		)	(128		)	—		(423		)	(246		)	(9		)	—		(1,190		)
Balance at end of period	$	18,599		17,616			4,598		6,358		4,231		11		436	$	51,849		$	17,525		$	23,767		$	7,148	$	11,865		$	2,843		$	7		$	251	$	63,406

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

8. Loans Receivable and Allowance for Loan Losses (continued)

The following ~~table presents~~tables present loans individually evaluated for impairment by loan ~~segment:~~segment at September 30, 2019 and December 31, 2018:



	At September 30, 2019
	Recorded Investment		Unpaid Principal Balance		Specific Allowance
	(In thousands)
With no allowance recorded:
Real estate loans:
One-to-four family	$	4,420	$	5,565	$	—
Multifamily and commercial	1,511		2,212		—
Commercial business loans	2,223		2,411		—
Consumer loans:
Home equity loans and advances	1,632		1,769		—
	9,786		11,957		—
With a specific allowance recorded:
Real estate loans:
One-to-four family	4,711		4,761		507
Multifamily and commercial	1,113		1,113		2
Commercial business loans	4,876		4,876		607
Consumer loans:
Home equity loans and advances	1,074		1,074		14
	11,774		11,824		1,130
Total:
Real estate loans:
One-to-four family	9,131		10,326		507
Multifamily and commercial	2,624		3,325		2
Commercial business loans	7,099		7,287		607
Consumer loans:
Home equity loans and advances	2,706		2,843		14
Total loans	$	21,560	$	23,781	$	1,130

COLUMBIA FINANCIAL, INC. AND ~~SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

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

~~COLUMBIA FINANCIAL, INC. AND SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~

~~Notes to Consolidated Financial Statements~~

8. Loans Receivable and Allowance for Loan Losses (continued)


	September 30, 2017					At December 31, 2018
	Recorded investment		Unpaid principal balance	Specific allowance		Recorded Investment		Unpaid Principal Balance		Specific Allowance
	(In thousands)					(In thousands)
With no allowance recorded:
Real estate loans:
One to four family	$	9,272	10,156	$	—
One-to-four family						$	4,156	$	5,307	$	—
Multifamily and commercial	4,701		5,577	—		2,695		3,482		—
Commercial business loans	1,545		2,038	—		2,285		2,374		—
Consumer loans:
Home equity loans and advances	2,745		3,214	—		2,511		2,866		—
	$	18,263	20,985	$	—	11,647		14,029		—
With a specific allowance recorded:
Real estate loans:
One to four family	$	2,975	2,989	$	407
Multifamily and commercial	1,642		2,215	35
One-to-four family						4,892		4,939		537
Commercial business loans	2,782		2,782	84		659		768		366
Consumer loans:
Home equity loans and advances						589		589		12
	253		253	14		6,140		6,296		915
Total:	$	7,652	8,239	$	540
Real estate loans:
One to four family	$	12,247	13,145	$	407
One-to-four family						9,048		10,246		537
Multifamily and commercial	6,343		7,792	35		2,695		3,482		—
Commercial business loans	4,327		4,820	84		2,944		3,142		366
Consumer loans:
Home equity loans and advances	2,998		3,467	14		3,100		3,455		12
Total loans	$	25,915	29,224	$	540
						$	17,787	$	20,325	$	915

Specific allocations of the allowance for loan losses attributable to impaired loans totaled ~~$546 thousand~~$1.1 million and ~~$540 thousand~~$915,000 at September 30, 2019 and December 31, ~~2017 and~~2018, respectively. At September 30, ~~2017, respectively. At~~2019 and December 31, ~~2017 and September 30, 2017,~~2018, impaired loans for which there was no related allowance for loan losses totaled ~~$14.6~~$9.8 million and ~~$18.3~~$11.6 million, respectively.

The recorded investment in TDRs totaled $18.7 million at September 30, 2019, of which there were no loans which had a payment default within the twelve month period ending September 30, 2019. The recorded investment in TDRs totaled $16.0 million at December 31, 2018, of which there no loans which had a payment default within the twelve month period ending December 31, 2018.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

8. Loans Receivable and Allowance for Loan Losses (continued)

The following ~~table presents~~tables present interest income recognized for loans individually evaluated for impairment, by loan segment, for the three and nine months ended ~~December 31, 2017~~September 30, 2019 and ~~2016:~~2018:


									For the Three Months Ended September 30,
	December 31, 2017				December 31, 2016				2019				2018
	Average recorded Investment		Interest Income Recognized		Average recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)				(In thousands)				(In thousands)
Real estate loans:
One to four family	$	14,015	$	110	$	16,419	$	118
One-to-four family									$	8,773	$	101	$	10,606	$	107
Multifamily and commercial	4,087		39		4,879		70		2,637		37		2,717		30
Construction									850		—		—		—
Commercial business loans	3,870		46		3,861		49		7,461		88		3,098		24
Consumer loans:
Home equity loans and advances	3,618		35		3,952		34		2,629		35		3,447		39
Total loans	$	25,590	$	230	$	29,111	$	271	$	22,350	$	261	$	19,868	$	200



	For the Nine Months Ended September 30,
	2019				2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
Real estate loans:
One-to-four family	$	9,144	$	340	$	10,873	$	105
Multifamily and commercial	2,667		111		2,961		29
Construction	850		—		—		—
Commercial business loans	5,848		268		3,390		25
Consumer loans:
Home equity loans and advances	2,866		122		3,233		39
Total loans	$	21,375	$	841	$	20,457	$	198

The Company utilizes an ~~internal~~ 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

~~COLUMBIA FINANCIAL, INC. AND SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~

~~Notes to Consolidated Financial Statements~~

loans with minimal risk. Loans that are deemed to be of “questionable quality” are rated 5 ~~(Watch)~~(Special Mention) or 6 ~~(Special Mention)~~(Substandard). Loans with adverse classifications are rated 7 (Doubtful) or 8 (Loss)~~, respectively.~~. 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~~credit risk review department. The Company requires an annual review be performed above certain dollar thresholds, depending on loan ~~review department.~~type, to help determine the appropriate risk ratings. Results from examinations are presented to the Audit Committee of the Board of Directors.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

8. Loans Receivable and Allowance for Loan Losses (continued)

The following ~~table presents~~tables present loans receivable by credit ~~quality~~ risk indicator and by loan segment:


	December 31, 2017
	Real Estate									At September 30, 2019
	One to four family		Multifamily and commercial	Construction	Home equity loans and advances	Commercial business	Other consumer	Total		One-to-Four Family		Multifamily and Commercial		Construction		Commercial Business		Home Equity Loans and Advances		Other Consumer Loans		Total
	(In thousands)									(In thousands)

Pass	$	1,606,672	1,851,772	233,652	446,364	268,355	998	$	4,407,813	$	1,841,273	$	2,303,084	$	268,522	$	351,083	$	361,384	$	1,681	$	5,127,027
Special mention	—		4,782	—	—	3,678	—	8,460		—		140		—		14,086		—		—		14,226
Substandard	9,587		14,656	—	1,656	5,937	—	31,836		3,234		13,698		—		10,243		1,048		—		28,223
Doubtful	—		—	—	—	—	—	—		—		—		—		—		—		—		—
Total	$	1,616,259	1,871,210	233,652	448,020	277,970	998	$	4,448,109	$	1,844,507	$	2,316,922	$	268,522	$	375,412	$	362,432	$	1,681	$	5,169,476


	September 30, 2017
	Real Estate									December 31, 2018
	One to four family		Multifamily and commercial	Construction	Home equity loans and advances	Commercial business	Other consumer	Total		One-to-Four Family		Multifamily and Commercial		Construction		Commercial Business		Home Equity Loans and Advances		Other Consumer Loans		Total
	(In thousands)									(In thousands)

Pass	$	1,569,064	1,796,786	218,408	463,257	258,454	1,270	$	4,307,239	$	1,826,066	$	2,128,680	$	261,473	$	320,451	$	392,092	$	1,108	$	4,929,870
Special mention	—		11,600	—	—	3,347	—	14,947		—		—		—		9,074		—		—		9,074
Substandard	9,771		13,596	—	1,705	5,863	—	30,935		4,120		13,474		—		4,351		1,400		—		23,345
Doubtful	—		—	—	—	—	—	—		—		—		—		—		—		—		—
Total	$	1,578,835	1,821,982	218,408	464,962	267,664	1,270	$	4,353,121	$	1,830,186	$	2,142,154	$	261,473	$	333,876	$	393,492	$	1,108	$	4,962,289


6.	9. Deposits

Deposits at September 30, 2019 and December 31, ~~2017 and September 30, 2017~~2018 are summarized as follows:

December 31,
September 30,

2017
2017

(In Thousands)

Non-interest bearing transaction $ 681,869

$ 676,067
Interest bearing transaction 1,370,403

1,268,833
Money market deposit accounts 262,396

273,605
Savings, including club deposits 544,765

546,449
Certificates of deposit 1,403,882

1,358,474
Total deposits $ 4,263,315

$ 4,123,428



	September 30,		December 31,
	2019		2018
	(In thousands)

Non-interest-bearing demand	$	771,138	$	723,794
Interest-bearing demand	1,421,064		1,219,381
Money market accounts	262,194		259,694
Savings and club deposits	464,089		510,688
Certificates of deposit	1,864,837		1,700,316
Total deposits	$	4,783,322	$	4,413,873

The aggregate amount of certificates of deposit that meet or exceed $100,000 istotaled approximately ~~$640.1 million~~$1.0 billion and ~~$608.5~~$885.3 million as of September 30, 2019 and December 31, ~~2017 and September 30, 2017,~~2018, respectively.

COLUMBIA FINANCIAL, INC. AND ~~SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

~~A summary~~9. Deposits (continued)

Interest expense on deposits for the three and nine months ended September 30, 2019 and September 30, 2018 totaled $16.1 million and $10.4 million, and $45.0 million and $27.7 million, respectively.

Scheduled maturities of ~~certificate~~certificates of deposit accounts ~~by maturity~~ at September 30, 2019 and December 31, ~~2017 is a~~2018 are summarized as follows:

December 31,
September 30,

2017
2017

(In Thousands)

Less than one year $ 669,610

$ 657,741
More than one years to two years 474,475

338,265
More than two years to three years 169,069

248,779
More than three years to four years 68,184

81,959
More than four years 22,544

31,730

$ 1,403,882

$ 1,358,474



	September 30,		December 31,
	2019		2018
	(In thousands)

One year or less	$	1,216,491	$	1,107,667
After one year to two years	464,718		326,800
After two years to three years	160,181		230,468
After three years to four years	9,502		24,939
After four years	13,945		10,442
	$	1,864,837	$	1,700,316


7.	~~Components of Periodic Benefit Costs~~

10. Stock Based Compensation

At the annual meeting held on June 6, 2019, stockholders of the Company approved the Columbia Financial, Inc. 2019 Equity Incentive Plan ("2019 Plan") which provides for the issuance of up to 7,949,996 shares (2,271,427 restricted stock awards and5,678,569 stock options) of Columbia Financial Inc. common stock.

On July 23, 2019, 1,389,570 shares of restricted stock were awarded, with a grant date fair value of $15.60 per share. To fund the grant of restricted common stock, the Company issued shares from authorized unissued shares. Restricted shares granted under the 2019 Plan vest in equal installments, over the performance or service periods ranging from three to five years, beginning one year from the date of grant. A portion of restricted shares awarded are performance vesting awards, which may or may not vest depending upon the attainment of certain corporate financial targets. Management recognizes compensation expense for the fair value of restricted shares on a straight line basis over the requisite performance or service period. During the three and nine months ended September 30, 2019, approximately $1.0 million in expense was recognized in regard to these awards. There was no restricted stock expense recorded for the three and nine months ended September 30, 2018. The expected future compensation expense related to the 1,389,570 non-vested restricted shares outstanding at September 30, 2019 is approximately $20.6 million over a weighted average period of 4.0 years.

The ~~Bank~~following is a summary of the Company's restricted stock activity during the nine months ended September 30, 2019:



	Number of Restricted Shares	Weighted Average Grant Date Fair Value

Outstanding, January 1, 2019	—	$	—
Granted	1,389,570	15.60
Outstanding, September 30, 2019	1,389,570	$	15.60

On July 23, 2019, options to purchase 3,707,901 shares of Company common stock were awarded, with a grant date fair value of $4.25 per option. Stock options granted under the 2019 Plan vest in equal installments over the service period of five years beginning one year from the date of grant. Stock options were granted at an exercise price of $15.60, which represents the fair value of the Company's common stock price on the grant date based on the closing market price, and have an expiration period of 10 years.

The fair value of stock options granted was estimated utilizing the Black-Scholes option pricing model using the following assumptions: expected life of 6.5 years, risk-free rate of return of 1.90%, volatility of 22.12%, and a dividend yield of 0.00%.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

10. Stock Based Compensation (continued)

The expected life of the options represents the period of time that stock options are expected to be outstanding and is estimated using the simplified approach, which assumes that all outstanding options will be exercised at the midpoint of the vesting date and full contractual

term. The risk-free rate of return is based on the rates on the grant date of a U.S. Treasury Note with a term equal to the expected option life. Since the Company recently converted to a public Company and does not have sufficient historical price data, the expected volatility is based on the historical daily stock prices of a peer group of similar entities based on factors such as industry, stage of life cycle, size and financial leverage. The Company has not paid any cash dividends on its common stock.

Management recognizes expense for the fair value of these awards on a straight line basis over the requisite service period. During the three and nine months ended September 30, 2019, approximately $601,000 in expense was recognized in regard to these awards. There was no stock option expense recorded for the three and nine months ended September 30, 2018. The expected future compensation expense related to the 3,707,901 non-vested options outstanding at September 30, 2019 is $15.2 million over a weighted average period of 4.8 years.

The following is a summary of the Company's option activity during the nine months ended September 30, 2019:



	Number of Stock Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value

Outstanding, January 1, 2019	—	$	—	—	$	—
Granted	3,707,901	$	15.6	9.8	$	704,501
Outstanding, September 30, 2019	3,707,901	$	15.6	9.8	$	704,501
Options exercisable at September 30, 2019	—	$	—	—	$	—

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value, the difference between the Company's closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options.

11. Components of Net Periodic Benefit Cost

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") ~~covering its~~which covers full-time employees ~~who~~that satisfy the Pension Plan's eligibility requirements. The benefits are based on years of service and the employee's compensation during the last five years of employment. ~~Costs of~~Effective October 1, 2018, employees hired by the Bank are not eligible to participate in the Pension Plan based on the actuarial computations of the current future benefits for employees, are recognized to expense and are funded in part based on the maximum amount that can be deducted for federal income tax purposes. The Pension Plan’s assets are primarily invested in fixed debt and equity securities managed by Aon Hewitt.

~~In addition to~~as the Pension Plan ~~certain health care and life insurance benefits are made available~~has been closed to ~~retirement~~new employees ~~(the "Post-retirement Plan").~~as of that date.

The ~~Bank~~Company also has a ~~retirement income maintenance plan~~Retirement Income Maintenance Plan (the "RIM ~~Plan"). The RIM Plan~~"Plan) which is a non-qualified defined benefit plan which provides benefits to all employees of the ~~Bank~~Company if their benefits under the Pension Plan are limited by ~~the~~ Internal Revenue Code ~~Sections~~ 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. Effective January 1, 2019, the Post-retirement Plan has been closed to new hires. The Company also provides life insurance benefits to eligible employees under an endorsement split-dollar life insurance program.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

11. Components of Net Periodic Benefit Cost (continued)

Net periodic benefit (income) cost for Pension Plan, RIM Plan, Post-retirement Plan and split-dollar life insurance arrangement plan benefits for the three and nine months ended September 30, 2019 and 2018, includes the following components:



	For the Three Months Ended September 30,
	Pension Plan						RIM Plan				Post-retirement Plans
	2019			2018			2019		2018		2019		2018			Affected Line Item in the Consolidated Statements of Income
	(In thousands)

Service cost	$	1,746		$	1,780		$	53	$	61	$	172	$	93		Compensation and employee benefits
Interest cost	2,090			2,129			116		111		321		205			Other non-interest expense
Expected return on plan assets	(5,802		)	(4,815		)	—		—		—		—			Other non-interest expense
Amortization:
Prior service cost	—			—			—		—		14		(34		)	Other non-interest expense
Net loss	770			707			61		103		99		69			Other non-interest expense
Net periodic (income) benefit cost	$	(1,196	)	$	(199	)	$	230	$	275	$	606	$	333



	For the Nine Months Ended September 30,
	Pension Plan						RIM Plan				Post-retirement Plans
	2019			2018			2019		2018		2019		2018
	(In thousands)

Service cost	$	4,748		$	5,340		$	159	$	183	$	516	$	279		Compensation and employee benefits
Interest cost	6,478			6,387			348		333		963		615			Other non-interest expense
Expected return on plan assets	(15,256		)	(14,445		)	—		—		—		—			Other non-interest expense
Amortization:
Prior service cost	—			—			—		—		42		(102		)	Other non-interest expense
Net loss	2,300			2,121			183		309		297		207			Other non-interest expense
Net periodic (income) benefit cost	$	(1,730	)	$	(597	)	$	690	$	825	$	1,818	$	999

Effective January 1, 2019, the Company implemented ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post-retirement Benefit Cost. Under this ASU, the FASB requires employers to report the service cost component in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic benefit cost are required to be presented in the consolidated statements of income separately from the service cost component. The table above details the affected line items within the consolidated statements of income related to the net periodic benefits costs for the periods noted. This ASU is also required to be applied retrospectively to all periods presented.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

11. Components of Net Periodic Benefit Cost (continued)

The following table summarizes the impact of retrospective application to the consolidated statements of income for the three and nine months ended September 30, 2018:



	For the Three Months Ended		For the Nine Months Ended
	September 30, 2018		September 30, 2018
	(In thousands)
Compensation and employee benefits:
As previously reported	$	16,654	$	49,929
As reported under new guidance	18,179		54,503

Other non-interest expense:
As previously reported	$	3,304	$	9,599
As reported under new guidance	1,779		5,024

During the nine months ended September 30, 2019, the Bank contributed $35.0 million which increased the funded status of the Plan to meet the approximate maximum tax deductible contribution limit. The net periodic cost (income) for pension benefits and other post-retirement benefits for the three and nine months ended ~~December 31, 2017 and 2016 includes the following components:~~

Pension
RIM
Post-retirement

December 31, 2017
December 31, 2016
December 31, 2017
December 31, 2016
December 31, 2017
December 31, 2016

(In thousands)
Service cost $ 1,780

$ 1,905

$ 61

$ 59

$ 93

$ 118
Interest cost 2,129

2,111

111

107

205

186
Expected return on plan assets (4,815 )
(6,202 )
—

—

—

—
Amortization:

Prior service cost —

—

—

—

(34 )
(34 )
Net loss 707

2,750

103

113

69

81
Net periodic cost (income) $ (199 )
$ 564

$ 275

$ 279

$ 333

$ 351

~~The net periodic benefit cost (income) for pension benefits and other benefits at December 31, 2017~~September 30, 2019 were calculated using the ~~December 31, 2017 third party actuarial valuation reports. For~~ the ~~three months ended December 31, 2017, the $9.1 million change in the funded status before tax of the Company's~~most recent available benefit plans is primarily attributed to a decline in the discount rate used to present value our pension benefit obligations. For December 31, 2016, the September 30, 2016 third party actuarial valuation reports were utilized as a proxy to calculate the net periodic benefit cost for pension benefits.

~~COLUMBIA FINANCIAL, INC. AND SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~

~~Notes to Consolidated Financial Statements~~


8.	~~Taxes~~

For the three months ended December 31, 2017 and 2016, the Company recorded tax expense of $9.0 million and $4.9 million, respectively. The effective tax rate was 70.9% and 32.7% for the three months ended December 31, 2017 and 2016, respectively.

On December 22, 2017, the United States Congress enacted tax reform legislation known as H.R.1, commonly referred to as the "Tax Cuts and Jobs Act" (the "Act"), which resulted in significant modifications to existing tax law. A number of the provisions directly impacts the Company. Included in the Act was a reduction of the corporate income tax rate from 35% to 21%. The Company has completed the analysis of remeasuring our gross deferred tax assets and liabilities utilizing the 21% corporate tax rate. The Company recorded the effect in our financial results for the period ended December 31, 2017. The effect of the change in the corporate tax rate on our gross deferred tax assets and liabilities resulted in a $4.7 million increase in tax expense for the period ended December 31, 2017. ASC Topic 740 requires that the tax effect of changes in tax law and rates be recognized in income from continuing operations in the period that includes the enactment date of the change even if the deferred tax balances related to a prior year.valuations.


9.	~~Fair Value Measurements~~

12. 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.

In January 2016, the FASB issued ASU 2016-01- "Financial Instruments". This guidance amended existing guidance to improve accounting standards for financial instruments including clarification and simplification of the accounting and disclosure requirements and the requirement to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. The Company adopted the guidance effective January 1, 2019, and the fair value of the Company's loan portfolio is now presented using an exit price method.

Fair value is ~~an estimate of~~ the exchange price that would be received ~~to sell~~for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants aton the measurement date. ~~However, in many instances, fair value estimates~~There are three levels of inputs that may ~~not~~ be ~~substantiated by comparison to independent markets and may not be realized in an immediate sale of the financial instrument.~~

~~U.S. GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques~~ used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy are as follows:values:

Level 1: Unadjusted quoted ~~market~~ prices for identical assets or liabilities in active markets that ~~are accessible at~~the Company has the ability to

access on the measurement ~~date for identical,~~

~~unrestricted assets or liabilities;~~date.

Level 2: ~~Quoted~~Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar instruments in markets that are active or not active, or inputs that are observable ~~either directly~~ or ~~indirectly~~can be corroborated by observable market data for

substantially the full term of the asset or ~~liability; and~~liability.

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.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

12. Fair Value Measurements (continued)

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~~methods described below were used to measure fair value of financial instruments as reflected in the tables below on a recurring basis as of September 30, 2019 and December 31, ~~2017 and September 30, 2017.~~2018.

~~COLUMBIA FINANCIAL, INC. AND SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~

~~Notes to Consolidated Financial Statements~~

Debt Securities ~~Available-for-Sale~~Available for Sale, at Fair Value

For debt securities ~~available-for-sale,~~available for sale, fair value was estimated using a market approach. The majority of ~~the Company’s~~these 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 a 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 ~~also holds equity securities and~~may hold 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.

Equity Securities, at Fair Value

The Company holds equity securities that are traded in active markets with readily accessible quoted market prices that are considered Level 1 inputs.

Derivatives

The Company records all derivatives included in other assets and liabilities on the consolidated ~~balance sheets~~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. See note 14 for disclosures related to the accounting treatment for derivatives.

The fair value of the Company's derivatives ~~are~~is determined using discounted cash flow analysis using observable market-based inputs, which are considered Level 2 inputs.

The following tables present the assets and liabilities reported on the consolidated statements of financial condition at their fair values as of September 30, 2019 and December 31, 2018, by level within the fair value hierarchy:

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

12. Fair Value Measurements (continued)



	September 30, 2019
			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)
Debt securities available for sale:
U.S. government and agency obligations	$	45,131	$	45,131	$	—	$	—
Mortgage-backed securities and collateralized mortgage obligations	1,001,443		—		1,001,443		—
Municipal obligations	190		—		190		—
Corporate debt securities	64,600		—		64,600		—
Trust preferred securities	4,541		—		4,541		—
Total debt securities available for sale	1,115,905		45,131		1,070,774		—
Equity securities	1,765		1,765		—		—
Derivative assets	8,740		—		8,740		—
	$	1,126,410	$	46,896	$	1,079,514	$	—

Derivative liabilities	$	22,676	$	—	$	22,676	$	—



	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)
Debt 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		—
Total debt securities available for sale	1,032,868		54,157		978,711		—
Equity securities	1,890		1,890		—
Derivative assets	1,342		—		1,342		—
	$	1,036,100	$	56,047	$	980,053	$	—

Derivative liabilities	$	3,944	$	—	$	3,944	$	—

There were no transfers between Level 1, Level 2 and Level 3 during the three and nine months ended September 30, 2019 and September 30, 2018.

There were no Level 3 assets measured at fair value on a recurring basis at September 30, 2019 and December 31, 2018.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

12. Fair Value Measurements (continued)

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 September 30, 2019 and December 31, ~~2017 and September 30, 2017.~~2018.

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%6.0% and 8%8.0%. The Company classifies these loans as Level 3 within the fair value hierarchy.

~~Foreclosed Assets~~Real Estate Owned

Assets acquired through foreclosure or deed in lieu of foreclosure are carried at fair value, less estimated ~~selling~~ costs ~~which is estimated~~ to ~~be 6%~~sell between 6.0% and 8.0%. 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~~case-by-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.

~~There were no changes to~~Mortgage Servicing Rights, Net ("MSR's")

Mortgage servicing rights are carried at the ~~valuation techniques for~~lower of cost or estimated fair value. The estimated fair value ~~measurements as~~ of ~~December 31, 2017~~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 ~~September 30, 2017.~~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.

The following tables present the assets ~~and liabilities~~ reported on the consolidated ~~balance sheets~~statements of financial condition at their fair values as of September 30, 2019 and December 31, ~~2017 and September 30, 2017,~~2018, by level within the fair value hierarchy:



	September 30, 2019
			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)

Mortgage servicing rights	$	582	$	—	$	—	$	582
	$	582	$	—	$	—	$	582

COLUMBIA FINANCIAL, INC. AND ~~SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

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)
Measured on a recurring basis:

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

$ —

12. Fair Value Measurements (continued)

September 30, 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)
Measured on a recurring basis:

Securities available-for-sale:

U.S. government and agency obligations $ 24,874

24,874

—

$ —
Mortgage-backed securities and collateralized mortgage obligations 473,491

—

473,491

—
Municipal obligations 1,357

—

1,357

—
Corporate debt securities 49,492

—

49,492

—
Trust preferred securities 4,708

—

4,708

—
Equity securities 3,254

3,254

—

—
Total securities available-for-sale 557,176

28,128

529,048

—
Derivative assets 277

—

277

—

$ 557,453

28,128

529,325

$ —

Derivative liabilities $ 182

—

182

$ —



	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	$	125	$	—	$	—	$	125
Real estate owned	92		—		—		92
Mortgage servicing rights	442		—		—		442
	$	659	$	—	$	—	$	659

~~There~~At September 30, 2019, there were no ~~transfers between Level 1, Level 2 and Level 3 during the three months ended December 31, 2017.~~

~~COLUMBIA FINANCIAL, INC. AND SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~

~~Notes to Consolidated Financial Statements~~

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)
Measured on a non-recurring basis:

Real estate owned $ 959

—

—

$ 959
Loans measured for impairment based on the

fair value of the underlying collateral $ 10,251

—

—

$ 10,251

11,210

—

—

11,210

September 30, 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)
Measured on a non-recurring basis:

Real estate owned $ 393

—

—

$ 393
Loans measured for impairment based on the

fair value of the underlying collateral $ 14,156

—

—

$ 14,156

14,549

—

—

14,549
impaired loans or real estate owned assets measured at fair value on a non-recurring basis.

The following table presents qualitative information for Level 3 assets measured at fair value on a non-recurring basis as of September 30, 2019 and December 31, ~~2017 and September 30, 2017:~~2018:

December 31, 2017

Fair value
Valuation methodology
Unobservable inputs
Range of inputs

(In Thousands)
Real estate owned $ 959

Appraised Value
Discount for cost to sell
6.0%
Loans measured for impairment based on the

fair value of the underlying collateral $ 10,251

Appraised Value
Discount for cost to sell
6.0% - 8.0%

September 30, 2017

Fair value
Valuation methodology
Unobservable inputs
Range of inputs

(In Thousands)
Real estate owned $ 393

Appraised Value
Discount for cost to sell
6.0%
Loans measured for impairment based on the

fair value of the underlying collateral $ 14,156

Appraised Value
Discount for cost to sell
6.0% - 8.0%



	September 30, 2019
	Fair Value		Valuation Methodology	Unobservable Inputs	Range of Inputs	Weighted Average
	(In thousands)

Mortgage servicing rights	$	582	Estimated cash flow	Prepayment speeds	5.8% - 21.4%	13.0%



	December 31, 2018
	Fair Value		Valuation Methodology	Unobservable Inputs	Range of Inputs	Weighted Average
	(In thousands)

Impaired loans	$	125	Appraised value⁽²⁾	Discount for cost to sell⁽³⁾	6.0%	6.0%
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%	12.0%

(1) Value is based on signed contract for sale.
(2) Value is based on independent appraisal of the 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. ~~The following is a~~A description of the valuation methodologies used for those assets and ~~liabilities.~~

~~COLUMBIA FINANCIAL, INC. AND SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~

~~Notes to Consolidated Financial Statements~~

liabilities not recorded at fair value on a recurring or non-recurring basis are set forth below.

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.

~~Investment~~

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

12. Fair Value Measurements (continued)

Debt Securities ~~Held-to-Maturity~~Held to Maturity

For debt securities ~~held-to-maturity,~~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 a benchmark or to ~~compare~~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 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 ~~inputs.~~inputs 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 and can only be sold to the issuing FHLB, to other FHLBs, or to other member banks. As such, the Company's FHLB stock is recorded at cost, or par value, and is evaluated for impairment each reporting period by considering the ultimate recoverability of the investment rather than temporary declines in value. 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, ~~etc.~~and consumer and other. Each ~~applicable~~ 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 iswas estimated using a combination of techniques, including a discounted cash flow model that utilizes a discount rate that reflects the ~~Company’s~~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.

In accordance with the prospective adoption of ASU 2016-01, the fair value of loans was measured using the exit price method as of September 30, 2019. The fair value of loans was measured using the entry price notion as of December 31, 2018.

Deposits

The fair value of deposits with no stated maturity, such as ~~non-interest bearing~~ demand, ~~deposits~~money market, and savings and club deposits ~~was equal to the amount~~are payable on demand at each reporting date 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.

Borrowed Funds

The fair value of borrowed funds 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.

COLUMBIA FINANCIAL, INC. AND ~~SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

12. 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 counter-parties. 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 ~~balance sheets~~statements of financial condition at their fair values as of September 30, 2019 and December 31, ~~2017 and September 30, 2017:~~2018:

December 31, 2017

Fair Value Instruments

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 $ 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

—

236,125

—
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:

—

Total deposits 4,263,315

3,959,460

—

3,959,460

—
Borrowings 929,057

925,032

—

925,032

—
Derivative liabilities $ 203

203

—

203

$ —


	September 30, 2017							September 30, 2019
			Fair Value Instruments							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)		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)							(In thousands)
Financial assets:
Cash and cash equivalents	$	100,975	100,975	100,975	—	$	—	$	57,952	$	57,952	$	57,952	$	—	$	—
Securities available-for-sale	557,176		557,176	28,128	529,048	—
Securities held-to-maturity	132,939		131,822	—	131,822	—
Federal Home Loan Bank Stock	35,844		35,844	—	35,844	—
Debt securities available for sale								1,115,905		1,115,905		45,131		1,070,774		—
Debt securities held to maturity								289,089		296,325		24,928		271,397		—
Equity securities								1,765		1,765		1,765		—		—
Federal Home Loan Bank stock								57,077		57,077		—		57,077		—
Loans held-for-sale								—		—		—		—		—
Loans receivable, net	4,307,623		4,301,138	—	—	4,301,138		5,123,468		5,219,669		—		—		5,219,669
Derivative assets	277		277	—	277	—		8,740		8,740		—		8,740		—

Financial liabilities:			—							—
Total deposits	4,123,428		3,880,363	—	3,880,363	—
Deposits								$	4,783,322	$	4,789,970	$	—	$	4,789,970	$	—
Borrowings	733,043		732,731	—	732,731	—		1,129,117		1,133,344		—		1,133,344		—
Derivative liabilities	$	182	182	—	182	$	—	22,676		22,676		—		22,676		—

COLUMBIA FINANCIAL, INC. AND ~~SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

12. Fair Value Measurements (continued)



	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	$	—	$	—
Debt securities available for sale	1,032,868		1,032,868		54,157		978,711		—
Debt securities held to maturity	262,143		254,841		23,241		231,600		—
Equity securities	1,890		1,890		1,890		—		—
Federal Home Loan Bank stock	58,938		58,938		—		58,938		—
Loans held-for-sale	8,081		8,081		—		8,081		—
Loans receivable, net	4,916,840		4,841,830		—		—		4,841,830
Derivative assets	1,342		1,342		—		1,342		—

Financial liabilities:
Deposits	$	4,413,873	$	4,402,336	$	—	$	4,402,336	$	—
Borrowings	1,189,180		1,185,007		—		1,185,007		—
Derivative liabilities	3,944		3,944		—		3,944		—

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 ~~no market exists~~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 ~~premises~~equipment, and ~~equipment.~~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.


~~10.~~	~~Other Comprehensive Income (Loss)~~

13.Other Comprehensive Income (Loss)

The following ~~table presents~~tables present the components of other comprehensive income (loss), both gross and net of tax, for the three and nine months ended ~~December 31, 2017~~September 30, 2019 and ~~2016:~~2018:

December 31, 2017
December 31, 2016

Before Tax
Tax Effect
After Tax
Before Tax
Tax Effect
After Tax

(In thousands)
Components of Other Comprehensive Income (Loss):

Unrealized gains on securities available for sale:

Net losses arising during the period $ (2,892 )
(147 )
(3,039 ) (23,624 )
8,417

$ (15,207 )
Accretion of unrealized loss on securities reclassified as held-to-maturity (2 )
(56 )
(58 ) —

—

—
Reclassification adjustment for (losses) gains included in net income (60 ) 94
13

(47 ) 411

(147 )
264

(2,954 )
(190 )
(3,144 ) (23,213 )
8,270

(14,943 )

Unrealized gain (loss) on swap contract 192

(28 )
164
—

—

—

Employee benefit plans:

Amortization of prior service cost included in net income (24 )
(19 )
(43 ) (28 )
10

(18 )
Reclassification adjustment of actuarial net (loss) gain included in net income (9 )
(94 )
(103 ) 7

(2 )
5
Change in funded status of retirement obligations (9,024 )
3,354

(5,670 ) 20

132

152
Tax effects resulting from the adoption of ASU No. 2018-02 —

(10,434 )
(10,434 ) —
—
—

(9,057 )
(7,193 )
(16,250 ) (1 )
140

139
Total other comprehensive loss $ (11,819 )
(7,411 )
(19,230 ) (23,214 )
8,410

$ (14,804 )



	For the Three Months Ended September 30,
	2019									2018
	Before Tax			Tax Effect			After Tax			Before Tax			Tax Effect			After Tax
	(In thousands)
Components of other comprehensive income (loss):
Unrealized gains (losses) on debt securities available for sale:	$	6,186		$	(1,271	)	$	4,915		$	(5,992	)	$	634		$	(5,358	)
Accretion of unrealized gain on debt securities reclassified as held to maturity	2			—			2			1			(12		)	(11		)
Reclassification adjustment for gains included in net income	1,256			(291		)	965			—			3			3
	7,444			(1,562		)	5,882			(5,991		)	625			(5,366		)
Derivatives:
Unrealized (loss) gain on swap contracts accounted for as cash flow hedges	(1,619		)	340			(1,279		)	1,554			(314		)	1,240
	(1,619		)	340			(1,279		)	1,554			(314		)	1,240

Employee benefit plans:
Amortization of prior service cost included in net income	(14		)	3			(11		)	—			—			—
Reclassification adjustment of actuarial net (loss) included in net income	(930		)	195			(735		)	—			—			—
Change in funded status of retirement obligations	1,887			(397		)	1,490			—			(1,908		)	(1,908		)
	943			(199		)	744			—			(1,908		)	(1,908		)
Total other comprehensive income (loss)	$	6,768		$	(1,421	)	$	5,347		$	(4,437	)	$	(1,597	)	$	(6,034	)

COLUMBIA FINANCIAL, INC. AND ~~SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

13.Other Comprehensive Income (Loss) (continued)

~~The Company, in accordance with ASU No. 2018-02, has elected~~



	For the Nine Months Ended September 30,
	2019									2018
	Before Tax			Tax Effect			After Tax			Before Tax			Tax Effect			After Tax
	(In thousands)
Components of other comprehensive income (loss):
Unrealized gains (losses) on debt securities available for sale:	$	35,781		$	(7,479	)	$	28,302		$	(23,253	)	$	5,067		$	(18,186	)
Accretion of unrealized gain (loss) on debt securities reclassified as held to maturity	13			(3		)	10			(18		)	5			(13		)
Reclassification adjustment for gains included in net income	1,721			(396		)	1,325			116			(26		)	90
	37,515			(7,878		)	29,637			(23,155		)	5,046			(18,109		)
Derivatives:
Unrealized (loss) gain on swap contracts accounted for as cash flow hedges	(11,059		)	2,324			(8,735		)	2,232			(486		)	1,746
	(11,059		)	2,324			(8,735		)	2,232			(486		)	1,746

Employee benefit plans:
Amortization of prior service cost included in net income	(42		)	9			(33		)	125			(27		)	98
Reclassification adjustment of actuarial net (loss) gain included in net income	(2,779		)	583			(2,196		)	664			(144		)	520
Change in funded status of retirement obligations	(2,785		)	585			(2,200		)	(789		)	174			(615		)
	(5,606		)	1,177			(4,429		)	—			3			3
Total other comprehensive income (loss)	$	20,850		$	(4,377	)	$	16,473		$	(20,923	)	$	4,563		$	(16,360	)

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to ~~reclassify the income tax effects of the Tax Act from accumulated other comprehensive (loss) income to retained earnings for the three months ended December 31, 2017.~~ Unaudited Consolidated Financial Statements

13.Other Comprehensive Income (Loss) (continued)

The following tables present the changes in the components of accumulated other comprehensive income (loss), net of tax, for the three and nine months ended ~~December 31, 2017~~September 30, 2019 and ~~2016:~~2018:



	For the Three Months Ended September 30,
	2019											2018
	Unrealized Gains on Securities Available for Sale		Unrealized (Losses) on Swaps			Employee Benefit Plans			Accumulated Other Comprehensive (Loss)			Unrealized (Losses) on Securities Available for Sale			Unrealized Gains on Swaps		Employee Benefit Plans			Accumulated Other Comprehensive (Loss)
	(In thousands)

Balance at beginning of period	$	9,981	$	(9,462	)	$	(61,838	)	$	(61,319	)	$	(20,086	)	$	730	$	(56,380	)	$	(75,736	)
Current period changes in other comprehensive income (loss)	5,882		(1,279		)	744			5,347			(5,366		)	1,240		(1,908		)	(6,034		)
Total other comprehensive income (loss)	$	15,863	$	(10,741	)	$	(61,094	)	$	(55,972	)	$	(25,452	)	$	1,970	$	(58,288	)	$	(81,770	)



	For the Nine Months Ended September 30,
	2019												2018
	Unrealized Gains (Losses) on Securities Available for Sale			Unrealized (Losses) Gains on Swaps			Employee Benefit Plans			Accumulated Other Comprehensive (Loss)			Unrealized (Losses) on Securities Available for Sale			Unrealized Gains on Swaps		Employee Benefit Plans			Accumulated Other Comprehensive (Loss)
	(In thousands)

Balance at beginning of period	$	(13,226	)	$	(2,006	)	$	(56,665	)	$	(71,897	)	$	(7,343	)	$	224	$	(58,291	)	$	(65,410	)
Effect of the adoption of ASU 2016-01	(548		)	—			—			(548		)	—			—		—			—
Balance at January 1, 2019	(13,774		)	(2,006		)	(56,665		)	(72,445		)	(7,343		)	224		(58,291		)	(65,410		)
Current period changes in other comprehensive income (loss)	29,637			(8,735		)	(4,429		)	16,473			(18,109		)	1,746		3			(16,360		)
Total other comprehensive income (loss)	$	15,863		$	(10,741	)	$	(61,094	)	$	(55,972	)	$	(25,452	)	$	1,970	$	(58,288	)	$	(81,770	)

December 31, 2017
Unrealized Gains on Securities Available for Sale
Employee Benefit Plans
Swaps Accumulated Other Comprehensive Loss

Balance at beginning of year $ (4,135 )
(42,105 )
60
$ (46,180 )
Current period changes in other comprehensive (loss) income (1,830 )
(5,816 )
124
(7,522 )
Reclassification of tax effects resulting from the adoption of ASU No. 2018-02 (1,314 ) (10,434 ) 40
(11,708 )
Total other comprehensive (loss) income $ (7,279 )
(58,355 )
224
$ (65,410 )

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

December 31, 2016
Unrealized Gains on Securities Available for Sale
Employee Benefit Plans
Swaps Accumulated Other Comprehensive Loss

Balance at beginning of year $ 5,664

(57,022 )
—
$ (51,358 )
Current period changes in other comprehensive (loss) income (14,943 )
139

—
(14,804 )
Total other comprehensive (loss) income $ (9,279 )
(56,883 )
—
$ (66,162 )

13.Other Comprehensive Income (Loss) (continued)

The following ~~table reflects~~tables reflect amounts reclassified from accumulated other comprehensive income (loss) ~~income~~ to the consolidated ~~statement~~statements of income and the affected line item in the statement where net income is presented for the three and nine months ended ~~December 31, 2017~~September 30, 2019 and ~~2016:~~2018:

December 31,

2017
2016
Accumulated other Comprehensive (Loss) Income Components

Affected line items in the Consolidated Statements of Income
Reclassification adjustment for (loss) gain included in net income
(60 )
411
(Loss) Gain on securities transactions, net
Reclassification adjustment of actuarial net (loss) gain included in net income
(9 )
7
Compensation and employee benefits expense
      Total before tax
(69 )
418

      Income tax benefit
(81 )
(149 )
      Net of tax
(150 )
269



	Accumulated Other Comprehensive Income (Loss) Components
	For the Three Months Ended September 30,					Affected Line Items in the Consolidated Statements of Income
	2019			2018
	(In thousands)

Reclassification adjustment for gains included in net income	$	1,256		$	—	Gains on securities transactions
Reclassification adjustment of actuarial net (loss) included in net income	(930		)	—		Other non-interest expense
Total before tax	326			—
Income (tax) benefit	(96		)	3
Net of tax	$	230		$	3



	Accumulated Other Comprehensive Income (Loss) Components
	For the Nine Months Ended September 30,						Affected Line Items in the Consolidated Statements of Income
	2019			2018
	(In thousands)

Reclassification adjustment for gains included in net income	$	1,721		$	116		Gains on securities transactions
Reclassification adjustment of actuarial net gain included in net income	(2,779		)	664			Other non-interest expense
Total before tax	(1,058		)	780
Income (tax) benefit	187			(170		)
Net of tax	$	(871	)	$	610


~~11.~~	~~Derivatives and Hedging Activities~~

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

14. Derivatives and Hedging Activities

The Company ~~offers currency forward contracts and~~uses derivative financial instruments as components of its market risk management, principally to manage interest rate ~~swap contracts~~risk. Certain derivatives are entered into in connection with transactions with commercial customers. Derivatives are not used for speculative purposes. All derivatives are recognized as either assets or liabilities in the consolidated statements of financial condition, reported at fair value and presented on a gross basis. Until a derivative is settled, a favorable change in fair value results in an unrealized gain that is recognized as an asset, while an unfavorable change in fair value results in an unrealized loss that is recognized as a liability.

The Company generally applies hedge accounting to its derivatives used for market risk management purposes. Hedge accounting is permitted only if specific criteria are met, including a requirement that a highly effective relationship exists between the derivative instrument and the hedged item, both at inception of the hedge and on an ongoing basis. Changes in the fair value of effective fair value hedges are recognized in current earnings (with the change in fair value of the hedged asset or liability also recognized in earnings). Changes in the fair value of effective cash flow hedges are recognized in other comprehensive income (loss) until earnings are affected by the variability in cash flows of the designated hedged item. Ineffective portions of hedge results are recognized in current earnings. Changes in the fair value of derivatives for which hedge accounting is not applied are recognized in current earnings.

The Company formally documents at inception all relationships between the derivative instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transactions. This process includes linking all derivatives that are designated as hedges to specific assets and liabilities, or to specific firm commitments. The Company also formally assesses, both at inception of the hedge and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the fair values or cash flows of the hedged items. If it is determined that a derivative is not highly effective or has ceased to be a highly effective hedge, the Company would discontinue hedge accounting prospectively. Gains or losses resulting from the termination of a derivative accounted for as a cash flow hedge remain in other comprehensive income (loss) and is (accreted) amortized to earnings over the remaining period of the former hedging relationship.

Certain derivative financial instruments are offered to certain commercial banking customers to manage their risk of exposure and risk management strategies. These derivative instruments consist primarily of currency forward contracts ~~are~~and interest rate swap contracts. The risk associated with these transactions is mitigated by simultaneously ~~hedged by~~entering into similar transactions having essentially offsetting ~~contracts~~terms with a third ~~party, such that the Company would minimize its net risk exposure resulting from these transactions.~~party. In addition, the Company executes interest rate swaps with third parties to in order to hedge the interest ~~expense~~

~~COLUMBIA FINANCIAL, INC. AND SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~

~~Notes to Consolidated Financial Statements~~

rate risk of short-term ~~Federal Home Loan Bank Advances. These contracts are simultaneously hedged with short-term Federal Home Loan Bank Advances.~~FHLB advances.

Currency Forward Contracts. At ~~both~~September 30, 2019 and December 31, ~~2017 and September 30, 2017,~~2018, the Company had ano currency forward ~~contract~~contracts 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-force for the respective time periods. The currency forward contracts associated with this program does not meet hedge accounting requirements. Changes in the fair valuecustomers.

of both the customer currency forward contract and the offsetting third party contract is 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, 2017 and~~ September 30, ~~2017,~~2019, the Company ~~did not have any interest rate swaps with commercial banking customers.~~

~~The Company~~ had ~~two~~ interest rate swaps in place ~~at both December 31, 2017 and September 30, 2017~~ with 15 commercial banking customers executed by offsetting ~~Federal Home Loan Bank Advances~~interest rate swaps with athird parties, with an aggregated notional amount of ~~$20.0~~$135.8 million. ~~The~~At December 31, 2018, the Company had interest rate swaps ~~associated~~in place with three commercial banking customers executed by offsetting interest rate swaps with third parties, with an aggregated notional amount of $36.6 million. These derivatives are not designated as hedges and are not speculative. These interest rate swaps do not meet hedge accounting requirements.

At September 30, 2019 and December 31, 2018, the ~~program~~Company had 29 and 24 interest rate swaps with notional amounts of $410.0 million and $320.0 million, respectively, 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 three and nine months ended ~~December 31, 2017~~September 30, 2019 and ~~2016,~~2018, the Company did not record any hedge ineffectiveness associated with these contracts.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

14. Derivatives and Hedging Activities (continued)

The ~~table~~tables below ~~presents~~present the fair value of the Company’s derivative financial instruments as well as their classification onin the ~~Consolidated Balance Sheets~~consolidated statements of financial condition at September 30, 2019 and December 31, ~~2017 and September 30, 2017:~~2018:

December 31, 2017

September 30, 2019

Asset Derivative

Liability Derivative

Asset Derivative

Liability Derivative

Consolidated Balance Sheet

Fair value

Consolidated Balance Sheet

Fair Value

Consolidated Statements of Financial Condition

Fair Value

Consolidated Statements of Financial Condition

Fair Value

(In thousands)

Derivatives:

Interest rate swap - cash flow hedge

Other Assets

287

Other Liabilities

—

Currency forward contract - non-designated hedge

Other Assets

203

Other Liabilities

203

Interest rate swaps

Other Assets

8,740

Other Liabilities

22,676

Total derivative instruments

490

203

8,740

22,676

September 30, 2017

Asset Derivative

Liability Derivative

Consolidated Balance Sheet

Fair value

Consolidated Balance Sheet

Fair Value

(In thousands)

Derivatives:

Interest rate swap - cash flow hedge

Other Assets

Other Liabilities

—

Currency forward contract - non-designated hedge

Other Assets

182

Other Liabilities

182

Total derivative instruments

277

182



	December 31, 2018
	Asset Derivative			Liability Derivative
	Consolidated Statements of Financial Condition	Fair Value		Consolidated Statements of Financial Condition	Fair Value
		(In thousands)
Derivatives:
Interest rate swaps	Other Assets	$	1,342	Other Liabilities	$	3,944
Total derivative instruments		$	1,342		$	3,944

For the three and nine months ended ~~December 31, 2017~~September 30, 2019, losses of $75,000 and $288,000, respectively, were recorded for changes in fair value of interest rate swaps with third parties. For the three and nine months ended September 30, 2018, $14,000 of losses were recorded for changes in fair value of interest rate swaps with third parties.

At September 30, 2019 and December 31, ~~2016, no gains or losses were recorded in the consolidated statements of income.~~

~~COLUMBIA FINANCIAL, INC. AND SUSIDIARIES~~

~~(A Wholly-owned Subsidiary of Columbia Bank MHC)~~

~~Notes to Consolidated Financial Statements~~

2018, accrued interest was $210,000 and $65,000, respectively.

The Company has agreements with ~~counter-parties~~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, 2017 and~~ September 30, ~~2017,~~2019, the termination value of derivatives in a net liability position, which includes accrued interest, was $13.9 million. The Company has collateral posting thresholds with certain of its derivative counterparties, and has posted collateral of $22.4 million against its obligations under these agreements.

15. Revenue Recognition

On January 1, 2019, the Company adopted ASU 2014-09 Revenue from Contracts with Customers (Topic 606) and all subsequent ASUs that modified Topic 606. The Company performed a review and assessment of all revenue streams, the related contracts with customers, and the underlying performance obligations in those contracts. This guidance does not apply to revenue associated with financial instruments, including interest income on loans and securities, which comprise the majority of the Company's revenue. Revenue-generating activities that are within the scope of Topic 606, are components of non-interest income. These revenue streams can generally be classified as demand deposit account fees, title insurance fees and other fees.

The Company, using a modified retrospective transition approach, determined that there was no cumulative effect adjustment to retained earnings as a result of adopting the new standard, nor did the standard have a material impact on our consolidated financial statements including the timing or amounts of revenue recognized.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

15. Revenue Recognition (continued)

The following table presents non-interest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and nine months ended September 30, 2019 and 2018.



	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2019		2018		2019		2018
	(In thousands)
Non-interest income
In-scope of Topic 606:
Demand deposit account fees	$	1,106	$	1,000	$	3,116	$	2,920
Title insurance fees	1,350		1,189		3,490		3,218
Other non-interest income	1,189		1,144		3,467		3,418
Total in-scope non-interest income	3,645		3,333		10,073		9,556
Total out-of-scope non-interest income	6,470		1,957		12,855		5,724
Total non-interest income	$	10,115	$	5,290	$	22,928	$	15,280

Demand deposit account fees include monthly maintenance fees and service charges. These fees are generally derived as a result of either transaction-based or serviced-based services. The Company's performance obligation for these services is generally satisfied, and revenue recognized, at the time the transaction is completed or the service rendered. Fees for these services are generally received from the customer either at the time of the transaction or monthly.

Title insurance fees are generally recognized at the time the transaction closes or when the service is rendered.

Other non-interest income includes check printing fees, traveler's check fees, gift card fees, branch service fees, overdraft fees, account analysis fees, other deposit related fees, wealth management related fee income which includes annuity fees, brokerage commissions, and asset management fees. Wealth management related fee income represent fees earned from customers as consideration for asset management and investment advisory services provided by a third party. The Company's performance obligation is generally satisfied monthly and the resulting fees are recognized monthly based upon the month-end market value of the assets under management and the applicable fee rate. The Company does not earn performance-based incentives. The Company's performance obligation for these transaction-based services are generally satisfied, and related revenue recognized, at the time the transaction closes or when the service is rendered or a point in time when the service is completed.

Also included in other fees are debit card and ATM fees which are transaction-based. Debit card revenue is primarily comprised of interchange fees earned when a customer's Company card is processed through a card payment network. ATM fees are largely generated when a Company cardholder uses a non-Company ATM, or a non-Company cardholder uses a Company ATM. The Company's performance obligation for these services is satisfied when the service is rendered. Payment is generally received at time of transaction or monthly.

Out-of-scope non-interest income primarily consists of income from bank-owned life insurance, loan prepayment and servicing fees, net fees loan level swaps, gains and losses on the sale of loans and securities, and changes in the fair value of ~~derivatives was in an asset position and includes accrued interest~~equity securities. None of ~~$7 thousand and $9 thousand, respectively.~~these revenue streams are subject to the requirements of Topic 606.


~~12.~~	~~Subsequent Events~~

16. Acquisition of Stewardship Financial Corporation

On November 1, 2019, the Company completed its previously announced acquisition of Stewardship Financial Corporation (“Stewardship”), pursuant to the Agreement and Plan of Merger, dated as of June 6, 2019 (the “Merger Agreement”), by and between the Company, Broadway Acquisition Corp., a wholly owned subsidiary of the Company (“Merger Sub”), and Stewardship.

Under the terms of the Merger Agreement, Merger Sub merged (the “First-Step Merger”) with and into Stewardship, with Stewardship as the surviving entity, and immediately following the effective time of the First-Step Merger, Stewardship merged with and into the Company, with the Company as the surviving entity (together with the First-Step Merger, the “Merger”). Immediately following

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

16. Acquisition of Stewardship Financial Corporation (continued)

the consummation of the Merger, Atlantic Stewardship Bank, a wholly owned subsidiary of Stewardship, merged with and into Columbia Bank, a wholly owned subsidiary of Columbia, with Columbia Bank as the surviving bank.

Under the terms of the Merger Agreement, at the effective time of the merger, each outstanding share of Stewardship common stock was converted into the right to receive $15.75 in cash.

Merger-related expenses which are recorded in the consolidated statements of income and include costs relating to the Company's acquisition of Stewardship, represent one-time costs associated with acquisition activities and do not represent ongoing costs of the fully integrated combined organization. Accounting guidance requires that acquisition-related transactional and restructuring costs incurred by the Company be charged to expense as incurred.

Based on the closing date of November 1, 2019, the Company's unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q do not reflect the changes attributable to the Company's acquisition of Stewardship.

17. Subsequent Events

The Company has evaluated events subsequent to ~~December 31, 2017~~September 30, 2019 and through the financial statement issuance date of ~~March 23, 2018. The~~November 12, 2019. See Note 16 regarding the Company's acquisition of Stewardship on November 1, 2019. Other than as disclosed, the Company has not identified any material subsequent ~~events.~~events that would require adjustment or disclosure in the consolidated financial statements.

~~Columbia Financial, Inc.~~

~~Management’s Discussion and Analysis~~

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES


~~Item 2.~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Certain statements contained herein are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “estimate,” "project," "intend," “anticipate,” “continue,” or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risk factors and uncertainties, including, but not limited to, those set forth in Item 1A of the Company's ~~prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b)(3)~~Annual Report on ~~February 20, 2018,~~Form 10-K as supplemented by its Quarterly Reports on Form 10-Q, and those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets, and the availability of and costs associated with sources of liquidity.

The Company cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date made. The Company also advises readers that the factors listed above could affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not have any obligation to update any forward-looking statements to reflect any subsequent events or circumstances after the date of this statement.

Comparison of Financial Condition at September 30, 2019 and December 31, 2018

Total assets increased $378.6 million, or 5.7%, to $7.1 billion at September 30, 2019 from $6.7 billion at December 31, 2018. The increase in total assets was primarily attributable to increases in debt securities available for sale of $83.0 million, debt securities held to maturity of $26.9 million, loans receivable, net of $206.6 million, and other assets of $40.7 million.

Debt securities available for sale increased $83.0 million, or 8.0%, to $1.1 billion at September 30, 2019 from $1.0 billion at December 31, 2018. The increase was mainly attributable to purchases of $143.2 million in U.S. agency obligations, mortgage-backed securities and corporate and municipal bonds, partially offset by maturities of $797,000 in municipal securities, repayments of $87.7 million in mortgage-backed securities, and sales of $31.8 million in U.S. government obligations and mortgage-backed securities. The gross unrealized gain on debt securities available for sale increased by $37.5 million during the period, due to current market conditions.

Debt securities held to maturity increased $26.9 million, or 10.3%, to $289.1 million at September 30, 2019 from $262.1 million at December 31, 2018. The increase was mainly attributable to purchases of $65.2 million in U.S. agency obligations, mortgage-backed securities and corporate bonds, partially offset by calls of $28.4 million in U.S. agency obligations, and repayments of $9.5 million in mortgage-backed securities.

Loans receivable, net, increased $206.6 million, or 4.2%, to $5.1 billion at September 30, 2019 from $4.9 billion at December 31, 2018. The increase was mainly attributable to increases in one-to-four family real estate, multifamily and commercial real estate and commercial business loans of $14.3 million, $174.8 million, and $41.5 million, respectively, partially offset by a decrease in home equity loans and advances of $31.1 million. There has been steady growth in most segments of the loan portfolio due to favorable pricing, even though competition for loans has remained intense.

Office properties and equipment, net, increased $11.7 million, or 22.4%, to $63.7 million at September 30, 2019 from $52.1 million at December 31, 2018. The increase is related to the renovation costs of premises and the upgrade of equipment at the executive and loan offices, and the costs related to newly opened branches.

Other assets increased $40.7 million, or 38.0%, to $147.8 million at September 30, 2019 from $107.0 million at December 31, 2018. The increase was primarily attributable to a $35.0 million contribution which increased the funded status of the Company's pension plan in June 2019.

Total liabilities increased $358.9 million, or 6.3%, to $6.1 billion at September 30, 2019 from $5.7 billion at December 31, 2018. The increase was primarily attributable to an increase in total deposits of $369.4 million, or 8.4%, coupled with an increase in accrued expense and other liabilities of $47.0 million, or 55.6%, partially offset by a decrease of $60.1 million, or 5.1%, in borrowings. The increase in total deposits consisted of increases in the balances of interest-bearing and non-interest-bearing demand accounts, as well as, certificates of deposit. The Bank's high yield checking account program experienced significant growth during the period, along with non-interest-bearing commercial demand accounts which were primarily obtained from existing commercial loan customers. Certificates of deposit balances also increased as the Bank continued to offer competitive rates on these products. The increase in accrued expenses

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

and other liabilities consisted of increases in investment purchases pending settlement and swap liabilities. The decrease in borrowings was attributable to maturing long-term borrowings of $220.0 million, partially offset by proceeds from new long-term borrowings of $127.3 million, and an increase of $32.6 million in short-term borrowings.

Total stockholders’ equity increased $19.8 million, or 2.0%, to $991.8 million at September 30, 2019 from $972.1 million at December 31, 2018. The net increase was primarily attributable to net income of $41.2 million, coupled with improved fair market values on debt securities within our available for sale portfolio, partially offset by the repurchase of approximately 2,742,000 shares of common stock for approximately $42.1 million, through September 30, 2019, under our stock repurchase program.

Comparison of Results of Operations for the Quarter Ended September 30, 2019 and September 30, 2018

Net income of $14.2 million was recorded for the quarter ended September 30, 2019, an increase of $3.4 million, or 31.3%, compared to net income of $10.8 million for the quarter ended September 30, 2018. The increase in net income was primarily attributable to a $1.1 million increase in net interest income, a $4.8 million increase in non-interest income, and a $1.6 million decrease in income tax expense, which was partially offset by a $4.5 million increase in non-interest expense.

Net interest income was $41.7 million for the quarter ended September 30, 2019, an increase of $1.1 million, or 2.8%, from $40.6 million for the quarter ended September 30, 2018. The increase in net interest income was attributable to a $6.7 million increase in interest income which was partially offset by a $5.6 million increase in interest expense. The increase in interest income for the quarter ended September 30, 2019 was largely due to increases in the average balances and yields on loans, securities and other interest-earning assets. The increase in interest expense for the quarter ended September 30, 2019 was largely due to increases in both the average balances and yields on deposits and Federal Home Loan Bank borrowings.

The average yield on loans for the quarter ended September 30, 2019 increased 15 basis points to 4.16%, as compared to 4.01% for the quarter ended September 30, 2018, while the average yield on securities for the quarter ended September 30, 2019 increased 4 basis points to 2.79%, as compared to 2.75% for the quarter ended September 30, 2018. Increases in yields on loans for the quarter ended September 30, 2019 reflect more significant increases in balances of higher yielding multifamily and commercial loans. Interest income on loans for the quarter ended September 30, 2019 included $758,000 in prepayment fee income on construction, multifamily and commercial loans as compared to $13,000 for the quarter ended September 30, 2018, as prepayment levels increased during the 2019 period. The average yield on other interest-earning assets for the quarter ended September 30, 2019 increased 165 basis points to 6.10%, as compared to 4.45% for the quarter ended September 30, 2018. This was mainly a result of the 2019 average balance of other interest-earning assets including a higher average balance of Federal Home Loan Bank stock which yielded a higher rate than other interest-earning assets.

Total interest expense was $22.7 million for the quarter ended September 30, 2019, an increase of $5.6 million, or 32.8%, from $17.1 million for the quarter ended September 30, 2018. The increase in interest expense was primarily attributable to a $155.1 million increase in the average balance of interest-bearing demand accounts and a $309.5 million increase in the average balance of certificates of deposits, partially offset by a decrease of $54.0 million in the average balance of savings and club accounts, coupled with a 44 basis point increase in the average cost of interest-bearing deposits. The increase in the cost of deposits was primarily driven by higher market rates and a shift in the mix from non-maturity deposits to higher costing certificates of deposit. The increase in interest on borrowings was attributable to a $70.4 million increase in the average balance of Federal Home Loan Bank advances coupled with a 24 basis point increase in the cost of these borrowings.

The Company's net interest margin for the quarter ended September 30, 2019 decreased 13 basis points to 2.52%, when compared to 2.65% for the quarter ended September 30, 2018. The weighted average yield on interest-earning assets increased 13 basis points to 3.89% for the quarter ended September 30, 2019 as compared to 3.76% for the quarter ended September 30, 2018. The average cost of interest-bearing liabilities increased 30 basis points to 1.77% for the quarter ended September 30, 2019 as compared to 1.47% for the quarter ended September 30, 2018. Increases in yields and costs for the quarter ended September 30, 2019 were largely driven by competitive pricing pressures in a higher market interest rate environment.

The provision for loan losses was $1.2 million for the quarter ended September 30, 2019, a decrease of $343,000, or 22.9%, from $1.5 million for the quarter ended September 30, 2018. The decrease was primarily driven by a decrease in historical loss factors, partially offset by the level of growth in the loan portfolio. Net charge offs increased to $931,000 for the quarter ended September 30, 2019, as compared to $618,000 for the quarter ended September 30, 2018.

Non-interest income was $10.1 million for the quarter ended September 30, 2019, an increase of $4.8 million, or 91.2%, from $5.3 million for the quarter ended September 30, 2018. The increase was primarily attributable to an increase in income from loan fees and service charges of $2.4 million, which represented an increase in income from customer swap transactions, and gains on the sale of

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

securities and loans of $1.3 million and $382,000, respectively. There were no realized gains on the sale of securities or loans for the quarter ended September 30, 2018. In addition, there was an increase of $475,000 in income from bank-owned life insurance which included income related to a death benefit of $461,000 during the 2019 period.

Non-interest expense was $31.1 million for the quarter ended September 30, 2019, an increase of $4.5 million, or 16.8%, from $26.6 million for the quarter ended September 30, 2018. This increase was attributable to an increase in compensation and employee benefits of $3.2 million, an increase in professional fees of $574,000, an increase in other non-interest expense of $438,000, and merger-related expenses of $740,000 recorded in the quarter ended September 30, 2019, partially offset by a $463,000 decrease in federal deposit insurance premiums. The higher compensation and employee benefits expense was primarily attributable to $1.6 million in expense recorded related to grants made under the Company's 2019 Equity Incentive Plan that was approved in June 2019, coupled with the cost of new hires. The increase in professional fees was the result of higher legal, accounting and consulting fees commensurate with being a public company. The increase in other non-interest expense was due to an increase of $372,000 in miscellaneous expense mainly attributable to the payment of $338,000 in state Franchise tax fees, which increased due to the issuance of stock related to the minority stock offering, along with increases in various other miscellaneous expenses. These increases were partially offset by an increase of $806,000 in the credit associated with pension benefit costs, resulting from a new pension accounting standard, effective January 1, 2019, which requires that other components of net periodic benefit costs be reported separately from the service cost as a component of non-interest expense in the statements of income. Merger-related expenses included expenses related to the Company's acquisition of Stewardship Financial Corporation ("Stewardship"), which was completed on November 1, 2019. The federal deposit insurance premium expense decreased during the quarter ended September 30, 2019, as the Federal Deposit Insurance Corporation's reserve rates exceeded a limit at which a small bank assessment credit was applied against premiums due.

Income tax expense was $5.4 million for the quarter ended September 30, 2019, a decrease of $1.6 million, as compared to $7.0 million for the quarter ended September 30, 2018. The Company's effective tax rate was 27.5% and 39.1% for the quarters ended September 30, 2019 and 2018, respectively. The 2019 income tax expense and resulting decrease in the effective tax rate was primarily driven by maximizing the tax benefits related to the real estate investment trust subsidiary of the Bank, coupled with other previously implemented tax strategies.

Results of Operations for the Nine Months Ended September 30, 2019 and September 30, 2018

Net income of $41.2 million was recorded for the nine months ended September 30, 2019, an increase of $33.3 million, compared to net income of $7.9 million for the nine months ended September 30, 2018. The increase in net income was primarily attributable to a $4.3 million increase in net interest income, a $4.2 million decrease in the provision for loan losses, a $7.6 million increase in non-interest income, and a $21.9 million decrease in non-interest expense, partially offset by a $4.7 million increase in income tax expense. The decrease in non-interest expense for the nine months ended September 30, 2019 was attributable to a $34.8 million one-time contribution to the Columbia Bank Foundation.

Net interest income was $124.9 million for the nine months ended September 30, 2019, an increase of $4.3 million, or 3.5%, from $120.7 million for the nine months ended September 30, 2018. The increase in net interest income was attributable to a $25.5 million increase in interest income, which was partially offset by a $21.3 million increase in interest expense. The increase in interest income for the period was largely due to increases in both the average balances and yields on loans and securities, coupled with an increase in the yield on other interest-earning assets.

The average yield on loans for the nine months ended September 30, 2019 increased 19 basis points to 4.18%, as compared to 3.99% for the nine months ended September 30, 2018, while the average yield on securities for the nine months ended September 30, 2019 increased 14 basis points to 2.87%, as compared to 2.73% for the nine months ended September 30, 2018. Increases in yields on loans for the nine months ended September 30, 2019 reflect more significant increases in balances of higher yielding multifamily and commercial loans. Interest income on loans for the nine months ended September 30, 2019 included $1.6 million in prepayment fees on construction, multifamily and commercial loans as compared to $108,000 for the nine months ended September 30, 2018. The average yield on other interest-earning assets for the nine months ended September 30, 2019 increased 317 basis points to 6.30%, as compared to 3.13% for the nine months ended September 30, 2018. This was driven by the 2019 average balance of other interest-earning assets including higher yielding Federal Home Loan Bank stock, while the 2018 average balance of other interest-earning assets included higher cash deposits related to the subscriptions for the Company's minority stock offering which yielded a lower rate of interest.

Total interest expense was $65.1 million for the nine months ended September 30, 2019, an increase of $21.3 million, or 48.5%, from $43.8 million for the nine months ended September 30, 2018. The increase in interest expense was primarily attributable to a $336.6 million increase in the average balance of certificates of deposit, partially offset by decreases of $7.3 million in the average balance of interest-bearing demand accounts, $48.3 million in the average balance of money market accounts and $179.5 million in the average balance of savings and club accounts, coupled with a 56 basis point increase in the cost of interest-bearing deposits. The decrease in the

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

average balance of savings and club accounts was primarily attributable to subscription funds from the minority stock offering in 2018. The increase in the cost of deposits was driven by higher market rates and a shift in the mix from core deposits to higher costing certificates of deposit. The increase in interest on borrowings was attributable to a $253.9 million increase in the average balance of Federal Home Loan Bank advances coupled with a 45 basis point increase in the cost of these borrowings.

The Company's net interest margin for the nine months ended September 30, 2019 decreased 15 basis points to 2.58%, when compared to 2.73% for the nine months ended September 30, 2018. The weighted average yield on interest-earning assets increased 20 basis points to 3.93% for the nine months ended September 30, 2019 as compared to 3.73% for the nine months ended September 30, 2018. The average cost of interest-bearing liabilities increased 49 basis points to 1.74% for the nine months ended September 30, 2019 as compared to 1.25% for the nine months ended September 30, 2018. Increases in yields and costs for the nine months ended September 30, 2019 were largely driven by competitive pricing pressures in a higher market interest rate environment.

The provision for loan losses was $1.7 million for the nine months ended September 30, 2019, a decrease of $4.2 million, or 71.1%, from $5.9 million for the nine months ended September 30, 2018. The decrease was primarily driven by a decrease in historical loss factors, partially offset by the level of growth in the loan portfolio. Net charge offs increased to $1.4 million for the nine months ended September 30, 2019, as compared to $672,000 for the nine months ended September 30, 2018.

Non-interest income was $22.9 million for the nine months ended September 30, 2019, an increase of $7.6 million, or 50.1%, from $15.3 million for the nine months ended September 30, 2018. The increase was primarily attributable to an increase in income from loan fees and service charges of $3.8 million, which included an increase in income from customer swap transactions of $3.7 million, and increases in gains on the sale of securities and loans of $1.6 million and $695,000, respectively. In addition, there was an increase of $584,000 in income from bank-owned life insurance which included income related to a death benefit of $461,000 during the 2019 period.

Non-interest expense was $92.5 million for the nine months ended September 30, 2019, a decrease of $21.9 million, or 19.2%, from $114.4 million for the nine months ended September 30, 2018. The decrease was primarily attributable to a decrease of $34.8 million in charitable contributions which was made during the 2018 period as previously noted. Excluding the impact of this one-time contribution in 2018, non-interest expense increased $12.9 million, or 16.2%, for the nine months ended September 30, 2019. This increase was attributable to an increase in compensation and employee benefits of $6.8 million, an increase in professional fees of $1.4 million, an increase in other non-interest expense of $3.5 million, and merger-related expenses of $1.2 million recorded in the 2019 period, partially offset by a $477,000 decrease in federal deposit insurance premiums. The higher compensation and employee benefits expense was primarily attributable to $1.6 million in expense recorded related to grants made under the Company's 2019 Equity Incentive Plan that was approved in June 2019, coupled with the cost of new hires. The increase in professional fees was the result of higher legal, accounting and consulting fees commensurate with being a public company. The increase in other non-interest expense was mainly due to $1.2 million in software amortization and related expenses recognized during the period, along with the payment of $338,000 in state Franchise tax fees noted above. Merger-related expenses included expenses related to the Company's acquisition of Stewardship, which was completed on November 1, 2019. The federal deposit insurance premium expense decreased during the nine months ended September 30, 2019, due to a reduction in our deposit insurance assessment as a result of the utilization of credits.

Income tax expense was $12.5 million for the nine months ended September 30, 2019, an increase of $4.7 million, from $7.8 million for the nine months ended September 30, 2018. The Company's effective tax rate was 23.3% and 49.8% for the nine months ended September 30, 2019 and 2018, respectively. The 2018 income tax expense and resulting effective tax rate was impacted by the net loss resulting from the one-time charitable contribution. The 2019 income tax expense and resulting decrease in the effective tax rate was primarily driven by maximizing the tax benefits related to the real estate investment trust subsidiary of the Bank, coupled with other previously implemented tax strategies.

Asset Quality

The Company's total non-performing loans at September 30, 2019 totaled $4.3 million, or 0.08% of total gross loans, as compared to $2.8 million, or 0.06% of total gross loans, at December 31, 2018. The $1.5 million increase in non-performing loans was mainly attributable to increases of $980,000 in one-to-four family real estate loans and $449,000 in multifamily and commercial real estate loans. The increase in one-to-four family real estate loans was the result of an increase in the number of loans from 6 non-performing loans at December 31, 2018 to 13 non-performing loans at September 30, 2019, while the multifamily and commercial real estate non-performing balance at September 30, 2019 consisted of six loans related to the same borrower. The Company had no real estate owned at September 30, 2019 compared to one property owned, with a carrying value of $92,000, at December 31, 2018. Non-performing assets as a percentage of total assets totaled 0.06% at September 30, 2019 as compared to 0.04% at December 31, 2018.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company's allowance for loan losses was $62.6 million, or 1.21% of total loans at September 30, 2019, compared to $62.3 million, or 1.26% of total loans, at December 31, 2018.

Critical Accounting Policies

The Company considers certain accounting policies to be critically important to the fair presentation of its consolidated ~~balance sheets~~statements of financial condition and consolidated statements of income. These policies require management to make judgments on matters which by their nature have elements of uncertainty. The sensitivity of the Company’s consolidated financial statements to these critical accounting policies, and the assumptions and estimates applied, could have a significant impact on its ~~consolidated balance sheets~~financial condition and ~~statements~~results of ~~income. Assumptions,~~operations. These assumptions, estimates and judgments made by management can be influenced by a number of factors, including the general economic environment. The Company has identified the following as critical accounting policies:

▪Adequacy of the allowance for loan losses

▪Valuation of ~~securities and impairment analysis~~deferred tax assets

▪Valuation of retirement and post-retirement benefits

▪~~Valuation of deferred tax assets~~

The calculation of the allowance for loan losses is a critical accounting policy of the Company. The allowance for loan losses is a valuation account that reflects management’s evaluation of the probable losses in the loan portfolio. Determining the amount of the allowance for loan losses involves a high degree of judgment. Estimates required to establish the allowance include: the overall economic environment, value of collateral, strength of guarantors, loss exposure in the event of default, the amount and timing of future cash flows on impaired loans, and determination of loss factors applied to the portfolio segments. These estimates are susceptible to significant change. Management regularly reviews loss experience within the portfolio and monitors current economic conditions and other factors related to the collectability of the loan portfolio.

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, ~~each quarter~~ 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 internal risk rating system. Loans deemed to be “acceptable quality” are rated 1 through 4, with a rating of 1 established for loans with minimal risk. Loans deemed to be of “questionable quality” are rated 5 ~~(Watch)~~(Special Mention) or 6 ~~(Special Mention)~~(Substandard). Loans with adverse classifications ~~(Substandard, doubtful or loss)~~ are rated 6, 7 (Doubtful) or 8 ~~respectively.~~(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. Results are presented to the Audit Committee of the Board of Directors.

Management estimates the ~~amount of loan losses~~allowance for ~~groups of~~ loans collectively evaluated for impairment by applying quantitative loss factors to the loan segments ~~at the~~by risk rating ~~level~~ and ~~applying~~determining qualitative adjustments to each loan segment at ~~the risk rating~~an overall level. Quantitative loss factors give consideration to historical loss experience and migration experience by loan type based ~~upon~~on an appropriate look-back period, adjusted for a loss emergence period. ~~Quantitative loss factors are evaluated periodically.~~

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.~~losses for loans collectively evaluated for impairment.

Management believes the primary risks inherent in the portfolio are a general decline in the economy, a decline in real estate market values, rising unemployment, 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’~~borrower's ability to repay ~~their~~its 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.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Although management believes that the Company has established and maintained 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 ~~Company’s available-for-sale securities portfolio~~determination of whether deferred tax assets will be realizable is ~~carried at fair value, with unrealized gains or losses, net~~predicated on the reversal of ~~taxes, reported in accumulated other comprehensive income or loss. Fair values~~existing deferred tax liabilities, utilization against carry-back years, and estimates of future taxable income. Such estimates are ~~based on third party market quotations. Securities which the Company has the intent and ability~~subject to ~~hold~~management’s judgment. A valuation allowance is established when management is unable to maturity are classified as held-to-maturity and carried at amortized cost. Management conducts a periodic review and evaluation of the securities portfolio to determine if any declines in the fair values of securities are other-than-temporary. In this evaluation, if such a decline were deemed other-than temporary, management would measure the total credit-related component of the unrealized loss, and recognizeconclude 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 (loss). 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 decline, the fair value of fixed-rate securities increases. The Company determines if it has the intent to sell these securities or if it is more likely than not that it will realize deferred tax assets based on the ~~Company would be required to sell the securities before the anticipated recovery. If either exists, the entire decline~~nature and timing of these items. The effect on deferred tax assets and liabilities of a change in ~~value~~tax rates is ~~considered other-than-temporary and would be~~ recognized ~~as an~~in income tax expense in the ~~current period.~~period enacted. 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 September 30, 2019 and December 31, 2018, the Company's gross deferred tax assets totaled $47.6 million and $52.1 million, respectively, while the valuation allowance totaled $1.8 million and $2.4 million, respectively.

The Company provides certain health care and life insurance benefits to eligible retired employees. The cost of retiree health care and other benefits during the employees' period of active service are accrued monthly. The accounting guidance requires the following: a) recognizing in the 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 obligations; b) measuring a plan's assets and its obligations that determine its funded status as of the end of the Company's fiscal year (with limited exceptions); and c) recognizing as a component of other comprehensive income (loss), net of tax, the actuarial gain and losses and the prior service costs and credits that arise during the period.

The determination of whether deferred tax assets will be realizable is predicated on the reversal of existing deferred tax liabilities, utilization against carry-back years and estimates of future taxable income. Such estimates are subject to management’s judgment. A valuation allowance is established when management is unable to conclude that it is more likely than not that it will realize deferred tax assets based on the nature and timing of these items. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period enacted.

~~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 investment 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 investment securities.

~~Investment Securities.~~ Total investment 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 investment 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 investment 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 investment 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 commercial real estate and multifamily loans combined with an increase in residential 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 thousand 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 interest-bearing and noninterest-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 Federal Home Loan Bank of New York advances used to purchase investment securities as part of our leverage strategy noted above.

~~Stockholder’s Equity.~~ Total stockholder’s equity decreased $3.8 million, 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 pension benefit obligations, which was partially offset by net income of $3.7 million for the three months ended December 31, 2017.

~~Comparison of the Results of Operations for the Three Months Ended December 31, 2017 and 2016~~

~~General.~~ Net income decreased $6.3 million, or 63.2%, to $3.7 million for the three months ended December 31, 2017 compared to $10.0 million for the three months ended December 31, 2016. The decrease was primarily attributable to a $4.1 million increase in income tax expense due to the re-measurement of our net deferred tax assets as well as a $3.4 million increase in the provision for loan losses. These items were partially offset by a $3.5 million increase in net interest income.

~~Net Interest Income.~~ Net interest income increased $3.5 million, or 10.5%, to $36.9 million for the three months ended December 31, 2017 compared to $33.4 million for the three months ended December 31, 2016. The increase was largely a result of an increase in interest income on loans of $3.7 million due to portfolio

~~growth.~~

~~Interest and Dividend Income.~~ Interest and dividend income increased $5.0 million, or 11.4%, to $49.2 million for the three months ended December 31, 2017 compared to $44.1 million for the three months ended December 31, 2016. The increase was primarily the result of increased average loan and investment security balances. In addition, the yield on average earning assets increased eight basis points for the three months ended December 31, 2017 compared to the prior year period.

Interest income on loans increased $3.7 million, or 9.3%, to $43.0 million for the three months ended December 31, 2017 compared to $39.4 million for the three months ended December 31, 2016, due to a $301.8 million increase in the average loan balance as well as a six basis point increase in the yield.

Interest income on investment securities, including Federal Home Loan Bank stock, increased $1.3 million, or 27.6%, to $6.0 million for the three months ended December 31, 2017 compared to $4.7 million for the three months ended December 31, 2016, due to a $122.1 million increase in the average balance coupled with a 24 basis point increase in the yield.

~~Interest Expense.~~ Interest expense increased $1.5 million, or 14.1%, to $12.2 million for the three months ended December 31, 2017 compared to $10.7 million for the three months ended December 31, 2016. The increase was attributable to both a $340.8 million increase in average interest-bearing liabilities and a five basis point increase in the cost of interest-bearing liabilities.

Interest expense on interest-bearing deposits increased $1.4 million, or 22.8%, to $7.6 million for the three months ended December 31, 2017 compared to $6.2 million for the three months ended December 31, 2016, due to a ten basis point increase in the cost of average interest-bearing deposits coupled with a $256.0 million increase in average interest-bearing deposits.

Interest expense on borrowings increased $101 thousand, or 2.2%, to $4.6 million for the three months ended December 31, 2017 compared to $4.5 million for the three months ended December 31, 2016, the result of an $84.8 million increase in average borrowings which was largely offset by a 27 basis point decrease in the cost of average borrowings. The decrease in the cost of average borrowings reflects the maturity of certain higher cost borrowings combined with the addition of lower cost short-term borrowings.

~~Provision for Loan Losses.~~ The provision for loan losses was $3.4 million for the three months ended December 31, 2017, compared to no provision for the three months ended December 31, 2016. The provision recorded during the three months ended December 31, 2017 was due to: (i) changes in certain qualitative factors based on management’s assessment of the impact of the Tax Cuts and Jobs Act on collateral values supporting our residential and home equity loan portfolio; (ii) an increase in the loss emergence period on the commercial real estate portfolio; and (iii) growth of the loan portfolio.

~~Non-Interest Income.~~ Non-interest income decreased $833 thousand, or 15.1%, to $4.7 million for the three months ended December 31, 2017 compared to $5.5 million for the three months ended December 31, 2016. The decrease was largely the result of a $411 thousand gain on sale of securities and a $409 thousand gain on sale of loans recognized during the three months ended December 31, 2016 which did not reoccur in the current year period. In addition, there was a decline in title insurance fees of $319 thousand between periods due to reduced activity in our title insurance business.

~~Non-Interest Expense.~~ Non-interest expense increased $1.5 million, or 6.2%, to $25.5 million for the three months ended December 31, 2017 compared to $24.1 million for the three months ended December 31, 2016. The increase was primarily the result of an increase in advertising expenses of $697 thousand related to product advertising and an increase in compensation and employee benefits expense of $611 thousand.

~~Income Tax Expense.~~ Income tax expense increased $4.1 million, or 84.6%, to $9.0 million for the three months ended December 31, 2017 compared to $4.9 million for the three months ended December 31, 2016. The increase was the result of the re-measurement of our net deferred tax assets resulting from the change in the federal corporate income tax rate and a corresponding charge to income tax expense of $4.7 million as discussed above.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


~~Item 3.~~	~~QUANTITATIVE AND QUALITATIVE DISCLOSURES~~

~~Net Interest Income:~~

Qualitative Analysis. Interest rate risk is defined as the exposure of a Company's current and future earnings and capital arising from adverse movements in interest rates. The guidelines of the Company’s interest rate risk policy seek to limit the exposure to changes in interest rates that affect the underlying economic value of assets, liabilities, earnings and capital.

The Asset/Liability Committee meets regularly to review the impact of interest rate changes on net interest income, net interest margin, net income, and the economic value of equity. The Asset/Liability Committee reviews a variety of strategies that project changes in asset or liability mix and the impact of those changes on projected net interest income and net income.

The Company’s strategy for liabilities has been to maintain a stable funding base by focusing on core deposit accounts. The Company’s ability to retain maturing time deposit accounts is the result of its strategy to remain competitively priced within its marketplace. The Company’s pricing strategy may vary depending upon current funding needs and the ability of the Company to fund operations through alternative sources.

Quantitative Analysis. Current and future sensitivity to changes in interest rates are measured through the use of balance sheet and income simulation models. The analysis captures changes in net interest income using flat rates as a base and rising and declining interest rate forecasts. Changes in net interest income and net income for the forecast period, generally twelve to twenty-four months, isare measured and compared to policy limits for acceptable changes. The Company periodically reviews historical deposit re-pricing activity and makes modifications to certain assumptions used in its balance sheet and income simulation models regarding the interest rate sensitivity of deposits. These modifications are made to more closely reflect the most likely results under the various interest rate change scenarios. Since it is inherently difficult to predict the sensitivity of interest bearing deposits to changes in interest rates, the changes in net interest income due to changes in interest rates cannot be precisely predicted. There are a variety of reasons that may cause actual results to vary considerably from the predictions presented below which include, but are not limited to, the timing, magnitude, and frequency of changes in interest rates, interest rate spreads, prepayments, and actions taken in response to such changes.

Assumptions used in the simulation model may include but are not limited to:

•Investment pricing from third parties;

•Loan pricing indications from third parties;

•Loan and depository spread assumptions based upon the Company's product offerings;

•Investment and borrowing spreads based upon third party indications; and

•Prepayment assumptions derived from the Company's actual results and third party surveys.

The ~~following~~ table below sets forth, ~~the results~~as of September 30, 2019, Columbia Bank's net portfolio value, the estimated ~~impact of interest rate~~ changes onin our ~~estimated~~net portfolio value, and the net interest income asthat would result from the designated instantaneous parallel changes in market interest rates. This data is for the Bank and its subsidiaries only and does not include any assets of ~~December 31, 2017:~~the Company.


	December 31,		Twelve Months Net Interest Income							Net Portfolio Value ("NPV")
	2017		Amount		Dollar Change			Percent of Change		Estimated NPV		Present Value Ratio		Percent Change
Change in Interest Rates (Basis Points)	Change in Net Interest Income
+200			$	158,720	$	2,393		1.53	%	$	905,020	13.55	%	(12.34	)%
+100			157,973		1,646			1.05		980,701		14.22		(5.00	)
Base			156,327		—			—		1,032,369		14.53		—
-100	(0.89	)%	153,269		(3,058		)	(1.96	)	1,041,760		14.27		0.91
Base	-
+100	(0.91	)%
+200	(2.38	)%
-200			149,028		(7,299		)	(4.67	)	946,190		12.80		(8.35	)

As of September 30, 2019, based on the scenarios above, net interest income would increase by approximately 1.53% if rates were to rise 200 basis points, but would decrease by 4.67% if rates were to decrease 200 basis points over a one-year time horizon.

Another measure of interest rate sensitivity is to model changes in ~~economic~~net portfolio value ~~of equity ("EVE")~~ through the use of immediate and sustained interest rate shocks. ~~The following table illustrates~~As of September 30, 2019, based on the ~~result of the economic value of equity model as of December 31, 2017 (dollars in thousands):~~

December 31, 2017

Estimated Increase (Decrease) in EVE
EVE as a Percentage of Economic Value of Assets
Change in Interest Rates (Basis Points)
Estimated EVE
Amount
Percent
EVE Ratio
Change in Basis Points
-100
$ 830,835

$ 40,586

5.1 %
14.10 %
27
Base
790,249

-

-

13.84 %
-
+100
711,430

(78,819 )
(10.0 )%
12.88 %
(96 )
+200
625,566

(164,683 )
(20.8 )%
11.72 %
(212 )

~~The preceding table indicates that as of December 31, 2017,~~scenarios above, in the event of an immediate and sustained 200 basis point increase in interest rates, the ~~EVE~~NPV is projected to decrease ~~20.8%, or $164.7 million.~~12.34%. If rates were to decrease ~~100~~200 basis points, the model forecasts a ~~5.1%, or $40.6 million increase~~8.35% decrease in the ~~EVE.~~ NPV.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes in net interest income requires the use of certain assumptions regarding prepayment and deposit repricing, which may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. While management believes such assumptions are reasonable, there can be no assurance that assumed prepayment rates and repricing rates will approximate actual future loan prepayment and deposit repricing activity.

Moreover, net interest income assumes that the composition of interest sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and also assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities. Accordingly, although the net interest income table provides an i~~ndication~~indication of the Company’s interest rate risk exposure at a particular point in time, such measurement is not intended to and does not provide a precise forecast of the effect of changes in market interest rates on the Company’s net interest income and will differ from actual.

~~Asset Quality:~~

~~The following table sets forth information regarding the Company’s non-performing assets as of December 31, 2017 and September 30, 2017 (in thousands):~~

December 31, 2017 September 30, 2017
(In Thousands)
Mortgage Loans:
Residential $ 3,360
$ 3,496
Multi-Family & Commercial 1,329
1,510
Total Mortgage Loans 4,689
5,006
Commercial Loans 1,263
1,038
Consumer Loans 573
351
Total Non-Performing Loans 6,525
6,395
Foreclosed Assets 959
393
Total Non-Performing Assets $ 7,484
$ 6,788

~~The following table sets forth information regarding the Company's 60-89 day delinquent loans as of December 31, 2017 and September 30, 2017 (in thousands):~~

December 31, 2017 September 30, 2017
(In Thousands)
Mortgage loans:
Residential $ 1,229
$ 932
Multi-Family & Commercial 380
123
Total Mortgage Loans 1,609
1,055
Commercial Loans 730
388
Consumer Loans 26
187
Total 60-89 day delinquent loans $ 2,365
$ 1,630

At December 31, 2017, the allowance for loan losses totaled $58.2 million, or 1.30% of total loans, compared with $54.6 million, or 1.26% of total loans at September 31, 2017. Total non-performing loans were $6.5 million, or 0.15% of total loans at December 31, 2017, compared to $6.4 million, or 0.15% of total loans at September 30, 2017.

At December 31, 2017 and September 30, 2017, the Company held $959 thousand and $393 thousand of foreclosed assets, respectively. During the three months ended December 31, 2017, there were 2 additions to foreclosed assets with a carrying value of $566 thousand.

~~Non-performing assets totaled $7.5 million, or 0.13% of total assets at December 31, 2017, compared to $6.8 million, or 0.13% of total assets at September 31, 2017.~~

Liquidity Management and Capital Resources:

Liquidity Management. Liquidity isrefers to the Company's ability to generate adequate amounts of cash to meet ~~current and future~~ financial obligations of a short-term and long-term nature. ~~Our primary source~~Sources of funds ~~consists~~consist of deposit inflows, loan repayments and maturities, maturities and sales of securities, and the ability to execute new borrowings. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows, calls of ~~investment~~debt securities, and ~~borrowed funds~~prepayments on loans and ~~prepayments of loans~~mortgage-based securities are influenced by economic conditions, competition, and interest rate movements.

The Company's cash flows are ~~classified~~identified as cash flows from operating activities, investing activities and financing activities. Refer to the ~~Consolidated Statements~~consolidated statements of ~~Cash Flows~~cash flows for further details of the cash inflows and outflows of the Company.

Capital Resources. The Company isand its subsidiary Bank are subject to various regulatory capital requirements administered by the federal banking ~~agencies.~~regulators, including a risk-based capital measure. 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)(1) total capital to risk-weighted assets of 8.0%; 2)(2) tier 1 capital to risk-weighted assets of 6.0%; 3)(3) common equity tier 1 capital to risk-weighted assets of 4.5%; and 4)(4) tier 1 capital to adjusted total assets of 4.0%. 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 capital requirement

was fully phased in ~~beginning January 1, 2016, at 0.625% of risk-weighted assets and increases each year until fully implemented at 2.5%~~ on January 1, 2019.

The ~~regulations establish~~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%~~10.0%, a tier 1 capital to risk-weighted assets ratio of at least 8%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 September 30, 2019 and December 31, ~~2017~~2018, each of the Company and the Bank exceeded all capital adequacy requirements to which it is subject.

The following table presents the Company's and the Bank's actual capital amounts and ratios as of September 30, 2019 and December 31, ~~2017~~2018 compared to the Federal Reserve Bank minimum capital adequacy requirements and the Federal Reserve Bank requirements for classification as a ~~well - capitalized~~well-capitalized institution:

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

December 31, 2017

Actual For capital adequacy purposes To be well capitalized under prompt corrective action provisions

Amount Ratio Amount Ratio Amount Ratio

(in Thousands)
Company:

     Total capital to risk-weighted assets $ 631,952
15.01 % $ 336,730
8.0 % $ 420,912
10.0 %
     Tier 1 capital to risk-weighted assets 579,080
13.76
252,547
6.0
336,730
8.0
     Common equity tier 1 capital to risk-weighted assets 528,080
12.55
189,410
4.5
273,593
6.5
     Tier 1 capital to adjusted total assets 579,080
10.54
219,833
4.0
210,456
5.0

September 30, 2017

Actual For capital adequacy purposes To be well capitalized under prompt corrective action provisions

Amount Ratio Amount Ratio Amount Ratio

(in Thousands)
Company:

     Total capital to risk-weighted assets $ 616,052
15.11 % $ 326,254
8.0 % $ 407,817
10.0 %
     Tier 1 capital to risk-weighted assets 564,854
13.85
244,690
6.0
326,254
8.0
     Common equity tier 1 capital to risk-weighted assets 513,854
12.60
183,518
4.5
265,081
6.5
     Tier 1 capital to adjusted total assets 564,854
10.59
213,298
4.0
266,023
5.0

December 31, 2017

Actual For capital adequacy purposes To be well capitalized under prompt corrective action provisions

Amount Ratio Amount Ratio Amount Ratio

(in Thousands)
Columbia Bank:

     Total capital to risk-weighted assets $ 625,336
14.90 % $ 335,736
8.0 % $ 419,671
10.0 %
     Tier 1 capital to risk-weighted assets 572,617
13.64
251,802
6.0
335,736
8.0
     Common equity tier 1 capital to risk-weighted assets 572,617
13.64
188,852
4.5
272,786
6.5
     Tier 1 capital to adjusted total assets 572,617
10.44
221,257
4.0
276,571
5.0



	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 September 30, 2019:
Total capital (to risk-weighted assets)	$	1,102,458	22.21	%	$	397,167	8.00	%	$	521,282	10.50	%	N/A	N/A
Tier 1 capital (to risk-weighted assets)	1,040,393		20.96	%	297,875		6.00	%	421,990		8.50	%	N/A	N/A
Common equity tier 1 capital (to risk-weighted assets)	1,040,393		20.96	%	223,407		4.50	%	347,521		7.00	%	N/A	N/A
Tier 1 capital (to adjusted total assets)	1,040,393		15.30	%	271,975		4.00	%	271,975		4.00	%	N/A	N/A

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

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

September 30, 2017

Actual For capital adequacy purposes To be well capitalized under prompt corrective action provisions

Amount Ratio Amount Ratio Amount Ratio

(in Thousands)
Columbia Bank:

     Total capital to risk-weighted assets $ 608,971
14.95 % $ 325,980
8.0 % $ 407,475
10.0 %
     Tier 1 capital to risk-weighted assets 557,815
13.69
244,485
6.0
325,980
8.0
     Common equity tier 1 capital to risk-weighted assets 557,815
13.69
183,364
4.5
264,859
6.5
     Tier 1 capital to adjusted total assets 557,815
10.47
213,160
4.0
266,450
5.0



	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
Bank	(In thousands, except ratio data)
At September 30, 2019:
Total capital (to risk-weighted assets)	$	892,078	18.00	%	$	396,471	8.00	%	$	520,369	10.50	%	$	495,589	10.00	%
Tier 1 capital (to risk-weighted assets)	830,120		16.75		297,354		6.00		421,251		8.50		396,471		8.00
Common equity tier 1 capital (to risk-weighted assets)	830,120		16.75		223,015		4.50		346,913		7.00		322,133		6.50
Tier 1 capital (to adjusted total assets)	830,120		12.21		272,042		4.00		272,042		4.00		340,053		5.00

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

As a result of the recently enacted Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies are required to develop a "Community Bank Leverage Ratio" (the ratio of a bank's Tier 1 equity capital to average total consolidated assets) for financial institutions with less than $10 billion. A "qualifying community bank" that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered "well capitalized' under Prompt Corrective Action statutes. The federal banking agencies may consider a financial institution's risk profile when evaluating whether it qualifies as a community bank for purposes of the capital ratio requirement. The federal banking agencies set the minimum capital for the new Community Bank Leverage Ratio at 9%. A financial institution can elect to be subject to this new definition.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES


~~Item 4.~~	~~CONTROLS AND PROCEDURES~~

Item 4. 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 Securities and Exchange Act of 1934, as amended) as of December 31, 2017. 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 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.September 30, 2019. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.effective.

During the quarter ended ~~December 31, 2017,~~September 30, 2019, there were no changes in the Company’s internal ~~controls~~control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal ~~controls~~control over financial reporting.

PART II – OTHER INFORMATION


~~Item 1.~~	~~Legal Proceedings~~

Item 1. Legal Proceedings

The Company is involved in various legal actions and claims arising in the normal course of business. In the opinion of management, these legal actions and claims are not expected to have a material adverse impact on the Company’s financial condition.


~~Item 1A.~~	~~Risk Factors~~

Item 1A. Risk Factors

For information regarding the Company’s risk factors, refer to the ~~“Risk Factors” in~~Risk Factors previously disclosed under Item 1A of the Company’s ~~prospectus,~~Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange ~~Commission pursuant to Rule 424(b)(3) on February 20, 2018. As~~Commission. Except as set forth below, as of ~~December 31, 2017,~~September 30, 2019 the risk factors of the Company have not materially changed ~~materially~~ from those disclosed in the ~~prospectus.~~ Company's Annual Report on Form 10-K.

Reforms to and uncertainty regarding LIBOR may adversely impact the value of, and the return on the Company's financial assets and liabilities which are indexed to LIBOR. In 2017, The United Kingdom Financial Conduct Authority, which regulates LIBOR, announced that it will no longer persuade or compel banks to submit rates for the calculation of LIBOR to the administrator of LIBOR after 2021. Subsequently, the Federal Reserve Bank announced final plans for the production of SOFR, which resulted in the commencement of its published rates by the Federal Reserve Bank of New York on April 2, 2018. Whether or not SOFR attains market attraction as a LIBOR replacement tool remains in question and the future of LIBOR at this time is uncertain. This uncertainty as to the nature and effect of such reforms and actions and the political discontinuance of LIBOR may adversely affect the value and return on the Company's financial assets and liabilities that are based on or are linked to LIBOR. In addition, these reforms may also require extensive changes to the contracts that govern these LIBOR based products, as well as the Company's systems and processes.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table reports information regarding repurchases of the Company's common stock during the quarter ended September 30, 2019:



Period	Total Number of Shares	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽¹⁾	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
July 1 - 31, 2019	396,100	$	15.38	396,100	3,340,000
August 1 - 31, 2019	1,145,700	15.26		1,145,700	2,194,300
September 1 - 30, 2019	936,600	15.63		936,600	1,257,700
Total	2,478,400	$	15.42	2,478,400

(1) On June 11, 2019, the Company announced that the Company's Board of Directors authorized a stock repurchase program for up to 4,000,000 shares of the Company's issued and outstanding common stock, commencing on June 13, 2019.


~~Item 2.~~	~~Unregistered Sales of Equity Securities~~

~~None.~~


~~Item 3.~~	~~Defaults Upon Senior Securities~~

Item 3. Defaults Upon Senior Securities

~~None.~~Not Applicable.


~~Item 4.~~	~~Mine Safety Disclosures~~

Item 4. Mine Safety Disclosures

Not Applicable.


~~Item 5.~~	~~Other Information~~

Item 5. Other Information

None.


~~Item 6.~~	~~Exhibits~~

Item 6. Exhibits

The exhibits listed in the Exhibit Index (following the signatures section of this report) are included in, or incorporated by reference into this Quarterly Report on Form 10-Q.

Exhibit Index



~~3.1~~		~~Certificate of Incorporation of Columbia Financial, Inc.~~

~~3.2~~		~~Amended and Restated Bylaws of Columbia Financial, Inc.~~

4		~~Form of Common Stock Certificate of Columbia Financial, Inc.~~

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.		The following materials from the Company’s Quarterly Report to Stockholders on Form 10-Q for the quarter ~~ended. December 31, 2017,~~ended September 30, 2019, formatted in 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 Statements of Changes in Stockholder’s Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.

101.		INS XBRL Instance Document

101.		SCH XBRL Taxonomy Extension Schema Document

101.		CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.		DEF XBRL Taxonomy Extension Definition Linkbase Document

101.		LAB XBRL Taxonomy Extension Labels Linkbase Document

101.		PRE XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Registrant has duly caused this quarterly report to be signed on its behalf by the undersigned, thereunto duly authorized.



		Columbia Financial, ~~Inc~~Inc.

Date:	~~March 23, 2018~~November 12, 2019	/s/Thomas J. Kemly
		Thomas J. Kemly
		President and Chief Executive Officer
		(Principal Executive Officer)

Date:	~~March 23, 2018~~November 12, 2019	/s/Dennis E. Gibney
		Dennis E. Gibney
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)



	Three Months Ended December 31,
	2017			2016
	(In thousands)

Interest and dividend income:
Loans receivable	$	43,043		$	39,374
Securities available-for-sale	5,074			4,307
Securities held-to-maturity	381			—
Federal funds and interest earning deposits	103			34
Federal Home Loan Bank stock dividends	567			413
Total interest and dividend income	49,168			44,128
Interest expense:
Deposits	7,632			6,216
Borrowings	4,609			4,508
Total interest expense	12,241			10,724

Net interest income	36,927			33,404

Provision for loan losses	3,400			—

Net interest income after provision for loan losses	33,527			33,404

Non-interest income:
Demand deposit account fees	960			851
Bank-owned life insurance	1,089			1,087
Title insurance fees	1,018			1,337
Loan fees and service charges	542			452
(Loss) gain on securities transactions, net	(60		)	411
Gain on sale of loans receivable, net	—			409
Other non-interest income	1,125			960
Total non-interest income	4,674			5,507

Non-interest expense:
Compensation and employee benefits expense	15,621			15,010
Occupancy expense	3,386			3,222
Federal insurance premiums expense	414			412
Advertising expense	1,408			711
Professional fees expense	398			219
Data processing expense	595			531
Charitable contributions	60			120
Other non-interest expense	3,659			3,827
Total non-interest expense	25,541			24,052

Income before income tax expense	12,660			14,859

Income tax expense	8,982			4,866

Net income	$	3,678		$	9,993

See accompanying notes to unaudited consolidated financial statements.



	Pension						RIM				Post-retirement
	December 31, 2017			December 31, 2016			December 31, 2017		December 31, 2016		December 31, 2017			December 31, 2016
	(In thousands)
Service cost	$	1,780		$	1,905		$	61	$	59	$	93		$	118
Interest cost	2,129			2,111			111		107		205			186
Expected return on plan assets	(4,815		)	(6,202		)	—		—		—			—
Amortization:
Prior service cost	—			—			—		—		(34		)	(34		)
Net loss	707			2,750			103		113		69			81
Net periodic cost (income)	$	(199	)	$	564		$	275	$	279	$	333		$	351



	December 31, 2017
			Estimated Increase (Decrease) in EVE					EVE as a Percentage of Economic Value of Assets
Change in Interest Rates (Basis Points)	Estimated EVE		Amount			Percent		EVE Ratio		Change in Basis Points
-100	$	830,835	$	40,586		5.1	%	14.10	%	27
Base	790,249		-			-		13.84	%	-
+100	711,430		(78,819		)	(10.0	)%	12.88	%	(96	)
+200	625,566		(164,683		)	(20.8	)%	11.72	%	(212	)



	December 31, 2017
	Actual				For capital adequacy purposes				To be well capitalized under prompt corrective action provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(in Thousands)
Company:
Total capital to risk-weighted assets	$	631,952	15.01	%	$	336,730	8.0	%	$	420,912	10.0	%
Tier 1 capital to risk-weighted assets	579,080		13.76		252,547		6.0		336,730		8.0
Common equity tier 1 capital to risk-weighted assets	528,080		12.55		189,410		4.5		273,593		6.5
Tier 1 capital to adjusted total assets	579,080		10.54		219,833		4.0		210,456		5.0

	September 30, 2017
	Actual				For capital adequacy purposes				To be well capitalized under prompt corrective action provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(in Thousands)
Company:
Total capital to risk-weighted assets	$	616,052	15.11	%	$	326,254	8.0	%	$	407,817	10.0	%
Tier 1 capital to risk-weighted assets	564,854		13.85		244,690		6.0		326,254		8.0
Common equity tier 1 capital to risk-weighted assets	513,854		12.60		183,518		4.5		265,081		6.5
Tier 1 capital to adjusted total assets	564,854		10.59		213,298		4.0		266,023		5.0


	December 31, 2017
	Actual				For capital adequacy purposes				To be well capitalized under prompt corrective action provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(in Thousands)
Columbia Bank:
Total capital to risk-weighted assets	$	625,336	14.90	%	$	335,736	8.0	%	$	419,671	10.0	%
Tier 1 capital to risk-weighted assets	572,617		13.64		251,802		6.0		335,736		8.0
Common equity tier 1 capital to risk-weighted assets	572,617		13.64		188,852		4.5		272,786		6.5
Tier 1 capital to adjusted total assets	572,617		10.44		221,257		4.0		276,571		5.0