UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended SeptemberJune 30, 20202021
or
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission File Number 001-38456
Columbia Financial, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
| | 22-3504946
|
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification Number) |
19-01 Route 208 North, | Fair Lawn, | | |
New Jersey | | 07140 |
(Address of principal executive offices) | | (Zip Code) |
(800) 522-4167
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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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.
☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
☒ 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:
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Large accelerated filer | ☒ | Accelerated filer | ☐ | Smaller reporting company | ☐ |
Non-accelerated filer | ☐ | Emerging growth company | ☐ | | |
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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes ☒ No
As of November 6, 2020,August 5, 2021, there were 112,655,544106,789,198 shares issued and outstanding of the Registrant's common stock, par value $0.01 per share.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Index to Form 10-Q
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Item Number | Page Number |
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PART I. | Financial Information | |
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Item 1. | Financial Statements | |
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Item 2. | | |
Item 3. | | |
Item 4. | | |
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PART II. | | |
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COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(In thousands, except share and per share data)
| | | September 30, | | December 31, | | June 30, | | December 31, |
| | 2020 | | 2019 | | 2021 | | 2020 |
Assets | Assets | (Unaudited) | | | Assets | (Unaudited) | | |
| Cash and due from banks | Cash and due from banks | $ | 265,737 | | | $ | 75,420 | | Cash and due from banks | $ | 387,034 | | | $ | 422,787 | |
Short-term investments | Short-term investments | 159 | | | 127 | | Short-term investments | 197 | | | 170 | |
Total cash and cash equivalents | Total cash and cash equivalents | 265,896 | | | 75,547 | | Total cash and cash equivalents | 387,231 | | | 422,957 | |
| Debt securities available for sale, at fair value | Debt securities available for sale, at fair value | 1,245,300 | | | 1,098,336 | | Debt securities available for sale, at fair value | 1,642,413 | | | 1,316,952 | |
Debt securities held to maturity, at amortized cost (fair value of $288,439 and $289,505 at September 30, 2020 and December 31, 2019, respectively) | 272,712 | | | 285,756 | | |
Debt securities held to maturity, at amortized cost (fair value of $415,033 and $277,091 at June 30, 2021 and December 31, 2020, respectively) | | Debt securities held to maturity, at amortized cost (fair value of $415,033 and $277,091 at June 30, 2021 and December 31, 2020, respectively) | 402,145 | | | 262,720 | |
Equity securities, at fair value | Equity securities, at fair value | 4,706 | | | 2,855 | | Equity securities, at fair value | 4,053 | | | 5,418 | |
Federal Home Loan Bank stock | Federal Home Loan Bank stock | 53,416 | | | 69,579 | | Federal Home Loan Bank stock | 40,922 | | | 43,759 | |
Loans held-for-sale, at fair value | Loans held-for-sale, at fair value | 4,146 | | | 0 | | Loans held-for-sale, at fair value | 0 | | | 4,146 | |
| Loans receivable | Loans receivable | 6,468,845 | | | 6,197,566 | | Loans receivable | 6,017,802 | | | 6,181,770 | |
Less: allowance for loan losses | Less: allowance for loan losses | 76,133 | | | 61,709 | | Less: allowance for loan losses | 69,898 | | | 74,676 | |
Loans receivable, net | Loans receivable, net | 6,392,712 | | | 6,135,857 | | Loans receivable, net | 5,947,904 | | | 6,107,094 | |
| Accrued interest receivable | Accrued interest receivable | 31,252 | | | 22,092 | | Accrued interest receivable | 28,296 | | | 29,456 | |
| Office properties and equipment, net | Office properties and equipment, net | 76,853 | | | 72,967 | | Office properties and equipment, net | 75,450 | | | 75,974 | |
Bank-owned life insurance | 233,127 | | | 211,415 | | |
Bank-owned life insurance ("BOLI") | | Bank-owned life insurance ("BOLI") | 235,790 | | | 232,824 | |
Goodwill and intangible assets | Goodwill and intangible assets | 92,506 | | | 68,582 | | Goodwill and intangible assets | 86,189 | | | 87,384 | |
Other assets | Other assets | 192,847 | | | 145,708 | | Other assets | 217,042 | | | 209,852 | |
Total assets | Total assets | $ | 8,865,473 | | | $ | 8,188,694 | | Total assets | $ | 9,067,435 | | | $ | 8,798,536 | |
| Liabilities and Stockholders' Equity | Liabilities and Stockholders' Equity | | Liabilities and Stockholders' Equity | |
Liabilities: | Liabilities: | | Liabilities: | |
Deposits | Deposits | $ | 6,629,648 | | | $ | 5,645,842 | | Deposits | $ | 7,079,276 | | | $ | 6,778,624 | |
Borrowings | Borrowings | 1,015,210 | | | 1,407,022 | | Borrowings | 749,683 | | | 799,364 | |
Advance payments by borrowers for taxes and insurance | Advance payments by borrowers for taxes and insurance | 34,254 | | | 35,507 | | Advance payments by borrowers for taxes and insurance | 36,155 | | | 32,570 | |
Accrued expenses and other liabilities | Accrued expenses and other liabilities | 169,031 | | | 117,806 | | Accrued expenses and other liabilities | 169,275 | | | 176,691 | |
Total liabilities | Total liabilities | 7,848,143 | | | 7,206,177 | | Total liabilities | 8,034,389 | | | 7,787,249 | |
| Stockholders' equity: | Stockholders' equity: | | Stockholders' equity: | |
Preferred stock, $0.01 par value. 10,000,000 shares authorized; NaN issued and outstanding at September 30, 2020 and December 31, 2019 | 0 | | | 0 | | |
Common stock, $0.01 par value. 500,000,000 shares authorized; 122,037,793 shares issued and 114,415,010 shares outstanding at September 30, 2020, and 117,278,745 shares issued and 113,765,387 outstanding at December 31, 2019 | 1,220 | | | 1,173 | | |
Preferred stock, $0.01 par value. 10,000,000 shares authorized; NaN issued and outstanding at June 30, 2021 and December 31, 2020 | | Preferred stock, $0.01 par value. 10,000,000 shares authorized; NaN issued and outstanding at June 30, 2021 and December 31, 2020 | 0 | | | 0 | |
Common stock, $0.01 par value. 500,000,000 shares authorized; 122,037,926 shares issued and 107,506,075 shares outstanding at June 30, 2021 and 122,037,793 shares issued and 110,939,753 shares outstanding at December 31, 2020 | | Common stock, $0.01 par value. 500,000,000 shares authorized; 122,037,926 shares issued and 107,506,075 shares outstanding at June 30, 2021 and 122,037,793 shares issued and 110,939,753 shares outstanding at December 31, 2020 | 1,220 | | | 1,220 | |
Additional paid-in capital | Additional paid-in capital | 607,735 | | | 531,667 | | Additional paid-in capital | 614,381 | | | 609,531 | |
Retained earnings | Retained earnings | 652,430 | | | 615,481 | | Retained earnings | 720,817 | | | 673,084 | |
Accumulated other comprehensive loss | Accumulated other comprehensive loss | (87,929) | | | (68,735) | | Accumulated other comprehensive loss | (43,267) | | | (69,625) | |
Treasury stock, at cost; 7,622,783 shares at September 30, 2020 and 3,513,358 shares at December 31, 2019 | (115,580) | | | (54,950) | | |
Treasury stock, at cost; 14,531,851 shares at June 30, 2021 and 11,098,040 shares at December 31, 2020 | | Treasury stock, at cost; 14,531,851 shares at June 30, 2021 and 11,098,040 shares at December 31, 2020 | (221,072) | | | (163,015) | |
Common stock held by the Employee Stock Ownership Plan | Common stock held by the Employee Stock Ownership Plan | (39,862) | | | (41,564) | | Common stock held by the Employee Stock Ownership Plan | (38,169) | | | (39,293) | |
Stock held by Rabbi Trust | Stock held by Rabbi Trust | (1,814) | | | (1,520) | | Stock held by Rabbi Trust | (2,205) | | | (1,875) | |
Deferred compensation obligations | Deferred compensation obligations | 1,130 | | | 965 | | Deferred compensation obligations | 1,341 | | | 1,260 | |
Total stockholders' equity | Total stockholders' equity | 1,017,330 | | | 982,517 | | Total stockholders' equity | 1,033,046 | | | 1,011,287 | |
Total liabilities and stockholders' equity | Total liabilities and stockholders' equity | $ | 8,865,473 | | | $ | 8,188,694 | | Total liabilities and stockholders' equity | $ | 9,067,435 | | | $ | 8,798,536 | |
| See accompanying notes to unaudited consolidated financial statements. | See accompanying notes to unaudited consolidated financial statements. | 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, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 | | 2021 | | 2020 | | 2021 | | 2020 |
Interest income: | Interest income: | (Unaudited) | Interest income: | (Unaudited) |
Loans receivable | Loans receivable | $ | 63,258 | | | $ | 53,594 | | | 192,511 | | | 157,563 | | Loans receivable | $ | 57,683 | | | $ | 65,235 | | | $ | 116,451 | | | $ | 129,253 | |
Debt securities available for sale and equity securities | Debt securities available for sale and equity securities | 7,034 | | | 7,736 | | | 21,654 | | | 23,295 | | Debt securities available for sale and equity securities | 7,521 | | | 7,292 | | | 13,899 | | | 14,620 | |
Debt securities held to maturity | Debt securities held to maturity | 1,749 | | | 2,068 | | | 5,807 | | | 6,090 | | Debt securities held to maturity | 2,151 | | | 1,993 | | | 3,903 | | | 4,058 | |
Federal funds and interest earning deposits | Federal funds and interest earning deposits | 71 | | | 182 | | | 287 | | | 405 | | Federal funds and interest earning deposits | 39 | | | 27 | | | 143 | | | 216 | |
Federal Home Loan Bank stock dividends | Federal Home Loan Bank stock dividends | 821 | | | 858 | | | 2,951 | | | 2,704 | | Federal Home Loan Bank stock dividends | 487 | | | 1,040 | | | 1,122 | | | 2,130 | |
Total interest income | Total interest income | 72,933 | | | 64,438 | | | 223,210 | | | 190,057 | | Total interest income | 67,881 | | | 75,587 | | | 135,518 | | | 150,277 | |
Interest expense: | Interest expense: | | | | | | | | Interest expense: | | | | | | | |
Deposits | Deposits | 12,826 | | | 16,055 | | | 44,569 | | | 44,984 | | Deposits | 7,855 | | | 14,911 | | | 16,730 | | | 31,743 | |
Borrowings | Borrowings | 3,783 | | | 6,667 | | | 15,744 | | | 20,130 | | Borrowings | 1,946 | | | 4,805 | | | 3,968 | | | 11,961 | |
Total interest expense | Total interest expense | 16,609 | | | 22,722 | | | 60,313 | | | 65,114 | | Total interest expense | 9,801 | | | 19,716 | | | 20,698 | | | 43,704 | |
| Net interest income | Net interest income | 56,324 | | | 41,716 | | | 162,897 | | | 124,943 | | Net interest income | 58,080 | | | 55,871 | | | 114,820 | | | 106,573 | |
| Provision for loan losses | 2,516 | | | 1,157 | | | 17,820 | | | 1,705 | | |
(Reversal of) provision for loan losses | | (Reversal of) provision for loan losses | (1,761) | | | 5,736 | | | (3,041) | | | 15,304 | |
| Net interest income after provision for loan losses | 53,808 | | | 40,559 | | | 145,077 | | | 123,238 | | |
Net interest income after (reversal of) provision for loan losses | | Net interest income after (reversal of) provision for loan losses | 59,841 | | | 50,135 | | | 117,861 | | | 91,269 | |
| Non-interest income: | Non-interest income: | | Non-interest income: | |
Demand deposit account fees | Demand deposit account fees | 787 | | | 1,106 | | | 2,706 | | | 3,116 | | Demand deposit account fees | 858 | | | 620 | | | 1,696 | | | 1,919 | |
Bank-owned life insurance | Bank-owned life insurance | 1,531 | | | 1,784 | | | 4,467 | | | 4,449 | | Bank-owned life insurance | 1,497 | | | 1,519 | | | 2,971 | | | 2,936 | |
Title insurance fees | Title insurance fees | 1,218 | | | 1,350 | | | 3,445 | | | 3,490 | | Title insurance fees | 1,503 | | | 996 | | | 3,123 | | | 2,227 | |
Loan fees and service charges | Loan fees and service charges | 565 | | | 3,038 | | | 1,826 | | | 5,358 | | Loan fees and service charges | 714 | | | 533 | | | 1,365 | | | 1,261 | |
Gain on securities transactions | 0 | | | 1,256 | | | 370 | | | 1,721 | | |
(Loss) gain on securities transactions | | (Loss) gain on securities transactions | (281) | | | 0 | | | (281) | | | 370 | |
Change in fair value of equity securities | Change in fair value of equity securities | (4) | | | (59) | | | 55 | | | 189 | | Change in fair value of equity securities | (778) | | | 643 | | | (1,366) | | | 59 | |
Gain on sale of loans | Gain on sale of loans | 1,873 | | | 382 | | | 3,422 | | | 710 | | Gain on sale of loans | 8,524 | | | 795 | | | 10,674 | | | 1,549 | |
Other non-interest income | Other non-interest income | 1,939 | | | 1,258 | | | 5,017 | | | 3,895 | | Other non-interest income | 2,354 | | | 1,902 | | | 4,804 | | | 3,078 | |
Total non-interest income | Total non-interest income | 7,909 | | | 10,115 | | | 21,308 | | | 22,928 | | Total non-interest income | 14,391 | | | 7,008 | | | 22,986 | | | 13,399 | |
| Non-interest expense: | Non-interest expense: | | Non-interest expense: | |
Compensation and employee benefits | Compensation and employee benefits | 26,666 | | | 21,362 | | | 76,349 | | | 61,285 | | Compensation and employee benefits | 23,601 | | | 25,218 | | | 46,994 | | | 49,683 | |
Occupancy | Occupancy | 4,823 | | | 3,973 | | | 14,319 | | | 11,628 | | Occupancy | 4,814 | | | 4,701 | | | 10,066 | | | 9,496 | |
Federal deposit insurance premiums | Federal deposit insurance premiums | 614 | | | 40 | | | 1,350 | | | 927 | | Federal deposit insurance premiums | 567 | | | 626 | | | 1,147 | | | 736 | |
Advertising | Advertising | 484 | | | 533 | | | 2,075 | | | 3,311 | | Advertising | 663 | | | 447 | | | 1,198 | | | 1,591 | |
Professional fees | Professional fees | 1,680 | | | 1,541 | | | 4,129 | | | 4,219 | | Professional fees | 1,651 | | | 1,083 | | | 3,441 | | | 2,449 | |
Data processing | 839 | | | 658 | | | 2,420 | | | 1,965 | | |
Data processing and software expenses | | Data processing and software expenses | 2,612 | | | 2,364 | | | 5,383 | | | 4,594 | |
Merger-related expenses | Merger-related expenses | 424 | | | 740 | | | 1,931 | | | 1,202 | | Merger-related expenses | 75 | | | 432 | | | 75 | | | 1,507 | |
Loss on extinguishment of debt | | Loss on extinguishment of debt | 0 | | | 0 | | | 742 | | | 0 | |
Other non-interest expense | Other non-interest expense | 5,848 | | | 2,217 | | | 14,756 | | | 7,927 | | Other non-interest expense | 3,627 | | | 2,572 | | | 6,267 | | | 5,895 | |
Total non-interest expense | Total non-interest expense | 41,378 | | | 31,064 | | | 117,329 | | | 92,464 | | Total non-interest expense | 37,610 | | | 37,443 | | | 75,313 | | | 75,951 | |
| Income before income tax expense | Income before income tax expense | 20,339 | | | 19,610 | | | 49,056 | | | 53,702 | | Income before income tax expense | 36,622 | | | 19,700 | | | 65,534 | | | 28,717 | |
| Income tax expense | Income tax expense | 5,252 | | | 5,392 | | | 12,107 | | | 12,534 | | Income tax expense | 9,934 | | | 4,603 | | | 17,801 | | | 6,855 | |
| Net income | Net income | $ | 15,087 | | | $ | 14,218 | | | 36,949 | | | 41,168 | | Net income | $ | 26,688 | | | $ | 15,097 | | | $ | 47,733 | | | $ | 21,862 | |
| Earnings per share - basic and diluted | Earnings per share - basic and diluted | $ | 0.14 | | | $ | 0.13 | | | $ | 0.34 | | | $ | 0.37 | | Earnings per share - basic and diluted | $ | 0.26 | | | $ | 0.14 | | | $ | 0.45 | | | $ | 0.20 | |
Weighted average shares outstanding -basic and diluted | Weighted average shares outstanding -basic and diluted | 110,983,871 | | | 111,371,754 | | | 110,177,736 | | | 111,486,179 | | Weighted average shares outstanding -basic and diluted | 104,537,656 | | | 111,102,306 | | | 105,253,661 | | | 109,770,239 | |
| See accompanying notes to unaudited consolidated financial statements. | See accompanying notes to unaudited consolidated financial statements. | 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, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 | | 2021 | | 2020 | | 2021 | | 2020 |
| | (Unaudited) | | (Unaudited) |
| Net income | Net income | $ | 15,087 | | | $ | 14,218 | | | $ | 36,949 | | | $ | 41,168 | | Net income | $ | 26,688 | | | $ | 15,097 | | | $ | 47,733 | | | $ | 21,862 | |
| Other comprehensive income (loss), net of tax: | | |
Unrealized (losses) gains on debt securities available for sale | (2,913) | | | 4,915 | | | 22,705 | | | 28,302 | | |
Other comprehensive gain (loss) income, net of tax: | | Other comprehensive gain (loss) income, net of tax: | |
Unrealized gain (loss) on debt securities available for sale | | Unrealized gain (loss) on debt securities available for sale | 4,788 | | | 6,352 | | | (12,246) | | | 25,619 | |
Accretion of unrealized (loss) gain on debt securities reclassified as held to maturity | Accretion of unrealized (loss) gain on debt securities reclassified as held to maturity | (4) | | | 2 | | | 1 | | | 10 | | Accretion of unrealized (loss) gain on debt securities reclassified as held to maturity | (12) | | | (2) | | | 2 | | | 4 | |
Reclassification adjustment for gains included in net income | 0 | | | 965 | | | 289 | | | 1,325 | | |
Reclassification adjustment for gain included in net income | | Reclassification adjustment for gain included in net income | (202) | | | 0 | | | (202) | | | 289 | |
| | (2,917) | | | 5,882 | | | 22,995 | | | 29,637 | | | 4,574 | | | 6,350 | | | (12,446) | | | 25,912 | |
| Derivatives, net of tax: | Derivatives, net of tax: | | Derivatives, net of tax: | |
Unrealized gain (loss) on swap contracts accounted for as cash flow hedges | Unrealized gain (loss) on swap contracts accounted for as cash flow hedges | 1,785 | | | (1,279) | | | (10,314) | | | (8,735) | | Unrealized gain (loss) on swap contracts accounted for as cash flow hedges | 948 | | | (750) | | | 6,631 | | | (12,099) | |
| | 1,785 | | | (1,279) | | | (10,314) | | | (8,735) | | | 948 | | | (750) | | | 6,631 | | | (12,099) | |
| Employee benefit plans, net of tax: | Employee benefit plans, net of tax: | | Employee benefit plans, net of tax: | |
Amortization of prior service cost included in net income | Amortization of prior service cost included in net income | (11) | | | (11) | | | (32) | | | (33) | | Amortization of prior service cost included in net income | (11) | | | (11) | | | (20) | | | (22) | |
Reclassification adjustment of actuarial net gain included in net income | (846) | | | (735) | | | (2,539) | | | (2,196) | | |
Reclassification adjustment of actuarial net (loss) gain included in net income | | Reclassification adjustment of actuarial net (loss) gain included in net income | (1,089) | | | (845) | | | (2,178) | | | (1,692) | |
Change in funded status of retirement obligations | Change in funded status of retirement obligations | (32,733) | | | 1,490 | | | (29,304) | | | (2,200) | | Change in funded status of retirement obligations | 24,818 | | | 1,714 | | | 34,371 | | | 3,429 | |
| | (33,590) | | | 744 | | | (31,875) | | | (4,429) | | | 23,718 | | | 858 | | | 32,173 | | | 1,715 | |
| Total other comprehensive income (loss) | (34,722) | | | 5,347 | | | (19,194) | | | 16,473 | | |
Total other comprehensive income | | Total other comprehensive income | 29,240 | | | 6,458 | | | 26,358 | | | 15,528 | |
| Total comprehensive income (loss), net of tax | $ | (19,635) | | | $ | 19,565 | | | $ | 17,755 | | | $ | 57,641 | | |
Total comprehensive income, net of tax | | Total comprehensive income, net of tax | $ | 55,928 | | | $ | 21,555 | | | $ | 74,091 | | | $ | 37,390 | |
| See accompanying notes to unaudited consolidated financial statements. | See accompanying notes to unaudited consolidated financial statements. | See accompanying notes to unaudited consolidated financial statements. |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
Three Months Ended SeptemberJune 30, 20202021 and 20192020
(In thousands)
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| 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 |
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Balance at June 30, 2019 | $ | 1,159 | | | $ | 527,650 | | | $ | 587,714 | | | $ | (61,319) | | | $ | (3,867) | | | $ | (42,710) | | | $ | (1,407) | | | $ | 689 | | | $ | 1,007,909 | |
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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 | |
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Stock based compensation | — | | | 1,630 | | | — | | | — | | | — | | | — | | | — | | | — | | | 1,630 | |
Purchase of treasury stock (2,478,400 shares) | — | | | — | | | — | | | — | | | (38,217) | | | — | | | — | | | — | | | (38,217) | |
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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 | |
| | | | | | | | | | | | | | | | | |
Balance at June 30, 2020 | $ | 1,220 | | | $ | 605,124 | | | $ | 637,343 | | | $ | (53,207) | | | $ | (108,327) | | | $ | (40,434) | | | $ | (1,767) | | | $ | 1,036 | | | $ | 1,040,988 | |
Net income | — | | | — | | | 15,087 | | | — | | | — | | | — | | | — | | | — | | | 15,087 | |
Other comprehensive (loss) | — | | | — | | | — | | | (34,722) | | | — | | | — | | | — | | | — | | | (34,722) | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Stock based compensation | — | | | 2,176 | | | — | | | — | | | — | | | — | | | — | | | — | | | 2,176 | |
Purchase of treasury stock (624,932 shares) | — | | | — | | | — | | | — | | | (6,925) | | | — | | | — | | | — | | | (6,925) | |
Restricted stock forfeitures (15,390 shares) | — | | | 173 | | | — | | | — | | | (173) | | | — | | | — | | | — | | | 0 | |
Repurchase shares for taxes (11,782 shares) | — | | | 155 | | | — | | | — | | | (155) | | | — | | | — | | | — | | | 0 | |
Employee Stock Ownership Plan shares committed to be released | — | | | 107 | | | — | | | — | | | — | | | 572 | | | — | | | — | | | 679 | |
Funding of deferred compensation obligations | — | | | — | | | — | | | — | | | — | | | — | | | (47) | | | 94 | | | 47 | |
Balance at September 30, 2020 | $ | 1,220 | | | $ | 607,735 | | | $ | 652,430 | | | $ | (87,929) | | | $ | (115,580) | | | $ | (39,862) | | | $ | (1,814) | | | $ | 1,130 | | | $ | 1,017,330 | |
| | | | | | | | | | | | | | | | | |
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 March 31, 2020 | $ | 1,173 | | | $ | 534,213 | | | $ | 622,246 | | | $ | (59,665) | | | $ | (95,326) | | | $ | (40,999) | | | $ | (1,728) | | | $ | 1,212 | | | $ | 961,126 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Net income | — | | | — | | | 15,097 | | | — | | | — | | | — | | | — | | | — | | | 15,097 | |
Other comprehensive income | — | | | — | | | — | | | 6,458 | | | — | | | — | | | — | | | — | | | 6,458 | |
Issuance of common stock to Columbia Bank MHC | 47 | | | 68,483 | | | — | | | — | | | — | | | — | | | — | | | — | | | 68,530 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Stock based compensation | — | | | 2,205 | | | — | | | — | | | — | | | — | | | — | | | — | | | 2,205 | |
Purchase of treasury stock (899,074 shares) | — | | | — | | | — | | | — | | | (12,998) | | | — | | | — | | | — | | | (12,998) | |
Restricted stock forfeitures (240 shares) | — | | | — | | | — | | | — | | | (3) | | | — | | | — | | | — | | | (3) | |
Employee Stock Ownership Plan shares committed to be released | — | | | 223 | | | — | | | — | | | — | | | 565 | | | — | | | — | | | 788 | |
Funding of deferred compensation obligations | — | | | — | | | — | | | — | | | — | | | — | | | (39) | | | (176) | | | (215) | |
Balance at June 30, 2020 | $ | 1,220 | | | $ | 605,124 | | | $ | 637,343 | | | $ | (53,207) | | | $ | (108,327) | | | $ | (40,434) | | | $ | (1,767) | | | $ | 1,036 | | | $ | 1,040,988 | |
| | | | | | | | | | | | | | | | | |
Balance at March 31, 2021 | $ | 1,220 | | | $ | 611,549 | | | $ | 694,129 | | | $ | (72,507) | | | $ | (195,361) | | | $ | (38,734) | | | $ | (2,141) | | | $ | 1,494 | | | $ | 999,649 | |
Net income | — | | | — | | | 26,688 | | | — | | | — | | | — | | | — | | | — | | | 26,688 | |
Other comprehensive income | — | | | — | | | — | | | 29,240 | | | — | | | — | | | — | | | — | | | 29,240 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Stock based compensation | — | | | 2,397 | | | — | | | — | | | — | | | — | | | — | | | — | | | 2,397 | |
Purchase of treasury stock (1,471,501 shares) | — | | | — | | | — | | | — | | | (25,709) | | | — | | | — | | | — | | | (25,709) | |
Exercise of stock options | — | | | 1 | | | — | | | — | | | — | | | — | | | — | | | — | | | 1 | |
Restricted stock forfeitures (128 shares) | — | | | 2 | | | — | | | — | | | (2) | | | — | | | — | | | — | | | 0 | |
| | | | | | | | | | | | | | | | | |
Employee Stock Ownership Plan shares committed to be released | — | | | 432 | | | — | | | — | | | — | | | 565 | | | — | | | — | | | 997 | |
Funding of deferred compensation obligations | — | | | — | | | — | | | — | | | — | | | — | | | (64) | | | (153) | | | (217) | |
Balance at June 30, 2021 | $ | 1,220 | | | $ | 614,381 | | | $ | 720,817 | | | $ | (43,267) | | | $ | (221,072) | | | $ | (38,169) | | | $ | (2,205) | | | $ | 1,341 | | | $ | 1,033,046 | |
| | | | | | | | | | | | | | | | | |
See accompanying notes to unaudited consolidated financial statements. |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
NineSix Months Ended SeptemberJune 30, 20192021 and 2020
(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, 2018 | $ | 1,159 | | | $ | 527,037 | | | $ | 560,216 | | | $ | (71,897) | | | $ | 0 | | | $ | (43,835) | | | $ | (1,259) | | | $ | 639 | | | $ | 972,060 | |
Effect of the adoption of Accounting Standards Update ("ASC") 2016-01 | — | | | — | | | 548 | | | (548) | | | — | | | — | | | — | | | — | | | 0 | |
Balance at January 1, 2019 | 1,159 | | | 527,037 | | | 560,764 | | | (72,445) | | | 0 | | | (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 (2,742,300 shares) | — | | | — | | | — | | | — | | | (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 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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, 2019 | $ | 1,173 | | | $ | 531,667 | | | $ | 615,481 | | | $ | (68,735) | | | $ | (54,950) | | | $ | (41,564) | | | $ | (1,520) | | | $ | 965 | | | $ | 982,517 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Net income | — | | | — | | | 21,862 | | | — | | | — | | | — | | | — | | | — | | | 21,862 | |
Other comprehensive income | — | | | — | | | — | | | 15,528 | | | — | | | — | | | — | | | — | | | 15,528 | |
Issuance of common stock to Columbia Bank MHC | 47 | | | 68,483 | | | — | | | — | | | — | | | — | | | — | | | — | | | 68,530 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Stock based compensation | — | | | 4,409 | | | — | | | — | | | — | | | — | | | — | | | — | | | 4,409 | |
Purchase of treasury stock (3,456,200 shares) | — | | | — | | | — | | | — | | | (53,361) | | | — | | | — | | | — | | | (53,361) | |
Restricted stock forfeitures ( 1,121 shares) | — | | | — | | | — | | | — | | | (16) | | | — | | | — | | | — | | | (16) | |
| | | | | | | | | | | | | | | | | |
Employee Stock Ownership Plan shares committed to be released | — | | | 565 | | | — | | | — | | | — | | | 1,130 | | | — | | | — | | | 1,695 | |
Funding of deferred compensation obligations | — | | | — | | | — | | | — | | | — | | | — | | | (247) | | | 71 | | | (176) | |
Balance at June 30, 2020 | $ | 1,220 | | | $ | 605,124 | | | $ | 637,343 | | | $ | (53,207) | | | $ | (108,327) | | | $ | (40,434) | | | $ | (1,767) | | | $ | 1,036 | | | $ | 1,040,988 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at December 31, 2020 | $ | 1,220 | | | $ | 609,531 | | | $ | 673,084 | | | $ | (69,625) | | | $ | (163,015) | | | $ | (39,293) | | | $ | (1,875) | | | $ | 1,260 | | | $ | 1,011,287 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Net income | — | | | — | | | 47,733 | | | — | | | — | | | — | | | — | | | — | | | 47,733 | |
Other comprehensive income | — | | | — | | | — | | | 26,358 | | | — | | | — | | | — | | | — | | | 26,358 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Treasury stock allocated to restricted stock award grants | — | | | (733) | | | — | | | — | | | 733 | | | — | | | — | | | — | | | 0 | |
Stock based compensation | — | | | 4,540 | | | — | | | — | | | — | | | — | | | — | | | — | | | 4,540 | |
Purchase of treasury stock (3,470,040 shares) | — | | | — | | | — | | | — | | | (58,546) | | | — | | | — | | | — | | | (58,546) | |
Exercise of stock options | — | | | 1 | | | — | | | — | | | — | | | — | | | — | | | — | | | 1 | |
Restricted stock forfeitures (13,974 shares) | — | | | 244 | | | — | | | — | | | (244) | | | — | | | — | | | — | | | 0 | |
| | | | | | | | | | | | | | | | | |
Employee Stock Ownership Plan shares committed to be released | — | | | 798 | | | — | | | — | | | — | | | 1,124 | | | — | | | — | | | 1,922 | |
Funding of deferred compensation obligations | — | | | — | | | — | | | — | | | — | | | — | | | (330) | | | 81 | | | (249) | |
Balance at June 30, 2021 | $ | 1,220 | | | $ | 614,381 | | | $ | 720,817 | | | $ | (43,267) | | | $ | (221,072) | | | $ | (38,169) | | | $ | (2,205) | | | $ | 1,341 | | | $ | 1,033,046 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
Nine Months Ended September 30, 2020
(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, 2019 | 1,173 | | | 531,667 | | | 615,481 | | | (68,735) | | | (54,950) | | | (41,564) | | | (1,520) | | | 965 | | | $ | 982,517 | |
Net income | — | | | — | | | 36,949 | | | — | | | — | | | — | | | — | | | — | | | 36,949 | |
Other comprehensive (loss) | — | | | — | | | — | | | (19,194) | | | — | | | — | | | — | | | — | | | (19,194) | |
Issuance of common stock to Columbia Bank MHC | 47 | | | 68,483 | | | — | | | — | | | — | | | — | | | — | | | — | | | 68,530 | |
| | | | | | | | | | | | | | | | | |
Stock based compensation | — | | | 6,585 | | | — | | | — | | | — | | | — | | | — | | | — | | | 6,585 | |
Purchase of treasury stock (4,081,132 shares) | — | | | — | | | — | | | — | | | (60,286) | | | — | | | — | | | — | | | (60,286) | |
Restricted stock forfeitures (16,511 shares) | — | | | 173 | | | — | | | — | | | (189) | | | — | | | — | | | — | | | (16) | |
Repurchase shares for taxes (11,782 shares) | — | | | 155 | | | — | | | — | | | (155) | | | — | | | — | | | — | | | 0 | |
Employee Stock Ownership Plan shares committed to be released | — | | | 672 | | | — | | | — | | | — | | | 1,702 | | | — | | | — | | | 2,374 | |
Funding of deferred compensation obligations | — | | | — | | | — | | | — | | | — | | | — | | | (294) | | | 165 | | | (129) | |
Balance at September 30, 2020 | $ | 1,220 | | | $ | 607,735 | | | $ | 652,430 | | | $ | (87,929) | | | $ | (115,580) | | | $ | (39,862) | | | $ | (1,814) | | | $ | 1,130 | | | $ | 1,017,330 | |
| | | | | | | | | | | | | | | | | |
See accompanying notes to unaudited consolidated financial statements. |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
| | | Nine Months Ended September 30, | | Six Months Ended June 30, |
| | 2020 | | 2019 | | 2021 | | 2020 |
| | (In thousands, unaudited) | | (In thousands, unaudited) |
Cash flows from operating activities: | Cash flows from operating activities: | | Cash flows from operating activities: | |
Net income | Net income | $ | 36,949 | | | $ | 41,168 | | Net income | $ | 47,733 | | | $ | 21,862 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | | Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |
Amortization of deferred loan costs, fees and purchased premiums and discounts | Amortization of deferred loan costs, fees and purchased premiums and discounts | 818 | | | 1,055 | | Amortization of deferred loan costs, fees and purchased premiums and discounts | (1,439) | | | 656 | |
Net amortization of premiums and discounts on securities | Net amortization of premiums and discounts on securities | 1,573 | | | 787 | | Net amortization of premiums and discounts on securities | 2,541 | | | 854 | |
Net amortization of mortgage servicing rights | Net amortization of mortgage servicing rights | 85 | | | (78) | | Net amortization of mortgage servicing rights | 129 | | | 57 | |
| Amortization of intangible assets | Amortization of intangible assets | 783 | | | 0 | | Amortization of intangible assets | 520 | | | 514 | |
Depreciation and amortization of office properties and equipment | Depreciation and amortization of office properties and equipment | 4,947 | | | 3,366 | | Depreciation and amortization of office properties and equipment | 3,362 | | | 3,314 | |
Amortization of operating lease right-of-use assets | Amortization of operating lease right-of-use assets | 2,641 | | | 0 | | Amortization of operating lease right-of-use assets | 1,811 | | | 1,440 | |
Provision for loan losses | 17,820 | | | 1,705 | | |
Gain on securities transactions | (370) | | | (1,721) | | |
Loss on extinguishment of debt | | Loss on extinguishment of debt | 742 | | | 0 | |
(Reversal of) provision for loan losses | | (Reversal of) provision for loan losses | (3,041) | | | 15,304 | |
Loss (gain) on securities transactions | | Loss (gain) on securities transactions | 281 | | | (370) | |
Change in fair value of equity securities | Change in fair value of equity securities | (55) | | | (189) | | Change in fair value of equity securities | 1,365 | | | (59) | |
Gain on securitizations | Gain on securitizations | (1,523) | | | 0 | | Gain on securitizations | (2,259) | | | 0 | |
Gain on sale of loans | Gain on sale of loans | (1,899) | | | (710) | | Gain on sale of loans | (8,415) | | | (1,549) | |
Loss on real estate owned | 0 | | | 1 | | |
| | Loss on disposal of office properties and equipment | Loss on disposal of office properties and equipment | 691 | | | 0 | | Loss on disposal of office properties and equipment | 61 | | | 691 | |
Loss on write-down of mortgage servicing rights | Loss on write-down of mortgage servicing rights | 75 | | | 0 | | Loss on write-down of mortgage servicing rights | 0 | | | 34 | |
Deferred tax expense (benefit) | (3,864) | | | (7,160) | | |
(Increase) in accrued interest receivable | (8,481) | | | (529) | | |
(Increase) in other assets | (80,110) | | | (44,037) | | |
Deferred tax expense | | Deferred tax expense | 736 | | | 7,220 | |
Decrease (increase) in accrued interest receivable | | Decrease (increase) in accrued interest receivable | 1,160 | | | (5,643) | |
Decrease (increase) in other assets | | Decrease (increase) in other assets | 23,155 | | | (80,652) | |
Increase in accrued expenses and other liabilities | Increase in accrued expenses and other liabilities | 33,687 | | | 36,367 | | Increase in accrued expenses and other liabilities | 592 | | | 36,507 | |
Income on bank-owned life insurance | Income on bank-owned life insurance | (4,467) | | | (4,449) | | Income on bank-owned life insurance | (2,971) | | | (2,936) | |
Employee stock ownership plan expense | Employee stock ownership plan expense | 2,374 | | | 2,619 | | Employee stock ownership plan expense | 1,922 | | | 1,695 | |
Stock based compensation | Stock based compensation | 6,585 | | | 1,630 | | Stock based compensation | 4,540 | | | 4,409 | |
Increase in deferred compensation obligations under Rabbi Trust | (129) | | | (45) | | |
(Decrease) in deferred compensation obligations under Rabbi Trust | | (Decrease) in deferred compensation obligations under Rabbi Trust | (249) | | | (176) | |
Net cash provided by operating activities | Net cash provided by operating activities | 8,130 | | | 29,780 | | Net cash provided by operating activities | 72,276 | | | 3,172 | |
Cash flows from investing activities: | Cash flows from investing activities: | | | | Cash flows from investing activities: | | | |
Proceeds from sales of debt securities available for sale | Proceeds from sales of debt securities available for sale | 20,761 | | | 31,811 | | Proceeds from sales of debt securities available for sale | 4,719 | | | 20,761 | |
Proceeds from sales of equity securities | 0 | | | 926 | | |
| Proceeds from paydowns/maturities/calls of debt securities available for sale | Proceeds from paydowns/maturities/calls of debt securities available for sale | 162,161 | | | 88,504 | | Proceeds from paydowns/maturities/calls of debt securities available for sale | 169,638 | | | 94,758 | |
Proceeds from paydowns/maturities/calls of debt securities held to maturity | Proceeds from paydowns/maturities/calls of debt securities held to maturity | 30,988 | | | 37,968 | | Proceeds from paydowns/maturities/calls of debt securities held to maturity | 20,633 | | | 24,971 | |
Purchases of debt securities available for sale | Purchases of debt securities available for sale | (201,504) | | | (143,196) | | Purchases of debt securities available for sale | (416,106) | | | (111,113) | |
Purchases of debt securities held to maturity | Purchases of debt securities held to maturity | (5,000) | | | (65,171) | | Purchases of debt securities held to maturity | (160,466) | | | 0 | |
Purchases of equity securities | 0 | | | (416) | | |
| Proceeds from sales of loans held-for-sale | Proceeds from sales of loans held-for-sale | 111,764 | | | 94,834 | | Proceeds from sales of loans held-for-sale | 274,980 | | | 103,992 | |
Proceeds from sales of loans receivable | Proceeds from sales of loans receivable | 28,923 | | | 10,273 | | Proceeds from sales of loans receivable | 0 | | | 22,876 | |
Purchases of loans receivable | Purchases of loans receivable | 0 | | | (29,885) | | Purchases of loans receivable | (71,590) | | | 0 | |
Net increase in loans receivable | Net increase in loans receivable | (294,040) | | | (297,434) | | Net increase in loans receivable | (125,022) | | | (409,327) | |
| Proceeds from bank-owned life insurance death benefit | 0 | | | 1,015 | | |
Proceeds from bank-owned life insurance death benefits | | Proceeds from bank-owned life insurance death benefits | 5 | | | 0 | |
Proceeds from redemptions of Federal Home Loan Bank stock | Proceeds from redemptions of Federal Home Loan Bank stock | 40,717 | | | 47,860 | | Proceeds from redemptions of Federal Home Loan Bank stock | 7,630 | | | 35,660 | |
Purchases of Federal Home Loan Bank stock | Purchases of Federal Home Loan Bank stock | (22,544) | | | (45,999) | | Purchases of Federal Home Loan Bank stock | (4,793) | | | (21,914) | |
Proceeds from sales of office properties and equipment | | Proceeds from sales of office properties and equipment | 685 | | | 0 | |
Additions to office properties and equipment | Additions to office properties and equipment | (3,750) | | | (15,039) | | Additions to office properties and equipment | (3,584) | | | (2,852) | |
Proceeds from sale of real estate owned | 0 | | | 91 | | |
| Net cash acquired in acquisition | Net cash acquired in acquisition | 155,248 | | | 0 | | Net cash acquired in acquisition | 0 | | | 155,248 | |
Net cash provided by (used in) investing activities | 23,724 | | | (283,858) | | |
Net cash (used in) investing activities | | Net cash (used in) investing activities | $ | (303,271) | | | $ | (86,940) | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (continued)
| | | Nine Months Ended September 30, | | Six Months Ended June 30, |
| | 2020 | | 2019 | | 2021 | | 2020 |
| | ( In thousands, unaudited) | | ( In thousands, unaudited) |
| Cash flows from financing activities: | Cash flows from financing activities: | | Cash flows from financing activities: | |
Net increase in deposits | Net increase in deposits | $ | 650,572 | | | $ | 369,449 | | Net increase in deposits | $ | 300,652 | | | $ | 602,033 | |
Proceeds from long-term borrowings | Proceeds from long-term borrowings | 90,000 | | | 127,337 | | Proceeds from long-term borrowings | 37,120 | | | 90,000 | |
Payments on long-term borrowings | Payments on long-term borrowings | (181,345) | | | (220,000) | | Payments on long-term borrowings | (54,168) | | | (116,465) | |
Net (decrease) increase in short-term borrowings | (321,595) | | | 32,600 | | |
Payment of subordinated debt | (16,600) | | | 0 | | |
Net decrease in short-term borrowings | | Net decrease in short-term borrowings | (33,375) | | | (288,306) | |
| Increase in advance payments by borrowers for taxes and insurance | Increase in advance payments by borrowers for taxes and insurance | (2,235) | | | 2,513 | | Increase in advance payments by borrowers for taxes and insurance | 3,585 | | | 217 | |
Issuance of common stock | 0 | | | 14 | | |
| Exercise of stock options | | Exercise of stock options | 1 | | | 0 | |
Purchase of treasury stock | Purchase of treasury stock | (60,286) | | | (42,084) | | Purchase of treasury stock | (58,546) | | | (53,361) | |
Purchase of employee stock ownership plan shares | 0 | | | 0 | | |
| Restricted stock forfeitures | Restricted stock forfeitures | (16) | | | 0 | | Restricted stock forfeitures | 0 | | | (16) | |
Issuance of treasury stock allocated to restricted stock award grants | 0 | | | 0 | | |
| Net cash provided by financing activities | Net cash provided by financing activities | $ | 158,495 | | | $ | 269,829 | | Net cash provided by financing activities | $ | 195,269 | | | $ | 234,102 | |
| Net increase in cash and cash equivalents | $ | 190,349 | | | $ | 15,751 | | |
Net (decrease) increase in cash and cash equivalents | | Net (decrease) increase in cash and cash equivalents | $ | (35,726) | | | $ | 150,334 | |
| Cash and cash equivalents at beginning of year | Cash and cash equivalents at beginning of year | 75,547 | | | 42,201 | | Cash and cash equivalents at beginning of year | 422,957 | | | 75,547 | |
Cash and cash equivalents at end of period | Cash and cash equivalents at end of period | $ | 265,896 | | | $ | 57,952 | | Cash and cash equivalents at end of period | $ | 387,231 | | | $ | 225,881 | |
| Cash paid during the period for: | Cash paid during the period for: | | Cash paid during the period for: | |
Interest on deposits and borrowings | Interest on deposits and borrowings | $ | 60,772 | | | $ | 64,892 | | Interest on deposits and borrowings | $ | 20,892 | | | $ | 43,801 | |
Income tax payments, net of (refunds) | Income tax payments, net of (refunds) | $ | 12,249 | | | $ | (4,293) | | Income tax payments, net of (refunds) | $ | 8,528 | | | $ | 1,300 | |
| Non-cash investing and financing activities: | Non-cash investing and financing activities: | | Non-cash investing and financing activities: | |
| Transfer of loans receivable to loans held-for-sale | Transfer of loans receivable to loans held-for-sale | $ | 114,171 | | | $ | 86,043 | | Transfer of loans receivable to loans held-for-sale | $ | 262,419 | | | $ | 112,219 | |
Securitization of loans | Securitization of loans | $ | 48,526 | | | $ | 21,615 | | Securitization of loans | 99,603 | | | 0 | |
Initial recognition of operating lease right-of-use assets | Initial recognition of operating lease right-of-use assets | $ | 22,218 | | | $ | 0 | | Initial recognition of operating lease right-of-use assets | 0 | | | 22,218 | |
Initial recognition of operating lease liabilities | Initial recognition of operating lease liabilities | $ | 23,290 | | | $ | 0 | | Initial recognition of operating lease liabilities | 0 | | | 23,290 | |
Acquisition: | Acquisition: | | Acquisition: | |
Non-cash assets acquired: | Non-cash assets acquired: | | Non-cash assets acquired: | |
Debt securities available for sale | Debt securities available for sale | $ | 51,479 | | | $ | 0 | | Debt securities available for sale | $ | 0 | | | $ | 51,479 | |
Debt securities held to maturity | Debt securities held to maturity | 13,418 | | | 0 | | Debt securities held to maturity | 0 | | | 13,418 | |
Equity securities | Equity securities | 1,796 | | | 0 | | Equity securities | 0 | | | 1,796 | |
Federal Home Loan Bank stock | Federal Home Loan Bank stock | 2,010 | | | 0 | | Federal Home Loan Bank stock | 0 | | | 2,010 | |
Loans receivable | Loans receivable | 171,593 | | | 0 | | Loans receivable | 0 | | | 171,593 | |
Accrued interest receivable | Accrued interest receivable | 679 | | | 0 | | Accrued interest receivable | 0 | | | 679 | |
Office properties and equipment, net | Office properties and equipment, net | 5,774 | | | 0 | | Office properties and equipment, net | 0 | | | 5,774 | |
Bank-owned life insurance | Bank-owned life insurance | 17,245 | | | 0 | | Bank-owned life insurance | 0 | | | 17,245 | |
| Other assets | Other assets | 2,823 | | | 0 | | Other assets | 0 | | | 2,823 | |
Total non-cash assets acquired | Total non-cash assets acquired | $ | 266,817 | | | $ | 0 | | Total non-cash assets acquired | $ | 0 | | | $ | 266,817 | |
Liabilities assumed: | Liabilities assumed: | | | | Liabilities assumed: | | | |
Deposits | Deposits | $ | 333,234 | | | $ | 0 | | Deposits | $ | 0 | | | $ | 333,234 | |
Borrowings | Borrowings | 37,728 | | | 0 | | Borrowings | 0 | | | 37,728 | |
Advance payments by borrowers for taxes and insurance | Advance payments by borrowers for taxes and insurance | 982 | | | 0 | | Advance payments by borrowers for taxes and insurance | 0 | | | 982 | |
Accrued expenses and other liabilities | Accrued expenses and other liabilities | 5,400 | | | 0 | | Accrued expenses and other liabilities | 0 | | | 5,400 | |
Total liabilities assumed | Total liabilities assumed | $ | 377,344 | | | $ | 0 | | Total liabilities assumed | $ | 0 | | | $ | 377,344 | |
Net non-cash liabilities acquired | $ | (110,527) | | | $ | 0 | | |
Net non-cash liabilities assumed | | Net non-cash liabilities assumed | $ | 0 | | | $ | (110,527) | |
Net cash and cash equivalents acquired in acquisition | Net cash and cash equivalents acquired in acquisition | $ | 155,248 | | | $ | 0 | | Net cash and cash equivalents acquired in acquisition | $ | 0 | | | $ | 155,248 | |
| See accompanying notes to unaudited consolidated financial statements. | See accompanying notes to unaudited consolidated financial statements. | See accompanying notes to unaudited consolidated financial statements. |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
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 intercompany accounts and transactions are eliminated.
Columbia Financial, Inc. is a majority-owned subsidiary of Columbia Bank, MHC (the "MHC"). The accounts of the MHC are not consolidated in the accompanying consolidated financial statements of the Company.
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 dates of the Consolidated 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 the determination of the adequacy of the allowance for credit losses, evaluation of the need for valuation allowances on deferred tax assets, and determination of liabilities related to retirement and other post-retirement benefits. These estimates and assumptions are evaluated on an ongoing basis and are adjusted when facts and circumstances dictate.
The interim unaudited consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, considered necessary for a fair presentation of the financial condition and results of operations for the periods presented. The results of operations for the three and ninesix month periods ended SeptemberJune 30, 20202021 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year or any other period. Certain reclassifications have been made in the consolidated financial statements to conform with current year 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 (“GAAP”). Certain information and note disclosures have been condensed or omitted pursuant to the rules and regulations of the SEC.
These 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, 20192020 and the audited consolidated financial statements included therein.
2. Acquisitions
Stewardship Financial Corporation
On November 1, 2019, the Company completed its 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 among Columbia Financial, Broadway Acquisition Corp. (a wholly owned subsidiary of Columbia Financial) and Stewardship. Under the terms of the merger agreement, each outstanding share of Stewardship common stock was converted into the right to received $15.75 in cash at the effective time of the merger. At the time of closing, Stewardship had $956.0 million in total assets, including $756.9 million in net loans receivable and $52.6 million in securities, and $877.8 million in total liabilities, including $781.4 million in deposits and $81.8 million in borrowings.The aggregate merger consideration paid was $136.3 million. The deposits initially acquired from Stewardship were held across a network of 12 branches located in New Jersey throughout Bergen, Morris, and Passaic Counties. During the ninesix months ended SeptemberJune 30, 2020, 4 of these branches were closed, and the Bank recorded a loss of $770,000 related to these branch closures. During both the three and six months ended June 30, 2021, the Bank recorded additional losses of $314,000 related to these branches.
Merger-related expenses are recorded in the Consolidated Statements of Income and are expensed as incurred. Direct acquisition and other charges incurred in connection with the Stewardship acquisition totaled $248,000$102,000 and $1.3$1.1 million during the three and ninesix months ended SeptemberJune 30, 2020, respectively. MergerThere were 0 merger expenses recorded duringfor the three and ninesix months ended SeptemberJune 30, 2019 totaled $740,000 and $1.2 million, respectively.
The assets acquired and liabilities assumed have been accounted for under the acquisition method of accounting. The fair value estimates are subject to change for up to one year after the closing date of the transaction if additional information (existing at the date of closing) relative to closing date fair values becomes available. There were no adjustments recorded to the amounts as of November 1, 2019.
2021.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
2. Acquisitions (continued)
Roselle Bank
On April 1, 2020, the Company completed its acquisition of RSB Bancorp, MHC, RSB Bancorp, Inc. and Roselle Bank (collectively, the "Roselle Entities" or "Roselle"). Pursuant to the terms of the Merger Agreement, RSB Bancorp, MHC merged with and into the MHC, with the MHC as the surviving entity; RSB Bancorp, Inc. merged with and into Columbia Financial, with the Columbia Financial as the surviving entity; and Roselle Bank merged with and into the Bank, with the Bank as the surviving institution. Under the terms of the merger agreement, depositors of Roselle Bank became depositors of the Bank and have the same rights and privileges in the MHC as if their accounts had been established at the Bank on the date established at Roselle Bank. The Company issued 4,759,048 shares of its common stock to the MHC, representing an amount equal to the fair value of the Roselle Entities as determined by an independent appraiser, at the effective time of the merger.
Merger-related expenses are recorded in the Consolidated Statements of Income and are expensed as incurred. Direct acquisition and other charges incurred in connection with the Roselle acquisition of the Roselle Entities totaled $175,000$335,000 and $618,000$443,000 during the three and ninesix months ended SeptemberJune 30, 2020, respectively.2020. There were 0 merger expenses recorded duringfor the three and ninesix months ended SeptemberJune 30, 2019.
2021.
The following table sets forth assets acquired and liabilities assumed in the acquisition of the Roselle Entities,acquisition, at their estimated fair values as of the closing date of the transaction:
| | | | | |
| April 1, 2020 |
| (In thousands) |
Assets acquired: | |
Cash and cash equivalents | $ | 155,248 | |
Debt securities available for sale | 51,479 | |
Debt securities held to maturity | 13,418 | |
Equity securities | 1,796 | |
Federal Home Loan Bank stock | 2,010 | |
Loans receivable | 171,593 | |
Accrued interest receivable | 679 | |
Office properties and equipment, net | 5,774 | |
Bank-owned life insurance | 17,245 | |
Deferred tax asset, net | 1,334 | |
| |
Other assets | 1,489 | |
Total assets acquired | $ | 422,065 | |
| |
Liabilities assumed: | |
Deposits | $ | 333,234 | |
Borrowings | 37,728 | |
Advance payments by borrowers for taxes and insurance | 982 | |
Accrued expenses and other liabilities | 5,400 | |
Total liabilities assumed | $ | 377,344 | |
| |
Net assets acquired | 44,721 | |
Fair market value of stock issued to Columbia Bank MHC for purchase | 68,530 | |
Goodwill recorded at merger | $ | 23,809 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
2. Acquisitions (continued)
Roselle Bank (continued)
The assets acquired and liabilities assumed have been accounted for under the acquisition method of accounting. The assets and liabilities were recorded at their fair values as of April 1, 2020, and resulted in the recognition of goodwill of $23.8 million. The determination of the fair value of assets acquired and liabilities assumed required management to make estimates about discount rates, future expected cash flows, market condition, and other future events that are highly subjective in nature and subject to change. The fair value estimates are subjectDuring the fourth quarter of 2020, the Company completed all tax returns related to change for upthe operation of the acquired entity and its impact on the Company's income taxes, which resulted in a $5.1 million adjustment to one year afterdeferred income taxes, net, and a decrease in goodwill. During the closingquarter ended March 31, 2021, the Company recorded a final adjustment of $1.1 million to deferred income taxes, net, and a decrease in goodwill. At June 30, 2021, goodwill related to the Roselle acquisition totaled $17.6 million.
Freehold Bank
On June 17, 2021, the MHC, Columbia Financial, Inc. and the Bank (collectively, “Columbia”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Freehold MHC, Freehold Bancorp and Freehold Bank (collectively, “Freehold”), pursuant to which Columbia will acquire Freehold, with Freehold MHC and Freehold Bancorp merging into the MHC and Columbia Financial, respectively. At the effective time of these mergers, Freehold Bank will convert to a federal savings bank and operate as a wholly-owned subsidiary of Columbia Financial. As a subsidiary of Columbia Financial, current depositors of Freehold Bank will become members of, and will have the same rights and privileges in the MHC, the mutual holding company parent of Columbia Bank, as if their accounts had been established in Columbia Bank on the date established at Freehold. As part of the transaction, ifColumbia Financial will issue additional information (existing at the dateshares of closing) relative to closing date fair values becomes available. As the Company continues to analyze the acquired assets and assumed liabilities, there may be adjustmentsits common stock to the recorded carrying values. However, management does not expect significant future adjustmentsMHC in an amount equal to the fair value of Freehold as determined by an independent appraiser. These shares are expected to be issued immediately prior to completion of the mergers. The Merger Agreement has been unanimously approved by the Boards of Directors of each of Columbia Financial, the MHC and the Bank and the Boards of Directors of each of Freehold MHC, Freehold Bancorp and Freehold Bank. Subject to the receipt of all required regulatory and other approvals, and the satisfaction or waiver of other customary closing conditions, the parties anticipate that the transactions contemplated by the Merger Agreement is anticipated to close in the fourth quarter of 2021.
Merger-related expenses are recorded amountsin the Consolidated Statements of Income and are expensed as of April 1,incurred. Direct acquisition and other charges incurred in connection with the Freehold acquisition totaled $75,000 during the three and six months ended June 30, 2021. There were 0 merger expenses recorded for the three and six months ended June 30, 2020.
Fair Value Measurement of Assets Acquired and Liabilities Assumed
Described below are the methods used to determine the fair values of the significant assets acquired and liabilities assumed:
Cash and cash equivalents. The estimated fair values of cash and cash equivalents approximate their stated face amounts, as these financial instruments are either due on demand or have short-term maturities.
Debt securities available for sale. The estimated fair values of the debt securities were calculated utilizing Level 2 inputs. The majority of the acquired securities were fixed income instruments that are not quoted on an exchange, but are traded in active markets. The prices for these instruments are obtained through an independent pricing service when available, or dealer market participants with whom the Company has historically transacted with for both purchases and sales of securities. The prices are derived from market quotations and matrix pricing. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, and the bond's terms and conditions, among other things. Management reviewed the data and assumptions used in pricing securities by its third party provider to ensure the highest level of significant inputs are derived from market observable data.
Loans receivable. The acquired loan portfolio was segregated into pools for valuation purposes primarily based on loan type, non-accrual status, and credit risk rating. The estimated fair values were computed by discounting the expected cash flows from the respective pools. Cash flows were estimated by using valuation models that incorporated estimates of current key assumptions such as prepayment speeds, default rates, and loss severity rates. The process included: (1) projecting monthly principal and/or interest cash flows based on the contractual terms of the loans, including both maturity and contractual amortization; (2) adjusting projected cash flows for expected losses and prepayments, where appropriate; (3) developing a discount rate based on the relative risk of the cash flows, considering the loan type, liquidity risk, the maturity of the loans, servicing costs, and a required return on capital; and (4) discounting the projected cash flows to a present value, to arrive at the calculated value of the loans.
The methods used to estimate the fair values of loans are extremely sensitive to the assumptions and estimates used. While management attempted to use assumptions and estimates that best reflected the acquired loan portfolios and current market conditions, a greater degree of subjectivity is inherent in the values than in those determined in active markets.
Office properties and equipment, net. The fair value of land and buildings was estimated using current appraisals. Acquired equipment was not material. Buildings are amortized over their estimated useful lives. Equipment is amortized or depreciated over their estimated useful lives usually ranging for three to ten years.
Goodwill. Goodwill is not amortized for book purposes: however, it is reviewed at least annually for impairment and is 0t deductible for tax purposes.
Deposits. The fair values of deposit liabilities with no stated maturity (i.e., non-interest bearing and interest-bearing demand deposit accounts, money market and savings and club accounts) are equal to the carrying amounts payable on demand. The fair value of certificates of deposit represent contractual cash flows, discounted to present value using interest rates currently offered on deposits with similar characteristics and remaining maturities.
Borrowings. The fair values of borrowings consisting of FHLB advances were estimated by discounting future cash flows using market discount rates for borrowings with similar characteristics, terms and remaining maturities.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
3. Earnings per Share
Basic earnings per share ("EPS") is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. For purposes of calculating basic EPS, weighted average common shares outstanding excludes treasury stock, unallocated employee stock ownership plan shares that have not been committed for release and deferred compensation obligations required to be settled in shares of Company stock.
Diluted EPS is computed using the same method as basic EPS and reflects the potential dilution which could occur if stock options and unvested shares were exercised and converted into common stock. The potentially diluted shares would then be included in the weighted average number of shares outstanding for the period using the treasury stock method.
The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations for the three and ninesix months ended SeptemberJune 30, 20202021 and 2019:2020:
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | For the Nine Months Ended September 30, |
| 2020 | | 2019 | | 2020 | | 2019 |
| (Dollars in thousands, except per share data) |
| | | | | | | |
Net income | $ | 15,087 | | | $ | 14,218 | | | $ | 36,949 | | | $ | 41,168 | |
Shares: | | | | | | | |
Weighted average shares outstanding - basic | 110,983,871 | | | 111,371,754 | | | 110,177,736 | | | 111,486,179 | |
Weighted average dilutive shares outstanding | 0 | | | 0 | | | 0 | | | 0 | |
Weighted average shares outstanding - diluted | 110,983,871 | | | 111,371,754 | | | 110,177,736 | | | 111,486,179 | |
Earnings per share: | | | | | | | |
Basic | $ | 0.14 | | | $ | 0.13 | | | $ | 0.34 | | | $ | 0.37 | |
Diluted | $ | 0.14 | | | $ | 0.13 | | | $ | 0.34 | | | $ | 0.37 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
3. Earnings per Share (continued) | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| 2021 | | 2020 | | 2021 | | 2020 |
| (Dollars in thousands, except per share data) |
| | | | | | | |
Net income | $ | 26,688 | | | $ | 15,097 | | | $ | 47,733 | | | $ | 21,862 | |
Shares: | | | | | | | |
Weighted average shares outstanding - basic | 104,537,656 | | | 111,102,306 | | | 105,253,661 | | | 109,770,239 | |
Weighted average dilutive shares outstanding | 0 | | | 0 | | | 0 | | | 0 | |
Weighted average shares outstanding - diluted | 104,537,656 | | | 111,102,306 | | | 105,253,661 | | | 109,770,239 | |
Earnings per share: | | | | | | | |
Basic | $ | 0.26 | | | $ | 0.14 | | | $ | 0.45 | | | $ | 0.20 | |
Diluted | $ | 0.26 | | | $ | 0.14 | | | $ | 0.45 | | | $ | 0.20 | |
ForDuring the three and ninesix months ended SeptemberJune 30, 2021, the average number of stock options which were anti-dilutive and were not included in the computation of diluted earnings per share totaled 466,265 and 321,263, respectively. During the three and six months ended June 30, 2020, the average number of stock options which were anti-dilutive and were not included in the computation of diluted earnings per share totaled 2,272,0601,494,367 and 1,436,476,1,101,780, respectively.
For the three and nine months ended September 30, 2019 the average number of stock options which were anti-dilutive and were not included in the computation of diluted earnings per share totaled 790,000 and 310,000, respectively.
4. 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, authorized the purchase of up to 4,000,000 shares, or approximately 3.5%, of the Company's then issued and outstanding common stock. On December 5, 2019, the Company announced that itsthe Board of Directors had expanded its stock repurchase program to authorize the purchase of an additional 3,000,000 shares of the Company's outstanding common stock in addition to the shares remaining under the repurchase program announced on June 11, 2019. On April 23, 2020, the Company completed the repurchases under these stock repurchase programs.
On September 10, 2020, the Company announced that its Board of Directors authorized the Company's second stock repurchase program for the purchase of up to 5,000,000 shares, or approximately 4.3%, of the Company's issued and outstanding common stock, commencing on September 15, 2020. On February 1, 2021, the Company announced that its Board of Directors authorized the Company's third stock repurchase program to acquire up to 5,000,000 shares, or approximately 4.5%, of the Company's then issued and outstanding common stock, commencing upon completion of the Company's second stock repurchase program. On February 5, 2021, the Company completed the repurchases under the second stock repurchase program.
During the three and ninesix months ended SeptemberJune 30, 2020,2021, the Company repurchased 624,9321,471,501 shares at a cost of approximately $6.9$25.7 million, or $11.08$17.47 per share, and 4,081,1323,470,040 shares, at a cost of approximately $60.3$58.5 million, or $14.78$16.87 per share, respectively, under these programs. During the three and ninesix months ended SeptemberJune 30, 2019,2020, the Company repurchased 2,478,400 and 2,742,300899,074 shares respectively, at a cost of approximately $38.2$13.0 million, or $15.42$14.46 per share, and 3,456,200 shares at a cost of approximately $42.1$53.4 million, or $15.35$15.44 per share, respectively.respectively, under these programs. Repurchased shares are held as treasury stock and are available for general corporate purposes.
5. Summary of Significant Accounting Policies
Accounting Pronouncement Adopted in 2021
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
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
5. Summary of Significant Accounting Policies
Accounting PronouncementsPronouncement Adopted in 20202021 (continued)
In October 2018, the FASB issued ASU No. 2018-16, Derivatives and Hedging (Topic 815)- Inclusionexplanation of the Secured Overnight Financing Rate ("SOFR") Overnight Index Swap ("OIS") Ratereasons 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 Benchmark Interest Rate for Hedge Accounting Purposes. This ASU permitsone-percentage-point change in assumed health care cost trend rates on the use(a) aggregate of the OIS rate based upon SOFR as a U.S. benchmarkservice and interest ratecost components of net periodic benefit costs and (b) benefit obligation 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 thispost-retirement health care benefits. ASU are required to be adopted concurrently with the amendments in ASU No. 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities, which was issued in August 2017. The2018-14 is effective date for this ASU for the Company is for fiscal years beginning after December 15, 2019,2020, including interim reporting periods within that reporting period, with early adoption including adoption in an interim period permitted. The amendments should be adopted on a prospective basis for qualifying new or redesignated hedging relationships entered into on or after date of adoption. The Company adopted this guidanceASU effective January 1, 2020.2021. The update will be applied on a retrospective basis to disclosures with regard to employee benefit plans. The adoption of this ASUupdate did not have a materialsignificant impact on the Company's consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820):Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The purpose of this updated guidance is to improve the effectiveness and disclosures in the notes to the financial statements. The ASU removes the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy; removes the policy for timing of transfers between levels; and removes the disclosure related to the valuation process for Level 3 fair value measurements. The ASU also modifies existing disclosure requirements which relate to the disclosure for investments in certain entities which calculate net asset value and clarifies the disclosure about uncertainty in the measurements as of the reporting date. For all entities, the effective date for this guidance is fiscal years beginning after December 15, 2019, including interim periods within the reporting period, with early adoption permitted. Entities are also allowed to elect early adoption of the eliminated or modified disclosure requirements and delay adoption of the new disclosure requirements until their effective date. The Company adopted this guidance effective January 1, 2020. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.
In March 2017, the FASB issued ASU No. 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20):Premium Amortization on Purchased Callable Debt Securities. This guidance shortens the amortization period for premiums on callable debt securities by requiring that premiums be amortized to the first (or earliest) call date instead of as an adjustment to the yield over the contractual life. This change more closely aligns the accounting with the economics of a callable debt security and the amortization period with expectations that already are included in market pricing on callable debt securities. This guidance does not change the accounting for discounts on callable debt securities, which will continue to be amortized to the maturity date. This guidance includes only instruments that are held at a premium and have explicit call features. It does not include instruments that contain prepayment features, such as mortgage backed securities; nor does it include call options that are contingent upon future events or in which the timing or amount to be paid is not fixed. The effective date for this ASU for the Company is fiscal years beginning after December 15, 2019, including interim periods within the reporting period, with early adoption permitted. Transition is on a modified retrospective basis with an adjustment to retained earnings as of the beginning of the period of adoption. The Company adopted this guidance effective January 1, 2020. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.
In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The main objective of this guidance is to simplify the accounting for goodwill impairment by requiring that impairment charges be based upon the first step in the current two-step impairment test under ASC 350. Currently, if the fair value of a reporting unit is lower than its carrying amount (Step 1), an entity calculates any impairment charge by comparing the implied fair value of goodwill with its carrying amount (Step 2). The implied fair value of goodwill is calculated by deducting the fair value of all assets and liabilities of the reporting unit from the reporting unit’s fair value as determined in Step 1. To determine the implied fair value of goodwill, entities estimate the fair value of any unrecognized intangible assets and any corporate-level assets or liabilities that were included in the determination of the carrying amount and fair value of the reporting unit in Step 1. Under this guidance, if a reporting unit’s carrying amount exceeds its fair value, an entity will record an impairment charge based on that difference. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. This guidance eliminates the requirement to calculate a goodwill impairment charge using Step 2. This guidance does not change the guidance on completing Step 1 of the goodwill impairment test. Under this guidance, an entity will still be able to perform the current optional qualitative goodwill impairment assessment before determining whether to proceed to Step 1. The guidance in the ASU was applied prospectively and is effective for the Company for annual and interim impairment tests performed in periods beginning after December 15, 2019. The Company adopted this guidance effective January 1, 2020. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
5. Summary of Significant Accounting Policies (continued)
Accounting Pronouncements Adopted in 2020 (continued)
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This guidance requires all lessees to recognize a lease liability and a right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date for leases classified as operating leases as well as finance leases. The update also requires new quantitative disclosures related to leases in the Company's consolidated financial statements. There are also practical expedients in this update related to leases that commenced before the effective date, initial direct costs and the use of hindsight to extend or terminate a lease or purchase a leased asset. Lessor accounting remains largely unchanged under this new guidance. In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842)-Land Easement Practical Expedient for Transition to Topic 842, which provides an optional practical expedient to not evaluate land easements which were existing or expired before the adoption of Topic 842 that were not accounted for as leases under Topic 840. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases (Topic 842) -Targeted Improvements which provides entities with an optional transition method under which comparative periods presented in the financial statements will continue to be in accordance with current Topic 840, Leases, and a practical expedient to not separate non-lease components from the associated lease component. The guidance is effective for the Company for annual periods beginning after December 15, 2019, including interim periods within that reporting period. 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 selected a software platformto support the recording, accounting and disclosure requirements of the new lease guidance. Upon adoption, the Company recorded a right-of-use asset and lease liability as of January 1, 2020. See note 10 for more information regarding adoption.
Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("CECL"), further amended by ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. Topic 326 pertains to the measurement of credit losses on financial instruments. This update requires the measurement of all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better determine their credit loss estimates. This update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. This update is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2019.
The Company elected to defer the adoption of the CECL methodology until December 31, 2020 as permitted by the recently enacted Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). In late December 2020, the Consolidated Appropriations Act, 2021 was enacted, and extended certain provisions of the CARES Act, which allowed the Company to extend the adoption of CECL until January 1, 2022. The Company will adoptelected to extend its adoption of CECL at the earlier of December 31, 2020 or when the national emergency concerning the COVID-19 outbreak has concluded. The Companyin accordance with this legislation, and will adopt the above mentioned ASUs related to Financial Instruments -Credit Losses (Topic 326) using a modified retrospective approach. Our CECL methodology includes the following key factors and assumptions for all loan portfolio segments:
•a historical loss period, which represents a full economic credit cycle utilizing internal loss experience, as well as industry and peer historical loss data;
•a single economic scenario with a reasonable and supportable forecast period of four to six quarters based on management’s current review of macroeconomic factors and the reliability of extended economic forecasts over different time horizons;
•a reversion to historical mean period (after the reasonable and supportable forecast period) using a straight-line approach that extends through the shorter of six quarters or the end of the remaining contractual term; and
•expected prepayment rates based on a combination of our historical experience and market observations.
Based on several analyses performed, as well as an implementation analysis utilizing existing exposures and forecasts of macroeconomic conditions at SeptemberJune 30, 2020,2021, we currently expect the adoption of ASU 2016-13 will result in an increasea decrease between 5%15% and 10%25% in our allowance for loan losses and our reserves for unfunded commitments.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
5. Summary of Significant Accounting Policies (continued)
Accounting Pronouncements Not Yet Adopted (continued)
As part of the implementation of the ASU, the Company will reconcile historical loan data, determine segmentation of the loan portfolio for application of the CECL calculation, determine the key assumptions, select calculation methods, and establish an internal control framework. We are currently finalizing the execution of our implementation controls and enhancing process documentation.
The expected increasedecrease in the allowance for loan losses and reserve for unfunded commitments is a result of the change from an incurred loss model, which encompasses allowances for current known and inherent losses within the portfolio, to an expected loss model, which encompasses allowances for losses expected to be incurred over the life of the portfolio. Furthermore, ASU 2016-13
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
5. Summary of Significant Accounting Policies
Accounting Pronouncements Not Yet Adopted (continued)
will necessitate that we establish an allowance for expected credit losses for certain debt securities and other financial assets; however, we do not expect these allowances to be significant.
Future amounts of provision expense related to our allowance for loan losses and reserves for unfunded commitments will depend on the size and composition of our loan portfolio, future economic conditions and borrowers’ payment performance. Future amounts of provision related our debt securities will depend on the composition of our securities portfolio and current market conditions.
The adoption of ASU 2016-13 is not expected to have a significant impact on our regulatory capital ratios.
Upon adoption, any impact to the allowance for credit losses as of January 1, 2022, currently the allowance for loan losses, will be reflected as an adjustment, net of tax, to retained earnings, net of tax.earnings.
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, and as its adoption is only disclosure related, does not expect it will have a significant impact on the Company's consolidated financial statements.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
6. Debt Securities Available for Sale
Debt securities available for sale at SeptemberJune 30, 20202021 and December 31, 20192020 are summarized as follows:
| | | September 30, 2020 | | June 30, 2021 |
| | 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 | U.S. government and agency obligations | $ | 29,421 | | | $ | 1,247 | | | $ | 0 | | | $ | 30,668 | | U.S. government and agency obligations | $ | 39,023 | | | $ | 913 | | | $ | (80) | | | $ | 39,856 | |
Mortgage-backed securities and collateralized mortgage obligations | Mortgage-backed securities and collateralized mortgage obligations | 1,095,120 | | | 39,429 | | | (443) | | | 1,134,106 | | Mortgage-backed securities and collateralized mortgage obligations | 1,495,440 | | | 28,231 | | | (5,396) | | | 1,518,275 | |
Municipal obligations | Municipal obligations | 1,870 | | | 15 | | | 0 | | | 1,885 | | Municipal obligations | 19,281 | | | 22 | | | 0 | | | 19,303 | |
Corporate debt securities | Corporate debt securities | 72,590 | | | 2,096 | | | (505) | | | 74,181 | | Corporate debt securities | 62,705 | | | 2,424 | | | (150) | | | 64,979 | |
Trust preferred securities | 5,000 | | | 0 | | | (540) | | | 4,460 | | |
| | $ | 1,204,001 | | | $ | 42,787 | | | $ | (1,488) | | | $ | 1,245,300 | | |
| | | $ | 1,616,449 | | | $ | 31,590 | | | $ | (5,626) | | | $ | 1,642,413 | |
| | | December 31, 2019 | | December 31, 2020 |
| | 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 | U.S. government and agency obligations | $ | 42,081 | | | $ | 321 | | | $ | (16) | | | $ | 42,386 | | U.S. government and agency obligations | $ | 24,425 | | | $ | 1,124 | | | $ | 0 | | | $ | 25,549 | |
Mortgage-backed securities and collateralized mortgage obligations | Mortgage-backed securities and collateralized mortgage obligations | 968,165 | | | 12,981 | | | (1,265) | | | 979,881 | | Mortgage-backed securities and collateralized mortgage obligations | 1,163,613 | | | 37,343 | | | (562) | | | 1,200,394 | |
Municipal obligations | Municipal obligations | 2,284 | | | 1 | | | (1) | | | 2,284 | | Municipal obligations | 16,845 | | | 17 | | | 0 | | | 16,862 | |
Corporate debt securities | Corporate debt securities | 68,613 | | | 945 | | | (378) | | | 69,180 | | Corporate debt securities | 67,628 | | | 2,264 | | | (415) | | | 69,477 | |
Trust preferred securities | Trust preferred securities | 5,000 | | | 0 | | | (395) | | | 4,605 | | Trust preferred securities | 5,000 | | | 0 | | | (330) | | | 4,670 | |
| | $ | 1,086,143 | | | $ | 14,248 | | | $ | (2,055) | | | $ | 1,098,336 | | | $ | 1,277,511 | | | $ | 40,748 | | | $ | (1,307) | | | $ | 1,316,952 | |
The amortized cost and fair value of debt securities available for sale at SeptemberJune 30, 2020,2021, by contractual final maturity, is shown below. Expected maturities may differ from contractual maturities due to prepayment or early call options exercised by the issuer.
| | | | | | | | | | | |
| September 30, 2020 |
| Amortized Cost | | Fair Value |
| (In thousands) |
| | | |
One year or less | $ | 16,399 | | | $ | 16,416 | |
More than one year to five years | 42,422 | | | 44,295 | |
More than five years to ten years | 49,590 | | | 50,000 | |
More than ten years | 470 | | | 483 | |
| $ | 108,881 | | | $ | 111,194 | |
Mortgage-backed securities and collateralized mortgage obligations | 1,095,120 | | | 1,134,106 | |
| $ | 1,204,001 | | | $ | 1,245,300 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
6. Debt Securities Available for Sale (continued)
| | | | | | | | | | | |
| June 30, 2021 |
| Amortized Cost | | Fair Value |
| (In thousands) |
| | | |
One year or less | $ | 15,118 | | | $ | 15,118 | |
More than one year to five years | 69,279 | | | 71,911 | |
More than five years to ten years | 36,612 | | | 37,109 | |
| | | |
| $ | 121,009 | | | $ | 124,138 | |
Mortgage-backed securities and collateralized mortgage obligations | 1,495,440 | | | 1,518,275 | |
| $ | 1,616,449 | | | $ | 1,642,413 | |
Mortgage-backed securities and collateralized mortgage obligations totaling $1.1$1.5 billion at amortized cost and $1.1 billion at fair value, respectively, are not classified by maturity in the table above as their expected lives are likely to be shorter than the contractual maturity date due to principal prepayments.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
6. Debt Securities Available for Sale (continued)
During the three months ended SeptemberJune 30, 2020, there2021, the sale of 1 debt security available for sale totaled $4.7 million, resulting in a gross loss of $281,000. There were 0 sales, calls or matured debt securities available for sale.sale during the quarter.
During the six months ended June 30, 2021, the sale of a debt security available for sale totaled $4.7 million, resulting in a gross loss of $281,000. Proceeds from called debt securities available for sale totaled $5.0 million, resulting in 0 gross gains or losses. Proceeds from matured debt securities available for sale totaled $210,000.
During the ninethree months ended SeptemberJune 30, 2020, there were 0 sales of debt securities available for sale. Proceeds from called debt securities available for sale totaled $5.5 million, resulting in 0 gross gains or losses. Proceeds from matured debt securities available for sale totaled $5.1 million.
During the six months ended June 30, 2020, proceeds from the sale of debt securities available for sale totaled $20.8 million, resulting in $369,000 of gross gains and 0 gross losses. During the nine months ended September 30, 2020, proceedsProceeds from called debt securities available for sale totaled $6.6 million, resulting in $1,000 of gross gains and 0 gross losses. During the nine months ended September 30, 2020, proceedsProceeds from matured debt securities available for sale totaled $5.8 million.
During the three months ended September 30, 2019, proceeds from the sale of debt securities available for sale totaled $16.1 million, resulting in $1.2 million of gross gains and 0 gross losses. During the three months ended September 30, 2019, there were 0 maturities or calls of debt securities available for sale.
During the nine months ended September 30, 2019, proceeds from the sale of debt securities available for sale totaled $31.8 million, resulting in $1.5 million of gross gains and 0 gross losses. During the nine months ended September 30, 2019, proceeds from 1 matured debt security available for sale totaled $797,000. During the nine months ended September 30, 2019 there were 0 calls of debt securities available for sale.
Debt securities available for sale having a carrying value of $800.9$626.4 million and $462.0$822.2 million, at SeptemberJune 30, 20202021 and December 31, 2019,2020, respectively, were pledged as security for public funds on deposit at the Bank as required and permitted by law, pledged for outstanding borrowings at the Federal Home Loan Bank, and pledged for potential borrowings at the Federal Reserve Bank of New York.
The following tables summarize the fair value and gross unrealized losses of those securities that reported an unrealized loss at SeptemberJune 30, 20202021 and December 31, 20192020 and if the unrealized loss position was continuous for the twelve months prior to those respective dates:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2020 |
| 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) |
| | | | | | | | | | | |
| | | | | | | | | | | |
Mortgage-backed securities and collateralized mortgage obligations | $ | 138,268 | | | $ | (367) | | | $ | 36,897 | | | $ | (76) | | | $ | 175,165 | | | $ | (443) | |
| | | | | | | | | | | |
Corporate debt securities | 993 | | | (7) | | | 4,503 | | | (498) | | | 5,496 | | | (505) | |
Trust preferred securities | 0 | | | 0 | | | 4,459 | | | (540) | | | 4,459 | | | (540) | |
| $ | 139,261 | | | $ | (374) | | | $ | 45,859 | | | $ | (1,114) | | | $ | 185,120 | | | $ | (1,488) | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
6. Debt Securities Available for Sale (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2021 |
| 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 | $ | 4,902 | | | $ | (80) | | | $ | 0 | | | $ | 0 | | | $ | 4,902 | | | $ | (80) | |
Mortgage-backed securities and collateralized mortgage obligations | 382,594 | | | (5,006) | | | 21,245 | | | (390) | | | 403,839 | | | (5,396) | |
| | | | | | | | | | | |
Corporate debt securities | 0 | | | 0 | | | 4,850 | | | (150) | | | 4,850 | | | (150) | |
Trust preferred securities | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
| $ | 387,496 | | | $ | (5,086) | | | $ | 26,095 | | | $ | (540) | | | $ | 413,591 | | | $ | (5,626) | |
| | | December 31, 2019 | | December 31, 2020 |
| | 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 | $ | 5,106 | | | $ | (13) | | | $ | 4,988 | | | $ | (3) | | | $ | 10,094 | | | $ | (16) | | |
| Mortgage-backed securities and collateralized mortgage obligations | Mortgage-backed securities and collateralized mortgage obligations | 178,665 | | | (946) | | | 58,208 | | | (319) | | | 236,873 | | | (1,265) | | Mortgage-backed securities and collateralized mortgage obligations | $ | 117,978 | | | $ | (481) | | | $ | 24,018 | | | $ | (81) | | | $ | 141,996 | | | $ | (562) | |
Municipal obligations | 696 | | | (1) | | | 0 | | | 0 | | | 696 | | | (1) | | |
| Corporate debt securities | Corporate debt securities | 2,588 | | | (5) | | | 4,627 | | | (373) | | | 7,215 | | | (378) | | Corporate debt securities | 9,845 | | | (155) | | | 5,740 | | | (260) | | | 15,585 | | | (415) | |
Trust preferred securities | Trust preferred securities | 0 | | | 0 | | | 4,605 | | | (395) | | | 4,605 | | | (395) | | Trust preferred securities | 0 | | | 0 | | | 4,670 | | | (330) | | | 4,670 | | | (330) | |
| | $ | 187,055 | | | $ | (965) | | | $ | 72,428 | | | $ | (1,090) | | | $ | 259,483 | | | $ | (2,055) | | | $ | 127,823 | | | $ | (636) | | | $ | 34,428 | | | $ | (671) | | | $ | 162,251 | | | $ | (1,307) | |
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 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 SeptemberJune 30, 2020,2021, nor is it more likely than not that the Company will be required to sell the securities before the anticipated recovery.
The number of securities in an unrealized loss position at SeptemberJune 30, 20202021 totaled 41,65, compared with 9740 at December 31, 2019.2020. All temporarily impaired securities were investment grade at Septemberas of June 30, 20202021 and December 31, 2019.2020.
The Company did 0t record an other-than-temporary impairment charge on debt securities available for sale during the three and ninesix months ended SeptemberJune 30, 20202021 and 2019.2020.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
7. Debt Securities Held to Maturity
Debt securities held to maturity at SeptemberJune 30, 20202021 and December 31, 20192020 are summarized as follows:
| | | September 30, 2020 | | June 30, 2021 |
| | 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 | U.S. government and agency obligations | $ | 5,000 | | | $ | 4 | | | $ | 0 | | | $ | 5,004 | | U.S. government and agency obligations | $ | 34,870 | | | $ | 2 | | | $ | (183) | | | $ | 34,689 | |
Mortgage-backed securities and collateralized mortgage obligations | Mortgage-backed securities and collateralized mortgage obligations | $ | 267,712 | | | $ | 15,754 | | | $ | (31) | | | $ | 283,435 | | Mortgage-backed securities and collateralized mortgage obligations | 367,275 | | | 13,280 | | | (211) | | | 380,344 | |
| | $ | 272,712 | | | $ | 15,758 | | | $ | (31) | | | $ | 288,439 | | | $ | 402,145 | | | $ | 13,282 | | | $ | (394) | | | $ | 415,033 | |
| | | December 31, 2019 | | December 31, 2020 |
| | 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 | U.S. government and agency obligations | $ | 20,000 | | | $ | 26 | | | $ | (66) | | | $ | 19,960 | | U.S. government and agency obligations | $ | 5,000 | | | $ | 1 | | | $ | 0 | | | $ | 5,001 | |
Mortgage-backed securities and collateralized mortgage obligations | Mortgage-backed securities and collateralized mortgage obligations | 265,756 | | | 4,048 | | | (259) | | | 269,545 | | Mortgage-backed securities and collateralized mortgage obligations | 257,720 | | | 14,372 | | | (2) | | | 272,090 | |
| | $ | 285,756 | | | $ | 4,074 | | | $ | (325) | | | $ | 289,505 | | | $ | 262,720 | | | $ | 14,373 | | | $ | (2) | | | $ | 277,091 | |
At September 30, 2020, theThe amortized cost and fair value of U.S. government and agency obligations maturing in more than one yeardebt held to five years totaled $5.0 million, respectively.maturity at June 30, 2021, by contractual final maturity, is shown below. Expected maturities may differ from contractual maturities due to prepayment or early call options exercised by the issuer.
| | | | | | | | | | | |
| June 30, 2021 |
| Amortized Cost | | Fair Value |
| (In thousands) |
| | | |
| | | |
More than one year to five years | $ | 14,875 | | | $ | 14,877 | |
More than five years to ten years | 19,995 | | | 19,812 | |
| | | |
| 34,870 | | | 34,689 | |
Mortgage-backed securities and collateralized mortgage obligations | 367,275 | | | 380,344 | |
| $ | 402,145 | | | $ | 415,033 | |
Mortgage-backed securities and collateralized mortgage obligations totaling $267.7$367.3 million at amortized cost, and $283.4$380.3 million at fair value at SeptemberJune 30, 2020,2021, are not classified by maturity as their expected lives are likely to be shorter than the contractual maturity date due to principal prepayments.
During the three and ninesix months ended SeptemberJune 30, 2021, there were 0 sales or maturities of debt securities held to maturity. During the three months ended June 30, 2021, proceeds from 1 called debt security held to maturity totaled $125,000, resulting in 0 gross gain or loss. During the six months ended June 30, 2021, proceeds from called debt securities held to maturity totaled $5.1 million, resulting in 0 gross gains or losses.
During the three and six months ended June 30, 2020, there were 0 sales or maturities of debt securities held to maturity. During both the three and ninesix months ended SeptemberJune 30, 2020, proceeds from called debt securities held to maturity totaled $20.0 million. NaNmillion, resulting in 0 gross gains or losses were recognized on the securities which were called.
During the three months ended September 30, 2019, there were 0 sales or maturities of debt securities held for 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 0 gross losses.
During the nine months ended September 30, 2019, there were 0 sales or maturities of debt securities held for maturity. During the nine months ended September 30, 2019, proceeds from calls of debt securities held
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to maturity totaled $28.4 million, resulting in $24,000 of gross gains and 0 gross losses.Unaudited Consolidated Financial Statements
7. Debt Securities Held to Maturity (continued)
Debt securities held to maturity having a carrying value of $235.3$187.9 million and $236.0$220.5 million, at SeptemberJune 30, 20202021 and December 31, 2019,2020, respectively, were pledged as security for public funds on deposit at the Bank as required and permitted by law, pledged for outstanding borrowings at the Federal Home Loan Bank, and pledged for potential borrowings at the Federal Reserve Bank of New York.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
7. Debt Securities Held to Maturity (continued)
The following tables summarize the fair value and gross unrealized losses of those securities that reported an unrealized loss at SeptemberJune 30, 20202021 and December 31, 20192020 and if the unrealized loss position was continuous for the twelve months prior to those respective dates:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2020 |
| 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) |
| | | | | | | | | | | |
| | | | | | | | | | | |
Mortgage-backed securities and collateralized mortgage obligations | $ | 2,695 | | | $ | (6) | | | $ | 1,883 | | | $ | (25) | | | $ | 4,578 | | | $ | (31) | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2021 |
| 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 | $ | 19,812 | | | $ | (183) | | | $ | 0 | | | $ | 0 | | | $ | 19,812 | | | $ | (183) | |
Mortgage-backed securities and collateralized mortgage obligations | 11,347 | | | (211) | | | 0 | | | 0 | | | 11,347 | | | (211) | |
| $ | 31,159 | | | $ | (394) | | | $ | 0 | | | $ | 0 | | | $ | 31,159 | | | $ | (394) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 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 | $ | 9,934 | | | $ | (66) | | | $ | 0 | | | $ | 0 | | | $ | 9,934 | | | $ | (66) | |
Mortgage-backed securities and collateralized mortgage obligations | 27,911 | | | (251) | | | 772 | | | (8) | | | 28,683 | | | (259) | |
| $ | 37,845 | | | $ | (317) | | | $ | 772 | | | $ | (8) | | | $ | 38,617 | | | $ | (325) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2020 |
| 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) |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Mortgage-backed securities and collateralized mortgage obligations | $ | 2,176 | | | $ | (2) | | | $ | 0 | | | $ | 0 | | | $ | 2,176 | | | $ | (2) | |
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 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 SeptemberJune 30, 2020,2021, nor is it more likely than not that the Company will be required to sell the securities before the anticipated recovery.
There were 3The number of securities in an unrealized loss position at SeptemberJune 30, 2020,2021 totaled 7, compared with 222 at December 31, 2019.2020. All temporarily impaired securities were investment grade at Septemberas of June 30, 20202021 and December 31, 2019.2020.
The Company did 0t record an other-than-temporary impairment charge on debt securities held to maturity during the three and ninesix months ended SeptemberJune 30, 20202021 and 2019.2020.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
8. Equity Securities at Fair Value
The Company has an equity securities portfolio which consists of common stock in other financial institutions, a payment technology company, a community bank correspondent services company, and preferred stock in U.S. Government agencies which are reported at fair value on the Company's Consolidated Statements of Financial Condition. The fair value of the equities portfolio at SeptemberJune 30, 20202021 and December 31, 20192020 was $4.7$4.1 million and $2.9$5.4 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 Consolidated Statements of Changes in Stockholders' Equity. The Company recorded a net (decrease) increasedecrease in the fair value of equity securities of $(4,000)$778,000 and $55,000,$1.4 million, during the three and ninesix months ended SeptemberJune 30, 2020,2021, respectively, as a component of non-interest income. During the three and ninesix months ended SeptemberJune 30, 2019,2020, the Company recorded a net (decrease) increase in the fair value of equity securities of $(59,000)$643,000 and $189,000,$59,000, respectively, as a component of non-interest income.
During the three and ninesix months ended SeptemberJune 30, 2021 and 2020, there were 0 sales of equity securities. During the three months ended September 30, 2019, proceeds from the sale of 1 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 gross gains of $196,000 and 0 gross losses.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
9. Loans Receivable and Allowance for Loan Losses
Loans receivable at SeptemberJune 30, 20202021 and December 31, 20192020 are summarized as follows:
| | | September 30, | | December 31, | | June 30, | | December 31, |
| | 2020 | | 2019 | | 2021 | | 2020 |
| | (In thousands) | | (In thousands) |
Real estate loans: | Real estate loans: | | Real estate loans: | |
One-to-four family | One-to-four family | $ | 2,053,293 | | | $ | 2,077,079 | | One-to-four family | $ | 1,867,924 | | | $ | 1,940,327 | |
Multifamily and commercial | Multifamily and commercial | 2,863,718 | | | 2,919,985 | | Multifamily and commercial | 3,115,054 | | | 2,817,965 | |
Construction | Construction | 307,659 | | | 298,942 | | Construction | 261,159 | | | 328,711 | |
Commercial business loans | Commercial business loans | 884,931 | | | 483,215 | | Commercial business loans | 471,700 | | | 752,870 | |
Consumer loans: | Consumer loans: | | Consumer loans: | |
Home equity loans and advances | Home equity loans and advances | 340,962 | | | 388,127 | | Home equity loans and advances | 278,078 | | | 321,177 | |
Other consumer loans | Other consumer loans | 1,538 | | | 1,960 | | Other consumer loans | 1,158 | | | 1,497 | |
Total gross loans | Total gross loans | 6,452,101 | | | 6,169,308 | | Total gross loans | 5,995,073 | | | 6,162,547 | |
Purchased credit-impaired loans | 6,706 | | | 7,021 | | |
Purchased credit-impaired ("PCI") loans | | Purchased credit-impaired ("PCI") loans | 3,116 | | | 6,345 | |
Net deferred loan costs, fees and purchased premiums and discounts | Net deferred loan costs, fees and purchased premiums and discounts | 10,038 | | | 21,237 | | Net deferred loan costs, fees and purchased premiums and discounts | 19,613 | | | 12,878 | |
Loans receivable | Loans receivable | $ | 6,468,845 | | | $ | 6,197,566 | | Loans receivable | $ | 6,017,802 | | | $ | 6,181,770 | |
The Company had 0 loans held-for-sale at June 30, 2021. The Company had $4.1 million of small business administration loans held-for-sale at September 30, 2020. The Company had 0SBA loans held-for-sale at December 31, 2019.2020. During the three months ended SeptemberJune 30, 2021, the Company sold $14.4 million of one-to-four family real estate loans and home equity loans held-for-sale, resulting in gross gains of $277,000 and 0 gross losses. During the three months ended June 30, 2021, the Company sold $244.7 million of SBA loans held-for-sale included in commercial business loans, resulting in gross gains of $7.7 million and 0 gross losses. During the three months ended June 30, 2021, the Company also sold a $31,000 construction loan held-for-sale resulting in 0 gross gain or loss. During the six months ended June 30, 2021, the Company sold $15.6 million, $4.1 million, $248.9 million, and $6.4 million of one-to-four family real estate loans and home equity loans, multifamily and commercial real estate loans, commercial business and SBA loans, and construction loans held-for-sale, respectively, resulting in gross gains of $8.4 million and 0 gross losses.
During the three months ended June 30, 2020, the Company sold $7.8$52.4 million of one-to-four family real estate loans held-for-sale resulting in gross gains of $327,000$740,000 and 0 gross losses. During the ninesix months ended SeptemberJune 30, 2020, the Company sold $111.8$104.0 million of one-to-four family real estate loans held-for-sale resulting in gross gains of $1.7$1.4 million and 0 gross losses.
During the three and six months ended June 30, 2021, 0 loans included in loans receivable were sold by the Company. During the three months ended SeptemberJune 30, 2019,2020, the Company sold $49.1a construction loan totaling $6.7 million included in loans receivable, resulting in 0 gross gain or loss. During the six months ended June 30, 2020, the Company sold $8.8 million and $7.3 million of one-to-four family real estate and home equity loans, held-for-saleand commercial business loans, respectively, included in loans receivable, resulting in gross gains of $382,000$82,000 and 0 gross losses. During the nine months ended September 30, 2019, the Company sold $94.8 million of one-to-four family real estate loans held-for-sale resulting in gross gains of $710,000$55,000, respectively, and 0 gross losses.
During the three and six months ended SeptemberJune 30, 2020, the Company sold 1 construction loan totaling $5.8 million included in loans receivable, resulting in 0 gross gains or losses. During the three months ended September 30, 2020, the Company sold 1 small business administration loan totaling $274,000 included in loans receivable, resulting in a gross gain of $23,000. During the nine months ended September 30, 2020, the Company sold $8.8 million of one-to-four family real estate loans, resulting in gross gains of $82,000 and 0 gross losses. During the nine months ended September 30, 2020, the Company sold construction loans totaling $12.5 million included in loans receivable, resulting in 0 gross gains or gross losses. During the nine months ended September 30, 2020, the Company sold commercial loans and small business administration loans totaling $7.6 million, resulting in gross gains of $78,000 and 0 gross losses. 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 real estate and home equity loans included in loans receivable, resulting in 0 gross gains or gross losses. During the three and nine months ended September 30, 2019, the Company sold $5.5 million of commercial real estate loans included in loans receivable, resulting in 0 gross gains or gross losses.
During the three and nine months ended September 30, 2020, there were 0 loans purchased by the Company. During the three months ended September 30, 2019, there were 0 loans purchased by the Company. During the nine months ended September 30, 2019,2021, the Company purchased $5.0$71.6 million of one-to-four family real estate loan from third partiesmultifamily and purchased $24.9 million of commercial real estate loans from third parties.
During the three and six months ended June 30, 2020, 0 loans were purchased by the Company.
At SeptemberJune 30, 2021 and December 31, 2020, commercial business loans included $474.9$91.1 million and $344.4 million, respectively, in SBA Payroll Protection Program ("PPP") loans and net deferred loan fees related to these loans totaling $11.2 million. At December 31, 2019 there were 0 SBA PPP loans.$2.3 million and $6.6 million, respectively.
The Company has entered into guarantor swaps with Freddie Mac which results in improved liquidity. During the three months ended June 30, 2021, the Company exchanged $35.6 million of loans for Freddie Mac mortgage participation certificates, resulting in gross gains of $544,000 and 0 gross losses. During the six months ended June 30, 2021, the Company exchanged $99.6 million of loans for Freddie Mac mortgage participation certificates, resulting in gross gains of $2.3 million and 0 gross losses. The Company retained the servicing of these loans. During the three and six months ended June 30, 2020, 0 loans were sold.
At June 30, 2021 and December 31, 2020, the carrying value of loans serviced by the Company for investors was $581.0 million and $598.0 million, respectively. These loans are not included in the Consolidated Statements of Financial Condition.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
9. Loans Receivable and Allowance for Loan Losses (continued)
The Company has entered into guarantor swaps with Freddie Mac which results in improved liquidity. During the three and nine months ended September 30, 2020, the Company exchanged $48.5 million of loans for Freddie Mac mortgage participation certificates, resulting in gross gains of $1.5 million and 0 gross losses. During the three months ended September 30, 2019, 0 loans were securitized. During the nine months ended September 30, 2019 the Company exchanged $21.6 million of loans for a Freddie Mac mortgage participation certificate. The Company retained the servicing of these loans.
At September 30, 2020 and December 31, 2019, the carrying value of loans serviced by the Company for investors was $602.5 million and $526.3 million, respectively.
The following tables summarize the aging of loans receivable by portfolio segment, including non-accrual loans and excluding PCI loans at SeptemberJune 30, 20202021 and December 31, 2019:2020:
| | | September 30, 2020 | | June 30, 2021 |
| | 30-59 Days | | 60-89 Days | | 90 Days or More | | Total Past Due | | Non-accrual | | Current | | Total | | 30-59 Days | | 60-89 Days | | 90 Days or More | | Total Past Due | | Non-accrual | | Current | | Total |
| | (In thousands) | | (In thousands) |
Real estate loans: | Real estate loans: | | Real estate loans: | |
One-to-four family | One-to-four family | $ | 4,347 | | | $ | 542 | | | $ | 1,760 | | | $ | 6,649 | | | $ | 2,881 | | | $ | 2,043,763 | | | $ | 2,053,293 | | One-to-four family | $ | 1,471 | | | $ | 957 | | | $ | 316 | | | $ | 2,744 | | | $ | 862 | | | $ | 1,864,318 | | | $ | 1,867,924 | |
Multifamily and commercial | Multifamily and commercial | 600 | | | 1,772 | | | 2,798 | | | 5,170 | | | 2,995 | | | 2,855,553 | | | 2,863,718 | | Multifamily and commercial | 3,893 | | | 392 | | | 2,433 | | | 6,718 | | | 2,433 | | | 3,105,903 | | | 3,115,054 | |
Construction | Construction | 80 | | | 0 | | | 0 | | | 80 | | | 0 | | | 307,579 | | | 307,659 | | Construction | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 261,159 | | | 261,159 | |
Commercial business loans | Commercial business loans | 2,910 | | | 2,643 | | | 2,698 | | | 8,251 | | | 4,536 | | | 872,144 | | | 884,931 | | Commercial business loans | 1,617 | | | 434 | | | 349 | | | 2,400 | | | 383 | | | 468,917 | | | 471,700 | |
Consumer loans: | Consumer loans: | | Consumer loans: | |
Home equity loans and advances | Home equity loans and advances | 1,610 | | | 186 | | | 323 | | | 2,119 | | | 499 | | | 338,344 | | | 340,962 | | Home equity loans and advances | 355 | | | 192 | | | 395 | | | 942 | | | 636 | | | 276,500 | | | 278,078 | |
Other consumer loans | Other consumer loans | 1 | | | 1 | | | 0 | | | 2 | | | 0 | | | 1,536 | | | 1,538 | | Other consumer loans | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 1,158 | | | 1,158 | |
Total loans | Total loans | $ | 9,548 | | | $ | 5,144 | | | $ | 7,579 | | | $ | 22,271 | | | $ | 10,911 | | | $ | 6,418,919 | | | $ | 6,452,101 | | Total loans | $ | 7,336 | | | $ | 1,975 | | | $ | 3,493 | | | $ | 12,804 | | | $ | 4,314 | | | $ | 5,977,955 | | | $ | 5,995,073 | |
| | | December 31, 2019 | | December 31, 2020 |
| | 30-59 Days | | 60-89 Days | | 90 Days or More | | Total Past Due | | Non-accrual | | Current | | Total | | 30-59 Days | | 60-89 Days | | 90 Days or More | | Total Past Due | | Non-accrual | | Current | | Total |
| | (In thousands) | | (In thousands) |
Real estate loans: | Real estate loans: | | Real estate loans: | |
One-to-four family | One-to-four family | $ | 6,249 | | | $ | 2,132 | | | $ | 1,638 | | | $ | 10,019 | | | $ | 1,732 | | | $ | 2,065,328 | | | $ | 2,077,079 | | One-to-four family | $ | 3,068 | | | $ | 912 | | | $ | 1,901 | | | $ | 5,881 | | | $ | 2,637 | | | $ | 1,931,809 | | | $ | 1,940,327 | |
Multifamily and commercial | Multifamily and commercial | 626 | | | 1,210 | | | 716 | | | 2,552 | | | 716 | | | 2,916,717 | | | 2,919,985 | | Multifamily and commercial | 15,645 | | | 0 | | | 1,238 | | | 16,883 | | | 1,873 | | | 2,799,209 | | | 2,817,965 | |
Construction | Construction | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 298,942 | | | 298,942 | | Construction | 550 | | | 0 | | | 0 | | | 550 | | | 0 | | | 328,161 | | | 328,711 | |
Commercial business loans | Commercial business loans | 1,056 | | | 0 | | | 2,489 | | | 3,545 | | | 3,686 | | | 475,984 | | | 483,215 | | Commercial business loans | 2,343 | | | 1,056 | | | 2,453 | | | 5,852 | | | 2,968 | | | 744,050 | | | 752,870 | |
Consumer loans: | Consumer loans: | | Consumer loans: | |
Home equity loans and advances | Home equity loans and advances | 1,708 | | | 246 | | | 405 | | | 2,359 | | | 553 | | | 385,215 | | | 388,127 | | Home equity loans and advances | 1,156 | | | 696 | | | 394 | | | 2,246 | | | 678 | | | 318,253 | | | 321,177 | |
Other consumer loans | Other consumer loans | 3 | | | 0 | | | 0 | | | 3 | | | 0 | | | 1,957 | | | 1,960 | | Other consumer loans | 4 | | | 0 | | | 0 | | | 4 | | | 0 | | | 1,493 | | | 1,497 | |
Total loans | Total loans | $ | 9,642 | | | $ | 3,588 | | | $ | 5,248 | | | $ | 18,478 | | | $ | 6,687 | | | $ | 6,144,143 | | | $ | 6,169,308 | | Total loans | $ | 22,766 | | | $ | 2,664 | | | $ | 5,986 | | | $ | 31,416 | | | $ | 8,156 | | | $ | 6,122,975 | | | $ | 6,162,547 | |
The Company considers a loan to be delinquent when we have not received a payment within 30 days of its contractual due date. Generally, a loan is designated as a non-accrual loan when the payment of interest is 90 days or more in arrears of its contractual due date. Non-accruing loans are returned to accrual status after there has been a sustained period of repayment performance (generally six consecutive months of payments) and 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 SeptemberJune 30, 20202021 and December 31, 2019,2020, non-accrual loans totaled $10.9$4.3 million and $6.7$8.2 million, respectively. Included in non-accrual loans at SeptemberJune 30, 2020,2021, are 229 loans totaling $3.9 million$821,000 which are less than 90 days in arrears. At December 31, 2019, 82020, 19 loans totaling $1.5$2.2 million were less than 90 days in arrears.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
9. Loans Receivable and Allowance for Loan Losses (continued)
At SeptemberJune 30, 20202021 and December 31, 2019,2020, there were 0 loans past due 90 days or more still accruing interest other than COVID-19 related loan forbearance and deferrals. In accordance with the CARES Act, these loans are not included in the aging of loans receivable by portfolio segment in the table above, and the Bank continues to accrue interest income during the forbearance or deferral period. If adverse information indicating that the borrower's capability of repaying all amounts due is unlikely, the interest accrual will cease.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
9. Loans Receivable and Allowance for Loan Losses (continued)
PCI loans are loans acquired at a discount primarily due to deteriorated credit quality. These loans are accounted forinitially recorded at fair value at acquisition, based upon the present value of expected future cash flows, with no related allowance for loan losses. PCI loans acquired in the Stewardship acquisition totaled $5.9$2.9 million at SeptemberJune 30, 20202021 and $6.9$6.1 million at December 31, 2019.2020. PCI loans acquired in the Roselle acquisition totaled $179,000$242,000 at SeptemberJune 30, 2021 and $246,000 at December 31, 2020.
The following table presents changes in accretable yield for PCI loans for the three and ninesix months ended SeptemberJune 30, 2020. There were no PCI loans outstanding for the three2021 and nine months ended September 30, 2019.2020.
| | | | | | | | | | | | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | Three Months Ended September 30, 2020 | | Nine Months Ended September 30, 2020 | | 2021 | | 2020 | | 2021 | | 2020 |
| | (In thousands) | | (In thousands) | | | | |
| Balance at beginning of period | Balance at beginning of period | $ | 471 | | | $ | 511 | | Balance at beginning of period | $ | 408 | | | $ | 463 | | | $ | 418 | | | $ | 511 | |
Acquisition | Acquisition | 0 | | | 58 | | Acquisition | 0 | | | 58 | | | 0 | | | 58 | |
Accretion | Accretion | (58) | | | (156) | | Accretion | (32) | | | (49) | | | (64) | | | (98) | |
Net change in expected cash flows | Net change in expected cash flows | 1 | | | 1 | | Net change in expected cash flows | (1) | | | (1) | | | 21 | | | 0 | |
Balance at end of period | Balance at end of period | $ | 414 | | | $ | 414 | | Balance at end of period | $ | 375 | | | $ | 471 | | | $ | 375 | | | $ | 471 | |
We may obtain physical possession of real estate collateralizing a residential mortgage loan via foreclosure or through an in-substance repossession. At SeptemberJune 30, 20202021 and December 31, 2019,2020, the Company had 0 real estate owned. At SeptemberJune 30, 2020 and December 31, 20192021 we had 1 and 4residential mortgage loan with a carrying value of $87,000 collateralized by residential real estate which was in the process of foreclosure. At December 31, 2020 we had 2 residential mortgage loans with carrying values totaling $180,000 and $522,000, respectively,$398,000 collateralized by residential real estate which arewere in the process of foreclosure.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes The states of New Jersey, New York and Pennsylvania issued executive orders which declared moratoriums on removing individuals from a residential property until at least two months after the COVID health crisis had ended. In response to Unaudited Consolidated Financial Statements
9. Loans Receivablethese orders, in March 2020, the Company temporarily suspended residential property foreclosure sales and Allowance for Loan Losses (continued)
The following tables summarize loans receivable (including PCI loans) and allowance for loan losses by portfolio segment and impairment method at September 30, 2020 and Decemberevictions. These moratoriums expire in these states beginning on August 31, 2019:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2020 |
| One-to-Four Family | | Multifamily and Commercial | | Construction | | Commercial Business | | Home Equity Loans and Advances | | Other Consumer Loans | | Total |
| (In thousands) |
Allowance for loan losses: | | | | | | | | | | | | | |
Individually evaluated for impairment | $ | 406 | | | $ | 550 | | | $ | 0 | | | $ | 871 | | | $ | 12 | | | $ | 0 | | | $ | 1,839 | |
Collectively evaluated for impairment | 15,369 | | | 30,439 | | | 10,534 | | | 16,631 | | | 1,314 | | | 7 | | | 74,294 | |
Loans acquired with deteriorated credit quality | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Total | $ | 15,775 | | | $ | 30,989 | | | $ | 10,534 | | | $ | 17,502 | | | $ | 1,326 | | | $ | 7 | | | $ | 76,133 | |
| | | | | | | | | | | | | |
Total loans: | | | | | | | | | | | | | |
Individually evaluated for impairment | $ | 7,230 | | | $ | 32,090 | | | $ | 0 | | | $ | 4,664 | | | $ | 1,862 | | | $ | 0 | | | $ | 45,846 | |
Collectively evaluated for impairment | 2,046,063 | | | 2,831,628 | | | 307,659 | | | 880,267 | | | 339,100 | | | 1,538 | | | 6,406,255 | |
Loans acquired with deteriorated credit quality | 291 | | | 4,923 | | | 0 | | | 1,492 | | | 0 | | | 0 | | | 6,706 | |
Total loans | $ | 2,053,584 | | | $ | 2,868,641 | | | $ | 307,659 | | | $ | 886,423 | | | $ | 340,962 | | | $ | 1,538 | | | $ | 6,458,807 | |
2021 through January 1, 2022.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
9. Loans Receivable and Allowance for Loan Losses (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2019 |
| One-to-Four Family | | Multifamily and Commercial | | Construction | | Commercial Business | | Home Equity Loans and Advances | | Other Consumer Loans | | Total |
| (In thousands) |
Allowance for loan losses: | | | | | | | | | | | | | |
Individually evaluated for impairment | $ | 484 | | | $ | 2 | | | $ | 0 | | | $ | 1,121 | | | $ | 14 | | | $ | 0 | | | $ | 1,621 | |
Collectively evaluated for impairment | 13,296 | | | 22,978 | | | 7,435 | | | 14,715 | | | 1,655 | | | 9 | | | 60,088 | |
Loans acquired with deteriorated credit quality | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Total | $ | 13,780 | | | $ | 22,980 | | | $ | 7,435 | | | $ | 15,836 | | | $ | 1,669 | | | $ | 9 | | | $ | 61,709 | |
| | | | | | | | | | | | | |
Total loans: | | | | | | | | | | | | | |
Individually evaluated for impairment | $ | 8,891 | | | $ | 2,599 | | | $ | 0 | | | $ | 5,178 | | | $ | 2,143 | | | $ | 0 | | | $ | 18,811 | |
Collectively evaluated for impairment | 2,068,188 | | | 2,917,386 | | | 298,942 | | | 478,037 | | | 385,984 | | | 1,960 | | | 6,150,497 | |
Loans acquired with deteriorated credit quality | 429 | | | 4,866 | | | 0 | | | 1,726 | | | 0 | | | 0 | | | 7,021 | |
Total loans | $ | 2,077,508 | | | $ | 2,924,851 | | | $ | 298,942 | | | $ | 484,941 | | | $ | 388,127 | | | $ | 1,960 | | | $ | 6,176,329 | |
The following tables summarize loans receivable (including PCI loans) and allowance for loan losses by portfolio segment and impairment method at June 30, 2021 and December 31, 2020: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2021 |
| One-to-Four Family | | Multifamily and Commercial | | Construction | | Commercial Business | | Home Equity Loans and Advances | | Other Consumer Loans | | Total |
| (In thousands) |
Allowance for loan losses: | | | | | | | | | | | | | |
Individually evaluated for impairment | $ | 274 | | | $ | 148 | | | $ | 0 | | | $ | 14 | | | $ | 14 | | | $ | 0 | | | $ | 450 | |
Collectively evaluated for impairment | 16,834 | | | 26,108 | | | 9,160 | | | 15,884 | | | 1,457 | | | 5 | | | 69,448 | |
Loans acquired with deteriorated credit quality | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Total | $ | 17,108 | | | $ | 26,256 | | | $ | 9,160 | | | $ | 15,898 | | | $ | 1,471 | | | $ | 5 | | | $ | 69,898 | |
| | | | | | | | | | | | | |
Total loans: | | | | | | | | | | | | | |
Individually evaluated for impairment | $ | 5,668 | | | $ | 33,995 | | | $ | 0 | | | $ | 2,124 | | | $ | 1,475 | | | $ | 0 | | | $ | 43,262 | |
Collectively evaluated for impairment | 1,862,256 | | | 3,081,059 | | | 261,159 | | | 469,576 | | | 276,603 | | | 1,158 | | | 5,951,811 | |
Loans acquired with deteriorated credit quality | 295 | | | 1,797 | | | 0 | | | 1,024 | | | 0 | | | 0 | | | 3,116 | |
Total loans | $ | 1,868,219 | | | $ | 3,116,851 | | | $ | 261,159 | | | $ | 472,724 | | | $ | 278,078 | | | $ | 1,158 | | | $ | 5,998,189 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2020 |
| One-to-Four Family | | Multifamily and Commercial | | Construction | | Commercial Business | | Home Equity Loans and Advances | | Other Consumer Loans | | Total |
| (In thousands) |
Allowance for loan losses: | | | | | | | | | | | | | |
Individually evaluated for impairment | $ | 391 | | | $ | 601 | | | $ | 0 | | | $ | 84 | | | $ | 12 | | | $ | 0 | | | $ | 1,088 | |
Collectively evaluated for impairment | 13,195 | | | 30,080 | | | 11,271 | | | 17,300 | | | 1,736 | | | 6 | | | 73,588 | |
Loans acquired with deteriorated credit quality | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Total | $ | 13,586 | | | $ | 30,681 | | | $ | 11,271 | | | $ | 17,384 | | | $ | 1,748 | | | $ | 6 | | | $ | 74,676 | |
| | | | | | | | | | | | | |
Total loans: | | | | | | | | | | | | | |
Individually evaluated for impairment | $ | 7,257 | | | $ | 32,792 | | | $ | 0 | | | $ | 3,447 | | | $ | 1,651 | | | $ | 0 | | | $ | 45,147 | |
Collectively evaluated for impairment | 1,933,070 | | | 2,785,173 | | | 328,711 | | | 749,423 | | | 319,526 | | | 1,497 | | | 6,117,400 | |
Loans acquired with deteriorated credit quality | 309 | | | 4,893 | | | 0 | | | 1,143 | | | 0 | | | 0 | | | 6,345 | |
Total loans | $ | 1,940,636 | | | $ | 2,822,858 | | | $ | 328,711 | | | $ | 754,013 | | | $ | 321,177 | | | $ | 1,497 | | | $ | 6,168,892 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
9. Loans Receivable and Allowance for Loan Losses (continued)
Loan modifications to borrowers experiencing financial difficulties that are considered troubled debt restructurings ("TDRs") primarily involve the lowering of the monthly payments on such loans through either a reduction in interest rate below a market rate, an extension of the term of the loan without a corresponding adjustment to the risk premium reflected in the interest rate, or a combination of these two methods. These modifications generally do not result in the forgiveness of principal or accrued interest. In addition, the Company attempts to obtain additional collateral or guarantor support when modifying such loans. Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible.
Section 4013 of the CARES Act, “Temporary Relief from Troubled Debt Restructurings,” allows banks to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time to account for the effects of COVID-19. The Bank elected to account for modifications on certain loans under Section 4013 of the CARES Act or, if the loan modification was not eligible under Section 4013, used the criteria in the COVID-19 guidance to determine when the loan modification was not a TDR in accordance with ASC 310-40. Guidance noted that modification or deferral programs mandated by the federal or a state government related to COVID-19 would not be in the scope of ASC 310-40, such as a state program that requires all institutions within that state to suspend mortgage payments for a specified period. These short-term loan modifications were not treated as a troubled debt restructuring during the short-term modification period if the loan was not in arrears at December 31, 2019. Furthermore, based on current evaluations, generally, we have continued the accrual of interest on these loans during the short-term modification period. The Consolidated Appropriations Act, 2021, which was enacted in late December 2020, extended certain provisions of the CARES Act, including provisions permitting loan deferral extension requests to not be treated as troubled debt restructurings.
The following tables present the number of loans modified as TDRs during the three and six months ended June 30, 2021 and 2020, along with their balances immediately prior to the modification date and post-modification. Post-modification recorded investment represents the net book balance immediately following modification.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, |
| 2021 | | 2020 |
| No. of Loans | | Pre-modification Recorded Investment | | Post-modification Recorded Investment | | No. of Loans | | Pre-modification Recorded Investment | | Post-modification Recorded Investment |
| (Dollars in thousands) |
Troubled Debt Restructurings | | | | | | | | | | | |
Real Estate loans: | | | | | | | | | | | |
One-to-four family | 1 | | | $ | 221 | | | $ | 322 | | | 0 | | | $ | 0 | | | $ | 0 | |
Multifamily and commercial | 1 | | | 192 | | | 211 | | | 0 | | | 0 | | | 0 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Total restructured loans | 2 | | | $ | 413 | | | $ | 533 | | | 0 | | | $ | 0 | | | $ | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Six Months Ended June 30, |
| 2021 | | 2020 |
| No. of Loans | | Pre-modification Recorded Investment | | Post-modification Recorded Investment | | No. of Loans | | Pre-modification Recorded Investment | | Post-modification Recorded Investment |
| (Dollars in thousands) |
Troubled Debt Restructurings | | | | | | | | | | | |
Real Estate loans: | | | | | | | | | | | |
One-to-four family | 1 | | | $ | 221 | | | $ | 322 | | | 0 | | | $ | 0 | | | $ | 0 | |
Multifamily and commercial | 1 | | | 192 | | | 211 | | | 1 | | | 10,212 | | | 11,507 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Total restructured loans | 2 | | | $ | 413 | | | $ | 533 | | | 1 | | | $ | 10,212 | | | $ | 11,507 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
9. Loans Receivable and Allowance for Loan Losses (continued)
The activity in the allowance for loan losses by portfolio segment for the three and six months ended June 30, 2021 and 2020 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, |
| One-to-Four Family | | Multifamily and Commercial | | Construction | | Commercial Business | | Home Equity Loans and Advances | | Other Consumer Loans | | | | Total |
| (In thousands) |
2021 | | | | | | | | | | | | | | | |
Balance at beginning of period | $ | 19,850 | | | $ | 23,849 | | | $ | 11,464 | | | $ | 14,804 | | | $ | 1,931 | | | $ | 6 | | | | | $ | 71,904 | |
Provision charged (credited) | (2,463) | | | 1,872 | | | (2,304) | | | 1,600 | | | (465) | | | (1) | | | | | (1,761) | |
Recoveries | 11 | | | 931 | | | 0 | | | 111 | | | 34 | | | 0 | | | | | 1,087 | |
Charge-offs | (290) | | | (396) | | | 0 | | | (617) | | | (29) | | | 0 | | | | | (1,332) | |
Balance at end of period | $ | 17,108 | | | $ | 26,256 | | | $ | 9,160 | | | $ | 15,898 | | | $ | 1,471 | | | $ | 5 | | | | | $ | 69,898 | |
| | | | | | | | | | | | | | | |
2020 | | | | | | | | | | | | | | | |
Balance at beginning of period | $ | 16,798 | | | $ | 26,085 | | | $ | 9,399 | | | $ | 17,191 | | | $ | 1,718 | | | $ | 9 | | | | | $ | 71,200 | |
Provision charged (credited) | (51) | | | 1,243 | | | 817 | | | 3,911 | | | (183) | | | (1) | | | | | 5,736 | |
Recoveries | 239 | | | 2 | | | 1 | | | 12 | | | 9 | | | 0 | | | | | 263 | |
Charge-offs | (353) | | | 0 | | | 0 | | | (2,800) | | | (30) | | | (1) | | | | | (3,184) | |
Balance at end of period | $ | 16,633 | | | $ | 27,330 | | | $ | 10,217 | | | $ | 18,314 | | | $ | 1,514 | | | $ | 7 | | | | | $ | 74,015 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Six Months Ended June 30, |
| One-to-Four Family | | Multifamily and Commercial | | Construction | | Commercial Business | | Home Equity Loans and Advances | | Other Consumer Loans | | | | Total |
| (In thousands) |
2021 | | | | | | | | | | | | | | | |
Balance at beginning of period | $ | 13,586 | | | $ | 30,681 | | | $ | 11,271 | | | $ | 17,384 | | | $ | 1,748 | | | $ | 6 | | | | | $ | 74,676 | |
Provision charged (credited) | 4,014 | | | (4,800) | | | (2,112) | | | 91 | | | (235) | | | 1 | | | | | (3,041) | |
Recoveries | 14 | | | 937 | | | 1 | | | 127 | | | 45 | | | 0 | | | | | 1,124 | |
Charge-offs | (506) | | | (562) | | | 0 | | | (1,704) | | | (87) | | | (2) | | | | | (2,861) | |
Balance at end of period | $ | 17,108 | | | $ | 26,256 | | | $ | 9,160 | | | $ | 15,898 | | | $ | 1,471 | | | $ | 5 | | | | | $ | 69,898 | |
| | | | | | | | | | | | | | | |
2020 | | | | | | | | | | | | | | | |
Balance at beginning of period | $ | 13,780 | | | $ | 22,980 | | | $ | 7,435 | | | $ | 15,836 | | | $ | 1,669 | | | $ | 9 | | | | | $ | 61,709 | |
Provision charged (credited) | 3,050 | | | 4,339 | | | 2,781 | | | 5,258 | | | (124) | | | 0 | | | | | 15,304 | |
Recoveries | 242 | | | 12 | | | 1 | | | 83 | | | 23 | | | 0 | | | | | 361 | |
Charge-offs | (439) | | | (1) | | | 0 | | | (2,863) | | | (54) | | | (2) | | | | | (3,359) | |
Balance at end of period | $ | 16,633 | | | $ | 27,330 | | | $ | 10,217 | | | $ | 18,314 | | | $ | 1,514 | | | $ | 7 | | | | | $ | 74,015 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
9. Loans Receivable and Allowance for Loan Losses (continued)
The following tables present loans individually evaluated for impairment by loan segment, excluding PCI loans, at June 30, 2021 and December 31, 2020:
| | | | | | | | | | | | | | | | | |
| At June 30, 2021 |
| Recorded Investment | | Unpaid Principal Balance | | Specific Allowance |
| (In thousands) |
With no allowance recorded: | | | | | |
Real estate loans: | | | | | |
One-to-four family | $ | 2,524 | | | $ | 3,064 | | | $ | — | |
Multifamily and commercial | 16,331 | | | 17,147 | | | — | |
| | | | | |
Commercial business loans | 632 | | | 632 | | | — | |
Consumer loans: | | | | | |
Home equity loans and advances | 530 | | | 636 | | | — | |
| 20,017 | | | 21,479 | | | — | |
With a specific allowance recorded: | | | | | |
Real estate loans: | | | | | |
One-to-four family | 3,144 | | | 3,162 | | | 274 | |
Multifamily and commercial | 17,664 | | | 17,667 | | | 148 | |
| | | | | |
Commercial business loans | 1,492 | | | 1,491 | | | 14 | |
Consumer loans: | | | | | |
Home equity loans and advances | 945 | | | 945 | | | 14 | |
| 23,245 | | | 23,265 | | | 450 | |
Total: | | | | | |
Real estate loans: | | | | | |
One-to-four family | 5,668 | | | 6,226 | | | 274 | |
Multifamily and commercial | 33,995 | | | 34,814 | | | 148 | |
| | | | | |
Commercial business loans | 2,124 | | | 2,123 | | | 14 | |
Consumer loans: | | | | | |
Home equity loans and advances | 1,475 | | | 1,581 | | | 14 | |
Total loans | $ | 43,262 | | | $ | 44,744 | | | $ | 450 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
9. Loans Receivable and Allowance for Loan Losses (continued)
| | | | | | | | | | | | | | | | | |
| At December 31, 2020 |
| Recorded Investment | | Unpaid Principal Balance | | Specific Allowance |
| (In thousands) |
With no allowance recorded: | | | | | |
Real estate loans: | | | | | |
One-to-four family | $ | 3,344 | | | $ | 3,898 | | | $ | — | |
Multifamily and commercial | 13,058 | | | 13,094 | | | — | |
| | | | | |
Commercial business loans | 1,945 | | | 1,945 | | | — | |
Consumer loans: | | | | | |
Home equity loans and advances | 714 | | | 851 | | | — | |
| 19,061 | | | 19,788 | | | — | |
With a specific allowance recorded: | | | | | |
Real estate loans: | | | | | |
One-to-four family | 3,913 | | | 3,919 | | | 391 | |
Multifamily and commercial | 19,734 | | | 20,350 | | | 601 | |
| | | | | |
Commercial business loans | 1,502 | | | 1,502 | | | 84 | |
Consumer loans: | | | | | |
Home equity loans and advances | 937 | | | 937 | | | 12 | |
| 26,086 | | | 26,708 | | | 1,088 | |
Total: | | | | | |
Real estate loans: | | | | | |
One-to-four family | 7,257 | | | 7,817 | | | 391 | |
Multifamily and commercial | 32,792 | | | 33,444 | | | 601 | |
| | | | | |
Commercial business loans | 3,447 | | | 3,447 | | | 84 | |
Consumer loans: | | | | | |
Home equity loans and advances | 1,651 | | | 1,788 | | | 12 | |
| $ | 45,147 | | | $ | 46,496 | | | $ | 1,088 | |
Specific allocations of the allowance for loan losses attributable to impaired loans totaled $450,000 and $1.1 million at June 30, 2021 and December 31, 2020, respectively. At June 30, 2021 and December 31, 2020, impaired loans for which there was no related allowance for loan losses totaled $20.0 million and $19.1 million, respectively.
The recorded investment in TDRs totaled $40.6 million at June 30, 2021, of which 1 loan with a balance of $409,000 was 60-89 days past due. The remaining loans modified were current at the time of restructuring and have complied with the terms of their restructure agreement at June 30, 2021. The recorded investment in TDRs totaled $45.4 million at December 31, 2020, of which 1 loan with a balance of $91,000 was over 90 days past due, and 3 loans totaling $11.9 million were 30-59 days past due. The remaining loans modified were current at the time of restructuring and have complied with the terms of their restructure agreement at December 31, 2020.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
9. Loans Receivable and Allowance for Loan Losses (continued)
The following table presents the number of loans modified as TDRs during the three and nine months ended September 30, 2020 and 2019, along with their balances immediately prior to the modification date and post-modification. Post-modification recorded investment represents the net book balance immediately following modification.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, |
| 2020 | | 2019 |
| No. of Loans | | Pre-modification Recorded Investment | | Post-modification Recorded Investment | | No. of Loans | | Pre-modification Recorded Investment | | Post-modification Recorded Investment |
| (Dollars in thousands) |
Troubled Debt Restructurings | | | | | | | | | | | |
Real Estate loans: | | | | | | | | | | | |
| | | | | | | | | | | |
Multifamily and commercial | 4 | | | $ | 16,387 | | | $ | 16,387 | | | 0 | | | $ | 0 | | | $ | 0 | |
Commercial business loans | 1 | | | 1,295 | | | 1,295 | | | 0 | | | 0 | | | 0 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Total restructured loans | 5 | | | $ | 17,682 | | | $ | 17,682 | | | 0 | | | $ | 0 | | | $ | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
| 2020 | | 2019 |
| No. of Loans | | Pre-modification Recorded Investment | | Post-modification Recorded Investment | | No. of Loans | | Pre-modification Recorded Investment | | Post-modification Recorded Investment |
| (Dollars in thousands) |
Troubled Debt Restructurings | | | | | | | | | | | |
Real Estate loans: | | | | | | | | | | | |
| | | | | | | | | | | |
Multifamily and commercial | 4 | | | $ | 16,387 | | | $ | 16,387 | | | 0 | | | $ | 0 | | | $ | 0 | |
Commercial business loans | 2 | | | 11,507 | | | 12,802 | | | 1 | | | 4,095 | | | 4,095 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Total restructured loans | 6 | | | $ | 27,894 | | | $ | 29,189 | | | 1 | | | $ | 4,095 | | | $ | 4,095 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
9. Loans Receivable and Allowance for Loan Losses (continued)
The activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2020 and 2019 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 | | | | Total |
| (In thousands) |
2020 | | | | | | | | | | | | | | | |
Balance at beginning of period | $ | 16,633 | | | $ | 27,330 | | | $ | 10,217 | | | $ | 18,314 | | | $ | 1,514 | | | $ | 7 | | | | | $ | 74,015 | |
Provision charged (credited) | (758) | | | 3,659 | | | 317 | | | (573) | | | (129) | | | 0 | | | | | 2,516 | |
Recoveries | 87 | | | 0 | | | 0 | | | 128 | | | 32 | | | 0 | | | | | 247 | |
Charge-offs | (187) | | | 0 | | | 0 | | | (367) | | | (91) | | | 0 | | | | | (645) | |
Balance at end of period | $ | 15,775 | | | $ | 30,989 | | | $ | 10,534 | | | $ | 17,502 | | | $ | 1,326 | | | $ | 7 | | | | | $ | 76,133 | |
| | | | | | | | | | | | | | | |
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 | | | 0 | | | 1 | | | 8 | | | 22 | | | 0 | | | | | 35 | |
Charge-offs | (228) | | | 0 | | | 0 | | | (738) | | | 0 | | | 0 | | | | | (966) | |
Balance at end of period | $ | 15,733 | | | $ | 22,969 | | | $ | 7,760 | | | $ | 14,028 | | | $ | 2,131 | | | $ | 8 | | | | | $ | 62,629 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
9. Loans Receivable and Allowance for Loan Losses (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, |
| One-to-Four Family | | Multifamily and Commercial | | Construction | | Commercial Business | | Home Equity Loans and Advances | | Other Consumer Loans | | | | Total |
| (In thousands) |
2020 | | | | | | | | | | | | | | | |
Balance at beginning of period | $ | 13,780 | | | $ | 22,980 | | | $ | 7,435 | | | $ | 15,836 | | | $ | 1,669 | | | $ | 9 | | | | | $ | 61,709 | |
Provision charged (credited) | 2,292 | | | 7,998 | | | 3,098 | | | 4,685 | | | (253) | | | 0 | | | | | 17,820 | |
Recoveries | 329 | | | 12 | | | 1 | | | 211 | | | 55 | | | 0 | | | | | 608 | |
Charge-offs | (626) | | | (1) | | | 0 | | | (3,230) | | | (145) | | | (2) | | | | | (4,004) | |
Balance at end of period | $ | 15,775 | | | $ | 30,989 | | | $ | 10,534 | | | $ | 17,502 | | | $ | 1,326 | | | $ | 7 | | | | | $ | 76,133 | |
| | | | | | | | | | | | | | | |
2019 | | | | | | | | | | | | | | | |
Balance at beginning of period | $ | 15,232 | | | $ | 23,251 | | | $ | 7,217 | | | $ | 14,176 | | | $ | 2,458 | | | $ | 8 | | | | | $ | 62,342 | |
Provision charged (credited) | 1,215 | | | (282) | | | 541 | | | 485 | | | (255) | | | 1 | | | | | 1,705 | |
Recoveries | 29 | | | 0 | | | 2 | | | 374 | | | 29 | | | 0 | | | | | 434 | |
Charge-offs | (743) | | | 0 | | | 0 | | | (1,007) | | | (101) | | | (1) | | | | | (1,852) | |
Balance at end of period | $ | 15,733 | | | $ | 22,969 | | | $ | 7,760 | | | $ | 14,028 | | | $ | 2,131 | | | $ | 8 | | | | | $ | 62,629 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
9. Loans Receivable and Allowance for Loan Losses (continued)
The following tables present loans individually evaluated for impairment by loan segment, excluding PCI loans, at September 30, 2020 and December 31, 2019:
| | | | | | | | | | | | | | | | | |
| At September 30, 2020 |
| Recorded Investment | | Unpaid Principal Balance | | Specific Allowance |
| (In thousands) |
With no allowance recorded: | | | | | |
Real estate loans: | | | | | |
One-to-four family | $ | 2,825 | | | $ | 3,616 | | | $ | — | |
Multifamily and commercial | 20,389 | | | 20,426 | | | — | |
| | | | | |
Commercial business loans | 2,577 | | | 2,680 | | | — | |
Consumer loans: | | | | | |
Home equity loans and advances | 708 | | | 845 | | | — | |
| 26,499 | | | 27,567 | | | — | |
With a specific allowance recorded: | | | | | |
Real estate loans: | | | | | |
One-to-four family | 4,405 | | | 4,420 | | | 406 | |
Multifamily and commercial | 11,701 | | | 12,316 | | | 550 | |
| | | | | |
Commercial business loans | 2,087 | | | 5,429 | | | 871 | |
Consumer loans: | | | | | |
Home equity loans and advances | 1,154 | | | 1,154 | | | 12 | |
| 19,347 | | | 23,319 | | | 1,839 | |
Total: | | | | | |
Real estate loans: | | | | | |
One-to-four family | 7,230 | | | 8,036 | | | 406 | |
Multifamily and commercial | 32,090 | | | 32,742 | | | 550 | |
| | | | | |
Commercial business loans | 4,664 | | | 8,109 | | | 871 | |
Consumer loans: | | | | | |
Home equity loans and advances | 1,862 | | | 1,999 | | | 12 | |
Total loans | $ | 45,846 | | | $ | 50,886 | | | $ | 1,839 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
9. Loans Receivable and Allowance for Loan Losses (continued)
| | | | | | | | | | | | | | | | | |
| At December 31, 2019 |
| Recorded Investment | | Unpaid Principal Balance | | Specific Allowance |
| (In thousands) |
With no allowance recorded: | | | | | |
Real estate loans: | | | | | |
One-to-four family | $ | 4,314 | | | $ | 5,473 | | | $ | — | |
Multifamily and commercial | 1,494 | | | 2,191 | | | — | |
| | | | | |
Commercial business loans | 3,859 | | | 4,048 | | | — | |
Consumer loans: | | | | | |
Home equity loans and advances | 1,080 | | | 1,217 | | | — | |
| 10,747 | | | 12,929 | | | — | |
With a specific allowance recorded: | | | | | |
Real estate loans: | | | | | |
One-to-four family | 4,577 | | | 4,613 | | | 484 | |
Multifamily and commercial | 1,105 | | | 1,105 | | | 2 | |
| | | | | |
Commercial business loans | 1,319 | | | 4,307 | | | 1,121 | |
Consumer loans: | | | | | |
Home equity loans and advances | 1,063 | | | 1,063 | | | 14 | |
| 8,064 | | | 11,088 | | | 1,621 | |
Total: | | | | | |
Real estate loans: | | | | | |
One-to-four family | 8,891 | | | 10,086 | | | 484 | |
Multifamily and commercial | 2,599 | | | 3,296 | | | 2 | |
| | | | | |
Commercial business loans | 5,178 | | | 8,355 | | | 1,121 | |
Consumer loans: | | | | | |
Home equity loans and advances | 2,143 | | | 2,280 | | | 14 | |
| $ | 18,811 | | | $ | 24,017 | | | $ | 1,621 | |
Specific allocations of the allowance for loan losses attributable to impaired loans totaled $1.8 million and $1.6 million at September 30, 2020 and December 31, 2019, respectively. At September 30, 2020 and December 31, 2019, impaired loans for which there was no related allowance for loan losses totaled $26.5 million and $10.7 million, respectively.
The recorded investment in TDRs totaled $44.1 million at September 30, 2020, of which 1 loan totaling $420,000 was 30-59 days past due, 1 loan totaling $262,000 was 60-89 days past due, and 3 loans totaling $910,000 were over 90 days past due. The remaining loans modified were current at the time of restructuring and have complied with the terms of their restructure agreement at September 30, 2020. The recorded investment in TDRs totaled $20.0 million at December 31, 2019, of which there were 0 loans over 90 days past due and 3 loans totaling $660,000 were 30-59 days past due. The remaining loans modified were current at the time of restructuring and have complied with the terms of their restructure agreement at December 31, 2019.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
9. Loans Receivable and Allowance for Loan Losses (continued)
The following tables present interest income recognized for loans individually evaluated for impairment, by loan segment, excluding PCI loans for the three and ninesix months ended SeptemberJune 30, 20202021 and 2019:2020:
| | | For the Three Months Ended September 30, | | For the Three Months Ended June 30, |
| | 2020 | | 2019 | | 2021 | | 2020 |
| | 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) |
Real estate loans: | Real estate loans: | | Real estate loans: | |
One-to-four family | One-to-four family | $ | 8,020 | | | $ | 74 | | | $ | 8,773 | | | $ | 101 | | One-to-four family | $ | 6,149 | | | $ | 102 | | | $ | 8,647 | | | $ | 81 | |
Multifamily and commercial | Multifamily and commercial | 23,525 | | | 227 | | | 2,637 | | | 37 | | Multifamily and commercial | 33,264 | | | 375 | | | 14,960 | | | 32 | |
Construction | 0 | | | 0 | | | 850 | | | 0 | | |
| Commercial business loans | Commercial business loans | 4,979 | | | 52 | | | 7,461 | | | 88 | | Commercial business loans | 2,295 | | | 41 | | | 5,871 | | | 157 | |
Consumer loans: | Consumer loans: | | Consumer loans: | |
Home equity loans and advances | Home equity loans and advances | 1,935 | | | 28 | | | 2,629 | | | 35 | | Home equity loans and advances | 1,523 | | | 18 | | | 2,062 | | | 29 | |
Total loans | Total loans | $ | 38,459 | | | $ | 381 | | | $ | 22,350 | | | $ | 261 | | Total loans | $ | 43,231 | | | $ | 536 | | | $ | 31,540 | | | $ | 299 | |
| | | For the Nine Months Ended September 30, | | For the Six Months Ended June 30, |
| | 2020 | | 2019 | | 2021 | | 2020 |
| | 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) |
Real estate loans: | Real estate loans: | | Real estate loans: | |
One-to-four family | One-to-four family | $ | 8,175 | | | $ | 226 | | | $ | 9,144 | | | $ | 340 | | One-to-four family | $ | 6,518 | | | $ | 170 | | | $ | 8,728 | | | $ | 188 | |
Multifamily and commercial | Multifamily and commercial | 20,670 | | | 653 | | | 2,667 | | | 111 | | Multifamily and commercial | 33,107 | | | 811 | | | 10,840 | | | 198 | |
Construction | 0 | | | 0 | | | 850 | | | 0 | | |
| Commercial business loans | Commercial business loans | 5,468 | | | 196 | | | 5,848 | | | 268 | | Commercial business loans | 2,679 | | | 70 | | | 5,640 | | | 224 | |
Consumer loans: | Consumer loans: | | Consumer loans: | |
Home equity loans and advances | Home equity loans and advances | 1,995 | | | 85 | | | 2,866 | | | 122 | | Home equity loans and advances | 1,565 | | | 38 | | | 2,089 | | | 58 | |
Total loans | Total loans | $ | 36,308 | | | $ | 1,160 | | | $ | 21,375 | | | $ | 841 | | Total loans | $ | 43,869 | | | $ | 1,089 | | | $ | 27,297 | | | $ | 668 | |
The Company utilizes an eight-point risk rating system to summarize its loan portfolio into categories with similar risk characteristics. Loans deemed to be “acceptable quality” are rated 1 through 4 (Pass), with a rating of 1 established for loans with minimal risk. Loans that are deemed to be of “questionable quality” are rated 5 (Special Mention) or 6 (Substandard). Loans with adverse classifications are rated 7 (Doubtful) or 8 (Loss). The risk ratings are also confirmed through periodic loan review examinations which are currently performed by both an independent third-party and the Company's credit risk review department. The Company requires an annual review be performed above certain dollar thresholds, depending on loan 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
9. Loans Receivable and Allowance for Loan Losses (continued)
The following tables present loans receivable by credit quality risk indicator and by loan segment, excluding PCI loans at SeptemberJune 30, 20202021 and December 31, 2019:2020:
| | | September 30, 2020 | | June 30, 2021 |
| | One-to-Four Family | | Multifamily and Commercial | | Construction | | Commercial Business | | Home Equity Loans and Advances | | Other Consumer Loans | | 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 | Pass | $ | 2,046,613 | | | $ | 2,828,021 | | | $ | 307,659 | | | $ | 869,122 | | | $ | 340,047 | | | $ | 1,538 | | | $ | 6,393,000 | | Pass | $ | 1,863,129 | | | $ | 3,047,108 | | | $ | 261,159 | | | $ | 462,592 | | | $ | 277,354 | | | $ | 1,158 | | | $ | 5,912,500 | |
Special mention | Special mention | 408 | | | 15,819 | | | 0 | | | 8,061 | | | 0 | | | 0 | | | 24,288 | | Special mention | 393 | | | 50,860 | | | 0 | | | 5,663 | | | 0 | | | 0 | | | 56,916 | |
Substandard | Substandard | 6,272 | | | 19,878 | | | 0 | | | 7,748 | | | 915 | | | 0 | | | 34,813 | | Substandard | 4,402 | | | 17,086 | | | 0 | | | 3,445 | | | 724 | | | 0 | | | 25,657 | |
Doubtful | Doubtful | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Doubtful | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Loss | Loss | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Loss | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Total | Total | $ | 2,053,293 | | | $ | 2,863,718 | | | $ | 307,659 | | | $ | 884,931 | | | $ | 340,962 | | | $ | 1,538 | | | $ | 6,452,101 | | Total | $ | 1,867,924 | | | $ | 3,115,054 | | | $ | 261,159 | | | $ | 471,700 | | | $ | 278,078 | | | $ | 1,158 | | | $ | 5,995,073 | |
| | | December 31, 2019 | | December 31, 2020 |
| | One-to-Four Family | | Multifamily and Commercial | | Construction | | Commercial Business | | Home Equity Loans and Advances | | Other Consumer Loans | | 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 | Pass | $ | 2,072,878 | | | $ | 2,900,286 | | | $ | 298,942 | | | $ | 454,183 | | | $ | 387,251 | | | $ | 1,960 | | | $ | 6,115,500 | | Pass | $ | 1,935,032 | | | $ | 2,758,905 | | | $ | 328,711 | | | $ | 740,010 | | | $ | 320,092 | | | $ | 1,497 | | | $ | 6,084,247 | |
Special mention | Special mention | 419 | | | 4,724 | | | 0 | | | 20,170 | | | 0 | | | 0 | | | 25,313 | | Special mention | 404 | | | 40,392 | | | 0 | | | 6,718 | | | 0 | | | 0 | | | 47,514 | |
Substandard | Substandard | 3,782 | | | 14,975 | | | 0 | | | 8,862 | | | 876 | | | 0 | | | 28,495 | | Substandard | 4,891 | | | 18,668 | | | 0 | | | 6,142 | | | 1,085 | | | 0 | | | 30,786 | |
Doubtful | Doubtful | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Doubtful | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Loss | Loss | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | Loss | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Total | Total | $ | 2,077,079 | | | $ | 2,919,985 | | | $ | 298,942 | | | $ | 483,215 | | | $ | 388,127 | | | $ | 1,960 | | | $ | 6,169,308 | | Total | $ | 1,940,327 | | | $ | 2,817,965 | | | $ | 328,711 | | | $ | 752,870 | | | $ | 321,177 | | | $ | 1,497 | | | $ | 6,162,547 | |
10. Leases
Effective January 1, 2020, the Company adopted ASU 2016-02 Leases (Topic 842) and all subsequent ASU's that modified Topic 842 as explained in note 5, Summary of Significant Accounting Policies, Accounting Pronouncements Adopted.. The Company's leases primarily relate to real estate property for branches and office space. At SeptemberJune 30, 2021 and December 31, 2020, all of the Company's leases are classified as operating leases.
The Company determines if an arrangement is a lease at inception. Topic 842 requires lessees to recognize a right-of-use asset and a lease liability, measured at the present value of the future minimum lease payments, at the lease commencement date. At the time of adoption, an operating lease right-of-use asset of $22.2 million and operating lease liabilities of $23.3 million were recorded in other assets and other liabilities, respectively on our Consolidated Statements of Financial Condition. The calculated amount of the right-of-use asset and lease liabilities are impacted by the length of the lease term and the discount rate used to calculate the present value of minimum lease payments. As the Company's leases do not provide an implicit rate, the discount rate used in determining the lease liability for each individual lease was the Company's incremental borrowing rate at the time of adoption of ASU 2016-02, on a collateralized basis, over a similar term. Certain leases include options to renew, with one or more renewal terms usually ranging from 53 years to 10 years. For each lease, these extension options were evaluated, and those which were considered reasonably certain of renewal were included in the lease term.
At SeptemberJune 30, 2021 and December 31, 2020, the weighted average remaining lease term for operating leases was 7.67.0 years and 7.5 years, respectively, and the weighted average discount rate used in the measurement of operating lease liabilities was 2.25%.2.17%, and 2.26%, respectively.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
10. Leases (continued)
The Company elected to account for the lease and non-lease components separately since such amounts are readily determinable under the Company's lease contracts. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are recognized as incurred. Variable lease payments include common area maintenance charges, real estate taxes, repairs and maintenance costs and utilities. Operating and variable lease expenses are recorded in occupancy expense in the Consolidated Statements of Income. During the three and nine months ended SeptemberJune 30, 2021 and 2020, operating and variable lease expenses totaled approximately $603,000$563,000 and $1.9$601,000, respectively. During the six months ended June 30, 2021 and 2020, operating and variable lease expenses totaled approximately $1.2 million and $1.3 million, respectively.
There were no sale and leaseback transactions, leveraged leases or lease transactions with related parties during the three and ninesix months ended SeptemberJune 30, 2021 and 2020. At SeptemberJune 30, 2020,2021, the Company had no leases that had not yet commenced.
The following table summarizes lease payment obligations for each of the next five years and thereafter as follows:
| At September 30, 2020 | | Lease Payment Obligations | |
At June 30, 2021 | | At June 30, 2021 | | Lease Payment Obligations |
| | | (In thousands) | | | (In thousands) |
| 2020 | | $ | 1,037 | | |
| 2021 | 2021 | | 4,010 | | 2021 | | $ | 2,053 | |
2022 | 2022 | | 3,624 | | 2022 | | 3,971 | |
2023 | 2023 | | 3,310 | | 2023 | | 3,590 | |
2024 | 2024 | | 2,586 | | 2024 | | 2,866 | |
2025 | | 2025 | | 2,194 | |
Thereafter | Thereafter | | 8,534 | | Thereafter | | 6,402 | |
Total undiscounted cash flows | Total undiscounted cash flows | | 23,101 | | Total undiscounted cash flows | | 21,076 | |
Discount on cash flows | Discount on cash flows | | (2,093) | | Discount on cash flows | | (1,736) | |
Total lease liability | Total lease liability | | $21,008 | Total lease liability | | $ | 19,340 | |
At December 31, 2019, operating lease commitments under lessee arrangements were $4.9 million, $4.5 million, $4.0 million, $3.5 million and $2.7 million for 2020 through 2024, respectively, and $5.0 million in aggregate for all years thereafter.
11. Deposits
Deposits at SeptemberJune 30, 20202021 and December 31, 20192020 are summarized as follows:
| | | September 30, | | December 31, | | June 30, | | December 31, |
| | 2020 | | 2019 | | 2021 | | 2020 |
| | (In thousands) | | (In thousands) |
| Non-interest-bearing demand | Non-interest-bearing demand | $ | 1,341,248 | | | $ | 958,442 | | Non-interest-bearing demand | $ | 1,513,197 | | | $ | 1,354,605 | |
Interest-bearing demand | Interest-bearing demand | 2,033,729 | | | 1,720,383 | | Interest-bearing demand | 2,355,819 | | | 2,189,164 | |
Money market accounts | Money market accounts | 540,723 | | | 410,392 | | Money market accounts | 645,590 | | | 588,180 | |
Savings and club deposits | Savings and club deposits | 652,970 | | | 543,480 | | Savings and club deposits | 749,531 | | | 688,309 | |
Certificates of deposit | Certificates of deposit | 2,060,978 | | | 2,013,145 | | Certificates of deposit | 1,815,139 | | | 1,958,366 | |
Total deposits | Total deposits | $ | 6,629,648 | | | $ | 5,645,842 | | Total deposits | $ | 7,079,276 | | | $ | 6,778,624 | |
Included in the above balances at SeptemberJune 30, 20202021 and December 31, 20192020 are certificates of deposit obtained through brokers, totaling $26.4$16.2 million and $31.6$26.3 million, respectively, that were acquired from Stewardship.
The aggregate amount of certificates of deposit that meet or exceed $100,000 totaled approximately $1.1$937.6 million and $1.0 billion at both SeptemberJune 30, 20202021 and December 31, 2019.2020, respectively. Interest expense on deposits for the three and nine months ended SeptemberJune 30, 2021 and 2020 and 2019 totaled $12.8$7.9 million and $16.1$14.9 million, respectively. Interest expense on deposits for the six months ended June 30, 2021 and 2020 totaled $16.7 million and $44.6 million and $45.0$31.7 million, respectively.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
11. Deposits (continued)
Scheduled maturities of certificates of deposit accounts at SeptemberJune 30, 20202021 and December 31, 20192020 are summarized as follows:
| | | September 30, | | December 31, | | June 30, | | December 31, |
| | 2020 | | 2019 | | 2021 | | 2020 |
| | (In thousands) | | (In thousands) |
| One year or less | One year or less | $ | 1,543,088 | | | $ | 1,293,613 | | One year or less | $ | 1,364,245 | | | $ | 1,494,129 | |
After one year to two years | After one year to two years | 390,328 | | | 548,995 | | After one year to two years | 277,629 | | | 337,579 | |
After two years to three years | After two years to three years | 55,389 | | | 142,458 | | After two years to three years | 74,863 | | | 52,809 | |
After three years to four years | After three years to four years | 24,618 | | | 11,362 | | After three years to four years | 27,845 | | | 23,018 | |
After four years | After four years | 47,555 | | | 16,717 | | After four years | 70,557 | | | 50,831 | |
| | $ | 2,060,978 | | | $ | 2,013,145 | | | $ | 1,815,139 | | | $ | 1,958,366 | |
12. Stock Based Compensation
At the Company's annual meeting of stockholders held on June 6, 2019, stockholders 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 and 5,678,569 stock options) of common stock.
On July 23, 2019, 1,419,1311,389,570 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 but unissued shares.
On December 16, 2019, 74,673 shares of restricted stock were awarded, with a grant date fair value of $17.00 per share. To fund the grant of restricted common stock, the Company reissued shares from treasury stock.
On December 14, 2020, 33,160 shares of restricted stock were awarded, with a grant date fair value of $15.08 per share. To fund the grant of restricted common stock, the Company reissued shares from treasury stock.
On March 22, 2021, 50,203 shares of restricted stock were awarded, with a grant date fair value of $17.86 per share. To fund the grant of restricted common stock, the Company reissued shares from treasury stock.
Restricted shares granted under the 2019 Plan generally vest in equal installments, over performance or service periods ranging from three1 year to five5 years, beginning one1 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 SeptemberJune 30, 2021 and 2020, approximately $1.4$1.6 million and $4.2 million, respectively, in expense was recognized in regard to these awards. During the three and nine months ended September 30, 2019, approximately $1.0$1.4 million in expense was recognized in regard to these awards. The expected future compensation expense related to the 1,236,0741,299,398 non-vested restricted shares outstanding at SeptemberJune 30, 20202021 is approximately $15.5$12.3 million over a weighted average period of 3.32.5 years. During the six months ended June 30, 2021 and 2020, approximately $3.0 million and $2.8 million in expense was recognized in regard to these awards.
The following is a summary of the Company's restricted stock activity during the three and nine months ended September 30, 2020 and 2019:
| | | | | | | | | | | |
| Number of Restricted Shares | | Weighted Average Grant Date Fair Value |
| | | |
Non-vested at January 1, 2020 | 1,420,012 | | | $ | 15.67 | |
Grants | 0 | | | 0 | |
Forfeited | (881) | | | 16.60 | |
Non-vested at March 31, 2020 | 1,419,131 | | | $ | 15.67 | |
| | | |
Forfeited | (240) | | | 15.60 | |
Non-vested at June 30, 2020 | 1,418,891 | | | $ | 15.67 | |
Vested | (167,427) | | | 15.62 | |
Forfeited | (15,390) | | | 16.07 | |
Non-vested at September 30, 2020 | 1,236,074 | | | $ | 15.68 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
12. Stock Based Compensation (Continued)(continued)
| | | | | | | | | | | |
| Number of Restricted Shares | | Weighted Average Grant Date Fair Value |
| | | |
Non-vested at January 1, 2019 | 0 | | | $ | 0 | |
Grants | 1,389,570 | | | 15.60 | |
Non-vested at September 30, 2019 | 1,389,570 | | | $ | 15.60 | |
The following is a summary of the Company's restricted stock activity during the three and six months ended June 30, 2021 and 2020: | | | | | | | | | | | |
| Number of Restricted Shares | | Weighted Average Grant Date Fair Value |
| | | |
Non-vested at January 1, 2021 | 1,263,169 | | | $ | 15.66 | |
Grants | 50,203 | | | 17.86 | |
Forfeited | (13,846) | | | 15.60 | |
Non-vested at March 31, 2021 | 1,299,526 | | | $ | 15.74 | |
| | | |
| | | |
Forfeited | (128) | | | 15.60 | |
Non-vested at June 30, 2021 | 1,299,398 | | | $ | 15.74 | |
| | | |
| | | |
| | | |
| | | | | | | | | | | |
| Number of Restricted Shares | | Weighted Average Grant Date Fair Value |
| | | |
Non-vested at January 1, 2020 | 1,420,012 | | | $ | 15.67 | |
| | | |
| | | |
Forfeited | (881) | | | 15.60 | |
Non-vested at March 31, 2020 | 1,419,131 | | | $ | 15.67 | |
| | | |
| | | |
Forfeited | (240) | | | 15.60 | |
Non-vested at June 30, 2020 | 1,418,891 | | | $ | 15.67 | |
On July 23, 2019, options to purchase 3,589,9593,707,901 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%.
On December 16, 2019, options to purchase 184,378 shares of Company common stock were awarded with a grant date fair value of $4.59 per option. Stock options granted under the 2019 Plan generally 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 $17.00, 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 approximately 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 1.79%, volatility of 22.23%, and a dividend yield of 0.00%.
On March 22, 2021, options to purchase 109,654 shares of Company common stock were awarded with a grant date fair value of $4.91 per option. Stock options granted under the 2019 Plan vest in equal installments over the service period of three years beginning one year from the date of grant. Stock options were granted at an exercise price of $17.86, 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 approximately 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 6.0 years, risk-free rate of return of 1.11%, volatility of 25.98%, and a dividend yield of 0.00%.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
12. 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 became a public company and does not have sufficient historical price data, the expected volatility is based on the historical daily stock prices of Company stock plus 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 SeptemberJune 30, 2021 and 2020, approximately $808,000$822,000 and $2.4 million$804,000 in expense was recognized in regard to these awards. During both the three and ninesix months ended SeptemberJune 30, 2019,2021 and 2020, approximately $601,000$1.6 million and $1.6 million in expense was recognized in regard to these awards. The expected future compensation expense related to the 2,999,7673,043,454 non-vested options outstanding at SeptemberJune 30, 20202021 is $12.1$10.1 million over a weighted average period of 8.83.1 years.
The following is a summary of the Company's option activity during the three and ninesix months ended SeptemberJune 30, 20202021 and 2019:2020:
| | | | | | | | | | | | | | | | | | | | | | | |
| Number of Stock Options | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Term (in years) | | Aggregate Intrinsic Value |
| | | | | | | |
Outstanding, January 1, 2020 | 3,784,044 | | | $ | 15.67 | | | 9.6 | | $ | 4,812,490 | |
| | | | | | | |
Forfeited | (9,707) | | | 15.60 | | | — | | | — | |
Outstanding, March 31, 2020 | 3,774,337 | | | $ | 15.67 | | | 9.3 | | $ | 0 | |
| | | | | | | |
Forfeited | (2,647) | | | 15.60 | | | — | | | — | |
Outstanding, June 30, 2020 | 3,771,690 | | | $ | 15.67 | | | 9.1 | | $ | 0 | |
Forfeited | (44,485) | | | 15.95 | | | — | | | — | |
Outstanding, September 30, 2020 | 3,727,205 | | | $ | 15.67 | | | 8.8 | | $ | 0 | |
Options exercisable at September 30, 2020 | 727,438 | | | $ | 15.62 | | | 8.7 | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Number of Stock Options | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Term (in years) | | Aggregate Intrinsic Value |
| | | | | | | |
Outstanding, January 1, 2021 | 3,708,628 | | | $ | 15.66 | | | 8.6 | | $ | 0 | |
Granted | 109,654 | | | 17.86 | | | — | | | — | |
Expired | (2,029) | | | 15.60 | | | — | | | — | |
Forfeited | (30,118) | | | 15.60 | | | — | | | — | |
Outstanding, March 31, 2021 | 3,786,135 | | | $ | 15.73 | | | 8.4 | | $ | 6,673,328 | |
| | | | | | | |
Exercised | (1,661) | | | 15.60 | | | — | | | — | |
Expired | (7,529) | | | 15.60 | | | — | | | — | |
Forfeited | (1,412) | | | 15.60 | | | — | | | — | |
Outstanding, June 30, 2021 | 3,775,533 | | | $ | 15.73 | | | 8.1 | | $ | 5,700,258 | |
| | | | | | | |
| | | | | | | |
Options exercisable at June 30, 2021 | 732,079 | | | $ | 15.67 | | | 8.1 | | $ | 1,138,280 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
12. Stock Based Compensation (Continued)
| | | | | | | | | | | | | | | | | | | | | | | |
| Number of Stock Options | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Term (in years) | | Aggregate Intrinsic Value |
| | | | | | | |
Outstanding, January 1, 2019 | 0 | | | $ | 0 | | | — | | | $ | 0 | |
Granted | 3,707,901 | | | 15.60 | | | 9.8 | | 704,501 | |
Outstanding, September 30, 2019 | 3,707,901 | | | $ | 15.60 | | | 9.8 | | $ | 704,501 | |
Options exercisable at September 30, 2019 | 0 | | | $ | 0 | | | — | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Number of Stock Options | | Weighted Average Exercise Price | | Weighted Average Remaining Contractual Term (in years) | | Aggregate Intrinsic Value |
| | | | | | | |
Outstanding, January 1, 2020 | 3,784,044 | | | $ | 15.67 | | | 9.6 | | $ | 4,812,490 | |
| | | | | | | |
Forfeited | (9,707) | | | 15.60 | | | — | | | — | |
Outstanding, March 31, 2020 | 3,774,337 | | | $ | 15.67 | | | 9.3 | | $ | 0 | |
| | | | | | | |
Forfeited | (2,647) | | | 15.60 | | | — | | | — | |
Outstanding, June 30, 2020 | 3,771,690 | | | $ | 15.67 | | | 9.1 | | $ | 0 | |
Options exercisable at June 30, 2020 | 0 | | | $ | 0 | | | — | | | $ | — | |
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.
During both the three and six months ended June 30, 2021, the aggregate intrinsic value of options exercised was $3,805. There were 0 stock option exercises during the three and ninesix months ended SeptemberJune 30, 2020 and 2019.2020.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
13. 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") which covers full-time employees that satisfy the Pension Plan's eligibility requirements. The benefits are based on years of service and the employee's average compensation for the highest five consecutive years of employment. Effective October 1, 2018, employees hired by the Bank are not eligible to participate in the Bank's Pension Plan as the plan has been closed to new employees as of that date.
The Company also has a Retirement Income Maintenance Plan (the "RIM "Plan) which is a non-qualified defined benefit plan which provides benefits to all employees of the Company if their benefits under the Pension Plan are limited by Internal Revenue Code 415 and 401(a)(17).
In addition, the Company provides certain health care and life insurance benefits to eligible retired employees under a Post-retirement Plan. The Company accrues the cost of retiree health care and other benefits during the employees’ period of active service. 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.
Net periodic benefit (income) cost for Pension Plan, RIM Plan, Post-retirement Plan and split-dollar life insurance arrangementSplit-dollar Life Insurance plan benefits for the three and ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, includes the following components:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, | | |
| Pension Plan | | RIM Plan | | Post-retirement Plan | | Split-Dollar Life Insurance | | |
| 2021 | | 2020 | | 2021 | | 2020 | | 2021 | | 2020 | | 2021 | | 2020 | | Affected Line Item in the Consolidated Statements of Income |
| (In thousands) | | |
| | | | | | | | | | | | | | | | | |
Service cost | $ | 2,150 | | | $ | 1,937 | | | $ | 100 | | | $ | 67 | | | $ | 130 | | | $ | 99 | | | $ | 141 | | | $ | 120 | | | Compensation and employee benefits |
Interest cost | 1,756 | | | 2,031 | | | 86 | | | 102 | | | 141 | | | 171 | | | 125 | | | 131 | | | Other non-interest expense |
Expected return on plan assets | (6,318) | | | (5,737) | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | Other non-interest expense |
Amortization: | | | | | | | | | | | | | | | | | |
Prior service cost | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 14 | | | 14 | | | Other non-interest expense |
Net loss | 1,000 | | | 781 | | | 166 | | | 99 | | | 153 | | | 77 | | | 191 | | | 113 | | | Other non-interest expense |
Net periodic (income) benefit cost | $ | (1,412) | | | $ | (988) | | | $ | 352 | | | $ | 268 | | | $ | 424 | | | $ | 347 | | | $ | 471 | | | $ | 378 | | | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
13. Components of Net Periodic Benefit Cost (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, | | |
| Pension Plan | | RIM Plan | | Post-retirement Plan | | Split-Dollar Life Insurance | | |
| 2020 | | 2019 | | 2020 | | 2019 | | 2020 | | 2019 | | 2020 | | 2019 | | Affected Line Item in the Consolidated Statements of Income |
| (In thousands) | | |
| | | | | | | | | | | | | | | | | |
Service cost | $ | 2,032 | | | $ | 1,746 | | | $ | 67 | | | $ | 53 | | | $ | 99 | | | $ | 84 | | | $ | 120 | | | $ | 88 | | | Compensation and employee benefits |
Interest cost | 1,824 | | | 2,090 | | | 102 | | | 116 | | | 171 | | | 207 | | | 135 | | | 114 | | | Other non-interest expense |
Expected return on plan assets | (5,908) | | | (5,802) | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | Other non-interest expense |
Amortization: | | | | | | | | | | | | | | | | | |
Prior service cost | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 14 | | | 14 | | | Other non-interest expense |
Net loss | 1,492 | | | 770 | | | 99 | | | 61 | | | 77 | | | 37 | | | 113 | | | 62 | | | Other non-interest expense |
Net periodic (income) benefit cost | $ | (560) | | | $ | (1,196) | | | $ | 268 | | | $ | 230 | | | $ | 347 | | | $ | 328 | | | $ | 382 | | | $ | 278 | | | |
| | | For the Nine Months Ended September 30, | | | For the Six Months Ended June 30, | |
| | Pension Plan | | RIM Plan | | Post-retirement Plan | | Split-Dollar Life Insurance | | | Pension Plan | | RIM Plan | | Post-retirement Plan | | Split-Dollar Life Insurance | |
| | 2020 | | 2019 | | 2020 | | 2019 | | 2020 | | 2019 | | 2020 | | 2019 | | Affected Line Item in the Consolidated Statements of Income | | 2021 | | 2020 | | 2021 | | 2020 | | 2021 | | 2020 | | 2021 | | 2020 | | Affected Line Item in the Consolidated Statements of Income |
| | (In thousands) | | | | (In thousands) | | |
| Service cost | Service cost | $ | 5,906 | | | $ | 4,748 | | | $ | 201 | | | $ | 159 | | | $ | 297 | | | $ | 252 | | | $ | 346 | | | $ | 264 | | | Compensation and employee benefits | Service cost | $ | 4,300 | | | $ | 3,874 | | | $ | 200 | | | $ | 134 | | | $ | 260 | | | $ | 198 | | | $ | 282 | | | $ | 226 | | | Compensation and employee benefits |
Interest cost | Interest cost | 5,887 | | | 6,478 | | | 306 | | | 348 | | | 513 | | | 621 | | | 384 | | | 342 | | | Other non-interest expense | Interest cost | 3,512 | | | 4,062 | | | 172 | | | 204 | | | 282 | | | 342 | | | 250 | | | 245 | | | Other non-interest expense |
Expected return on plan assets | Expected return on plan assets | (17,383) | | | (15,256) | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | Other non-interest expense | Expected return on plan assets | (12,636) | | | (11,474) | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | Other non-interest expense |
Amortization: | Amortization: | | Amortization: | |
Prior service cost | Prior service cost | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 42 | | | 42 | | | Other non-interest expense | Prior service cost | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 28 | | | 28 | | | Other non-interest expense |
Net loss | Net loss | 3,054 | | | 2,300 | | | 297 | | | 183 | | | 231 | | | 111 | | | 339 | | | 186 | | | Other non-interest expense | Net loss | 2,000 | | | 1,562 | | | 332 | | | 198 | | | 306 | | | 154 | | | 382 | | | 226 | | | Other non-interest expense |
Net periodic (income) benefit cost | Net periodic (income) benefit cost | $ | (2,536) | | | $ | (1,730) | | | $ | 804 | | | $ | 690 | | | $ | 1,041 | | | $ | 984 | | | $ | 1,111 | | | $ | 834 | | | Net periodic (income) benefit cost | $ | (2,824) | | | $ | (1,976) | | | $ | 704 | | | $ | 536 | | | $ | 848 | | | $ | 694 | | | $ | 942 | | | $ | 725 | | |
For the three and ninesix months ended SeptemberJune 30, 2020, a $12.0 million contribution was2021, 0 contributions were made to the Pension Plan. The net periodic cost (income) for pension benefits, other post-retirement and split dollar life insurance benefits for the three and ninesix months ended SeptemberJune 30, 20202021 were calculated using the most recent available benefit valuations.
Through the acquisition of the Roselle entities, the Company acquired a non-contributory defined benefit supplemental executive retirement plan with the only participant being a former president of Roselle Bank. For the three and ninesix months ended SeptemberJune 30, 2021 and 2020, the Company recorded a net periodic benefit cost of $2,000 and $4,000, and $8,000,$4,000 and $4,000, respectively, in connection with this plan.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
14. Fair Value Measurements
The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The determination of fair values of financial instruments often requires the use of estimates. Where quoted market values in an active market are not readily available, the Company utilizes various valuation techniques to estimate fair value.
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 the exchange price that would be received 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 on the measurement date. There are three levels of inputs that may be used to measure fair values:
Level 1: Unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access on the measurement date.
Level 2: 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 or can be corroborated by observable market data for substantially the full term of the asset or liability.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
14. Fair Value Measurements (continued)
Level 3: Prices or valuation techniques that require unobservable inputs that are both significant to the fair value measurement and unobservable (i.e., supported by minimal or no market activity). Valuation techniques include the use of option pricing models, discounted cash flow models and similar techniques.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The methods described below were used to measure fair value of financial instruments as reflected in the tables below on a recurring basis at SeptemberJune 30, 20202021 and December 31, 2019.2020.
Debt Securities Available for Sale, at Fair Value
For debt securities available for sale, fair value was estimated using a market approach. The majority of 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 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. A trust preferred security that is not traded in an active market and Federal Home Loan Mortgage Corporation ("FHLMC") and Federal National Mortgage Association ("FNMA") preferred stock are considered Level 2 instruments.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
14. Fair Value Measurements (continued)
In addition, Level 2 instruments include Atlantic Community Bankers Bank ("ACCB") stock, which is based on redemption at par value and can only be sold to the issuing ACBB or another institution that holds ACBB or another institution that holds ACBB stock.
Derivatives
The Company records all derivatives included in other assets and liabilities on the Consolidated Statements of Financial Condition at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. See note 16 for disclosures related to the accounting treatment for derivatives.
The fair value of the Company's derivatives 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 at September 30, 2020 and December 31, 2019, by level within the fair value hierarchy:
| | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2020 |
| | | 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 | $ | 30,668 | | | $ | 30,668 | | | $ | 0 | | | $ | 0 | |
Mortgage-backed securities and collateralized mortgage obligations | 1,134,106 | | | 0 | | | 1,134,106 | | | 0 | |
Municipal obligations | 1,885 | | | 0 | | | 1,885 | | | 0 | |
Corporate debt securities | 74,181 | | | 0 | | | 74,181 | | | 0 | |
Trust preferred securities | 4,460 | | | 0 | | | 4,460 | | | 0 | |
Total debt securities available for sale | 1,245,300 | | | 30,668 | | | 1,214,632 | | | 0 | |
Equity securities | 4,706 | | | 4,379 | | | 327 | | | 0 | |
Derivative assets | 22,305 | | | 0 | | | 22,305 | | | 0 | |
| $ | 1,272,311 | | | $ | 35,047 | | | $ | 1,237,264 | | | $ | 0 | |
| | | | | | | |
Derivative liabilities | $ | 47,873 | | | $ | 0 | | | $ | 47,873 | | | $ | 0 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
14. Fair Value Measurements (continued)
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 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 | $ | 42,386 | | | $ | 42,386 | | | $ | 0 | | | $ | 0 | |
Mortgage-backed securities and collateralized mortgage obligations | 979,881 | | | 0 | | | 979,881 | | | 0 | |
Municipal obligations | 2,284 | | | 0 | | | 2,284 | | | 0 | |
Corporate debt securities | 69,180 | | | 0 | | | 69,180 | | | 0 | |
Trust preferred securities | 4,605 | | | 0 | | | 4,605 | | | 0 | |
Total debt securities available for sale | 1,098,336 | | | 42,386 | | | 1,055,950 | | | 0 | |
Equity securities | 2,855 | | | 2,587 | | | 268 | | | |
Derivative assets | 185 | | | 0 | | | 185 | | | 0 | |
| $ | 1,101,376 | | | $ | 44,973 | | | $ | 1,056,403 | | | $ | 0 | |
| | | | | | | |
Derivative liabilities | $ | 11,546 | | | $ | 0 | | | $ | 11,546 | | | $ | 0 | |
The following tables present the assets and liabilities reported on the Consolidated Statements of Financial Condition at their fair values at June 30, 2021 and December 31, 2020, by level within the fair value hierarchy:
| | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2021 |
| | | 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 | $ | 39,856 | | | $ | 35,318 | | | $ | 4,538 | | | $ | 0 | |
Mortgage-backed securities and collateralized mortgage obligations | 1,518,275 | | | 0 | | | 1,518,275 | | | 0 | |
Municipal obligations | 19,303 | | | 0 | | | 19,303 | | | 0 | |
Corporate debt securities | 64,979 | | | 0 | | | 64,979 | | | 0 | |
Trust preferred securities | 0 | | | 0 | | | 0 | | | 0 | |
Total debt securities available for sale | 1,642,413 | | | 35,318 | | | 1,607,095 | | | 0 | |
Equity securities | 4,053 | | | 3,707 | | | 346 | | | 0 | |
Derivative assets | 12,741 | | | 0 | | | 12,741 | | | 0 | |
| $ | 1,659,207 | | | $ | 39,025 | | | $ | 1,620,182 | | | $ | 0 | |
| | | | | | | |
Derivative liabilities | $ | 28,347 | | | $ | 0 | | | $ | 28,347 | | | $ | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2020 |
| | | 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 | $ | 25,549 | | | $ | 25,549 | | | $ | 0 | | | $ | 0 | |
Mortgage-backed securities and collateralized mortgage obligations | 1,200,394 | | | 0 | | | 1,200,394 | | | 0 | |
Municipal obligations | 16,862 | | | 0 | | | 16,862 | | | 0 | |
Corporate debt securities | 69,477 | | | 0 | | | 69,477 | | | 0 | |
Trust preferred securities | 4,670 | | | 0 | | | 4,670 | | | 0 | |
Total debt securities available for sale | 1,316,952 | | | 25,549 | | | 1,291,403 | | | 0 | |
Equity securities | 5,418 | | | 5,072 | | | 346 | | | 0 |
Derivative assets | 19,425 | | | 0 | | | 19,425 | | | 0 | |
| $ | 1,341,795 | | | $ | 30,621 | | | $ | 1,311,174 | | | $ | 0 | |
| | | | | | | |
Derivative liabilities | $ | 42,384 | | | $ | 0 | | | $ | 42,384 | | | $ | 0 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
14. Fair Value Measurements (continued)
There were no Level 3 assets measured at fair value on a recurring basis at SeptemberJune 30, 20202021 and December 31, 2019.2020.
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 at SeptemberJune 30, 20202021 and December 31, 2019.2020.
Collateral Dependent Impaired Loans
Loans which meet certain criteria are evaluated individually for impairment. Loan impairment is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. 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 6.0% and 8.0%. The Company classifies these loans as Level 3 within the fair value hierarchy.
Mortgage Servicing Rights, Net ("MSR's")
Mortgage servicing rights are carried at the lower of cost or estimated fair value. The estimated fair value of MSRs is obtained through an analysis of future cash flows, incorporating assumptions that market participants would use in determining fair value including market discount rates, prepayments speeds, servicing income, servicing costs, default rates and other market driven data, including the market's perception of future interest rate movements. The prepayment speed and the discount rate are considered two of the most significant inputs in the model. A significant degree of judgment is involved in valuing the mortgage servicing rights using Level 3 inputs. The use of different assumptions could have a significant effect on this fair value estimate.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
14. Fair Value Measurements (continued)
The following tables present the assets and liabilities reported on the Consolidated Statements of Financial Condition at their fair values on a non-recurring basis at SeptemberJune 30, 20202021 and December 31, 2019,2020, by level within the fair value hierarchy:
| | | September 30, 2020 | | June 30, 2021 |
| | | Fair Value Measurements | | | 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) | | 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) |
| Impaired loans | Impaired loans | $ | 708 | | | $ | 0 | | | $ | 0 | | | $ | 708 | | Impaired loans | $ | 1,232 | | | $ | 0 | | | $ | 0 | | | $ | 1,232 | |
| Mortgage servicing rights | Mortgage servicing rights | $ | 774 | | | $ | 0 | | | $ | 0 | | | $ | 774 | | Mortgage servicing rights | 2,319 | | | 0 | | | 0 | | | 2,319 | |
| | $ | 1,482 | | | $ | 0 | | | $ | 0 | | | $ | 1,482 | | | $ | 3,551 | | | $ | 0 | | | $ | 0 | | | $ | 3,551 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 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) |
| | | | | | | |
Impaired loans | $ | 1,063 | | | $ | 0 | | | $ | 0 | | | $ | 1,063 | |
| | | | | | | |
Mortgage servicing rights | 681 | | | 0 | | | 0 | | | 681 | |
| $ | 1,744 | | | $ | 0 | | | $ | 0 | | | $ | 1,744 | |
At September 30, 2020, there were no impaired loans or real estate owned measured at fair value on a non-recurring basis.
The following table presents information for Level 3 assets measured at fair value on a non-recurring basis at September 30, 2020 and December 31, 2019:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2020 |
| Fair Value | | Valuation Methodology | | Unobservable Inputs | | Range of Inputs | | Weighted Average |
| (Dollars in thousands) |
| | | | | | | | | |
Impaired loans | $ | 708 | | | Estimated cash flow | | Expected value of future cash flows (1) | | 0% | | 0% |
| | | | | | | | | |
Mortgage servicing rights | $ | 774 | | | Estimated cash flow | | Prepayment speeds and discount rates(3) | | 8.9% - 27.7% | | 18.3% |
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2020 |
| | | 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 | 1,338 | | | 0 | | | 0 | | | 1,338 | |
| $ | 1,338 | | | $ | 0 | | | $ | 0 | | | $ | 1,338 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
14. Fair Value Measurements (continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2019 |
| Fair Value | | Valuation Methodology | | Unobservable Inputs | | Range of Inputs | | Weighted Average |
| (Dollars in thousands) |
| | | | | | | | | |
Impaired loans | $ | 1,063 | | | Estimated cash flow | | Expected value of future cash flows (1) | | 0% | | 0% |
| | | | | | | | | |
Mortgage servicing rights | 681 | | | Estimated cash flow | | Prepayment speeds and discount rates (2) | | 3.6% - 24.0% | | 12.7% |
| | | | | | | | | |
(1) Value based on management's estimate of expected future cash flows. |
(2) Value of SBA servicing rights based on a discount rate of 11.75%. |
(3) Value of SBA servicing rights based on a discount rate of 10.25%. |
The following table presents information for Level 3 assets measured at fair value on a non-recurring basis at June 30, 2021 and December 31, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2021 |
| Fair Value | | Valuation Methodology | | Unobservable Inputs | | Range of Inputs | | Weighted Average |
| (Dollars in thousands) |
| | | | | | | | | |
Impaired loans | $ | 1,232 | | | Other | | Contracted sale price of collateral | | 0 | % | | 0 | % |
| | | | | | | | | |
Mortgage servicing rights | 2,319 | | | Discounted cash flow | | Prepayment speeds and discount rates (1) | | 8.1% - 24.3% | | 11.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2020 |
| Fair Value | | Valuation Methodology | | Unobservable Inputs | | Range of Inputs | | Weighted Average |
| (Dollars in thousands) |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Mortgage servicing rights | 1,338 | | | Discounted cash flow | | Prepayment speeds and discount rates (1) | | 9.7% - 26.2% | | 16.7% |
| | | | | | | | | |
|
|
(1) Value of SBA servicing rights based on a discount rate of 10.25%. |
Other Fair Value Disclosures
The Company is required to disclose estimated fair value of financial instruments, both assets and liabilities on and off the balance sheet, for which it is practicable to estimate fair value. A description of the valuation methodologies used for those assets and liabilities not recorded at fair value on a recurring or non-recurring basis are set forth below.
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.
Debt Securities Held to Maturity
For debt securities held to maturity, fair value was estimated using a market approach. The majority of the Company’s securities are fixed income instruments that are not quoted on an exchange, but are traded in active markets. Prices for these instruments are obtained through third-party data service providers or dealer market participants with which the Company has historically transacted both purchases and sales of securities. Prices obtained from these sources include market quotations and matrix pricing. Matrix pricing, a Level 2 input, is a mathematical technique used principally to value certain securities to 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.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
14. Fair Value Measurements (continued)
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 within the fair value hierarchy.
Federal Home Loan Bank Stock ("FHLB")
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.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
14. Fair Value Measurements (continued)
Loans Receivable
Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial mortgage, residential mortgage, commercial, construction, and consumer and other. Each loan category is further segmented into fixed and adjustable rate interest terms and into performing and non-performing categories.
The fair value of performing loans was estimated using a combination of techniques, including a discounted cash flow model that utilizes a discount rate that reflects the Company's current pricing for loans with similar characteristics and remaining maturity, adjusted by an amount for estimated credit losses inherent in the portfolio at the balance sheet date. The rates take into account the expected yield curve, as well as an adjustment for prepayment risk, when applicable. The Company classifies the estimated fair value of its loan portfolio as Level 3.
The fair value for non-performing loans deemed significant was based on recent external appraisals of collateral securing such loans, adjusted for the timing of anticipated cash flows. The Company classifies the estimated fair value of its non-performing loan portfolio as Level 3.
Deposits
The fair value of deposits with no stated maturity, such as demand, money market, and savings and club deposits 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.
Borrowings
The fair value of borrowings was estimated by discounting future cash flows using rates available for debt with similar terms and maturities and is classified by the Company as Level 2 within the fair value hierarchy.
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.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
14. Fair Value Measurements (continued)
The following tables present the assets and liabilities reported on the Consolidated Statements of Financial Condition at their fair values at SeptemberJune 30, 20202021 and December 31, 2019:2020:
| | | September 30, 2020 | | June 30, 2021 |
| | | Fair Value Measurements | | | 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: | Financial assets: | | Financial assets: | |
Cash and cash equivalents | Cash and cash equivalents | $ | 265,896 | | | $ | 265,896 | | | $ | 265,896 | | | $ | 0 | | | $ | 0 | | Cash and cash equivalents | $ | 387,231 | | | $ | 387,231 | | | $ | 387,231 | | | $ | 0 | | | $ | 0 | |
Debt securities available for sale | Debt securities available for sale | 1,245,300 | | | 1,245,300 | | | 30,668 | | | 1,214,632 | | | 0 | | Debt securities available for sale | 1,642,413 | | | 1,642,413 | | | 35,318 | | | 1,607,095 | | | 0 | |
Debt securities held to maturity | Debt securities held to maturity | 272,712 | | | 288,439 | | | 5,004 | | | 283,435 | | | 0 | | Debt securities held to maturity | 402,145 | | | 415,033 | | | 0 | | | 415,033 | | | 0 | |
Equity securities | Equity securities | 4,706 | | | 4,706 | | | 4,379 | | | 327 | | | 0 | | Equity securities | 4,053 | | | 4,053 | | | 3,707 | | | 346 | | | 0 | |
Federal Home Loan Bank stock | Federal Home Loan Bank stock | 53,416 | | | 53,416 | | | 0 | | | 53,416 | | | 0 | | Federal Home Loan Bank stock | 40,922 | | | 40,922 | | | 0 | | | 40,922 | | | 0 | |
| Loans receivable, net | Loans receivable, net | 6,392,712 | | | 6,657,586 | | | 0 | | | 0 | | | 6,657,586 | | Loans receivable, net | 5,947,904 | | | 6,206,197 | | | 0 | | | 0 | | | 6,206,197 | |
| Derivative assets | | Derivative assets | 12,741 | | | 12,741 | | | 0 | | | 12,741 | | | 0 | |
| Financial liabilities: | Financial liabilities: | | — | | | Financial liabilities: | |
Deposits | Deposits | $ | 6,629,648 | | | $ | 6,649,238 | | | $ | 0 | | | $ | 6,649,238 | | | $ | 0 | | Deposits | $ | 7,079,276 | | | $ | 7,084,350 | | | $ | 0 | | | $ | 7,084,350 | | | $ | 0 | |
Borrowings | Borrowings | 1,015,210 | | | 1,027,590 | | | 0 | | | 1,027,590 | | | 0 | | Borrowings | 749,683 | | | 755,076 | | | 0 | | | 755,076 | | | 0 | |
Derivative liabilities | Derivative liabilities | 47,873 | | | 47,873 | | | 0 | | | 47,873 | | | 0 | | Derivative liabilities | 28,347 | | | 28,347 | | | 0 | | | 28,347 | | | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2019 |
| | | 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 | $ | 75,547 | | | $ | 75,547 | | | $ | 75,547 | | | $ | 0 | | | $ | 0 | |
Debt securities available for sale | 1,098,336 | | | 1,098,336 | | | 42,386 | | | 1,055,950 | | | 0 | |
Debt securities held to maturity | 285,756 | | | 289,505 | | | 19,960 | | | 269,545 | | | 0 | |
Equity securities | 2,855 | | | 2,855 | | | 2,587 | | | 268 | | | 0 | |
Federal Home Loan Bank stock | 69,579 | | | 69,579 | | | 0 | | | 69,579 | | | 0 | |
| | | | | | | | | |
Loans receivable, net | 6,135,857 | | | 6,219,008 | | | 0 | | | 0 | | | 6,219,008 | |
Derivative assets | 185 | | | 185 | | | 0 | | | 185 | | | 0 | |
| | | | | | | | | |
Financial liabilities: | | | | | | | | | |
Deposits | $ | 5,645,842 | | | $ | 5,654,075 | | | $ | 0 | | | $ | 5,654,075 | | | $ | 0 | |
Borrowings | 1,407,022 | | | 1,411,962 | | | 0 | | | 1,411,962 | | | 0 | |
Derivative liabilities | 11,546 | | | 11,546 | | | 0 | | | 11,546 | | | 0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2020 |
| | | 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 | $ | 422,957 | | | $ | 422,957 | | | $ | 422,957 | | | $ | 0 | | | $ | 0 | |
Debt securities available for sale | 1,316,952 | | | 1,316,952 | | | 25,549 | | | 1,291,403 | | | 0 | |
Debt securities held to maturity | 262,720 | | | 277,091 | | | 5,001 | | | 272,090 | | | 0 | |
Equity securities | 5,418 | | | 5,418 | | | 5,072 | | | 346 | | | 0 | |
Federal Home Loan Bank stock | 43,759 | | | 43,759 | | | 0 | | | 43,759 | | | 0 | |
| | | | | | | | | |
Loans receivable, net | 6,107,094 | | | 6,394,524 | | | 0 | | | 0 | | | 6,394,524 | |
Derivative assets | 19,425 | | | 19,425 | | | 0 | | | 19,425 | | | 0 | |
| | | | | | | | | |
Financial liabilities: | | | | | | | | | |
Deposits | $ | 6,778,624 | | | $ | 6,793,034 | | | $ | 0 | | | $ | 6,793,034 | | | $ | 0 | |
Borrowings | 799,364 | | | 808,853 | | | 0 | | | 808,853 | | | 0 | |
Derivative liabilities | 42,384 | | | 42,384 | | | 0 | | | 42,384 | | | 0 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
14. Fair Value Measurements (continued)
Limitations
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because limited markets exist for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on and off balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Other significant assets and liabilities that are not considered financial assets or liabilities include goodwill and intangibles assets, deferred tax assets, office properties and equipment, and bank-owned life insurance.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
15. Other Comprehensive Income (Loss)
The following tables present the components of other comprehensive income (loss) income,, both gross and net of tax, for the three and ninesix months ended SeptemberJune 30, 20202021 and 2019:2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, |
| 2020 | | 2019 |
| Before Tax | | Tax Effect | | After Tax | | Before Tax | | Tax Effect | | After Tax |
| (In thousands) |
Components of other comprehensive (loss) income: | | | | | | | | | | | |
Unrealized (losses) gains on debt securities available for sale: | $ | (3,688) | | | $ | 775 | | | $ | (2,913) | | | $ | 6,186 | | | $ | (1,271) | | | $ | 4,915 | |
Accretion of unrealized gain on debt securities reclassified as held to maturity | (4) | | | 0 | | | (4) | | | 2 | | | 0 | | | 2 | |
Reclassification adjustment for gains included in net income | 0 | | | 0 | | | 0 | | | 1,256 | | | (291) | | | 965 | |
| (3,692) | | | 775 | | | (2,917) | | | 7,444 | | | (1,562) | | | 5,882 | |
Derivatives: | | | | | | | | | | | |
Unrealized gain (loss) on swap contracts accounted for as cash flow hedges | 2,256 | | | (471) | | | 1,785 | | | (1,619) | | | 340 | | | (1,279) | |
| 2,256 | | | (471) | | | 1,785 | | | (1,619) | | | 340 | | | (1,279) | |
| | | | | | | | | | | |
Employee benefit plans: | | | | | | | | | | | |
Amortization of prior service cost included in net income | (14) | | | 3 | | | (11) | | | (14) | | | 3 | | | (11) | |
Reclassification adjustment of actuarial net gain included in net income | (1,071) | | | 225 | | | (846) | | | (930) | | | 195 | | | (735) | |
Change in funded status of retirement obligations | (41,434) | | | 8,701 | | | (32,733) | | | 1,887 | | | (397) | | | 1,490 | |
| (42,519) | | | 8,929 | | | (33,590) | | | 943 | | | (199) | | | 744 | |
Total other comprehensive (loss) income | $ | (43,955) | | | $ | 9,233 | | | $ | (34,722) | | | $ | 6,768 | | | $ | (1,421) | | | $ | 5,347 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, |
| 2021 | | 2020 |
| Before Tax | | Tax Effect | | After Tax | | Before Tax | | Tax Effect | | After Tax |
| (In thousands) |
Components of other comprehensive income (loss): | | | | | | | | | | | |
Unrealized gains on debt securities available for sale: | $ | 6,645 | | | $ | (1,857) | | | $ | 4,788 | | | $ | 8,041 | | | $ | (1,689) | | | $ | 6,352 | |
Accretion of unrealized gain on debt securities reclassified as held to maturity | (17) | | | 5 | | | (12) | | | (2) | | | 0 | | | (2) | |
Reclassification adjustment for (loss) included in net income | (281) | | | 79 | | | (202) | | | 0 | | | 0 | | | 0 | |
| 6,347 | | | (1,773) | | | 4,574 | | | 8,039 | | | (1,689) | | | 6,350 | |
Derivatives: | | | | | | | | | | | |
Unrealized gain (loss) on swap contracts accounted for as cash flow hedges | 1,315 | | | (367) | | | 948 | | | (945) | | | 195 | | | (750) | |
| 1,315 | | | (367) | | | 948 | | | (945) | | | 195 | | | (750) | |
| | | | | | | | | | | |
Employee benefit plans: | | | | | | | | | | | |
Amortization of prior service cost included in net income | (14) | | | 3 | | | (11) | | | (14) | | | 3 | | | (11) | |
Reclassification adjustment of actuarial net (loss) included in net income | (1,511) | | | 422 | | | (1,089) | | | (1,071) | | | 226 | | | (845) | |
Change in funded status of retirement obligations | 34,441 | | | (9,623) | | | 24,818 | | | 2,170 | | | (456) | | | 1,714 | |
| 32,916 | | | (9,198) | | | 23,718 | | | 1,085 | | | (227) | | | 858 | |
Total other comprehensive income (loss) | $ | 40,578 | | | $ | (11,338) | | | $ | 29,240 | | | $ | 8,179 | | | $ | (1,721) | | | $ | 6,458 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
15. Other Comprehensive Income (Loss) (continued)
| | | For the Nine Months Ended September 30, | | For the Six Months Ended June 30, |
| | 2020 | | 2019 | | 2021 | | 2020 |
| | Before Tax | | Tax Effect | | After Tax | | Before Tax | | Tax Effect | | After Tax | | Before Tax | | Tax Effect | | After Tax | | Before Tax | | Tax Effect | | After Tax |
| | (In thousands) | | (In thousands) |
Components of other comprehensive income (loss): | Components of other comprehensive income (loss): | | Components of other comprehensive income (loss): | |
Unrealized gains on debt securities available for sale: | $ | 28,736 | | | $ | (6,031) | | | $ | 22,705 | | | $ | 35,781 | | | $ | (7,479) | | | $ | 28,302 | | |
Accretion of unrealized gain on debt securities reclassified as held to maturity | 1 | | | 0 | | | 1 | | | 13 | | | (3) | | | 10 | | |
Reclassification adjustment for gains included in net income | 370 | | | (81) | | | 289 | | | 1,721 | | | (396) | | | 1,325 | | |
Unrealized (loss) gains on debt securities available for sale: | | Unrealized (loss) gains on debt securities available for sale: | $ | (13,196) | | | $ | 950 | | | $ | (12,246) | | | $ | 32,425 | | | $ | (6,806) | | | $ | 25,619 | |
Accretion of unrealized (loss) gain on debt securities reclassified as held to maturity | | Accretion of unrealized (loss) gain on debt securities reclassified as held to maturity | (21) | | | 23 | | | 2 | | | 5 | | | (1) | | | 4 | |
Reclassification adjustment for (loss) gain included in net income | | Reclassification adjustment for (loss) gain included in net income | (281) | | | 79 | | | (202) | | | 370 | | | (81) | | | 289 | |
| | 29,107 | | | (6,112) | | | 22,995 | | | 37,515 | | | (7,878) | | | 29,637 | | | (13,498) | | | 1,052 | | | (12,446) | | | 32,800 | | | (6,888) | | | 25,912 | |
Derivatives: | Derivatives: | | | | | | | | | | | | Derivatives: | | | | | | | | | | | |
Unrealized (loss) on swap contracts accounted for as cash flow hedges | (13,050) | | | 2,736 | | | (10,314) | | | (11,059) | | | 2,324 | | | (8,735) | | |
Unrealized gain (loss) on swap contracts accounted for as cash flow hedges | | Unrealized gain (loss) on swap contracts accounted for as cash flow hedges | 7,147 | | | (516) | | | 6,631 | | | (15,306) | | | 3,207 | | | (12,099) | |
| | (13,050) | | | 2,736 | | | (10,314) | | | (11,059) | | | 2,324 | | | (8,735) | | | 7,147 | | | (516) | | | 6,631 | | | (15,306) | | | 3,207 | | | (12,099) | |
| Employee benefit plans: | Employee benefit plans: | | Employee benefit plans: | |
Amortization of prior service cost included in net income | Amortization of prior service cost included in net income | (42) | | | 10 | | | (32) | | | (42) | | | 9 | | | (33) | | Amortization of prior service cost included in net income | (28) | | | 8 | | | (20) | | | (28) | | | 6 | | | (22) | |
Reclassification adjustment of actuarial net (loss) included in net income | Reclassification adjustment of actuarial net (loss) included in net income | (3,213) | | | 674 | | | (2,539) | | | (2,779) | | | 583 | | | (2,196) | | Reclassification adjustment of actuarial net (loss) included in net income | (3,022) | | | 844 | | | (2,178) | | | (2,142) | | | 450 | | | (1,692) | |
Change in funded status of retirement obligations | Change in funded status of retirement obligations | (37,093) | | | 7,789 | | | (29,304) | | | (2,785) | | | 585 | | | (2,200) | | Change in funded status of retirement obligations | 37,491 | | | (3,120) | | | 34,371 | | | 4,340 | | | (911) | | | 3,429 | |
| | (40,348) | | | 8,473 | | | (31,875) | | | (5,606) | | | 1,177 | | | (4,429) | | | 34,441 | | | (2,268) | | | 32,173 | | | 2,170 | | | (455) | | | 1,715 | |
Total other comprehensive (loss) income | $ | (24,291) | | | $ | 5,097 | | | $ | (19,194) | | | $ | 20,850 | | | $ | (4,377) | | | $ | 16,473 | | |
Total other comprehensive income (loss) | | Total other comprehensive income (loss) | $ | 28,090 | | | $ | (1,732) | | | $ | 26,358 | | | $ | 19,664 | | | $ | (4,136) | | | $ | 15,528 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
15. 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 ninesix months ended SeptemberJune 30, 20202021 and 2019:2020:
| | | For the Three Months Ended September 30, | | For the Three Months Ended June 30, |
| | 2020 | | 2019 | | 2021 | | 2020 |
| | Unrealized Gains on Debt Securities Available for Sale | | Unrealized (Losses) on Swaps | | Employee Benefit Plans | | Accumulated Other Comprehensive (Loss) | | Unrealized Gains on Debt Securities Available for Sale | | Unrealized (Losses) on Swaps | | Employee Benefit Plans | | Accumulated Other Comprehensive (Loss) | | Unrealized Gains on Debt Securities Available for Sale | | Unrealized (Losses) on Swaps | | Employee Benefit Plans | | Accumulated Other Comprehensive (Loss) | | Unrealized Gains on Debt Securities Available for Sale | | Unrealized (Losses) on Swaps | | Employee Benefit Plans | | Accumulated Other Comprehensive (Loss) |
| | (In thousands) | | (In thousands) |
| Balance at beginning of period | Balance at beginning of period | $ | 35,225 | | | $ | (20,573) | | | $ | (67,859) | | | $ | (53,207) | | | $ | 9,981 | | | $ | (9,462) | | | $ | (61,838) | | | $ | (61,319) | | Balance at beginning of period | $ | 14,008 | | | $ | (11,173) | | | $ | (75,342) | | | $ | (72,507) | | | $ | 28,875 | | | $ | (19,823) | | | $ | (68,717) | | | $ | (59,665) | |
| Current period changes in other comprehensive income (loss) | Current period changes in other comprehensive income (loss) | (2,917) | | | 1,785 | | | (33,590) | | | (34,722) | | | 5,882 | | | (1,279) | | | 744 | | | 5,347 | | Current period changes in other comprehensive income (loss) | 4,574 | | | 948 | | | 23,718 | | | 29,240 | | | 6,350 | | | (750) | | | 858 | | | 6,458 | |
Total other comprehensive income (loss) | Total other comprehensive income (loss) | $ | 32,308 | | | $ | (18,788) | | | $ | (101,449) | | | $ | (87,929) | | | $ | 15,863 | | | $ | (10,741) | | | $ | (61,094) | | | $ | (55,972) | | Total other comprehensive income (loss) | $ | 18,582 | | | $ | (10,225) | | | $ | (51,624) | | | $ | (43,267) | | | $ | 35,225 | | | $ | (20,573) | | | $ | (67,859) | | | $ | (53,207) | |
| | | For the Nine Months Ended September 30, | | For the Six Months Ended June 30, |
| | 2020 | | 2019 | | 2021 | | 2020 |
| | Unrealized Gains on Debt Securities Available for Sale | | Unrealized (Losses) on Swaps | | Employee Benefit Plans | | Accumulated Other Comprehensive (Loss) | | Unrealized (Losses) Gains on Debt Securities Available for Sale | | Unrealized (Losses) on Swaps | | Employee Benefit Plans | | Accumulated Other Comprehensive (Loss) | | Unrealized Gains on Debt Securities Available for Sale | | Unrealized (Losses) on Swaps | | Employee Benefit Plans | | Accumulated Other Comprehensive (Loss) | | Unrealized Gains on Debt Securities Available for Sale | | Unrealized (Losses) on Swaps | | Employee Benefit Plans | | Accumulated Other Comprehensive (Loss) |
| | (In thousands) | | (In thousands) |
| Balance at beginning of period | Balance at beginning of period | $ | 9,313 | | | $ | (8,474) | | | $ | (69,574) | | | $ | (68,735) | | | $ | (13,226) | | | $ | (2,006) | | | $ | (56,665) | | | $ | (71,897) | | Balance at beginning of period | $ | 31,028 | | | $ | (16,856) | | | $ | (83,797) | | | $ | (69,625) | | | $ | 9,313 | | | $ | (8,474) | | | $ | (69,574) | | | $ | (68,735) | |
Effect of adoption of ASU 2016-01 | — | | | — | | | — | | | — | | | (548) | | | — | | | — | | | (548) | | |
Balance at January 1, | 9,313 | | | (8,474) | | | (69,574) | | | (68,735) | | | (13,774) | | | (2,006) | | | (56,665) | | | (72,445) | | |
| Current period changes in other comprehensive income (loss) | Current period changes in other comprehensive income (loss) | 22,995 | | | (10,314) | | | (31,875) | | | (19,194) | | | 29,637 | | | (8,735) | | | (4,429) | | | 16,473 | | Current period changes in other comprehensive income (loss) | (12,446) | | | 6,631 | | | 32,173 | | | 26,358 | | | 25,912 | | | (12,099) | | | 1,715 | | | 15,528 | |
Total other comprehensive income (loss) | Total other comprehensive income (loss) | $ | 32,308 | | | $ | (18,788) | | | $ | (101,449) | | | $ | (87,929) | | | $ | 15,863 | | | $ | (10,741) | | | $ | (61,094) | | | $ | (55,972) | | Total other comprehensive income (loss) | $ | 18,582 | | | $ | (10,225) | | | $ | (51,624) | | | $ | (43,267) | | | $ | 35,225 | | | $ | (20,573) | | | $ | (67,859) | | | $ | (53,207) | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
15. Other Comprehensive Income (Loss) (continued)
The following tables reflect amounts reclassified from accumulated other comprehensive income (loss) to the Consolidated Statements of Income and the affected line item in the statement where net income is presented for the three and ninesix months ended SeptemberJune 30, 20202021 and 2019:2020:
| | | Accumulated Other Comprehensive Income (Loss) Components | | | Accumulated Other Comprehensive Income (Loss) Components | |
| | For the Three Months Ended September 30, | | Affected Line Items in the Consolidated Statements of Income | | For the Three Months Ended June 30, | | Affected Line Items in the Consolidated Statements of Income |
| | 2020 | | 2019 | | | | 2021 | | 2020 | | |
| | (In thousands) | | | (In thousands) | |
| Reclassification adjustment for gains included in net income | | $ | 0 | | | $ | 1,256 | | | Gain on securities transactions | |
Reclassification adjustment for (loss) included in net income | | Reclassification adjustment for (loss) included in net income | | $ | (281) | | | $ | 0 | | | (Loss) gain on securities transactions |
Reclassification adjustment of actuarial net (loss) included in net income | Reclassification adjustment of actuarial net (loss) included in net income | | (1,071) | | | (930) | | | Other non-interest expense | Reclassification adjustment of actuarial net (loss) included in net income | | (1,511) | | | (1,071) | | | Other non-interest expense |
Total before tax | Total before tax | | (1,071) | | | 326 | | | Total before tax | | (1,792) | | | (1,071) | | |
Income (tax) benefit | Income (tax) benefit | | 225 | | | (96) | | | Income (tax) benefit | | 501 | | | 226 | | |
Net of tax | Net of tax | | $ | (846) | | | $ | 230 | | | Net of tax | | $ | (1,291) | | | $ | (845) | | |
| | | | | | | | | | | | | | | | | | | | |
| | Accumulated Other Comprehensive Income (Loss) Components | | |
| | For the Nine Months Ended September 30, | | Affected Line Items in the Consolidated Statements of Income |
| | 2020 | | 2019 | | |
| | (In thousands) | | |
| | | | | | |
Reclassification adjustment for gains included in net income | | $ | 370 | | | $ | 1,721 | | | Gain on securities transactions |
Reclassification adjustment of actuarial net (loss) included in net income | | (3,213) | | | (2,779) | | | Other non-interest expense |
Total before tax | | (2,843) | | | (1,058) | | | |
Income (tax) benefit | | 593 | | | 187 | | | |
Net of tax | | $ | (2,250) | | | $ | (871) | | | |
| | | | | | | | | | | | | | | | | | | | |
| | Accumulated Other Comprehensive Income (Loss) Components | | |
| | For the Six Months Ended June 30, | | Affected Line Items in the Consolidated Statements of Income |
| | 2021 | | 2020 | | |
| | (In thousands) | | |
| | | | | | |
Reclassification adjustment for (loss) gain included in net income | | $ | (281) | | | $ | 370 | | | (Loss) gain on securities transactions |
Reclassification adjustment of actuarial net (loss) included in net income | | (3,022) | | | (2,142) | | | Other non-interest expense |
Total before tax | | (3,303) | | | (1,772) | | | |
Income (tax) benefit | | 923 | | | 369 | | | |
Net of tax | | $ | (2,380) | | | $ | (1,403) | | | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
16. Derivatives and Hedging Activities
The Company uses derivative financial instruments as components of its market risk management, principally to manage interest rate 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 and interest rate swap contracts. The risk associated with these transactions is mitigated by simultaneously entering into similar transactions having essentially offsetting terms with a third party. In addition, the Company executes interest rate swaps with third parties in order to hedge the interest rate risk of short-term FHLB advances.
Currency Forward Contracts. At SeptemberJune 30, 20202021 and December 31, 2019,2020, the Company had 0 currency forward contracts in place with commercial banking customers.
Interest Rate Swaps. At Septemberboth June 30, 2021 and December 31, 2020, the Company had interest rate swaps in place with 4648 commercial banking customers executed by offsetting interest rate swaps with third parties, with an aggregated notional amount of $170.9 million. At December 31, 2019, the Company had interest rate swaps in place with 22 commercial banking customers executed by offsetting interest rate swaps with third parties, with an aggregated notional amount of $169.9$175.1 million. These derivatives are not designated as hedges and are not speculative. These interest rate swaps do not meet hedge accounting requirements.
At SeptemberJune 30, 20202021 and December 31, 2019,2020, the Company had 3228 and 2931 interest rate swaps with notional amounts of $445.0$400.0 million and $410.0$430.0 million, respectively, hedging certain FHLB advances. These interest rate swaps meet the cash flow hedge accounting requirements. 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 payments over the life of the agreements without the exchange of the underlying notional amount.
For the three and ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, the Company did not record any hedge ineffectiveness associated with these contracts.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
16. Derivatives and Hedging Activities (continued)
The tables below present the fair value of the Company’s derivative financial instruments as well as their classification in the Consolidated Statements of Financial Condition at SeptemberJune 30, 20202021 and December 31, 2019:2020:
| | | September 30, 2020 | | June 30, 2021 |
| | Asset Derivative | | Liability Derivative | | Asset Derivative | | Liability Derivative |
| | Consolidated Statements of Financial Condition | | Fair Value | | Consolidated Statements of Financial Condition | | Fair Value | | Consolidated Statements of Financial Condition | | Fair Value | | Consolidated Statements of Financial Condition | | Fair Value |
| | | | (In thousands) | | | | | | (In thousands) | | |
Derivatives: | Derivatives: | | Derivatives: | |
Interest rate swaps | Interest rate swaps | Other Assets | | $ | 22,305 | | | Other Liabilities | | $ | 47,873 | | Interest rate swaps | Other Assets | | $ | 12,741 | | | Other Liabilities | | $ | 28,347 | |
| Total derivative instruments | Total derivative instruments | | $ | 22,305 | | | $ | 47,873 | | Total derivative instruments | | $ | 12,741 | | | $ | 28,347 | |
| | | December 31, 2019 | | December 31, 2020 |
| | Asset Derivative | | Liability Derivative | | Asset Derivative | | Liability Derivative |
| | Consolidated Statements of Financial Condition | | Fair Value | | Consolidated Statements of Financial Condition | | Fair Value | | Consolidated Statements of Financial Condition | | Fair Value | | Consolidated Statements of Financial Condition | | Fair Value |
| | | | (In thousands) | | | | | | (In thousands) | | |
Derivatives: | Derivatives: | | Derivatives: | |
Interest rate swaps | Interest rate swaps | Other Assets | | $ | 185 | | | Other Liabilities | | $ | 11,546 | | Interest rate swaps | Other Assets | | $ | 19,425 | | | Other Liabilities | | $ | 42,384 | |
| Total derivative instruments | Total derivative instruments | | $ | 185 | | | $ | 11,546 | | Total derivative instruments | | $ | 19,425 | | | $ | 42,384 | |
For the three months ended SeptemberJune 30, 2021 and 2020, and 2019, (gains)/losses of $(44,000)$167,000 and $75,000,$24,000, respectively, were recorded for changes in fair value of interest rate swaps with third parties. For the ninesix months ended SeptemberJune 30, 2021 and 2020, and 2019, (gains)/losses of $406,000$(201,000) and $288,000,$450,000, respectively, were recorded for changes in fair value of interest rate swaps with third parties.
At Septemberboth June 30, 20202021 and December 31, 2019,2020, accrued interest was $1.1 million and $344,000, respectively.$1.0 million.
The Company has agreements with counterparties that contain a provision that if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default of its derivative obligations.
At SeptemberJune 30, 2020,2021, the termination value of derivatives in a net liability position, which includes accrued interest, was $24.5$14.6 million. The Company has collateral posting thresholds with certain of its derivative counterparties, and has posted collateral of $47.1$27.9 million against its obligations under these agreements.
17. 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
17. 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 ninesix months ended SeptemberJune 30, 20202021 and 2019.2020.
| | | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, | | For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| | 2020 | | 2019 | | 2020 | | 2019 | | 2021 | | 2020 | | 2021 | | 2020 |
| | (In thousands) | | (In thousands) |
Non-interest income | Non-interest income | | Non-interest income | |
In-scope of Topic 606: | In-scope of Topic 606: | | In-scope of Topic 606: | |
Demand deposit account fees | Demand deposit account fees | $ | 787 | | | $ | 1,106 | | | $ | 2,706 | | | $ | 3,116 | | Demand deposit account fees | $ | 858 | | | $ | 620 | | | $ | 1,696 | | | $ | 1,919 | |
Title insurance fees | Title insurance fees | 1,218 | | | 1,350 | | | 3,445 | | | 3,490 | | Title insurance fees | 1,503 | | | 996 | | | 3,123 | | | 2,227 | |
Other non-interest income | Other non-interest income | 1,749 | | | 1,189 | | | 4,688 | | | 3,467 | | Other non-interest income | 1,956 | | | 1,527 | | | 3,697 | | | 2,944 | |
Total in-scope non-interest income | Total in-scope non-interest income | 3,754 | | | 3,645 | | | 10,839 | | | 10,073 | | Total in-scope non-interest income | 4,317 | | | 3,143 | | | 8,516 | | | 7,090 | |
Total out-of-scope non-interest income | Total out-of-scope non-interest income | 4,155 | | | 6,470 | | | 10,469 | | | 12,855 | | Total out-of-scope non-interest income | 10,074 | | | 3,865 | | | 14,470 | | | 6,309 | |
Total non-interest income | Total non-interest income | $ | 7,909 | | | $ | 10,115 | | | $ | 21,308 | | | $ | 22,928 | | Total non-interest income | $ | 14,391 | | | $ | 7,008 | | | $ | 22,986 | | | $ | 13,399 | |
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 on loan level interest rate swaps, gains and losses on the sale of loans and securities, and changes in the fair value of equity securities. None of these revenue streams are subject to the requirements of Topic 606.
18. Subsequent Events
The Company has evaluated events subsequent to SeptemberJune 30, 20202021 and through the financial statement issuance date of NovemberAugust 9, 2020.2021. The Company has not identified any material subsequent events that would require adjustment or disclosure in the consolidated financial statements.
The COVID-19 pandemic has disrupted and adversely affected the Bank’s business and results of operations, and the ultimate impacts of the pandemic on the Bank’s business, financial condition and results of operations will depend on future developments and other factors that are highly uncertain and will be impacted by the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
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 Annual Report on 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, the outcome of the recent presidential election, as well as its impact on 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, the Company's ability to successfully implement its business strategy, including the consummation of its pending acquisition of Freehold Bank, acquisitions and the integration of acquired businesses, credit risk management, the effect of the COVID-19 pandemic (including its impact on our borrowers and their ability to repay their loans, and on the local and national economies), 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 SeptemberJune 30, 20202021 and December 31, 20192020
Total assets increased $676.8$268.9 million, or 8.3%3.1%, to $8.9$9.1 billion at SeptemberJune 30, 20202021 from $8.2$8.8 billion at December 31, 2019.2020. The increase in total assets was primarily attributable to increases in cash and cash equivalents of $190.3 million, debt securities available for sale of $147.0$325.5 million, loans receivable, net,debt securities held to maturity of $256.9 million, bank-owned life insurance of $21.7 million, goodwill and intangible assets of $23.9$139.4 million, and other assets of $47.1$7.2 million, partially offset by decreases of $13.0$35.7 million in securities held to maturitycash and $16.2cash equivalents, and $159.2 million in Federal Home Loan Bank stock.loans receivable, net.
Cash and cash equivalents increased $190.3decreased $35.7 million, or 252.0%8.4%, to $265.9$387.2 million at SeptemberJune 30, 20202021 from $75.5$423.0 million at December 31, 2019.2020. The increasedecrease was primarily attributable to $155.2$576.6 million in cash acquired duepurchases of debt securities available for sale and held to the Roselle merger, and strong growth in deposits, partially offset by $60.3maturity, $58.5 million in repurchases of common stock under our stock repurchase program.program, and $56.5 million in prepayments of borrowings, partially offset by an increase in repayments on loans, repayments on mortgage-backed securities, and growth in deposits.
Debt securities available for sale increased $147.0$325.5 million, or 13.4%24.7%, to $1.2$1.6 billion at SeptemberJune 30, 20202021 from $1.1$1.3 billion at December 31, 2019.2020. The increase was attributable to $51.5purchases of $416.1 million of investments acquiredsecurities primarily consisting of U.S. government and agency obligations, mortgage-backed securities and municipal securities, and $99.6 million in the Roselle merger and purchases of $201.5 million in mortgage-backed securities,guarantor swaps with Freddie Mac, partially offset by maturities, calls and callssales of $12.4$9.9 million in U.S. government and agency obligations, corporate debt and municipal securities, and repayments of $149.8 million, and sales of $20.8$164.4 million. The gross unrealized gain (loss) on debt securities available for sale increaseddecreased by $29.7$13.5 million during the ninesix months ended SeptemberJune 30, 2021.
Debt securities held to maturity increased $139.4 million, or 53.1%, to $402.1 million at June 30, 2021 from $262.7 million at December 31, 2020. The increase was primarily attributable to purchases of $160.5 million of securities primarily consisting of U.S. agency obligations and mortgage-backed securities, partially offset by the call of a $5.0 million U.S. agency obligation and repayments of $15.5 million.
Loans receivable, net, increased $256.9decreased $159.2 million, or 4.2%2.6%, to $6.4$5.9 billion at SeptemberJune 30, 20202021 from $6.1 billion at December 31, 2019. The increase included $171.6 million of loans which were acquired due to the Roselle merger, which mainly consisted of one-to-four family2020. Multi-family and commercial real estate loans. The increases in construction and commercial business loans of $8.7increased $297.1 million, and $401.7 million, respectively, were partially offset by decreases in commercial business loans, one-to-four family real estate loans, multifamily and commercial real estateconstruction loans, and home equity loans and advances of $23.8$281.2 million, $56.3$72.4 million, $67.6 million and $47.2$43.1 million, respectively. A significant portionThe increase in multi-family and commercial real estate loans included the purchase of the increase$71.6 million of loan participations in June 2021. The decrease in commercial business loans includedwas mainly due to the sale of $237.0 million in loans granted and $255.7 in forgiven PPP loans as part of the SBA Paycheck Protection Program, which totaled $474.9 million at September 30, 2020.Small Business Administration PPP. The allowance for loan loss balance increased $14.4decreased $4.8 million to $76.1$69.9 million at SeptemberJune 30, 20202021 from $61.7$74.7 million at December 31, 2019,2020, which was primarily attributable to a decrease in loan loss rates, and a decrease in the balance of delinquent and non-accrual loans, as well as the consideration of the deterioration ofimproving economic conditions and loan performance due to the ongoing COVID-19 pandemic resulting from increases to qualitative factors.conditions. The current allowance for loan losses was calculated utilizing the existing incurred loss methodology.
Bank-owned life insurance increased $21.7 million, or 10.3%, The Company elected to $233.1 million at September 30, 2020 from $211.4 million at December 31, 2019. The increasedefer the adoption of the Current Expected Credit Loss ("CECL") methodology as was primarily attributable to $17.2 million acquired in connection with the Roselle merger.
Goodwill and intangible assets increased $23.9 million, or 34.9%, to $92.5 million at September 30, 2020 from $68.6 million at December 31, 2019. The increase was primarily attributable to $23.8 million in goodwill recorded in connection with the Roselle merger.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
originally permitted by the CARES Act and the Consolidated Appropriations Act, 2021, which, when enacted, extended certain provisions of the CARES Act. The Company expects to adopt CECL on January 1, 2022.
Other assets increased $47.1$7.2 million, or 32.4%3.4%, to $192.8$217.0 million at SeptemberJune 30, 20202021 from $145.7$209.9 million at December 31, 2019.2020. The increase in other assets consisted of an increase of $36.2 million in the Company's pension plan balance based on a $19.9revaluation of the plan, partially offset by a decrease of $13.3 million balance of a right-of-use asset recognized in connection with the adoption of Accounting Standards Update 2016-02-Leases ("ASU 2016-02"), a $28.7 million increase in the collateral balance related to our swap agreement obligations, and a $16.2decrease of $6.8 million increase in interest rate swap fair value adjustments, partially offset byassets, a decrease of $26.8$6.3 million in the Company's prepaid pension plan balance. An adjustmentfederal and state income tax receivables, and a decrease of $43.6$2.5 million was made to the Company's pension plan balance reflecting the revaluation impact related to the voluntary employee retirement program, partially offset by a $12.0 million contribution made to the plan in September 2020.
deferred taxes.
Total liabilities increased $642.0$247.1 million, or 8.9%3.2%, to $7.8$8.0 billion at SeptemberJune 30, 20202021 from $7.2$7.8 billion at December 31, 2019.2020. The increase was primarily attributable to an increase in total deposits of $983.8$300.7 million, or 17.4%, and an increase in accrued expenses and other liabilities of $51.2 million, or 43.5%4.4%, partially offset by a decrease in borrowings of $391.8$49.7 million, or 27.8%6.2%, and a decrease in accrued expenses and other liabilities of $7.4 million, or 4.2%. The increase in total deposits was partially driven by $333.2 millionconsisted of increases in deposits assumed in connection with the Roselle merger. Non-interest-bearingnon-interest-bearing and interest-bearing demand deposits increased $382.8of $158.6 million and $313.3$166.7 million, respectively. Moneyrespectively, and money market accounts and savings and club deposits of $57.4 million and $61.2 million, respectively, partially offset by a decrease in certificates of deposits also increased $130.3deposit accounts of $143.2 million. The decrease in borrowings was primarily driven by the prepayment of $56.5 million $109.5 million and $47.8 million, respectively, during the period.of FHLB borrowings. The increasedecrease in accrued expenses and other liabilities consisted of a $21.0$14.0 million lease liability recognized in connection with the adoption of ASU 2016-02, and a $29.6 million increasedecrease in interest rate swap liabilities. The decrease in borrowings was primarily driven by maturing long-term borrowings of $181.3 million, a net decrease in short-term borrowings of $321.6 million, and a payoff of $16.6 million of subordinated notes,liabilities, partially offset by new long-term borrowingsa $7.6 million increase in balance of $90.0 million and $ 37.7 million in borrowings assumed from Roselle.
outstanding checks.
Total stockholders’ equity increased $34.8$21.8 million, or 3.5%2.2%, towith a balance of $1.0 billion at Septemberboth June 30, 2020 from $982.5 million at2021 and December 31, 2019.2020. The net increase was primarily attributable to net income of $36.9$47.7 million, an increaseand a change in additional capitalthe pension obligation of $68.5$32.2 million due toa revaluation of the issuance of 4,759,048 shares of Company common stock to Columbia Bank MHC in connection with the Roselle merger, and improved fair values on debt securities within our available for sale portfolio of $23.0 million,plan, partially offset by the repurchase of 4,081,1323,470,040 shares of common stock totaling $60.3$58.5 million under our stock repurchase program.
Comparison of Results of Operations for the QuarterThree months Ended SeptemberJune 30, 20202021 and SeptemberJune 30, 20192020
Net income of $15.1$26.7 million was recorded for the quarter ended SeptemberJune 30, 2020,2021, an increase of $869,000,$11.6 million, or 6.1%76.8%, compared to net income of $14.2$15.1 million for the quarter ended SeptemberJune 30, 2019.2020. The increase in net income was primarily attributable to a $14.6$2.2 million increase in net interest income, partially offset by a $2.2$7.5 million decrease in non-interest income, a $1.4 million increase in the provision for loan losses, and a $10.3$7.4 million increase in non-interest income, partially offset by a $5.3 million increase in income tax expense.
Net interest income was $56.3$58.1 million for the quarter ended SeptemberJune 30, 2020,2021, an increase of $14.6$2.2 million, or 35.0%4.0%, from $41.7$55.9 million for the quarter ended SeptemberJune 30, 2019.2020. The increase in net interest income was primarily attributable to an $8.5 million increase in interest income, compounded by a $6.1$9.9 million decrease in interest expense.expense, partially offset by a $7.7 million decrease in interest income. The increasedecrease in interest expense on deposits was driven by both an inflow of lower cost deposits and the repricing of existing deposits at a significantly reduced rate as a result of a lower interest rate environment. The decrease in interest expense on borrowings was the result of decreases in both the average balance and average cost of borrowings. The decrease in interest income for the quarter ended SeptemberJune 30, 20202021 was largely due to increases in the average balances on loans, securities and other interest-earning assets, which was the result of internal growth and the acquisitions of Stewardship and Roselle, partially offset by decreases in the average yields on theseinterest-earning assets. Prepayment penalties, which are included in interest income on loans, totaled $380,000$1.1 million for the quarter ended SeptemberJune 30, 2020,2021, compared to $758,000$964,000 for the quarter ended SeptemberJune 30, 2019.2020.
The average yield on loans for the quarter ended SeptemberJune 30, 20202021 decreased 3124 basis points to 3.85%3.72%, as compared to 4.16%3.96% for the quarter ended SeptemberJune 30, 2019,2020, while the average yield on securities for the quarter ended SeptemberJune 30, 20202021 decreased 4163 basis points to 2.38%1.93%, as compared to 2.79%2.56% for the quarter ended SeptemberJune 30, 2019.2020. The average yield on other interest-earning assets for the quarter ended SeptemberJune 30, 20202021 decreased 484171 basis points to 1.26%1.24%, as compared to 6.10%2.95% for the quarter ended SeptemberJune 30, 2019,2020, as there were substantially higher cash balances in low yielding bank accounts infor the 2020 period.quarter ended June 30, 2021. Decreases in the average yields on these portfolios for the quarter ended SeptemberJune 30, 20202021 were influenced by the lower interest rate environment as the Federal Reserve reduced interest rates by 75 basis points in the third and fourth quarters of 2019, and in response to COVID-19, reduced interest rates again by 150 basis points in March 2020.2020 in response to the COVID-19 pandemic.
Total interest expense was $16.6$9.8 million for the quarter ended SeptemberJune 30, 2020,2021, a decrease of $6.1$9.9 million, or 26.9%50.3%, from $22.7$19.7 million for the quarter ended SeptemberJune 30, 2019.2020. The decrease in interest expense was primarily attributable to a 6458 basis point decrease in the average cost of interest-bearing deposits which was partially offset by the impact fromof the increase in the average balance of deposits. The decrease in the cost of deposits was driven by both an inflow of lower costingcost deposits and the repricing of existing deposits at lower interest rates. Interest on borrowings decreased $2.9 million due to a decrease in the average balancebalances of borrowingsFHLB advances and subordinated notes, coupled with a 9959 basis point decrease in the cost of these borrowings due to a lowertotal borrowings.
The Company's net interest rate environment. Duringmargin for the quarter excess liquidity was usedended June 30, 2021 increased 4 basis points to repay long-term high rate borrowings2.77%, when compared to 2.73% for the quarter ended June 30, 2020. The weighted average yield on interest-earning assets decreased 45 basis points to 3.24% for the quarter ended June 30, 2021 as they matured.compared to 3.69% for the quarter ended June 30, 2020. Excluding the impact of PPP loan
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company's net interest margindeferred fee acceleration for the quarter ended SeptemberJune 30, 2020 increased 18 basis points to 2.70%, when compared to 2.52% for2021, the quarter ended September 30, 2019. The weighted average yield on interest-earning assets decreased 39 basis points to 3.50% for the quarter ended September 30, 2020 as compared to 3.89% for the quarter ended September 30, 2019.net interest margin would have been 2.66%. The average cost of interest-bearing liabilities decreased 7363 basis points to 1.04%0.62% for the quarter ended SeptemberJune 30, 20202021 as compared to 1.77%1.25% for the quarter ended SeptemberJune 30, 2019.2020. The decreasesdecrease in yields and costs for the quarter ended SeptemberJune 30, 20202021 were largely driven by a continued lower interest rate environment. The net interest margin increased for the quarter ended June 30, 2021 as the cost of interest-bearing liabilities repricedcontinued to reprice lower more rapidly than the yields on interest-earning assets.
The reversal of provision for loan lossesloss recorded for the quarter ended June 30, 2021 was $2.5$1.8 million, a decrease of $7.5 million, from $5.7 million of provision for loan loss expense recorded for the quarter ended June 30, 2020. The comparatively lower level of provision for the 2021 period was primarily attributable to a decrease in the average balance of loans, a decrease in loan loss rates, a decrease in the balances of delinquent and non-accrual loans, and the consideration of the improving economic environment.
Non-interest income was $14.4 million for the quarter ended SeptemberJune 30, 2020,2021, an increase of $1.4$7.4 million, or 105.4%, from $1.2$7.0 million for the quarter ended SeptemberJune 30, 2019. The increase was primarily attributable to consideration of the deterioration of economic conditions and loan performance due to the ongoing COVID-19 pandemic which resulted in increases to qualitative risk factors.
Non-interest income was $7.9 million for the quarter ended September 30, 2020, a decrease of $2.2 million, or 21.8%, from $10.1 million for the quarter ended September 30, 2019. The decrease is primarily attributable to a $2.5 million decrease in loan fees and service charges during the quarter and a $1.3 million decrease in gain on securities transactions, partially offset by a $1.5 million increase in gain on sale of loans. Loan fees and service charges were lower due to the decrease in fees related to customer swaps and the impact of the COVID-19 pandemic.
Non-interest expense was $41.4 million for the quarter ended September 30, 2020, an increase of $10.3 million, or 33.2%, from $31.1 million for the quarter ended September 30, 2019.2020. The increase was primarily attributable to an increase in income from a $7.7 million gain on the sale of $237.0 million of commercial business loans granted as part of the Small Business Administration PPP, and an increase in title insurance fees of $507,000, partially offset by the decrease in the fair value of equity securities of $1.4 million.
Non-interest expense was $37.6 million for the quarter ended June 30, 2021, an increase of $167,000, or 0.4%, from $37.4 million for the quarter ended June 30, 2020. The increase was primarily attributable to an increase in data processing and software expenses of $248,000, professional fees of $568,000, and other non-interest expenses of $1.1 million, partially offset by a decrease in compensation and employee benefits expense of $5.3$1.6 million, and a decrease in merger-related expenses of $357,000. Professional fees included an increase in occupancy expense of $850,000,consulting expenses related to information technology improvements, and anthe increase in other non-interest expense of $3.6 million. The increase in compensation and employee benefits expense was primarily attributable to an increase of $3.0 million in expense recorded in connection with a voluntary early retirement program which offered early retirement incentives for qualified Bank employees. The increase in occupancy expense was primarily the result of an increase in the numberincluded $561,000 of branch offices acquired from Stewardship and Roselle. The increase in other non-interest expense includes $1.9 million related to interest rate swap transactions.closure costs.
Income tax expense was $5.3$9.9 million for the quarter ended SeptemberJune 30, 2020, a decrease2021, an increase of $140,000, or 1.0%,$5.3 million, as compared to $5.4$4.6 million for the quarter ended SeptemberJune 30, 2019.2020, mainly due to an increase in pre-tax income, and to a lesser extent, an increase in the Company's effective state income tax rate. The Company's effective tax rate was 25.8%27.1% and 27.5%23.4% for the quarters ended SeptemberJune 30, 20202021 and 2019,2020, respectively.
Comparison of Results of Operations for the NineSix Months Ended SeptemberJune 30, 20202021 and SeptemberJune 30, 20192020
Net income of $36.9$47.7 million was recorded for the ninesix months ended SeptemberJune 30, 2020, a decrease2021, an increase of $4.2$25.9 million, or 10.2%118.3%, compared to net income of $41.2$21.9 million for the ninesix months ended SeptemberJune 30, 2019.2020. The decreaseincrease in net income was primarily attributable to a $16.1an $8.2 million increase in net interest income, an $18.3 million decrease in provision for loan losses, and a $24.9$9.6 million increase in non-interest expense,income, partially offset by a $38.0$10.9 million increase in net interest income.income tax expense.
Net interest income was $162.9$114.8 million for the ninesix months ended SeptemberJune 30, 2020,2021, an increase of $38.0$8.2 million, or 30.4%7.7%, from $124.9$106.6 million for the ninesix months ended SeptemberJune 30, 2019.2020. The increase in net interest income was primarily attributable to a $33.2 million increase in interest income and a $4.8$23.0 million decrease in interest expense, partially offset by a $14.8 million decrease in interest income. The decrease in interest expense on deposits was driven by both an inflow of lower cost deposits and the repricing of existing deposits at a significantly reduced rate as a result of a lower interest rate environment. The decrease in interest expense on borrowings was the result of decreases in both the average balance and average cost of borrowings. During the six months ended June 30, 2021, $56.5 million of Federal Home Loan Bank of New York ("FHLB") borrowings were prepaid, resulting in a $742,000 loss on early extinguishment of debt included in non-interest expense. The increaseCompany has significantly reduced the cost of borrowings over the period by prepaying high rate borrowings. The decrease in interest income for the ninesix months ended SeptemberJune 30, 20202021 was largely due to increases in the average balances on loans, securities and other interest-earning assets, which were the result of internal growth and the acquisitions of Stewardship and Roselle, partially offset by decreases in the average yields on theseinterest-earning assets. Prepayment penalties, which are included in interest income on loans, totaled $2.0 million for the ninesix months ended SeptemberJune 30, 2020,2021, compared to $1.6 million for the ninesix months ended SeptemberJune 30, 2019.2020.
The average yield on loans for the ninesix months ended SeptemberJune 30, 20202021 decreased 2026 basis points to 3.98%3.79%, as compared to 4.18%4.05% for the ninesix months ended SeptemberJune 30, 2019,2020, while the average yield on securities for the ninesix months ended SeptemberJune 30, 20202021 decreased 3266 basis points to 2.55%1.98%, as compared to 2.87%2.64% for the ninesix months ended SeptemberJune 30, 2019.2020. The average yield on other interest-earning assets for the ninesix months ended SeptemberJune 30, 20202021 decreased 385299 basis points to 2.45%0.82%, as compared to 6.30%3.81% for the ninesix months ended SeptemberJune 30, 2019.2020, as there were substantially higher cash balances in low yielding bank accounts for the six months ended June 30, 2021. Decreases in the average yields on these portfolios for the ninesix months ended SeptemberJune 30, 20202021 were influenced by the lower interest rate environment.environment as the Federal Reserve reduced interest rates in early 2020 in response to the COVID-19 pandemic.
Total interest expense was $60.3$20.7 million for the ninesix months ended SeptemberJune 30, 2020,2021, a decrease of $4.8$23.0 million, or 7.37%52.6%, from $65.1$43.7 million for the ninesix months ended SeptemberJune 30, 2019.2020. The decrease in interest expense on deposits was primarily attributable to a 3768 basis point
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
decrease in the average cost of interest-bearing deposits which was partially offset by the impact fromof the increase in the average balance of deposits. The decrease in the cost of deposits was driven by both an inflow of lower costing
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
cost deposits and the repricing of existing deposits at a significantly reduced rate.lower interest rates. Interest on borrowings decreased $4.4$8.0 million due to a 72decrease in the average balances of FHLB advances and subordinated notes, coupled with a 80 basis point decrease in the cost of thesetotal borrowings. During the six months ended June 30, 2021, we prepaid $53.5 million of FHLB borrowings due towith an average rate of 2.64% and original contractual maturities through March 2022, and a lower interest$3.0 million FHLB borrowing acquired in our acquisition of Roselle Bank with a rate environment, which was partially offsetof 2.74% and an original contractual maturity of March 2024. The prepayments were funded by an increaseexcess cash liquidity. The transactions were accounted for as early debt extinguishments resulting in the average balancea loss of borrowings.$742,000.
The Company's net interest margin for the ninesix months ended SeptemberJune 30, 20202021 increased 1210 basis points to 2.70%2.79%, when compared to 2.58%2.69% for the ninesix months ended SeptemberJune 30, 2019.2020. The weighted average yield on interest-earning assets decreased 2451 basis points to 3.69%3.29% for the ninesix months ended SeptemberJune 30, 20202021 as compared to 3.93%3.80% for the ninesix months ended SeptemberJune 30, 2019.2020. Excluding the impact of PPP loan deferred fee acceleration for the six months ended June 30, 2021, the net interest margin would have been 2.64%. The average cost of interest-bearing liabilities decreased 4674 basis points to 1.28%0.67% for the ninesix months ended SeptemberJune 30, 20202021 as compared to 1.74%1.41% for the ninesix months ended SeptemberJune 30, 2019.2020. The decreases in yields and costs for the ninesix months ended SeptemberJune 30, 20202021 were largely driven by a continued lower interest rate environment. The net interest margin increased for the ninesix months ended SeptemberJune 30, 20202021 as the cost of interest-bearing liabilities repricedcontinued to reprice lower more rapidly than the yields on interest-earning assets.
The reversal of provision for loan losses was $17.8 millionloss recorded for the ninesix months ended SeptemberJune 30, 2020, an increase2021 was $3.0 million, a decrease of $16.1$18.3 million, from $1.7$15.3 million of provision for loan loss expense recorded for the ninesix months ended SeptemberJune 30, 2019.2020. The increasecomparatively lower level of provision for the 2021 period was primarily attributable to a decrease in the average balance of loans, a decrease in loan loss rates, a decrease in the balances of delinquent and non-accrual loans, and the consideration of the deterioration ofimproving economic conditions and loan performance due to the ongoing COVID-19 pandemic which resulted in increases to qualitative factors.environment.
Non-interest income was $21.3$23.0 million for the ninesix months ended SeptemberJune 30, 2020, a decrease2021, an increase of $1.6$9.6 million, or 7.1%71.6%, from $22.9$13.4 million for the ninesix months ended SeptemberJune 30, 2019. The decrease was primarily attributable to decreases in loan fees and service charges of $3.5 million and gain on securities transactions of $1.4 million partially offset by increases in gain on sale of loans of $2.7 million and other non-interest income of $1.1 million. Loan fees and service charges were lower due to the decrease in fees related to customer swaps and the impact of the COVID-19 pandemic.
Non-interest expense was $117.3 million for the nine months ended September 30, 2020, an increase of $24.9 million, or 26.9%, from $92.5 million for the nine months ended September 30, 2019.2020. The increase was primarily attributable to an increase in income from the gain on the sale of loans of $9.1 million and an increase in other non-interest income of $1.7 million, partially offset by the decrease in the fair value of equity securities of $1.4 million. The increase in the gain on sale of loans was primarily attributable to a gain of $7.7 million resulting from the sale of $237.0 million of commercial business loans granted as part of the Small Business Administration PPP. Other non-interest income included increases of $755,000 from debit card transactions and $651,000 from swap transactions.
Non-interest expense was $75.3 million for the six months ended June 30, 2021, a decrease of $638,000, or 0.8%, from $76.0 million for the six months ended June 30, 2020. The decrease was primarily attributable to a decrease in compensation and employee benefits expense of $15.1 million, occupancy expense of $2.7 million, and other non-interest expensea decrease in merger-related expenses of $6.8 million.$1.4 million, partially offset by an increase in professional fees of $992,000, an increase in data processing and software expenses of $789,000, and the loss on the extinguishment of debt of $742,000. The increasedecrease in compensation and employee benefits expense was primarily attributable to an increase of $4.6 million in expense recorded in connection with grants made under the Company's 2019 Equity Incentive Plan and an increase in expense due toamounts deferred as direct loan origination costs as a larger number of employees in the 2020 period, which included continuing employees of Stewardship and Roselle. In addition, $3.0 million in expense was recorded in connection with a voluntary early retirement program which offered early retirement incentives for qualified Bank employees. The increase in occupancy expense was primarily the result of an increase in originations. Merger-related expenses recorded in the number2020 period related to the acquisitions of branch offices acquired from Stewardship Financial Corporation and Roselle Bank. Professional fees included an increase in consulting expenses related to information technology, and the increase in data processing and software expenses was attributable to the purchase and implementation of several digital banking and other non-interest expense was due to lossesFintech solutions, as well as the amortization of $1.3 million recorded in connection with the branch consolidation resulting from the Stewardship merger and also includes $4.0 millionsoftware costs related to interest rate swap transactions.a digital small business lending solution. As noted above, during the six months ended June 30, 2021, the Company utilized excess liquidity to prepay long-term borrowings which resulted in a $742,000 loss on the early extinguishment of debt.
Income tax expense was $12.1$17.8 million for the ninesix months ended SeptemberJune 30, 2020, a decrease2021, an increase of $427,000, or 3.4%,$10.9 million, as compared to $12.5$6.9 million for the ninesix months ended SeptemberJune 30, 2019.2020, mainly due to an increase in pre-tax income, and to a lesser extent, an increase in the Company's effective state income tax rate. The Company's effective tax rate was 24.7%27.2% and 23.3%23.9% for the ninesix months ended SeptemberJune 30, 2021 and 2020, and 2019, respectively.
Asset Quality
The Company's non-performing loans at SeptemberJune 30, 20202021 totaled $10.9$4.3 million, or 0.17%0.07% of total gross loans, as compared to $6.7$8.2 million, or 0.11%0.13% of total gross loans, at December 31, 2019.2020. The $4.2$3.8 million increasedecrease in non-performing loans was primarily attributable to increasesdecreases of $1.1$1.8 million in non-performing one-to-four family real estate loans, $2.3$2.6 million in non-performing commercial business loans, and $43,000 in non-performing home equity loans and advances, partially offset by an increase of $560,000 in non-performing multifamily and commercial real estate loans and $850,000 in non-performing commercial business loans. The increasedecrease in non-performing one-to-four family real estate loans was due to an increasea decrease in the number of loans from 1013 non-performing loans at December 31, 20192020 to 17six non-performing loans at SeptemberJune 30, 2020.2021. The increasedecrease in non-performing multifamilycommercial business loans was mainly due to charge-offs totaling $1.7 million. The decrease in non-performing home equity loans and commercial real estate loansadvances was due to an increasea decrease in the number of loans from seven non-performing loans at December 31, 2019 to 12 non-performing loans at September 30, 2020. The increase in non-performing commercial business loans was due to an increase in the number of loans from 16 non-performing loans at December 31, 2019 to 31 non-performing loans at September 30, 2020. Non-performing assets as a percentage of total assets totaled 0.12% at September 30, 2020 as compared to 0.08% at December 31, 2019.
For the quarter ended September 30, 2020, net charge-offs totaled $397,000 as compared to $931,000 for the quarter ended September 30, 2019. For the nine months ended September 30, 2020, net charge-offs totaled $3.4 million as compared to $1.4 million for the nine months ended September 30, 2019. The increase in net charge-offs during the nine month period was primarily attributable to a $2.8 million charge-off of one commercial business loan.non-
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
performing loans at December 31, 2020 to eight non-performing loans at June 30, 2021. Non-performing assets as a percentage of total assets totaled 0.05% at June 30, 2021 as compared to 0.09% at December 31, 2020.
For the quarter ended June 30, 2021, net charge-offs totaled $244,000 as compared to $2.9 million for the quarter ended June 30, 2020. For the six months ended June 30, 2021, net charge-offs totaled $1.7 million as compared to $3.0 million for the six months ended June 30, 2020.
The Company's allowance for loan losses was $76.1$69.9 million, or 1.18%1.17% of total loans, at SeptemberJune 30, 2020,2021, compared to $61.7$74.7 million, or 1.00%1.21% of total loans, at December 31, 2019.2020. The increasedecrease in the allowance for loan losses iswas primarily attributable to a decrease in loan loss rates, and a decrease in the balance of delinquent and non-accrual loans, as well as the consideration of improving economic conditions and loan performance due to the ongoing COVID-19 pandemic which resulted in increases to qualitative factors and, to a lesser extent, due to the growth in the Bank's loan portfolio.conditions.
COVID-19
Through SeptemberJune 30, 2020,2021, the Company granted $802.5 million of commercial loan modification requests with respect to multifamily, commercial, and construction real estate loans and $197.4with current balances of $705.8 million ofand consumer-related loan modification requests with respect to one-to-four family real estate loans and home equity loans and advances forwith current balances of $142.4 million to our customers affected by the COVID-19 pandemic. These short-term loan modifications will be treated in accordance with Section 4013 of the CARES Act and will not be treated as troubled debt restructurings during the short-term modification period if the loan was not in arrears atarrears. The Consolidated Appropriations Act, 2021, which was enacted in late December 31, 2019.2020, extended certain provisions of the CARES Act, including provisions permitting loan deferral extension requests to not be treated as troubled debt restructurings. Furthermore, these loans will continue to accrue interest and will not be tested for impairment during the short-term modification period. Commercial loan modification requests include various industries and property types. The following table is a summary of loan modifications that have not begun to remit full payment:
| | | Balance at July 21, 2020 | | Percent of Total Loans at June 30, 2020 | | Balance at September 30, 2020 | | Percent of Total Loans at September 30, 2020 | | Balance at October 21, 2020 | | Percent of Total Loans at October 21, 2020 | | Balance at December 31, 2020 | | Percent of Total Loans at December 31, 2020 | | Balance at June 30, 2021 | | Percent of Total Loans at June 30, 2021 | | Balance at July 22, 2021 | | Percent of Total Loans at July 22, 2021 |
| | (Dollars in thousands) | | (Dollars in thousands) |
Real estate loans: | Real estate loans: | | Real estate loans: | |
One-to-four family | One-to-four family | $ | 73,502 | | | 3.40 | % | | $ | 43,515 | | | 2.12 | % | | $ | 21,461 | | | 1.06 | % | One-to-four family | $ | 6,770 | | | 0.35 | % | | $ | 2,459 | | | 0.13 | % | | $ | 2,105 | | | 0.11 | % |
Multifamily and commercial | Multifamily and commercial | 447,925 | | | 15.59 | | | 88,031 | | | 3.07 | | | 85,482 | | | 3.05 | | Multifamily and commercial | 71,348 | | | 2.53 | | | 55,617 | | | 1.79 | | | 27,173 | | | 0.88 | |
Construction | Construction | 13,525 | | | 4.14 | | | 13,525 | | | 4.40 | | | 3,400 | | | 1.08 | | Construction | 3,312 | | | 1.01 | | | 3,337 | | | 1.28 | | | 2,537 | | | 0.98 | |
Commercial business loans | Commercial business loans | 34,059 | | | 3.79 | | | 9,479 | | | 1.07 | | | 1,850 | | | 0.21 | | Commercial business loans | 3,397 | | | 0.45 | | | 2,301 | | | 0.49 | | | 1,457 | | | 0.31 | |
| Home equity loans and advances | Home equity loans and advances | 8,427 | | | 2.34 | | | 1,574 | | | 0.46 | | | 1,088 | | | 0.32 | | Home equity loans and advances | 314 | | | 0.10 | | | 57 | | | 0.02 | | | 57 | | | 0.02 | |
| Total loans | Total loans | $ | 577,438 | | | 8.72 | % | | $ | 156,124 | | | 2.42 | % | | $ | 113,281 | | | 1.78 | % | Total loans | $ | 85,141 | | | 1.38 | % | | $ | 63,771 | | | 1.06 | % | | $ | 33,329 | | | 0.56 | % |
At October 21, 2020, $80.8June 30, 2021, $37.9 million of the commercial loans in the above table are remitting partial payments and $48.6$61.3 million were granted an additional deferral period of which $46.5 million are remitting payments.period.
Through September 30, 2020, the Company originated 2,449 loans for $488.5 million under the SBA Paycheck Protection Program. While some borrower applications for forgiveness were filed during the third quarter of 2020, none were approved until October 2020.
Critical Accounting Policies
The Company considers certain accounting policies to be critically important to the fair presentation of its Consolidated Statements of Financial Condition and Consolidated Statements of Income. These policies require management to make significant 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 financial condition and results of 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 deferred tax assets
▪Valuation of retirement and post-retirement benefits
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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. As previously mentioned, the Company elected to defer the adoption of the CECL methodology as permitted by the recently enacted CARES Act. The Company expects to adopt CECL on December 31, 2020.January 1, 2022.
The Company maintains the allowance for loan losses through provisions for (reversal of) loan losses which are charged to income. Charge-offs against the allowance for loan losses are taken on loans where management determines that the collection of loan principal is unlikely. Recoveries made on loans that have been charged-off are credited to the allowance for loan losses.
As part of the evaluation of the adequacy of the allowance for loan losses, management prepares an analysis each quarter that categorizes the loan portfolio by certain risk characteristics such as loan type (residential mortgage, commercial mortgage, construction, commercial business, 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 (Special Mention) or 6 (Substandard). Loans with adverse classifications are rated 7 (Doubtful) or 8 (Loss). The risk ratings are also confirmed through periodic loan review examinations, which are currently performed by both an independent third-party and the Company's internal loan review department. The Company requires an annual review be performed above certain dollar thresholds, depending on loan type, to help determine the appropriate risk rating. Results are presented to the Audit Committee of the Board of Directors.
Management estimates the allowance for loans collectively evaluated for impairment by applying quantitative loss factors to the loan segments by risk rating and determining qualitative adjustments to each loan segment at an overall level. Quantitative loss factors give consideration to historical loss experience and migration experience by loan type based on an appropriateover a look-back period, adjusted for a loss emergence period.
Qualitative adjustments give consideration to other qualitative or environmental factors such as trends and levels of delinquencies, impaired loans, charge-offs, recoveries and loan volumes, as well as national and local economic trends and conditions.
Qualitative adjustments reflect risks in the loan portfolio not captured by the quantitative loss factors and, as such, are evaluated relative to the risk levels present over the look-back period. The reserves resulting from the application of both the quantitative experienceexperiences and qualitative factors are combined to arrive at the allowance for loan losses for loans collectivelycollectability evaluated for impairment.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 borrower's ability to repay 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.
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.
We assessed the impact of the pandemic on the Company’s financial condition, including its determination of the allowance for loan losses aslosses. Beginning in March 2020, management established an additional qualitative loss factor solely related to the impact of September 30, 2020.COVID-19 in the calculation. As part of that assessment, the Company considered the effects of the pandemic on economic conditions such as increasing unemployment rates and the shut-down of all non-essential businesses. The Company also analyzed the impact of COVID-19 on its primary market as well as the impact on the Company’s market sectors and its specific customers. As part of its estimation of an adjustment to the allowance due to COVID-19, the Company identified those market sectors
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
estimation of an adjustment to the allowance due to COVID-19, the Company identified those market sectors or industries that were more likely to be affected, such as hospitality, transportation and outpatient care centers. To determine the potential impact on the Company’s customers, management considered significant revenue declines in a borrower’s business as well as reductions in its operating cash flows and the impact on their ability to repay their loans, and estimated the probability of default and loss-given-default for the various loan categories at September 30, 2020 and assigned a weighting to each scenario. Based on this analysis, management estimated the potential impact resulting from COVID-19, and the adjustment to the allowance that was necessary asnecessary. Management continues to evaluate the impact of September 30, 2020. During March 2020, management also established an additionalthe COVID-19 qualitative loss factor solely related to the impact of COVID-19 in the calculation. Ason a result of management’s assessments, the Bank recorded an additional loan loss provision of $2.5 million for the quarter ended September 30, 2020. However, during this period of great uncertainty, the full impact of COVID-19 on the Company’s borrowers is likely to be felt over the next several quarters. As such, future adjustments to the allowance may be required.quarterly basis.
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 estimatesprojections of future taxable income. SuchThese 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. BasedManagement believes, based on all available evidence, a valuation allowance was established for the portion of the state tax benefitcurrent facts, that it is not more likely than not that there will be sufficient taxable income in future years to realize federal deferred tax assets and that it is more likely than not that the benefits from certain state temporary differences will not be realized. At SeptemberJune 30, 20202021 and December 31, 2019,2020, the Company's net deferred tax (liabilities)/assets totaled $(3.9)$4.7 million and $10.4$7.2 million, respectively, which included a valuation allowance againsttotaling $3.7 million and $3.4 million, respectively. Based upon projections of future taxable income and the ability to carryforward operating losses indefinitely, management believes it is more likely than not the Company will realize the remaining deferred tax assets totaling $9.4 million and $7.4 million, respectively.assets.
The Company provides certain health care and life insurance benefits, along with a split dollar BOLI death benefit, 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) recognizingrecognize 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) measuringmeasure 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 asrecognizes 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. These assets and liabilities and expenses are based upon actuarial assumptions including interest rates, rates of increase in compensation, expected rate of return on plan assets and the length of time we will have to provide those benefits. Actual results may differ from these assumptions. These assumptions are reviewed and updated at least annually and management believes the estimates are reasonable.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Qualitative Analysis. Interest rate risk is defined as the exposure of a Company's current and future earnings and capital arising from movements in market 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, are 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:
•Securities pricing from third parties;
•Loan pricing indications from third parties;
•Loan and depository spread assumptions based upon the Company's product offerings;
•Securities and borrowing spreads based upon third party indications; and
•Prepayment assumptions derived from the Company's actual results and third party surveys.
Certain shortcomings are inherent in the methodologies used in the 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 asset prepayment and liability repricing activity.
Moreover, netThe table below sets forth an approximation of our interest rate exposure. 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 indication of the Company’sour 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 our net interest income and will differ from actual.
The table below sets forth, as of SeptemberJune 30, 2020,2021, Columbia Bank's net portfolio value, the estimated changes in our net portfolio value, and the net interest income that would result from the designated instantaneous parallel changes in market interest rates. This data is for Columbia Bank and its subsidiaries only and does not include any assets of the Company.
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
| | | Twelve Months Net Interest Income | | Net Portfolio Value ("NPV") | | Twelve Months Net Interest Income | | Net Portfolio Value ("NPV") |
(Dollars in thousands) | Amount | | Dollar Change | | Percent of Change | | Estimated NPV | | Present Value Ratio | | Percent Change | |
Change in Interest Rates (Basis Points) | Change in Interest Rates (Basis Points) | | | | | | | | | | | | Change in Interest Rates (Basis Points) | Amount | | Dollar Change | | Percent of Change | | Estimated NPV | | Present Value Ratio | | Percent Change |
| | | | | | | (Dollars in Thousands) | | | | |
+300 | +300 | $ | 224,532 | | | $ | 12,048 | | | 5.67 | % | | $ | 972,963 | | | 11.74 | % | | (8.48) | % | +300 | $ | 218,082 | | | $ | 3,488 | | | 1.63 | % | | $ | 978,449 | | | 11.85 | % | | (14.60) | % |
+200 | +200 | 220,439 | | | 7,955 | | | 3.74 | | | 1,025,450 | | | 12.01 | | | (3.55) | | +200 | 217,317 | | | 2,723 | | | 1.27 | | | 1,043,380 | | | 12.25 | | | (8.93) | |
+100 | +100 | 216,287 | | | 3,803 | | | 1.79 | | | 1,055,418 | | | 12.02 | | | (0.73) | | +100 | 216,123 | | | 1,529 | | | 0.71 | | | 1,098,811 | | | 12.50 | | | (4.09) | |
Base | Base | 212,484 | | | — | | | — | | | 1,063,152 | | | 11.77 | | | — | | Base | 214,594 | | | — | | | — | | | 1,145,659 | | | 12.61 | | | — | |
-100 | -100 | 203,248 | | | (9,236) | | | (4.35) | | | 1,013,578 | | | 10.95 | | | (4.66) | | -100 | 201,434 | | | (13,160) | | | (6.13) | | | 1,073,620 | | | 11.49 | | | (6.29) | |
As of SeptemberJune 30, 2020,2021, based on the scenarios above, net interest income would increase by approximately 3.74%1.27% if rates were to rise 200 basis points, and would decrease by 4.35%6.13% if rates were to decrease 100 basis points over a one-year time horizon.
Another measure of interest rate sensitivity is to model changes in net portfolio value through the use of immediate and sustained interest rate shocks. As of SeptemberJune 30, 2020,2021, based on the scenarios above, in the event of an immediate and sustained 200 basis point increase in interest rates, the NPV is projected to decrease 3.55%8.93%. If rates were to decrease 100 basis points, the model forecasts a 4.66%6.29% decrease in the NPV.
Overall, our SeptemberJune 30, 20202021 results indicate that we are adequately positioned with an acceptable net interest income and economic value at risk in all scenarios and that all interest rate risk results continue to be within our policy guidelines.
Liquidity Management and Capital Resources:
Liquidity Management. Liquidity refers to the Company's ability to generate adequate amounts of cash to meet financial obligations of a short-term and long-term nature. Sources of funds 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 debt securities, and prepayments on loans and mortgage-backed securities are influenced by economic conditions, competition, and interest rate movements.
The Company's cash flows are identified as cash flows from operating activities, investing activities and financing activities. Refer to the Consolidated Statements of Cash Flows for further details of the cash inflows and outflows of the Company.
Capital Resources. The Company and its subsidiary Bank are subject to various regulatory capital requirements administered by the federal banking 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 Office of the Comptroller of the Currency (the "OCC") has similar requirements for the Company's subsidiary bank. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's Consolidated Statements of Financial Condition.
Federal regulators require federally insured depository institutions to meet several minimum capital standards: (1) total capital to risk-weighted assets of 8.0%; (2) tier 1 capital to risk-weighted assets of 6.0%; (3) common equity tier 1 capital to risk-weighted assets of 4.5%; and (4) tier 1 capital to adjusted total assets of 4.0%. In addition to establishing the minimum regulatory capital requirements, 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 on January 1, 2019. The regulators established a framework for the classification of savings institutions into five categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. Generally, an institution is considered well capitalized if it has: a total capital to risk-weighted assets ratio of at least 10.0%, a tier 1 capital to risk-weighted assets ratio of at least 8.0%, a common tier 1 capital to risk-weighted assets ratio of at least 6.5%, and a tier 1 capital to adjusted total assets ratio of at least 5.0%. As of SeptemberJune 30, 20202021 and December 31, 2019,2020, 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 Septemberat June 30, 20202021 and December 31, 20192020 compared to the Federal Reserve Bank minimum capital adequacy requirements and the Federal Reserve Bank requirements for classification as a well-capitalized institution:
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
| | | Actual | | Minimum Capital Adequacy Requirements | | Minimum Capital Adequacy Requirements with Capital Conservation Buffer | | To be Well Capitalized Under Prompt Corrective Action Provisions | | 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 | | Amount | Ratio | | Amount | Ratio | | Amount | Ratio | | Amount | Ratio |
Company | Company | (In thousands, except ratio data) | | | Company | (In thousands, except ratio data) |
At September 30, 2020: | | |
At June 30, 2021: | | At June 30, 2021: | |
Total capital (to risk-weighted assets) | Total capital (to risk-weighted assets) | $ | 1,086,078 | | 18.66 | % | | $ | 465,585 | | 8.00 | % | | $ | 611,080 | | 10.50 | % | | N/A | Total capital (to risk-weighted assets) | $ | 1,070,270 | | 17.87 | % | | $ | 479,253 | | 8.00 | % | | $ | 629,019 | | 10.50 | % | | N/A |
Tier 1 capital (to risk-weighted assets) | Tier 1 capital (to risk-weighted assets) | 1,018,285 | | 17.50 | % | | 349,189 | | 6.00 | % | | 494,684 | | 8.50 | % | | N/A | Tier 1 capital (to risk-weighted assets) | 999,821 | | 16.69 | | | 359,440 | | 6.00 | | | 509,206 | | 8.50 | | | N/A |
Common equity tier 1 capital (to risk-weighted assets) | Common equity tier 1 capital (to risk-weighted assets) | 1,011,068 | | 17.37 | % | | 261,891 | | 4.50 | % | | 407,387 | | 7.00 | % | | N/A | Common equity tier 1 capital (to risk-weighted assets) | 992,604 | | 16.57 | | | 269,580 | | 4.50 | | | 419,346 | | 7.00 | | | N/A |
Tier 1 capital (to adjusted total assets) | Tier 1 capital (to adjusted total assets) | 1,018,285 | | 11.70 | % | | 348,206 | | 4.00 | % | | 348,206 | | 4.00 | % | | N/A | Tier 1 capital (to adjusted total assets) | 999,821 | | 11.25 | | | 355,349 | | 4.00 | | | 355,349 | | 4.00 | | | N/A |
| At December 31, 2019: | | |
At December 31, 2020: | | At December 31, 2020: | |
Total capital (to risk-weighted assets) | Total capital (to risk-weighted assets) | $ | 1,061,555 | | 17.25 | % | | $ | 492,438 | | 8.00 | % | | $ | 646,324 | | 10.50 | % | | N/A | Total capital (to risk-weighted assets) | $ | 1,070,361 | | 18.54 | % | | $ | 461,766 | | 8.00 | % | | $ | 606,068 | | 10.50 | % | | N/A |
Tier 1 capital (to risk-weighted assets) | Tier 1 capital (to risk-weighted assets) | 988,172 | | 16.05 | | | 369,328 | | 6.00 | | | 523,215 | | 8.50 | | | N/A | Tier 1 capital (to risk-weighted assets) | 988,172 | | 17.29 | | | 346,325 | | 6.00 | | | 490,627 | | 8.50 | | | N/A |
Common equity tier 1 capital (to risk-weighted assets) | Common equity tier 1 capital (to risk-weighted assets) | 980,995 | | 15.94 | | | 276,996 | | 4.50 | | | 430,883 | | 7.00 | | | N/A | Common equity tier 1 capital (to risk-weighted assets) | 980,995 | | 17.17 | | | 259,744 | | 4.50 | | | 404,046 | | 7.00 | | | N/A |
Tier 1 capital (to adjusted total assets) | Tier 1 capital (to adjusted total assets) | 988,172 | | 12.92 | | | 305,824 | | 4.00 | | | 305,824 | | 4.00 | | | N/A | Tier 1 capital (to adjusted total assets) | 988,172 | | 11.38 | | | 350,923 | | 4.00 | | | 350,923 | | 4.00 | | | N/A |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
| | | Actual | | Minimum Capital Adequacy Requirements | | Minimum Capital Adequacy Requirements with Capital Conservation Buffer | | To be Well Capitalized Under Prompt Corrective Action Provisions | | 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 | | Amount | Ratio | | Amount | Ratio | | Amount | Ratio | | Amount | Ratio |
Bank | Bank | (In thousands, except ratio data) | Bank | (In thousands, except ratio data) |
At September 30, 2020: | | |
At June 30, 2021: | | At June 30, 2021: | |
Total capital (to risk-weighted assets) | Total capital (to risk-weighted assets) | $ | 943,563 | | 16.24 | % | | $ | 464,747 | | 8.00 | % | | $ | 609,980 | | 10.50 | % | | $ | 580,933 | | 10.00 | % | Total capital (to risk-weighted assets) | $ | 981,541 | | 16.41 | % | | $ | 478,609 | | 8.00 | % | | $ | 628,175 | | 10.50 | % | | $ | 598,262 | | 10.00 | % |
Tier 1 capital (to risk-weighted assets) | Tier 1 capital (to risk-weighted assets) | 870,899 | | 14.99 | | | 348,560 | | 6.00 | | | 493,793 | | 8.50 | | | 464,747 | | 8.00 | | Tier 1 capital (to risk-weighted assets) | 911,092 | | 15.23 | | | 358,957 | | 6.00 | | | 508,522 | | 8.50 | | | 478,609 | | 8.00 | |
Common equity tier 1 capital (to risk-weighted assets) | Common equity tier 1 capital (to risk-weighted assets) | 870,899 | | 14.99 | | | 261,420 | | 4.50 | | | 406,653 | | 7.00 | | | 377,607 | | 6.50 | | Common equity tier 1 capital (to risk-weighted assets) | 911,092 | | 15.23 | | | 269,218 | | 4.50 | | | 418,783 | | 7.00 | | | 388,870 | | 6.50 | |
Tier 1 capital (to adjusted total assets) | Tier 1 capital (to adjusted total assets) | 870,899 | | 10.00 | | | 348,492 | | 4.00 | | | 348,492 | | 4.00 | | | 435,615 | | 5.00 | | Tier 1 capital (to adjusted total assets) | 911,092 | | 10.23 | | | 356,078 | | 4.00 | | | 356,078 | | 4.00 | | | 445,098 | | 5.00 | |
| At December 31, 2019: | | |
At December 31, 2020: | | At December 31, 2020: | |
Total capital (to risk-weighted assets) | Total capital (to risk-weighted assets) | $ | 844,664 | | 14.25 | % | | $ | 474,125 | | 8.00 | % | | $ | 622,290 | | 10.50 | % | | $ | 592,657 | | 10.00 | % | Total capital (to risk-weighted assets) | $ | 924,959 | | 16.05 | % | | $ | 460,944 | | 8.00 | % | | $ | 604,989 | | 10.50 | % | | $ | 576,180 | | 10.00 | % |
Tier 1 capital (to risk-weighted assets) | Tier 1 capital (to risk-weighted assets) | 782,881 | | 13.21 | | | 355,594 | | 6.00 | | | 503,758 | | 8.50 | | | 474,125 | | 8.00 | | Tier 1 capital (to risk-weighted assets) | 852,897 | | 14.80 | | | 345,708 | | 6.00 | | | 489,753 | | 8.50 | | | 460,944 | | 8.00 | |
Common equity tier 1 capital (to risk-weighted assets) | Common equity tier 1 capital (to risk-weighted assets) | 782,881 | | 13.21 | | | 266,696 | | 4.50 | | | 414,860 | | 7.00 | | | 385,227 | | 6.50 | | Common equity tier 1 capital (to risk-weighted assets) | 852,897 | | 14.80 | | | 259,281 | | 4.50 | | | 403,326 | | 7.00 | | | 374,517 | | 6.50 | |
Tier 1 capital (to adjusted total assets) | Tier 1 capital (to adjusted total assets) | 782,881 | | 10.25 | | | 305,423 | | 4.00 | | | 305,423 | | 4.00 | | | 381,779 | | 5.00 | | Tier 1 capital (to adjusted total assets) | 852,897 | | 9.72 | | | 350,815 | | 4.00 | | | 350,815 | | 4.00 | | | 438,519 | | 5.00 | |
COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES
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 SeptemberJune 30, 2020.2021. In designing and evaluating the Company’s disclosure controls and procedures, the Company and its management recognize that any controls and procedures, no matter how well-designed and operated, can provide only a reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating and implementing possible controls and procedures. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.
During the quarter ended SeptemberJune 30, 2020,2021, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II – OTHER INFORMATION
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
For information regarding the Company’s risk factors, refer to the Risk Factors previously disclosed under Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 20192020 filed with the Securities and Exchange Commission and the Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 andCommission. As of June 30, 2020. As of September 30, 20202021, the risk factors of the Company have not materially changed from those disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020.
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 SeptemberJune 30, 2020:2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Period | | Total Number of Shares (2) | | 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, 2020 | | 12,022 | | | $ | 13.19 | | | — | | | — | |
August 1 - 31, 2020 | | 5,987 | | | 11.25 | | | — | | | — | |
September 1 - 30, 2020 | | 634,095 | | | 11.08 | | | 624,932 | | | 4,375,068 | |
Total | | 652,104 | | | $ | 11.12 | | | 624,932 | | | |
| | | | | | | | |
(1) On September 10, 2020, the Company announced that the Company's Board of Directors authorized a new stock repurchase program for up to 5,000,000 shares of the Company's issued and outstanding common stock, commencing on September 15, 2020. |
(2) During the three months ended September 30, 2020, 15,390 shares were repurchased pursuant to forfeitures and 11,782 shares were repurchased for taxes related to the 2019 Equity Incentive Plan and not as part of a share repurchase program. |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Period | | Total Number of Shares (2) | | 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 |
April 1 - 30, 2021 | | 326,929 | | | $ | 17.90 | | | 326,801 | | | 3,543,718 | |
May 1 - 31, 2021 | | 400,100 | | | 17.68 | | | 400,100 | | | 3,143,618 | |
June 1 - 30, 2021 | | 744,600 | | | 17.17 | | | 744,600 | | | 2,399,018 | |
Total | | 1,471,629 | | | $ | 17.47 | | | 1,471,501 | | | |
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(1) On February 1, 2021, the Company announced that its Board of Directors authorized a new stock repurchase program to acquire up to 5,000,000 shares of the Company's then issued and outstanding common stock, commencing upon the completion of the repurchase of the remaining shares under the Company's existing stock repurchase program that was approved in September 2020. On February 5, 2021, the Company completed the repurchases under the previous stock repurchase program. |
(2) During the three months ended June 30, 2021, 128 shares were repurchased pursuant to forfeitures related to the 2019 Equity Incentive Plan and not as part of a share repurchase program. |
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
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
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31.1 | | |
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31.2 | | |
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32 | | |
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101.101.0 | | The following materials from the Company’s Quarterly Report to Stockholders on Form 10-Q for the quarter ended SeptemberJune 30, 2020,2021, formatted in inline XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholder’s Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to the Consolidated Financial Statements. |
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101. INS | | The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document |
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101. SCH | | Inline XBRL Taxonomy Extension Schema Document |
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101. CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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101. DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document |
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101. LAB | | Inline XBRL Taxonomy Extension Labels Linkbase Document |
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101. PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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104 | | Cover page Interactive Data File (embedded within the Inline XBRL 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.
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| | | | Columbia Financial, Inc. |
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Date: | | NovemberAugust 9, 20202021 | | /s/Thomas J. Kemly |
| | | | Thomas J. Kemly |
| | | | President and Chief Executive Officer |
| | | | (Principal Executive Officer) |
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Date: | | NovemberAugust 9, 20202021 | | /s/Dennis E. Gibney |
| | | | Dennis E. Gibney |
| | | | Executive Vice President and Chief Financial Officer |
| | | | (Principal Financial and Accounting Officer)
|