Columbia Financial, Inc. - Quarter Report: 2022 June (Form 10-Q)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)


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

For the quarterly period ended June 30, 2022


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

Commission File Number 001-38456

Columbia Financial, Inc.

(Exact name of registrant as specified in its charter)


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:


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:

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 August 5, 2022, there were 110,499,898 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


Item Number		Page Number

PART I.	Financial Information

Item 1.	Financial Statements
	Consolidated Statements of Financial Condition as of June 30, 2022 (Unaudited) and December 31, 2021	2
	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)	3
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)	4
	Consolidated Statements of Changes in Stockholder's Equity for the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)	5
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 (Unaudited)	9
	Notes to Unaudited Consolidated Financial Statements	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	59
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	66
Item 4.	Controls and Procedures	70

PART II.	Other Information
	Item 1. Legal Proceedings	71
	Item 1A. Risk Factors	71
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	71
	Item 3. Defaults Upon Senior Securities	71
	Item 4. Mine Safety Disclosures	71
	Item 5. Other Information	71
	Item 6. Exhibits	71

	Exhibit Index	72

	SIGNATURES	73

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition

(In thousands, except share and per share data)


	June 30,		December 31,
	2022		2021
Assets	(Unaudited)

Cash and due from banks	$	109,021	$	70,702
Short-term investments	131		261
Total cash and cash equivalents	109,152		70,963

Debt securities available for sale, at fair value	1,490,642		1,703,847
Debt securities held to maturity, at amortized cost (fair value of $393,025 and $434,789 at June 30, 2022 and December 31, 2021, respectively)	425,884		429,734
Equity securities, at fair value	3,717		2,710
Federal Home Loan Bank stock	26,293		23,141


Loans receivable	6,982,796		6,360,601
Less: allowance for credit losses (1)	50,583		62,689
Loans receivable, net	6,932,213		6,297,912

Accrued interest receivable	28,272		28,300

Office properties and equipment, net	83,743		78,708
Bank-owned life insurance ("BOLI")	261,586		247,474
Goodwill and intangible assets	129,094		91,693
Other assets	260,822		249,615
Total assets	$	9,751,418	$	9,224,097

Liabilities and Stockholders' Equity
Liabilities:
Deposits	$	8,033,064	$	7,570,216
Borrowings	419,969		377,309
Advance payments by borrowers for taxes and insurance	45,869		36,471
Accrued expenses and other liabilities	178,232		161,020
Total liabilities	8,677,134		8,145,016

Stockholders' equity:
Preferred stock, $0.01 par value. 10,000,000 shares authorized; none issued and outstanding at June 30, 2022 and December 31, 2021	—		—
Common stock, $0.01 par value. 500,000,000 shares authorized; 130,777,623 shares issued and 111,000,740 shares outstanding at June 30, 2022 and 124,630,738 shares issued and 107,442,453 shares outstanding at December 31, 2021	1,308		1,246
Additional paid-in capital	776,542		667,906
Retained earnings	814,708		765,133
Accumulated other comprehensive loss	(155,845)		(45,919)
Treasury stock, at cost; 19,776,883 shares at June 30, 2022 and 17,188,285 shares at December 31, 2021	(325,723)		(271,647)
Common stock held by the Employee Stock Ownership Plan	(35,895)		(37,026)
Stock held by Rabbi Trust	(2,878)		(2,425)
Deferred compensation obligations	2,067		1,813
Total stockholders' equity	1,074,284		1,079,081
Total liabilities and stockholders' equity	$	9,751,418	$	9,224,097

See accompanying notes to unaudited consolidated financial statements.

(1) The Company adopted ASU 2016-13 as of January 1, 2022. Prior year periods have not been restated.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(In thousands, except per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Interest income:	(Unaudited)
Loans receivable	$	61,927	$	57,683	$	118,884	$	116,451
Debt securities available for sale and equity securities	8,419		7,521		17,307		13,899
Debt securities held to maturity	2,357		2,151		4,783		3,903
Federal funds and interest-earning deposits	77		39		94		143
Federal Home Loan Bank stock dividends	298		487		745		1,122
Total interest income	73,078		67,881		141,813		135,518
Interest expense:
Deposits	4,671		7,855		9,358		16,730
Borrowings	1,900		1,946		3,222		3,968
Total interest expense	6,571		9,801		12,580		20,698

Net interest income	66,507		58,080		129,233		114,820

Provision for (reversal of) credit losses (1)	1,539		(1,761)		2,998		(3,041)

Net interest income after provision for (reversal of) credit losses	64,968		59,841		126,235		117,861

Non-interest income:
Demand deposit account fees	1,449		858		2,619		1,696
Bank-owned life insurance	2,139		1,497		3,868		2,971
Title insurance fees	1,035		1,503		1,992		3,123
Loan fees and service charges	856		714		1,496		1,365
Gain (loss) on securities transactions	210		(281)		210		(281)
Change in fair value of equity securities	(147)		(778)		(68)		(1,366)
Gain on sale of loans	—		8,524		110		10,674
Other non-interest income	2,127		2,354		4,483		4,804
Total non-interest income	7,669		14,391		14,710		22,986

Non-interest expense:
Compensation and employee benefits	28,871		23,601		54,870		46,994
Occupancy	5,436		4,814		10,865		10,066
Federal deposit insurance premiums	630		567		1,277		1,147
Advertising	795		663		1,444		1,198
Professional fees	1,839		1,651		3,593		3,441
Data processing and software expenses	3,099		2,612		6,366		5,383
Merger-related expenses	1,327		75		1,478		75
Loss on extinguishment of debt	—		—		—		742
Other non-interest expense, net	(277)		3,627		2,576		6,267
Total non-interest expense	41,720		37,610		82,469		75,313

Income before income tax expense	30,917		36,622		58,476		65,534

Income tax expense	7,958		9,934		15,113		17,801

Net income	$	22,959	$	26,688	$	43,363	$	47,733

Earnings per share-basic and diluted	$	0.22	$	0.26	$	0.41	$	0.45

Weighted average shares outstanding-basic	106,204,230		104,537,656		104,684,765		105,253,661
Weighted average shares outstanding-diluted	106,750,557		104,537,656		105,246,304		105,253,661

See accompanying notes to unaudited consolidated financial statements.

(1) The Company adopted ASU 2016-13 as of January 1, 2022. Prior year periods have not been restated.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

(In thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(Unaudited)

Net income	$	22,959	$	26,688	$	43,363	$	47,733

Other comprehensive (loss) income, net of tax:
Unrealized (loss) gain on debt securities available for sale	(37,676)		4,788		(95,491)		(12,246)
Accretion of unrealized (loss) gain on debt securities reclassified as held to maturity	(3)		(12)		(6)		2
Reclassification adjustment for gain included in net income	152		(202)		152		(202)
	(37,527)		4,574		(95,345)		(12,446)

Derivatives, net of tax:
Unrealized gain on swap contracts accounted for as cash flow hedges	828		948		3,985		6,631
	828		948		3,985		6,631

Employee benefit plans, net of tax:
Amortization of prior service cost included in net income	(11)		(11)		(22)		(20)
Reclassification adjustment of actuarial net (loss) included in net income	(244)		(1,089)		(488)		(2,178)
Change in funded status of retirement obligations	(18,536)		24,818		(18,056)		34,371
	(18,791)		23,718		(18,566)		32,173

Total other comprehensive (loss) income	(55,490)		29,240		(109,926)		26,358

Total comprehensive (loss) income, net of tax	$	(32,531)	$	55,928	$	(66,563)	$	74,091

See accompanying notes to unaudited consolidated financial statements.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

Three Months Ended June 30, 2022 and 2021

(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 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 options	—		1		—		—		—		—		—		—		1
Restricted stock forfeitures (128 shares)	—		2		—		—		(2)		—		—		—		—

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)

Three Months Ended June 30, 2022 and 2021

(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 March 31, 2022	$	1,247	$	670,955	$	791,749	$	(100,355)	$	(294,121)	$	(36,461)	$	(2,746)	$	2,219	$	1,032,487


Net income	—		—		22,959		—		—		—		—		—		22,959
Other comprehensive (loss)	—		—		—		(55,490)		—		—		—		—		(55,490)
Issuance of common stock to Columbia Bank MHC	61		102,680		—		—		—		—		—		—		102,741

Stock based compensation	—		2,192		—		—		—		—		—		—		2,192
Purchase of treasury stock (1,523,148 shares)	—		—		—		—		(31,491)		—		—		—		(31,491)
Exercise of stock options (5,412 shares)	—		(10)		—		—		—		—		—		—		(10)
Restricted stock forfeitures (5,182 shares)	—		111		—		—		(111)		—		—		—		—

Employee Stock Ownership Plan shares committed to be released	—		614		—		—		—		566		—		—		1,180
Funding of deferred compensation obligations	—		—		—		—		—		—		(132)		(152)		(284)
Balance at June 30, 2022	$	1,308	$	776,542	$	814,708	$	(155,845)	$	(325,723)	$	(35,895)	$	(2,878)	$	2,067	$	1,074,284

See accompanying notes to unaudited consolidated financial statements.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

Six Months Ended June 30, 2022 and 2021

(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, 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		—		—		—		—
Stock based compensation	—		4,540		—		—		—		—		—		—		4,540
Purchase of treasury stock (3,470,040 shares)	—		—		—		—		(58,546)		—		—		—		(58,546)
Exercise of stock options (1,661 shares)	—		1		—		—		—		—		—		—		1
Restricted stock forfeitures (13,974 shares)	—		244		—		—		(244)		—		—		—		—

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

See accompanying notes to unaudited consolidated financial statements.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

Six Months Ended June 30, 2022 and 2021

(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, 2021	$	1,246	$	667,906	$	765,133	$	(45,919)	$	(271,647)	$	(37,026)	$	(2,425)	$	1,813	$	1,079,081
Effect of adopting ASU No. 2016-13 ("CECL")	—		—		6,212		—		—		—				—		6,212
Balance at January 1, 2022	1,246		667,906		771,345		(45,919)		(271,647)		(37,026)		(2,425)		1,813		1,085,293
Net income	—		—		43,363		—		—		—		—		—		43,363
Other comprehensive (loss)	—		—		—		(109,926)		—		—		—		—		(109,926)
Issuance of common stock to Columbia Bank MHC	61		102,680		—		—		—		—		—		—		102,741
Issuance of common stock allocated to restricted stock award grants (51,746 shares)	1		(1)		—		—		—		—		—		—		—

Stock based compensation	—		4,107		—		—		—		—		—		—		4,107
Purchase of treasury stock (2,546,667 shares)	—		—		—		—		(53,176)		—		—		—		(53,176)
Exercise of stock options ( 68,271 shares)	—		(192)		—		—		—		—		—		—		(192)
Restricted stock forfeitures (36,752 shares)	—		787		—		—		(787)		—		—		—		—
Repurchase shares for taxes (5,179 shares)	—		—		—		—		(113)		—		—		—		(113)
Employee Stock Ownership Plan shares committed to be released	—		1,255		—		—		—		1,131		—		—		2,386
Funding of deferred compensation obligations	—		—		—		—		—		—		(453)		254		(199)
Balance at June 30, 2022	$	1,308	$	776,542	$	814,708	$	(155,845)	$	(325,723)	$	(35,895)	$	(2,878)	$	2,067	$	1,074,284

See accompanying notes to unaudited consolidated financial statements.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows


	Six Months Ended June 30,
	2022		2021
	(In thousands, unaudited)
Cash flows from operating activities:
Net income	$	43,363	$	47,733
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred loan costs, fees and purchased premiums and discounts	3,267		(1,439)
Net amortization of premiums and discounts on securities	1,472		2,541
Net amortization of mortgage servicing rights	124		129
Amortization of intangible assets	749		520
Depreciation and amortization of office properties and equipment	3,605		3,362
Amortization of operating lease right-of-use assets	1,905		1,811
Loss on extinguishment of debt	—		742
Provision for (reversal of) credit losses	2,998		(3,041)
(Gain) loss on securities transactions	(210)		281
Change in fair value of equity securities	68		1,365
Gain on securitizations	—		(2,259)
Gain on sale of loans	(110)		(8,415)
Net loss on disposal of office properties and equipment	29		61
Deferred tax expense	2,219		736
Decrease in accrued interest receivable	938		1,160
Decrease in other assets	7,249		23,155
Increase in accrued expenses and other liabilities	4,661		592
Income on bank-owned life insurance	(3,868)		(2,971)
Employee stock ownership plan expense	2,386		1,922
Stock based compensation	4,107		4,540
(Decrease) in deferred compensation obligations under Rabbi Trust	(199)		(249)
Net cash provided by operating activities	74,753		72,276
Cash flows from investing activities:
Proceeds from sales of debt securities available for sale	126,772		4,719

Proceeds from paydowns/maturities/calls of debt securities available for sale	169,220		169,638
Proceeds from paydowns/maturities/calls of debt securities held to maturity	21,919		20,633
Purchases of debt securities available for sale	(137,025)		(416,106)
Purchases of debt securities held to maturity	(18,298)		(160,466)

Proceeds from sales of loans held-for-sale	3,212		274,980
Purchases of loans receivable	—		(71,590)
Net increase in loans receivable	(291,878)		(125,022)
Proceeds from bank-owned life insurance death benefits	774		5
Proceeds from redemptions of Federal Home Loan Bank stock	42,219		7,630
Purchases of Federal Home Loan Bank stock	(44,465)		(4,793)
Proceeds from sales of office properties and equipment	1,009		685
Additions to office properties and equipment	(2,382)		(3,584)
Net cash acquired in acquisition	140,769		—
Net cash provided by (used in) investing activities	$	11,846	$	(303,271)

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (continued)


	Six Months Ended June 30,
	2022		2021
	( In thousands, unaudited)

Cash flows from financing activities:
Net (decrease) increase in deposits	$	(39,884)	$	300,652
Proceeds from long-term borrowings	—		37,120
Payments on long-term borrowings	—		(54,168)
Net increase (decrease) in short-term borrowings	36,898		(33,375)
Increase in advance payments by borrowers for taxes and insurance	8,057		3,585

Exercise of stock options	(192)		1
Purchase of treasury stock	(53,176)		(58,546)
Repurchase of shares for taxes	(113)		—


Net cash (used in) provided by financing activities	$	(48,410)	$	195,269

Net increase (decrease) in cash and cash equivalents	$	38,189	$	(35,726)

Cash and cash equivalents at beginning of year	70,963		422,957
Cash and cash equivalents at end of period	$	109,152	$	387,231

Cash paid during the period for:
Interest on deposits and borrowings	$	12,863	$	20,892
Income tax payments, net of (refunds)	$	11,919	$	8,528

Non-cash investing and financing activities:

Transfer of loans receivable to loans held-for-sale	$	3,102	$	262,419
Securitization of loans	—		99,603
Acquisition:
Non-cash assets acquired:
Debt securities available for sale	$	79,024	$	—

Equity securities	1,075		—
Federal Home Loan Bank stock	906		—
Loans receivable	335,501		—
Accrued interest receivable	910		—
Office properties and equipment, net	7,296		—
Goodwill and intangibles	38,274		—
Deferred tax asset, net	3,633		—
Bank-owned life insurance	13,033		—
Other assets	2,723		—
Total non-cash assets acquired	$	482,375	$	—
Liabilities assumed:
Deposits	$	502,732	$	—
Borrowings	5,762		—
Advance payments by borrowers for taxes and insurance	1,341		—
Accrued expenses and other liabilities	10,568		—
Total liabilities assumed	$	520,403	$	—
Net non-cash liabilities assumed	$	(38,028)	$	—
Net cash and cash equivalents acquired in acquisition	$	140,769	$	—

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 consolidated financial statements include the accounts of Columbia Financial, Inc. ("Columbia Financial"), its wholly-owned subsidiaries, Columbia Bank ("Columbia") and Freehold Bank ("Freehold") and Columbia's wholly-owned subsidiaries, Columbia Investment Services, Inc., 2500 Broadway Corp., 1901 Residential Management Co. LLC, Plaza Financial Services, Inc., First Jersey Title Services, Inc., Real Estate Management Corp. LLC, 1901 Commercial Management Co. LLC, Stewardship Realty LLC, CSB Realty Corp., RSI Insurance Agency, Inc., RSI Investment Corporation, and Highlander Investment Company and Freehold's wholly-owned inactive subsidiary, Freehold S & L Service Corporation (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 six month periods ended June 30, 2022 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, 2021 and the audited consolidated financial statements included therein.

2. Acquisitions

Freehold Bank

On December 1, 2021, the Company completed its acquisition of Freehold Bancorp, MHC, Freehold Bancorp, Inc. and Freehold Bank (collectively, the "Freehold Entities"). Pursuant to the terms of the Merger Agreement, Freehold Bancorp, MHC merged with and into the MHC, with the MHC as the surviving entity; and Freehold Bancorp, Inc. merged with and into Columbia Financial, with Columbia Financial as the surviving entity. In connection with the merger, Freehold Bank converted to a federal savings bank and will operate as a wholly-owned subsidiary of Columbia Financial for at least two years following the effective time of the merger, or no later than December 31, 2023. Under the terms of the merger agreement, depositors of Freehold Bank became depositors of the Columbia Bank and have the same rights and privileges in the MHC as if their accounts had been established at Columbia Bank on the date established at Freehold Bank. The Company issued 2,591,007 shares of its common stock to the MHC, representing an amount equal to the fair value of the Freehold 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 acquisition of the Freehold Entities totaled $7,000 during the three and six months ended June 30, 2022. Merger expenses recorded during the three and six months ended June 30, 2021 totaled $75,000.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

2. Acquisitions (continued)

RSI Bank

On May 1, 2022, the Company completed its acquisition of RSI Bancorp, M.H.C., RSI Bancorp, Inc. and RSI Bank (collectively, the “RSI Entities”). Pursuant to the terms of the merger agreement, RSI Bancorp, M.H.C. merged with and into the MHC, with the MHC as the surviving entity; RSI Bancorp, Inc. merged with and into Columbia Financial, with Columbia Financial as the surviving entity; and RSI Bank merged with and into Columbia Bank, with Columbia Bank as the surviving institution. Under the terms of the merger agreement, depositors of RSI Bank became depositors of Columbia Bank and have the same rights and privileges in the MHC as if their accounts had been established at Columbia Bank on the date established at RSI Bank. The Company issued 6,086,314 shares of its common stock to the MHC, representing an amount equal to the discounted fair value of the RSI 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 acquisition of the RSI Entities totaled $1.3 million and $1.5 million, respectively, during the three and six months ended June 30, 2022. There were no related merger expenses associated with the acquisition of the RSI Entities recorded during the three and six months ended June 30, 2021.

The following table sets forth assets acquired and liabilities assumed in the acquisition of the RSI Entities, at their estimated fair values as of the closing date of the transaction:


	May 1, 2022
	(In thousands)
Assets acquired:
Cash and cash equivalents	$	140,769
Debt securities available for sale	79,024
Equity securities	1,075
Federal Home Loan Bank Stock	906
Loans receivable	335,501
Accrued interest receivable	910
Office properties and equipment, net	7,296
Bank-owned life insurance	13,033
Deferred tax asset, net	3,633
Core deposit intangibles	10,271
Other assets	2,723
Total assets acquired	$	595,141

Liabilities assumed:
Deposits	$	502,732
Borrowings	5,762
Advance payments by borrowers for taxes and insurance	1,341
Accrued expenses and other liabilities	10,568
Total liabilities assumed	$	520,403

Net assets acquired	$	74,738
Fair market value of stock issued to Columbia Bank MHC for purchase	102,741
Goodwill recorded at merger	$	28,003

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

2. Acquisitions (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 May 1, 2022, and resulted in the recognition of goodwill of $28.0 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 conditions, and other future events that are highly subjective in nature and subject to change. 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. As the Company continues to analyze the acquired assets and assumed liabilities, there may be adjustments to the recorded carrying values.

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 from three to fifteen years.

Goodwill. Goodwill is not amortized for book purposes: however, it is reviewed at least annually for impairment and is not deductible for tax purposes.

Core deposit intangibles. Core deposit intangibles ("CDI") are the measure of the value of non-maturity deposits in a business combination. The fair value of the CDI was calculated utilizing the cost savings approach, the expected cost savings attributable to the core deposits funding relative to an alternative source of funding, using a discounted cash flow present value methodology. Key inputs and assumptions utilized in the discounted cash flow present value methodology include core deposit balances and rates paid, the cost of an additional funding source, the aggregate life of deposits and truncation points, non-interest deposit costs, and the immediate deposit outflow assumption.

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.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

2. Acquisitions (continued)

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.

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 six months ended June 30, 2022 and 2021:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
	(Dollars in thousands, except per share data)

Net income	$	22,959	$	26,688	$	43,363	$	47,733
Shares:
Weighted average shares outstanding - basic	106,204,230		104,537,656		104,684,765		105,253,661
Weighted average dilutive shares outstanding	546,327		—		561,539		—
Weighted average shares outstanding - diluted	106,750,557		104,537,656		105,246,304		105,253,661
Earnings per share:
Basic	$	0.22	$	0.26	$	0.41	$	0.45
Diluted	$	0.22	$	0.26	$	0.41	$	0.45

During the three and six months ended June 30, 2022, the average number of stock options which could potentially dilute basic earnings per share in the future that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive totaled 237,110 and 73,753, respectively. During the three and six months ended June 30, 2021, the average number of stock options which could potentially dilute basic earnings per share in the future that were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive totaled 466,265 and 321,263, respectively.

4. Stock Repurchase Program

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 5, 2021, the Company completed the repurchases under the second stock repurchase program.

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 December 6, 2021, the Company announced that its Board of Directors authorized the Company's fourth stock repurchase program to acquire up to 5,000,000 shares, or approximately 4.6%, of the Company's then issued and outstanding common stock, commencing upon the completion of the Company's third stock repurchase program.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

4. Stock Repurchase Program (continued)

During the three and six months ended June 30, 2022, the Company repurchased 1,523,148 shares at a cost of approximately $31.5 million, or $20.67 per share, and 2,546,667 shares at a cost of approximately $53.2 million, or $20.88 per share, respectively, under these programs. During the three and six months ended June 30, 2021, the Company repurchased 1,471,501 shares at a cost of approximately $25.7 million, or $17.47 per share, and 3,470,040 shares, at a cost of approximately $58.5 million, or $16.87 per share, 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 2022

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 was 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 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 elected to extend its adoption of CECL in accordance with this legislation, and adopted the above mentioned ASUs related to Financial Instruments -Credit Losses (Topic 326) using a modified retrospective approach.

The Company adopted ASU 2016-13 on January 1, 2022 for all financial assets measured at amortized cost and off balance sheet credit exposures. Results for the three months ended March 31, 2022 are presented under Accounting Standards Codification 326, Financial Instruments - Credit Losses, while prior period amounts continue to be reported with previously applicable GAAP and have not been restated. Effective January 1, 2022, the Company recorded a $12.1 million decrease in the allowance for credit losses on loans (previously allowance for loan losses), established a $353,000 allowance for credit losses on debt securities available for sale, and recorded a $5.5 million increase in the liability for off balance sheet credit exposures, which resulted in a total cumulative effect adjustment of $6.2 million, net of tax, and an increase to retained earnings.

Accounting Pronouncement Not Yet Adopted

In March 2022, the FASB issued ASU 2022-02, Financial Instruments-Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 addresses areas identified by the FASB as part of its post-implementation review of the credit losses standard (ASU 2016-13) that introduced the CECL model. The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL model and enhance the disclosure requirements for loan refinancing and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require a public business entity to disclose current period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. For entities that have adopted ASU 2016-13, this ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on its 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 June 30, 2022 and December 31, 2021 are summarized as follows:


	June 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
	(In thousands)

U.S. government and agency obligations	$	68,236	$	144	$	(1,569)	$	66,811
Mortgage-backed securities and collateralized mortgage obligations	1,452,210		482		(117,345)		1,335,347
Municipal obligations	4,615		5		(123)		4,497
Corporate debt securities	90,146		1		(6,160)		83,987
	$	1,615,207	$	632	$	(125,197)	$	1,490,642


	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
			(In thousands)

U.S. government and agency obligations	$	34,711	$	404	$	(236)	$	34,879
Mortgage-backed securities and collateralized mortgage obligations	1,553,491		14,141		(13,273)		1,554,359
Municipal obligations	4,159		20		—		4,179
Corporate debt securities	109,018		2,378		(966)		110,430

	$	1,701,379	$	16,943	$	(14,475)	$	1,703,847

The amortized cost and fair value of debt securities available for sale at June 30, 2022, 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, 2022
	Amortized Cost		Fair Value
	(In thousands)

One year or less	$	915	$	914
More than one year to five years	56,479		54,788
More than five years to ten years	105,603		99,593

	$	162,997	$	155,295
Mortgage-backed securities and collateralized mortgage obligations	1,452,210		1,335,347
	$	1,615,207	$	1,490,642

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

6. Debt Securities Available for Sale (continued)

Mortgage-backed securities and collateralized mortgage obligations totaling $1.5 billion at amortized cost, and $1.3 billion at fair value, 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.

During the three and six months ended June 30, 2022, proceeds from the sales of debt securities available for sale totaled $126.8 million, resulting in gross gains of $210,000 and no gross losses. There were no calls or maturities of debt securities available for sale during three and six months ended June 30, 2022.

During the three months ended June 30, 2021, proceeds from the sale of one debt security available for sale totaled $4.7 million, resulting in a gross loss of $281,000. During the three months ended June 30, 2021, there were no calls or maturities of debt securities available for sale. During the six months ended June 30, 2021, proceeds from called debt securities available for sale totaled $5.0 million, and proceeds from matured debt securities available for sale totaled $210,000, resulting in no gross gains or losses.

Debt securities available for sale having a carrying value of $637.5 million and $587.7 million, at June 30, 2022 and December 31, 2021, respectively, were pledged as security for public funds on deposit at Columbia 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. Debt securities available for sale having a carrying value of $34.4 million and $44.1 million, at June 30, 2022 and December 31, 2021, respectively, were pledged by Freehold Bank for outstanding borrowings at the Federal Home Loan Bank, and 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 June 30, 2022 and December 31, 2021 and if the unrealized loss position was continuous for the twelve months prior to those respective dates:


	June 30, 2022
	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	$	46,356	$	(1,135)	$	4,552	$	(434)	$	50,908	$	(1,569)
Mortgage-backed securities and collateralized mortgage obligations	995,720		(79,434)		266,919		(37,911)		1,262,639		(117,345)
Municipal obligations	4,031		(123)		—		—		4,031		(123)
Corporate debt securities	77,334		(5,810)		4,650		(350)		81,984		(6,160)

	$	1,123,441	$	(86,502)	$	276,121	$	(38,695)	$	1,399,562	$	(125,197)


	December 31, 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	$	14,488	$	(236)	$	—	$	—	$	14,488	$	(236)
Mortgage-backed securities and collateralized mortgage obligations	820,746		(11,892)		62,407		(1,381)		883,153		(13,273)

Corporate debt securities	29,221		(671)		4,705		(295)		33,926		(966)

	$	864,455	$	(12,799)	$	67,112	$	(1,676)	$	931,567	$	(14,475)

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

6. Debt Securities Available for Sale (continued)

The number of securities in an unrealized loss position at June 30, 2022 totaled 405, compared with 219 at December 31, 2021. All temporarily impaired securities were investment grade as of June 30, 2022 and December 31, 2021.

For available for sale securities, the Company assesses whether a loss is from credit or other factors and considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency and adverse conditions related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows is less than the amortized cost, a credit loss would be recorded through an allowance for credit losses, limited by the amount that the fair value is less than the amortized cost basis.

The following table presents the activity in the allowance for credit losses on debt securities available for sale for the three and six months ended June 30, 2022:


	Three Months Ended June 30, 2022		Six Months Ended June 30, 2022
	(In thousands)
Allowance for Credit Losses:
Beginning balance	$	1,144	$	—
Impact of adopting ASU 2016-13 (CECL) effective January 1, 2022	—		490
(Reversal of ) provision for credit losses	(1,144)		(490)
Balance at June 30, 2022	$	—	$	—

The Company made an accounting policy election to exclude accrued interest receivable from the amortized cost basis of debt securities available for sale. Accrued interest receivable on debt securities available for sale is reported as a component of accrued interest receivable on the Consolidated Statement of Financial Condition, which totaled $3.1 million at June 30, 2022, and is excluded from the estimate of credit losses.

7. Debt Securities Held to Maturity

Debt securities held to maturity at June 30, 2022 and December 31, 2021 are summarized as follows:


	June 30, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Allowance for Credit Losses		Fair Value
	(In thousands)

U.S. government and agency obligations	$	44,870	$	—	$	(5,528)	$	—	$	39,342
Mortgage-backed securities and collateralized mortgage obligations	381,014		—		(27,331)		—		353,683
	$	425,884	$	—	$	(32,859)	$	—	$	393,025

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

7. Debt Securities Held to Maturity (continued)


	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
	(In thousands)

U.S. government and agency obligations	$	44,870	$	—	$	(759)	$	44,111
Mortgage-backed securities and collateralized mortgage obligations	384,864		6,741		(927)		390,678
	$	429,734	$	6,741	$	(1,686)	$	434,789

The amortized cost and fair value of debt securities held to maturity at June 30, 2022, 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, 2022
	Amortized Cost		Fair Value
	(In thousands)


More than one year to five years	$	14,874	$	13,656
More than five years to ten years	19,996		17,590
More than ten years	10,000		8,096
	44,870		39,342
Mortgage-backed securities and collateralized mortgage obligations	381,014		353,683
	$	425,884	$	393,025

Mortgage-backed securities and collateralized mortgage obligations totaling $381.0 million at amortized cost, and $353.7 million at fair value at June 30, 2022, 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 six months ended June 30, 2022, there were no sales, calls or maturities of debt securities held to maturity.

During the three and six months ended June 30, 2021, there were no sales, calls or maturities of debt securities held to maturity. During the three months ended June 30, 2021, proceeds from one called debt security held to maturity totaled $125,000, resulting in no 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 no gross gains or losses.

Debt securities held to maturity having a carrying value of $237.2 million and $252.4 million, at June 30, 2022 and December 31, 2021, respectively, were pledged as security for public funds on deposit at Columbia 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)


	June 30, 2022
	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	$	21,752	$	(3,122)	$	17,590	$	(2,406)	$	39,342	$	(5,528)
Mortgage-backed securities and collateralized mortgage obligations	337,750		(24,639)		15,849		(2,692)		353,599		(27,331)
	$	359,502	$	(27,761)	$	33,439	$	(5,098)	$	392,941	$	(32,859)


	December 31, 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	$	44,111	$	(759)	$	—	$	—	$	44,111	$	(759)
Mortgage-backed securities and collateralized mortgage obligations	79,036		(927)		—		—		79,036		(927)
	$	123,147	$	(1,686)	$	—	$	—	$	123,147	$	(1,686)

The number of securities in an unrealized loss position at June 30, 2022 totaled 112, compared with 25 at December 31, 2021. All temporarily impaired securities were investment grade as of June 30, 2022 and December 31, 2021.

For held to maturity securities, management measures expected credit losses on a collective basis by major security type. All of the mortgage-backed securities are issued by U.S. government agencies and are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses and, therefore, the expectation of non-payment is zero and the Company is not required to estimate an allowance for credit losses on these securities under the CECL standard. All these securities reflect a credit quality rating of AAA by Moody's Investors Service.

The Company made an accounting policy election to exclude accrued interest receivable from the amortized cost basis of debt held to maturity. Accrued interest receivable on debt securities held to maturity is reported as a component of accrued interest receivable on the Consolidated Statement of Financial Condition, which totaled $920,000 at June 30, 2022, and is excluded from the estimate of credit losses.

8. Equity Securities at Fair Value

The Company has an equity securities portfolio which consists of stock in other financial institutions, a payment technology company, a community bank correspondent services company, preferred stock in U.S. Government agencies, and a community reinvestment act qualifying bond fund which are reported at fair value on the Company's Consolidated Statements of Financial Condition. The fair value of the equities portfolio at June 30, 2022 and December 31, 2021 was $3.7 million and $2.7 million, respectively.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

8. Equity Securities at Fair Value (continued)

The Company recorded a net decrease in the fair value of equity securities of $(147,000) and $(778,000), during the three months ended June 30, 2022 and 2021, respectively, as a component of non-interest income. During the six months ended June 30, 2022 and 2021, the Company recorded a net decrease in the fair value of equity securities of $(68,000) and $(1.4) million, respectively, as a component of non-interest income.

During the three and six months ended June 30, 2022 and 2021, there were no sales of equity securities.

9. Loans Receivable and Allowance for Credit Losses

On January 1, 2022, the Company adopted CECL (ASC Topic 326), which replaced the historical incurred loss methodology with an expected loss methodology. The loan portfolio segmentation was expanded to seven portfolio segments taking into consideration common loan attributes and risk characteristics, as well as historical reporting metrics and data availability. Disclosures at and for the periods ended December 31, 2021 and June 30, 2021, are presented in accordance with the expanded segmentation adopted in conjunction with CECL, when appropriate. The Company made an accounting policy election to exclude accrued interest receivable from the amortized cost basis of loans receivable. Accrued interest receivable on loans receivable is reported as a component of accrued interest receivable on the Consolidated Statement of Financial Condition, which totaled $24.1 million at June 30, 2022, and is excluded from the estimate of credit losses.

The allowance for credit losses is a valuation account that reflects management’s evaluation of the current expected credit losses in the loan portfolio. The Company maintains the allowance for credit losses through provisions for credit losses that are charged to income. Charge-offs against the allowance for credit losses are taken on loans where management determines that the collection of loan principal and interest is unlikely. Recoveries made on loans that have been charged-off are credited to the allowance for credit losses.

Management estimates the allowance balance using relevant available information, from internal and external sources, related to past events, current conditions, and a reasonable and supportable forecast. Historical credit loss experience for both the Company and peers provides the basis for the estimation of expected credit losses, where observed credit losses are converted to probability of default rate through the use of segment-specific loss given default risk factors that convert default rates to loss severity based on industry-level, observed relationships between the two variables for each segment, primarily due to the nature of the underlying collateral. These risk factors were assessed for reasonableness against the Company’s own loss experience and adjusted in certain cases when the relationship between the Company’s historical default and loss severity deviate from that of the wider industry. The historical probability of default ("PD") curves, together with corresponding economic conditions, establish a quantitative relationship between economic conditions and loan performance through an economic cycle.

Using the historical relationship between economic conditions and loan performance, management’s expectation of future loan performance is incorporated using an externally developed economic forecast. This forecast is applied over a period that management has determined to be reasonable and supportable. Beyond the period over which management can develop or source a reasonable and supportable forecast, the model will revert to long-term average economic conditions using a straight-line, time-based methodology. The Company's current forecast period is six quarters, with a four quarter reversion period to historical average macroeconomic factors.

The allowance for credit losses is measured on a collective (pool) basis, with both a quantitative and qualitative analysis that is applied on a quarterly basis, when similar risk characteristics exist. The respective quantitative allowance for each segment is measured using an economic forecast, discounted cash flow modeling methodology in which distinct, segment-specific multi-variate regression models are applied to an external economic forecast. Under the discounted cash flows methodology, expected credit losses are estimated over the effective life of the loans by measuring the difference between the net present value of modeled cash flows and amortized cost basis. Contractual cash flows over the contractual life of the loans are the basis for modeled cash flows, adjusted for modeled defaults and expected prepayments and discounted at the loan-level effective interest rate. The contractual term excludes expected extensions, renewals, and modifications. After quantitative considerations, management applies additional qualitative adjustments so that the allowance for credit loss is reflective of the estimate of lifetime losses that exist in the loan portfolio at the balance sheet date.

Portfolio segment is defined as the level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses. Management developed segments for estimating loss based on type of borrower and collateral, which is generally based upon federal call report segmentation. The segments have been combined or sub-segmented as needed to ensure loans of similar risk profiles are appropriately pooled.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

9. Loans Receivable and Allowance for Credit Losses (continued)

The allowance for credit losses on loans individually evaluated for impairment is based upon loans that have been identified through the Company’s loan monitoring process. This process includes the review of delinquent, restructured, and charged-off loans.

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, 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 credit losses to total loans at an acceptable level considering the current composition of the loan portfolio.

Loans receivable at June 30, 2022 and December 31, 2021 are summarized as follows:


	June 30,		December 31,
	2022		2021
	(In thousands)
Real estate loans:
One-to-four family	$	2,511,715	$	2,092,317
Multifamily	1,077,459		1,041,108
Commercial real estate	2,306,683		2,170,236
Construction	276,710		295,047
Commercial business loans	474,145		452,232
Consumer loans:
Home equity loans and advances	281,590		276,563
Other consumer loans	2,131		1,428
Total gross loans	6,930,433		6,328,931
Purchased credit-deteriorated ("PCD") loans	21,353		6,791
Net deferred loan costs, fees and purchased premiums and discounts	31,010		24,879
Loans receivable	$	6,982,796	$	6,360,601

The Company had no loans held-for-sale at June 30, 2022 and December 31, 2021. During the three months ended June 30, 2022, the Company sold $589,000 and $424,000 of one-to-four family real estate loans and construction loans held-for-sale, respectively, resulting no gross gains or losses. During the six months ended June 30, 2022, the Company sold $589,000, $1.3 million and $1.3 million, of one-to-four family real estate loans, SBA loans included in commercial business loans, and construction loans held-for-sale, respectively, resulting in gross gains of $110,000 and no gross losses.

During the three months ended June 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 no 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 no gross losses. During the three months ended June 30, 2021, the Company also sold a $31,000 construction loan held-for-sale resulting in no 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 no gross losses.

During the three and six months ended June 30, 2022, no loans were purchased by the Company. During the three and six months ended June 30, 2021, the Company purchased $71.6 million of commercial real estate loans from third parties.

At June 30, 2022 and December 31, 2021, commercial business loans included $10.6 million and $44.9 million, respectively, in SBA Payroll Protection Program ("PPP") loans and net deferred fees related to these loans totaling $269,000 and $1.2 million, respectively.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

9. Loans Receivable and Allowance for Credit Losses (continued)

The Company has entered into guarantor swaps with Freddie Mac which results in improved liquidity. During the three and six months ended June 30, 2022, no loans were exchanged for Freddie Mac mortgage participation certificates. 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 no 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 no gross losses. The Company retained the servicing of these loans.

At June 30, 2022 and December 31, 2021, the carrying value of loans serviced by the Company for investors was $521.7 million and $519.5 million, respectively. These loans are not included in the Consolidated Statements of Financial Condition.

The following tables summarize the aging of loans receivable by portfolio segment, including non-accrual loans and excluding PCD loans at June 30, 2022 and December 31, 2021:


	June 30, 2022
	30-59 Days		60-89 Days		90 Days or More		Total Past Due		Non-accrual		Current		Total
	(In thousands)
Real estate loans:
One-to-four family	$	4,237	$	1,785	$	666	$	6,688	$	2,267	$	2,505,027	$	2,511,715
Multifamily	—		—		—		—		—		1,077,459		1,077,459
Commercial real estate	3,563		1,607		1,774		6,944		1,774		2,299,739		2,306,683
Construction	—		—		—		—		—		276,710		276,710
Commercial business loans	455		—		250		705		318		473,440		474,145
Consumer loans:
Home equity loans and advances	417		50		136		603		166		280,987		281,590
Other consumer loans	—		—		14		14		—		2,117		2,131
Total loans	$	8,672	$	3,442	$	2,840	$	14,954	$	4,525	$	6,915,479	$	6,930,433


	December 31, 2021
	30-59 Days		60-89 Days		90 Days or More		Total Past Due		Non-accrual		Current		Total
	(In thousands)
Real estate loans:
One-to-four family	$	3,131	$	1,976	$	373	$	5,480	$	1,416	$	2,086,837	$	2,092,317
Multifamily	—		—		—		—		—		1,041,108		1,041,108
Commercial real estate	2,189		—		1,561		3,750		1,561		2,166,486		2,170,236
Construction	—		—		—		—		—		295,047		295,047
Commercial business loans	412		—		203		615		761		451,617		452,232
Consumer loans:
Home equity loans and advances	108		53		81		242		201		276,321		276,563
Other consumer loans	—		4		—		4		—		1,424		1,428
Total loans	$	5,840	$	2,033	$	2,218	$	10,091	$	3,939	$	6,318,840	$	6,328,931

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

9. Loans Receivable and Allowance for Credit Losses (continued)

The Company considers a loan to be delinquent when we have not received a payment within 30 days of its contractual due date. 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 June 30, 2022 and December 31, 2021, non-accrual loans totaled $4.5 million and $3.9 million, respectively. Included in non-accrual loans at both June 30, 2022 and December 31, 2021, are 10 loans totaling $1.7 million, respectively, which are less than 90 days in arrears.

At June 30, 2022 there were no loans past due 90 days or more still accruing interest. At December 31, 2021, there were no 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 were not included in the aging of loans receivable by portfolio segment in the table above, and the Company continued to accrue interest income during the forbearance or deferral period.

Purchased credit impaired loans ("PCI") were loans acquired at a discount primarily due to deteriorated credit quality. These loans were initially recorded at fair value at acquisition, based upon the present value of expected future cash flows, with no related allowance for credit losses. In connection with the adoption of CECL on January 1, 2022, all loans considered PCI loans prior to that date were converted to purchase credit-deteriorated ("PCD") loans. Loans acquired in a business combination after January 1, 2022 are recorded in accordance with ASC Topic 326, which requires loans as of the acquisition date, that have experienced a more than insignificant deterioration in credit quality since origination to be classified as PCD loans.

At June 30, 2022 and December 31, 2021, PCD loans acquired in the Stewardship Financial Corporation ("Stewardship") acquisition totaled $2.1 million and $2.7 million, respectively, PCD loans acquired in the Roselle Bank acquisition totaled $185,000 and $184,000, respectively, and PCD loans acquired in the Freehold Bank acquisition totaled $3.8 million and $3.9 million, respectively. At June 30, 2022, PCD loans acquired in the RSI Bank acquisition totaled $15.3 million.

We may obtain physical possession of real estate collateralizing a residential mortgage loan via foreclosure or through an in-substance repossession. At June 30, 2022 and December 31, 2021, the Company had no real estate owned. At both June 30, 2022 and December 31, 2021, we had one residential mortgage loan with a carrying value of $87,000 collateralized by residential real estate which was in the process of foreclosure.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

9. Loans Receivable and Allowance for Credit Losses (continued)

The following tables summarize loans receivable (including PCD loans) and allowance for credit losses by portfolio segment and impairment method at June 30, 2022 and December 31, 2021:


	June 30, 2022
	One-to-Four Family		Multifamily		Commercial Real Estate		Construction		Commercial Business		Home Equity Loans and Advances		Other Consumer Loans		Total
	(In thousands)
Allowance for credit losses:
Individually evaluated for impairment	$	246	$	4	$	97	$	—	$	10	$	28	$	—	$	385
Collectively evaluated for impairment	10,580		10,928		14,331		5,560		7,269		1,443		10		50,121
Loans acquired with deteriorated credit quality	10		—		52		10		5		—		—		77
Total	$	10,836	$	10,932	$	14,480	$	5,570	$	7,284	$	1,471	$	10	$	50,583

Total loans:
Individually evaluated for impairment	$	4,278	$	720	$	15,337	$	—	$	1,300	$	859	$	—	$	22,494
Collectively evaluated for impairment	2,507,437		1,076,739		2,291,346		276,710		472,845		280,731		2,131		6,907,939
Loans acquired with deteriorated credit quality	3,344		—		16,074		1,040		699		196		—		21,353
Total loans	$	2,515,059	$	1,077,459	$	2,322,757	$	277,750	$	474,844	$	281,786	$	2,131	$	6,951,786

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

9. Loans Receivable and Allowance for Credit Losses (continued)


	December 31, 2021
	One-to-Four Family		Multifamily		Commercial Real Estate		Construction		Commercial Business		Home Equity Loans and Advances		Other Consumer Loans		Total
	(In thousands)
Allowance for credit losses:
Individually evaluated for impairment	$	258	$	—	$	97	$	—	$	16	$	7	$	—	$	378
Collectively evaluated for impairment	8,540		7,741		16,017		8,943		20,198		866		6		62,311
Loans acquired with deteriorated credit quality	—		—		—		—		—		—		—		—
Total	$	8,798	$	7,741	$	16,114	$	8,943	$	20,214	$	873	$	6	$	62,689

Total loans:
Individually evaluated for impairment	$	5,184	$	762	$	15,830	$	—	$	1,806	$	705	$	—	$	24,287
Collectively evaluated for impairment	2,087,133		1,040,346		2,154,406		295,047		450,426		275,858		1,428		6,304,644
Loans acquired with deteriorated credit quality	431		—		5,426		—		934		—		—		6,791
Total loans	$	2,092,748	$	1,041,108	$	2,175,662	$	295,047	$	453,166	$	276,563	$	1,428	$	6,335,722

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,” allowed 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 Company 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 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 through January 1, 2022, including provisions permitting loan deferral extension requests to not be treated as troubled debt restructurings. Subsequent modifications to these loans are evaluated for troubled debt restructuring accounting treatment.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

9. Loans Receivable and Allowance for Credit Losses (continued)

The following tables present the number of loans modified as TDRs during the three and six months ended June 30, 2022 and 2021, 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,
	2022					2021
	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

Commercial	—	—		—		1	192		211



Total restructured loans	—	$	—	$	—	2	$	413	$	533


	For the Six Months Ended June 30,
	2022					2021
	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

Commercial	—	—		—		1	192		211

Consumer loans:
Home equity loans and advances	1	$	119	$	119	—	$	—	$	—
Total restructured loans	1	$	119	$	119	2	$	413	$	533

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

9. Loans Receivable and Allowance for Credit Losses (continued)

The activity in the allowance for credit losses by portfolio segment for the three and six months ended June 30, 2022 and 2021 are as follows:


	For the Three Months Ended June 30,
	One-to-Four Family		Multifamily		Commercial Real Estate		Construction		Commercial Business		Home Equity Loans and Advances		Other Consumer Loans		Totals
	(In thousands)
2022
Balance at beginning of period	$	8,814	$	11,203	$	13,513	$	4,974	$	7,143	$	1,507	$	8	$	47,162

Initial allowance related to PCD loans	131		—		474		3		19		6		—		633
Provision for (reversal of) credit losses	1,785		(271)		493		593		127		(46)		2		2,683
Recoveries	199		—		—		—		30		4		—		233
Charge-offs	(93)		—		—		—		(35)		—		—		(128)
Balance at end of period	$	10,836	$	10,932	$	14,480	$	5,570	$	7,284	$	1,471	$	10	$	50,583

2021
Balance at beginning of period	$	19,850	$	6,955	$	16,894	$	11,464	$	14,804	$	1,931	$	6	$	71,904
Provision for (reversal of) credit losses	(2,463)		1,783		89		(2,304)		1,600		(465)		(1)		(1,761)
Recoveries	11		—		931		—		111		34		—		1,087
Charge-offs	(290)		(296)		(100)		—		(617)		(29)		—		(1,332)
Balance at end of period	$	17,108	$	8,442	$	17,814	$	9,160	$	15,898	$	1,471	$	5	$	69,898

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

9. Loans Receivable and Allowance for Credit Losses (continued)


	For the Six Months Ended June 30,
	One-to-Four Family		Multifamily		Commercial Real Estate		Construction		Commercial Business		Home Equity Loans and Advances		Other Consumer Loans		Totals
	(In thousands)
2022
Balance at beginning of period	$	8,798	$	7,741	$	16,114	$	8,943	$	20,214	$	873	$	6	$	62,689
Effect of adopting ASU No. 2016-13 ("CECL")	(2,308)		(2,030)		(4,227)		(2,346)		(5,302)		(229)		(1)		(16,443)
Initial allowance related to PCD loans	131		—		474		3		19		6		—		633
Provision for (reversal of) credit losses	3,970		5,221		2,119		(1,030)		(7,640)		840		8		3,488
Recoveries	338		—		—		—		55		8		—		401
Charge-offs	(93)		—		—		—		(62)		(27)		(3)		(185)
Balance at end of period	$	10,836	$	10,932	$	14,480	$	5,570	$	7,284	$	1,471	$	10	$	50,583

2021
Balance at beginning of period	$	13,586	$	8,897	$	21,784	$	11,271	$	17,384	$	1,748	$	6	$	74,676
Provision for (reversal of) credit losses	4,014		(159)		(4,641)		(2,112)		91		(235)		1		(3,041)
Recoveries	14		—		937		1		127		45		—		1,124
Charge-offs	(506)		(296)		(266)		—		(1,704)		(87)		(2)		(2,861)
Balance at end of period	$	17,108	$	8,442	$	17,814	$	9,160	$	15,898	$	1,471	$	5	$	69,898

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

9. Loans Receivable and Allowance for Credit Losses (continued)

The following tables present loans individually evaluated for impairment by loan segment, excluding PCD loans, at June 30, 2022 and December 31, 2021:


	At June 30, 2022
	Recorded Investment		Unpaid Principal Balance		Specific Allowance
	(In thousands)
With no allowance recorded:
Real estate loans:
One-to-four family	$	1,146	$	1,494	$	—
Multifamily	64		67		—
Commercial real estate	13,406		14,095		—

Commercial business loans	168		168		—
Consumer loans:
Home equity loans and advances	249		355		—
	15,033		16,179		—
With a specific allowance recorded:
Real estate loans:
One-to-four family	3,132		3,151		246
Multifamily	656		656		4
Commercial real estate	1,931		1,934		97

Commercial business loans	1,132		1,132		10
Consumer loans:
Home equity loans and advances	610		610		28
	7,461		7,483		385
Total:
Real estate loans:
One-to-four family	4,278		4,645		246
Multifamily	720		723		4
Commercial real estate	15,337		16,029		97

Commercial business loans	1,300		1,300		10
Consumer loans:
Home equity loans and advances	859		965		28
Total loans	$	22,494	$	23,662	$	385

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

9. Loans Receivable and Allowance for Credit Losses (continued)


	At December 31, 2021
	Recorded Investment		Unpaid Principal Balance		Specific Allowance
	(In thousands)
With no allowance recorded:
Real estate loans:
One-to-four family	$	1,882	$	2,421	$	—
Multifamily	762		765		—
Commercial real estate	13,861		14,586		—

Commercial business loans	573		573		—
Consumer loans:
Home equity loans and advances	202		308		—
	17,280		18,653		—
With a specific allowance recorded:
Real estate loans:
One-to-four family	3,302		3,321		258

Commercial real estate	1,969		1,971		97

Commercial business loans	1,233		1,233		16
Consumer loans:
Home equity loans and advances	503		503		7
	7,007		7,028		378
Total:
Real estate loans:
One-to-four family	5,184		5,742		258
Multifamily	762		765		—
Commercial real estate	15,830		16,557		97

Commercial business loans	1,806		1,806		16
Consumer loans:
Home equity loans and advances	705		811		7
	$	24,287	$	25,681	$	378

Specific allocations of the allowance for credit losses attributable to impaired loans totaled $385,000 and $378,000 at June 30, 2022 and December 31, 2021, respectively. At June 30, 2022 and December 31, 2021, impaired loans for which there was no related allowance for credit losses totaled $15.0 million and $17.3 million, respectively.

The recorded investment in TDRs totaled $20.8 million at June 30, 2022, of which one loan with a balance of $30,000 was 60 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, 2022. The recorded investment in TDRs totaled $22.4 million at December 31, 2021, of which one loan with a balance of $36,000 was 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, 2021.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

9. Loans Receivable and Allowance for Credit Losses (continued)

The following tables present interest income recognized for loans individually evaluated for impairment, by loan segment, excluding PCD loans for the three and six months ended June 30, 2022 and 2021:


	For the Three Months Ended June 30,
	2022				2021
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
Real estate loans:
One-to-four family	$	4,577	$	46	$	6,149	$	102
Multifamily	731		11		16,468		177
Commercial real estate	16,176		164		25,030		198

Commercial business loans	1,373		22		2,295		41
Consumer loans:
Home equity loans and advances	873		10		1,523		18
Total loans	$	23,730	$	253	$	51,465	$	536


	For the Six Months Ended June 30,
	2022				2021
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
Real estate loans:
One-to-four family	$	4,779	$	101	$	6,518	$	170
Multifamily	741		22		16,468		349
Commercial real estate	16,061		406		27,617		462

Commercial business loans	1,517		44		2,679		70
Consumer loans:
Home equity loans and advances	817		21		1,565		38
Total loans	$	23,915	$	594	$	54,847	$	1,089

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 Credit Losses (continued)

The following table summarizes the Company's loans by year of origination and internally assigned credit risk rating, excluding PCD loans at June 30, 2022 and December 31, 2021:


	Loans by Year of Origination at June 30, 2022
	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans to Term Loans		Total
	(In thousands)
One-to-Four Family
Pass	$	374,154	$	852,583	$	308,495	$	185,900	$	133,938	$	653,327	$	—	$	—	$	2,508,397
Special mention	—		—		—		—		—		195		—		—		195
Substandard	—		488		—		688		325		1,622		—		—		3,123


Total One-to-Four Family	374,154		853,071		308,495		186,588		134,263		655,144		—		—		2,511,715

Multifamily
Pass	103,694		307,293		177,317		209,352		47,552		227,705		—		—		1,072,913
Special mention	—		—		—		—		—		4,546		—		—		4,546
Substandard	—		—		—		—		—		—		—		—		—


Total Multifamily	103,694		307,293		177,317		209,352		47,552		232,251		—		—		1,077,459

Commercial Real Estate
Pass	189,253		393,998		178,019		264,387		241,040		964,935		—		—		2,231,632
Special mention	—		—		—		1,071		15,853		29,644		—		—		46,568
Substandard	—		—		1,286		—		—		27,197		—		—		28,483


Total Commercial Real Estate	189,253		393,998		179,305		265,458		256,893		1,021,776		—		—		2,306,683

Construction
Pass	64,943		117,908		40,766		18,216		9,826		25,051		—		—		276,710
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—


Total Construction	$	64,943	$	117,908	$	40,766	$	18,216	$	9,826	$	25,051	$	—	$	—	$	276,710

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

9. Loans Receivable and Allowance for Credit Losses (continued)


	Loans by Year of Origination at June 30, 2022
	2022		2021		2020		2019		2018		Prior		Revolving Loans		Revolving Loans to Term Loans		Total
	(In thousands)
Commercial Business
Pass	$	28,615	$	45,700	$	34,306	$	26,367	$	28,320	$	42,923	$	252,220	$	—	$	458,451
Special mention	—		224		62		1,322		1,132		43		3,661		—		6,444
Substandard	—		151		66		212		2,556		486		5,779		—		9,250


Total Commercial Business	28,615		46,075		34,434		27,901		32,008		43,452		261,660		—		474,145

Home Equity Loans and Advances
Pass	18,100		23,603		15,643		14,070		13,078		98,835		97,582		457		281,368
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		186		36		—		222


Total Home Equity Loans and Advances	18,100		23,603		15,643		14,070		13,078		99,021		97,618		457		281,590

Other Consumer Loans
Pass	1,241		107		122		159		45		130		327		—		2,131
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—


Total Other Consumer Loans	1,241		107		122		159		45		130		327		—		2,131

Total Loans	$	780,000	$	1,742,055	$	756,082	$	721,744	$	493,665	$	2,076,825	$	359,605	$	457	$	6,930,433

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

9. Loans Receivable and Allowance for Credit Losses (continued)


	Loans by Year of Origination at December 31, 2021
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans to Term Loans		Total
	(In thousands)
One-to-Four Family
Pass	$	793,848	$	298,815	$	196,244	$	138,215	$	134,811	$	525,615	$	—	$	—	$	2,087,548
Special mention	—		—		—		—		—		203		—		—		203
Substandard	—		—		1,463		1,420		360		1,323		—		—		4,566


Total One-to-Four family	793,848		298,815		197,707		139,635		135,171		527,141		—		—		2,092,317

Multifamily
Pass	312,738		181,285		231,252		47,024		131,169		137,640		—		—		1,041,108
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—


Total Multifamily	312,738		181,285		231,252		47,024		131,169		137,640		—		—		1,041,108

Commercial Real Estate
Pass	381,222		161,136		278,581		241,669		222,752		803,945		—		—		2,089,305
Special mention	—		—		1,303		16,070		1,885		34,788		—		—		54,046
Substandard	—		386		—		1,561		1,276		23,662		—		—		26,885


Total Commercial Real Estate	381,222		161,522		279,884		259,300		225,913		862,395		—		—		2,170,236

Construction
Pass	107,070		77,549		37,498		41,591		28,814		2,418		—		—		294,940
Special mention	—		—		107		—		—		—		—		—		107
Substandard	—		—		—		—		—		—		—		—		—


Total Construction	$	107,070	$	77,549	$	37,605	$	41,591	$	28,814	$	2,418	$	—	$	—	$	295,047

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

9. Loans Receivable and Allowance for Credit Losses (continued)


	Loans by Year of Origination at December 31, 2021
	2021		2020		2019		2018		2017		Prior		Revolving Loans		Revolving Loans to Term Loans		Total
	(In thousands)
Commercial Business
Pass	$	84,113	$	36,115	$	25,156	$	30,670	$	21,762	$	26,515	$	210,597	$	—	$	434,928
Special mention	246		15		1,729		1,369		18		46		3,291		—		6,714
Substandard	192		71		352		1,084		371		609		7,911		—		10,590


Total Commercial Business	84,551		36,201		27,237		33,123		22,151		27,170		221,799		—		452,232

Home Equity Loans and Advances
Pass	22,393		15,977		15,906		13,146		12,023		100,870		95,484		426		276,225
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		246		92		—		338


Total Home Equity Loans and Advances	22,393		15,977		15,906		13,146		12,023		101,116		95,576		426		276,563

Other Consumer Loans
Pass	659		58		284		60		9		5		353		—		1,428
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—


Total Other Consumer Loans	659		58		284		60		9		5		353		—		1,428

Total Loans	$	1,702,481	$	771,407	$	789,875	$	533,879	$	555,250	$	1,657,885	$	317,728	$	426	$	6,328,931

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

9. Loans Receivable and Allowance for Credit Losses (continued)

The Company is required to include unfunded commitments that are expected to be funded in the future within the allowance calculation, other than those that are unconditionally cancellable. To arrive at that reserve, the reserve percentage for each applicable segment is applied to the unused portion of the expected commitment balance and is multiplied by the expected funding rate. To determine the expected funding rate, the Company uses a historical utilization rate for each segment. The allowance for credit losses on off balance sheet exposures is reported in other liabilities in the Consolidated Statements of Financial Condition. The liability represents an estimate of expected credit losses arising from off balance sheet exposures such as unfunded commitments. At June 30, 2022, the balance of the allowance for credit losses on unfunded commitments, included in other liabilities, totaled $8.4 million. The Company recorded a (reversal of) provision for credit losses on unfunded commitments, included in other non-interest expense in the Consolidated Statements of Income, of $(488,000) and $160,000 during the three and six months ended June 30, 2022.

The following table presents the activity in the allowance for credit losses on off balance sheet exposures for the three and six months ended June 30, 2022:


	Three Months Ended June 30, 2022		Six Months Ended June 30, 2022
	(In thousands)
Allowance for Credit Losses:
Beginning balance	$	8,846	$	524
Impact of adopting ASU 2016-13 ("CECL") effective January 1, 2022	—		7,674
(Reversal of) provision for credit losses	(488)		160
Balance at June 30, 2022	$	8,358	$	8,358

10. Leases

The Company's leases real estate property for branches and office space. At June 30, 2022 and December 31, 2021, 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. 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.

At June 30, 2022 and December 31, 2021, the weighted average remaining lease term for operating leases was 6.7 years and 7.0 years, respectively, and the weighted average discount rate used in the measurement of operating lease liabilities was 2.22% and 2.13%, respectively.

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 months ended June 30, 2022 and 2021, operating and variable lease expenses totaled approximately $607,000 and $563,000, respectively. During the six months ended June 30, 2022 and 2021, operating and variable lease expenses totaled approximately $1.3 million and $1.2 million, respectively.

There were no sale and leaseback transactions, leveraged leases or lease transactions with related parties during the three and six months ended June 30, 2022 and 2021. At June 30, 2022, the Company had not entered into any leases which had not yet commenced.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

10. Leases (continued)

The following table summarizes lease payment obligations for each of the next five years and thereafter as follows:


	Lease Payment Obligations at
	June 30, 2022		December 31, 2021
	(In thousands)


One year or less	$	2,150	$	4,198
After one year to two years	4,206		3,950
After two years to three years	3,413		3,150
After three years to four years	2,742		2,479
After four years to five years	2,440		2,177
Thereafter	5,783		5,340
Total undiscounted cash flows	20,734		21,294
Discount on cash flows	(1,648)		(1,709)
Total lease liability	$	19,086	$	19,585

11. Deposits

Deposits at June 30, 2022 and December 31, 2021 are summarized as follows:


	June 30,		December 31,
	2022		2021
	(In thousands)

Non-interest-bearing demand	$	1,788,091	$	1,712,061
Interest-bearing demand	2,706,948		2,599,987
Money market accounts	712,004		657,156
Savings and club deposits	984,926		822,833
Certificates of deposit	1,841,095		1,778,179
Total deposits	$	8,033,064	$	7,570,216

Included in the above balance at December 31, 2021 are certificates of deposit obtained through brokers totaling $5.0 million that were acquired from Stewardship.

The aggregate amount of certificates of deposit that meet or exceed $100,000 totaled approximately $960.6 million and $932.4 million at June 30, 2022 and December 31, 2021, respectively. Interest expense on deposits for the three months ended June 30, 2022 and 2021 totaled $4.7 million and $7.9 million, respectively. Interest expense on deposits for the six months ended June 30, 2022 and 2021 totaled $9.4 million and $16.7 million, respectively.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

11. Deposits (continued)

Scheduled maturities of certificates of deposit accounts at June 30, 2022 and December 31, 2021 are summarized as follows:


	June 30,		December 31,
	2022		2021
	(In thousands)

One year or less	$	1,166,258	$	1,087,631
After one year to two years	394,853		418,515
After two years to three years	161,556		143,950
After three years to four years	56,636		36,277
After four years	61,792		91,806
	$	1,841,095	$	1,778,179

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.

At June 30, 2022, there were 835,814 shares remaining available for future restricted stock awards and 1,966,728 shares remaining available for future stock option grants under the 2019 plan

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.

On March 2, 2022, 51,746 shares of restricted stock were awarded, with a grant date fair value of $21.79 per share. To fund the grant of restricted common stock, the Company issued shares from authorized but unissued shares.

Restricted shares granted under the 2019 Plan generally vest in equal installments, over performance or service periods ranging from 1 year to 5 years, beginning 1 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 months ended June 30, 2022 and 2021, approximately $1.4 million and $1.6 million in expense was recognized in regard to these awards. The expected future compensation expense related to the 1,041,554 non-vested restricted shares outstanding at June 30, 2022 is approximately $6.7 million over a weighted average period of 1.3 years. During the six months ended June 30, 2022 and 2021, approximately $2.5 million and $3.0 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 six months ended June 30, 2022 and 2021:


	Number of Restricted Shares	Weighted Average Grant Date Fair Value

Non-vested at January 1, 2022	1,054,335	$	15.78
Grants	51,746	21.79
Vested	(27,775)	17.86
Forfeited	(31,570)	16.91
Non-vested at March 31, 2022	1,046,736	$	15.98


Forfeited	(5,182)	18.34
Non-vested at June 30, 2022	1,041,554	$	15.97

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

12. Stock Based Compensation (continued)


	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

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%.

On March 21, 2022, options to purchase 130,951 shares of Company common stock were awarded with a grant date fair value of $6.51 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 $21.79, 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 six years risk-free rate of return of 2.34%, volatility of 25.31%, and a dividend yield of 0.00%.

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 months ended June 30, 2022 and 2021, approximately $811,000 and $822,000 in expense was recognized in regard to these awards. The expected future compensation expense related to the 2,222,014 non-vested options outstanding at June 30, 2022 is $7.0 million over a weighted average period of 1.9 years. During the six months ended June 30, 2022 and 2021, approximately $1.6 million and $1.6 million in expense was recognized in regard to these awards.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

12. Stock Based Compensation (continued)

The following is a summary of the Company's option activity during the three and six months ended June 30, 2022 and 2021:


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

Outstanding, January 1, 2022	3,637,542	$	15.78	7.6	$	18,654,905
Granted	130,951	21.79		0	—
Exercised	(62,859)	16.42
Expired	(1,412)	15.60		0	—
Forfeited	(61,961)	16.84		0	—
Outstanding, March 31, 2022	3,642,261	$	15.92	7.5	$	20,401,381

Exercised	(5,412)	15.60		0	—

Forfeited	(21,801)	17.78		0	—
Outstanding, June 30, 2022	3,615,048	$	15.91	7.2	$	21,335,939




Options exercisable at June 30, 2022	1,393,034	$	15.69	7.1	$	8,526,586


	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	$	—
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

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 the three and six months ended June 30, 2022, the aggregate intrinsic value of options exercised was $360,469 and $388,990, respectively. During both the three and six months ended June 30, 2021, the aggregate intrinsic value of options exercised was $3,805.

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") Post-retirement Plan, and Split-Dollar Life Insurance Plans

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 are not eligible to participate in the Columbia 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.

Through the acquisition of the RSI Entities, the Company acquired a funded pension plan, a non-funded post -retirement plan, and a split-dollar life insurance plan which are included in the tables below, based on benefit valuations as of the acquisition date.

Net periodic benefit (income) cost for Pension Plan, RIM Plan, Post-retirement Plan and Split-Dollar Life Insurance plan benefits for the three and six months ended June 30, 2022 and 2021, includes the following components:


	For the Three Months Ended June 30,
	Pension Plan				RIM Plan				Post-retirement Plan				Split-Dollar Life Insurance
	2022		2021		2022		2021		2022		2021		2022		2021		Affected Line Item in the Consolidated Statements of Income
	(In thousands)

Service cost	$	1,966	$	2,150	$	93	$	100	$	110	$	130	$	128	$	141	Compensation and employee benefits
Interest cost	2,081		1,756		97		86		173		141		153		125		Other non-interest expense
Expected return on plan assets	(7,633)		(6,318)		—		—		—		—		—		—		Other non-interest expense
Amortization:
Prior service cost	—		—		—		—		—		—		14		14		Other non-interest expense
Net loss	—		1,000		111		166		78		153		151		191		Other non-interest expense
Net periodic (income) benefit cost	$	(3,586)	$	(1,412)	$	301	$	352	$	361	$	424	$	446	$	471

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

13. Components of Net Periodic Benefit Cost (continued)


	For the Six Months Ended June 30,
	Pension Plan				RIM Plan				Post-retirement Plan				Split-Dollar Life Insurance
	2022		2021		2022		2021		2022		2021		2022		2021		Affected Line Item in the Consolidated Statements of Income
	(In thousands)

Service cost	$	3,932	$	4,300	$	186	$	200	$	197	$	260	$	253	$	282	Compensation and employee benefits
Interest cost	4,112		3,512		194		172		323		282		295		250		Other non-interest expense
Expected return on plan assets	(15,192)		(12,636)		—		—		—		—		—		—		Other non-interest expense
Amortization:
Prior service cost	—		—		—		—		—		—		28		28		Other non-interest expense
Net loss	—		2,000		222		332		156		306		302		382		Other non-interest expense
Net periodic (income) benefit cost	$	(7,148)	$	(2,824)	$	602	$	704	$	676	$	848	$	878	$	942

For the three and six months ended June 30, 2022, no contribution was made to the Pension Plan. Columbia Bank made a $10.0 million contribution to the Pension Plan in August 2022. The net periodic (income) cost for pension benefits, other post-retirement and split dollar life insurance benefits for the three and six months ended June 30, 2022 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 six months ended June 30, 2022 and 2021, the Company recorded a net periodic benefit cost of $3,000 and $6,000, and $4,000 and $4,000 respectively, in connection with this plan.

Freehold Bank has a non-contributory defined benefit supplemental executive plan with the only participant being the former

president of Freehold Bank. For the three and six months ended June 30, 2022, the Company recorded a net periodic benefit cost of $2,000 and $4,000, respectively, in connection with this plan.

In addition, through the acquisition of the RSI Entities, the Company acquired a non-contributory defined benefit supplemental executive retirement plan with the only participant being a former president of RSI Bank. For both the three and six months ended June 30, 2022 , the Company recorded a net periodic benefit cost of $11,000, in connection with this plan.

14. Fair Value Measurements

The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The determination of fair values of financial instruments often requires the use of estimates. Where quoted market values in an active market are not readily available, the Company utilizes various valuation techniques to estimate fair value.

Fair value is 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.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

14. Fair Value Measurements (continued)

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.

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 June 30, 2022 and December 31, 2021.

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, matrix pricing and discounted cash flow 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. Discounted cash flows, a Level 3 input, is estimated by discounting the expected future cash flows using the current rates for securities with similar credit ratings and similar remaining maturities. 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. The Company classifies the estimated fair value of its loan portfolio as Level 3.

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. 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 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.

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 June 30, 2022 and December 31, 2021, by level within the fair value hierarchy:


	June 30, 2022
			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	$	66,811	$	57,176	$	9,635	$	—
Mortgage-backed securities and collateralized mortgage obligations	1,335,347		—		1,335,347		—
Municipal obligations	4,497		—		908		3,589
Corporate debt securities	83,987		—		74,037		9,950

Total debt securities available for sale	1,490,642		57,176		1,419,927		13,539
Equity securities	3,717		3,377		340		—
Derivative assets	8,642		—		8,642		—
	$	1,503,001	$	60,553	$	1,428,909	$	13,539

Derivative liabilities	$	9,943	$	—	$	9,943	$	—


	December 31, 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	$	34,879	$	34,879	$	—	$	—
Mortgage-backed securities and collateralized mortgage obligations	1,554,359		—		1,554,359		—
Municipal obligations	4,179		—		4,179		—
Corporate debt securities	110,430		—		110,430		—

Total debt securities available for sale	1,703,847		34,879		1,668,968		—
Equity securities	2,710		2,364		346
Derivative assets	9,492		—		9,492		—
	$	1,716,049	$	37,243	$	1,678,806	$	—

Derivative liabilities	$	17,366	$	—	$	17,366	$	—

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

14. Fair Value Measurements (continued)

The table below provides activity of assets reported as Level 3 for the period ended June 30, 2022:


	Significant Unobservable Inputs (Level 3)
	(In thousands)
Debt securities available for sale:
Balance of recurring Level 3 assets -December 31, 2021	$	—
Transfers into Level 3 assets	13,539
Balance of recurring Level 3 assets - June 30, 2022	$	13,539

The fair value of investments placed in Level 3 is estimated by discounting the expected future cash flows using reasonably available current rates for comparable new issue securities with similar structure, including original maturity, call date, and assumptions about risk. Discounted cash flow estimated valuations are subsequently validated against comparable structures as an approximation of value.

Expected cash flows were projected based on contractual cash flows. Two private placement corporate debt securities classified as available for sale and four private placement municipal obligations classified as available for sale were transferred from Level 2 to Level 3 during the three and six months ended June 30, 2022.

Private placement debt security cash flows were discounted to a market yield ranging from 5.0% to 8.0% (weighted average is 7.1%), and private placement municipal obligation cash flows were discounted to a market yield ranging from 1.0% to 4.0% (weighted average is 2.2%).

The period end valuations were support by an analysis prepared by an independent third party market participant and approved by management.

There were no Level 3 assets measured at fair value on a recurring basis at December 31, 2021.

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 June 30, 2022 and December 31, 2021.

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 June 30, 2022 and December 31, 2021, by level within the fair value hierarchy:


	June 30, 2022
			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	$	2,239	$	—	$	—	$	2,239
	$	2,239	$	—	$	—	$	2,239


	December 31, 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)

Impaired loans	$	1,213	$	—	$	—	$	1,213

Mortgage servicing rights	1,906		—		—		1,906
	$	3,119	$	—	$	—	$	3,119

The following table presents information for Level 3 assets measured at fair value on a non-recurring basis at June 30, 2022 and December 31, 2021:

June 30, 2022

Fair Value

Valuation Methodology

Unobservable Inputs

Range of Inputs

Weighted Average

(Dollars in thousands)

Mortgage servicing rights

2,239

Discounted cash flow

Prepayment speeds and discount rates (1)

5.6% - 24.5%

8.0

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

14. Fair Value Measurements (continued)


	December 31, 2021
	Fair Value		Valuation Methodology	Unobservable Inputs	Range of Inputs		Weighted Average
	(Dollars in thousands)

Impaired loans	$	1,213	Other	Contracted sales price of collateral	—	%	—	%

Mortgage servicing rights	$	1,906	Discounted cash flow	Prepayment speeds and discount rates (2)	7.5% - 24.9%		12.7	%



(1) Value of SBA servicing rights based on a discount rate of 11.75%.
(2) 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. 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 significant non-performing loans was based on recent external appraisals of collateral securing such loans, adjusted for the timing of anticipated cash flows. The Company classifies the estimated fair value of its non-performing loan portfolio as Level 3.

Deposits

The fair value of deposits with no stated maturity, such as demand, money market, 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 June 30, 2022 and December 31, 2021:


	June 30, 2022
			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	$	109,152	$	109,152	$	109,152	$	—	$	—
Debt securities available for sale	1,490,642		1,490,642		57,176		1,419,927		13,539
Debt securities held to maturity	425,884		393,025		—		393,025		—
Equity securities	3,717		3,717		3,377		340		—
Federal Home Loan Bank stock	26,293		26,293		—		26,293		—

Loans receivable, net	6,932,213		6,416,145		—		—		6,416,145
Derivative assets	8,642		8,642		—		8,642		—

Financial liabilities:
Deposits	$	8,033,064	$	7,987,886	$	—	$	7,987,886	$	—
Borrowings	419,969		415,715		—		415,715		—
Derivative liabilities	9,943		9,943		—		9,943		—


	December 31, 2021
			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	$	70,963	$	70,963	$	70,963	$	—	$	—
Debt securities available for sale	1,703,847		1,703,847		34,879		1,668,968		—
Debt securities held to maturity	429,734		434,789		—		434,789		—
Equity securities	2,710		2,710		2,364		346		—
Federal Home Loan Bank stock	23,141		23,141		—		23,141		—

Loans receivable, net	6,297,912		6,457,766		—		—		6,457,766
Derivative assets	9,492		9,492		—		9,492		—

Financial liabilities:
Deposits	$	7,570,216	$	7,564,210	$	—	$	7,564,210	$	—
Borrowings	377,309		378,810		—		378,810		—
Derivative liabilities	17,366		17,366		—		17,366		—

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), both gross and net of tax, for the three and six months ended June 30, 2022 and 2021:


	For the Three Months Ended June 30,
	2022						2021
	Before Tax		Tax Effect		After Tax		Before Tax		Tax Effect		After Tax
	(In thousands)
Components of other comprehensive income (loss):
Unrealized (loss) on debt securities available for sale:	$	(52,246)	$	14,570	$	(37,676)	$	6,645	$	(1,857)	$	4,788
Accretion of unrealized (loss) on debt securities reclassified as held to maturity	(4)		1		(3)		(17)		5		(12)
Reclassification adjustment for gain (loss) included in net income	210		(58)		152		(281)		79		(202)
	(52,040)		14,513		(37,527)		6,347		(1,773)		4,574
Derivatives:
Unrealized gain on swap contracts accounted for as cash flow hedges	1,149		(321)		828		1,315		(367)		948
	1,149		(321)		828		1,315		(367)		948

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	(339)		95		(244)		(1,511)		422		(1,089)
Change in funded status of retirement obligations	(25,704)		7,168		(18,536)		34,441		(9,623)		24,818
	(26,057)		7,266		(18,791)		32,916		(9,198)		23,718
Total other comprehensive (loss)	$	(76,948)	$	21,458	$	(55,490)	$	40,578	$	(11,338)	$	29,240

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

15. Other Comprehensive Income (Loss) (continued)


	For the Six Months Ended June 30,
	2022						2021
	Before Tax		Tax Effect		After Tax		Before Tax		Tax Effect		After Tax
	(In thousands)
Components of other comprehensive income (loss):
Unrealized (loss) on debt securities available for sale:	$	(132,429)	$	36,938	$	(95,491)	$	(13,196)	$	950	$	(12,246)
Accretion of unrealized (loss) on debt securities reclassified as held to maturity	(8)		2		(6)		(21)		23		2
Reclassification adjustment for gain (loss) included in net income	210		(58)		152		(281)		79		(202)
	(132,227)		36,882		(95,345)		(13,498)		1,052		(12,446)
Derivatives:
Unrealized gain on swap contracts accounted for as cash flow hedges	5,532		(1,547)		3,985		7,147		(516)		6,631
	5,532		(1,547)		3,985		7,147		(516)		6,631

Employee benefit plans:
Amortization of prior service cost included in net income	(28)		6		(22)		(28)		8		(20)
Reclassification adjustment of actuarial net (loss) included in net income	(678)		190		(488)		(3,022)		844		(2,178)
Change in funded status of retirement obligations	(24,997)		6,941		(18,056)		37,491		(3,120)		34,371
	(25,703)		7,137		(18,566)		34,441		(2,268)		32,173
Total other comprehensive (loss)	$	(152,398)	$	42,472	$	(109,926)	$	28,090	$	(1,732)	$	26,358

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 six months ended June 30, 2022 and 2021:


	For the Three Months Ended June 30,
	2022								2021
	Unrealized (Losses) 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)

Balance at beginning of period	$	(56,174)	$	(1,760)	$	(42,421)	$	(100,355)	$	14,008	$	(11,173)	$	(75,342)	$	(72,507)
Current period changes in other comprehensive (loss) income	(37,527)		828		(18,791)		(55,490)		4,574		948		23,718		29,240
Total other comprehensive (loss) income	$	(93,701)	$	(932)	$	(61,212)	$	(155,845)	$	18,582	$	(10,225)	$	(51,624)	$	(43,267)


	For the Six Months Ended June 30,
	2022								2021
	Unrealized Gains (Losses) on Debt Securities Available for Sale		Unrealized (Losses) on Swaps		Employee Benefit Plans		Accumulated Other Comprehensive (Loss)		Unrealized Gains (Losses) on Debt Securities Available for Sale		Unrealized (Losses) on Swaps		Employee Benefit Plans		Accumulated Other Comprehensive (Loss)
	(In thousands)

Balance at beginning of period	$	1,644	$	(4,917)	$	(42,646)	$	(45,919)	$	31,028	$	(16,856)	$	(83,797)	$	(69,625)
Current period changes in other comprehensive (loss) income	(95,345)		3,985		(18,566)		(109,926)		(12,446)		6,631		32,173		26,358
Total other comprehensive (loss) income	$	(93,701)	$	(932)	$	(61,212)	$	(155,845)	$	18,582	$	(10,225)	$	(51,624)	$	(43,267)

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 six months ended June 30, 2022 and 2021:


	Accumulated Other Comprehensive Income (Loss) Components
	For the Three Months Ended June 30,				Affected Line Items in the Consolidated Statements of Income
	2022		2021
	(In thousands)

Reclassification adjustment for gain (loss) included in net income	$	210	$	(281)	Gain (loss) on securities transactions
Reclassification adjustment of actuarial net (loss) included in net income	(339)		(1,511)		Other non-interest expense
Total before tax	(129)		(1,792)
Income tax benefit	37		501
Net of tax	$	(92)	$	(1,291)


	Accumulated Other Comprehensive Income (Loss) Components
	For the Six Months Ended June 30,				Affected Line Items in the Consolidated Statements of Income
	2022		2021
	(In thousands)

Reclassification adjustment for gain included in net income	$	210	$	(281)	Gain (loss) on securities transactions
Reclassification adjustment of actuarial net (loss) included in net income	(678)		(3,022)		Other non-interest expense
Total before tax	(468)		(3,303)
Income tax benefit	132		923
Net of tax	$	(336)	$	(2,380)

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 June 30, 2022 and December 31, 2021, the Company had no currency forward contracts in place with commercial banking customers.

Interest Rate Swaps. At both June 30, 2022 and December 31, 2021, the Company had interest rate swaps in place with 50 and 52 commercial banking customers executed by offsetting interest rate swaps with third parties, with aggregated notional amounts of $171.8 million and $183.4 million, respectively. These derivatives are not designated as hedges and are not speculative. These interest rate swaps do not meet hedge accounting requirements.

At June 30, 2022 and December 31, 2021, the Company had 12 and 14 interest rate swaps with notional amounts of $170.0 million and $190.0 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.

At June 30, 2022, the Company had two interest rate swaps hedged against pools of floating rate commercial loans with notional amounts totaling $100.0 million. These 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. At December 31, 2021, the Company had no interest rate swaps hedged against pools of floating rate commercial loans.

For the three and six months ended June 30, 2022 and 2021, 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 June 30, 2022 and December 31, 2021:

June 30, 2022

Asset Derivative

Liability Derivative

Consolidated Statements of Financial Condition

Fair Value

Consolidated Statements of Financial Condition

Fair Value

(In thousands)

Derivatives:

Interest rate swaps

Other Assets

8,642

Other Liabilities

9,943

Total derivative instruments

8,642

9,943

December 31, 2021

Asset Derivative

Liability Derivative

Consolidated Statements of Financial Condition

Fair Value

Consolidated Statements of Financial Condition

Fair Value

(In thousands)

Derivatives:

Interest rate swaps

Other Assets

9,492

Other Liabilities

17,366

Total derivative instruments

9,492

17,366

For the three months ended June 30, 2022 and 2021, gains(losses) of $226,000 and losses of $(167,000), respectively, were recorded for changes in fair value of interest rate swaps with third parties. For the six months ended June 30, 2022 and 2021, gains of $475,000 and $201,000, respectively, were recorded for changes in fair value of interest rate swaps with third parties.

At June 30, 2022 and December 31, 2021, accrued interest was $251,000 and $567,000.

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 June 30, 2022, the termination value of derivatives in a net liability position, which includes accrued interest, was $1.3 million. The Company has collateral posting thresholds with certain of its derivative counterparties, and has posted collateral of $1.8 million against its obligations under these agreements.

17. Revenue Recognition

The Company's revenue includes net interest income on financial instruments and non-interest income. Most of the Company's revenue is not within the scope of Accounting Standards Codification Topic 606 which 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 this guidance are components of non-interest income. These revenue streams can generally be classified as demand deposit account fees, title insurance fees, insurance agency income and other fees.

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 six months ended June 30, 2022 and 2021.


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
	(In thousands)
Non-interest income
In-scope of Topic 606:
Demand deposit account fees	$	1,449	$	858	$	2,619	$	1,696
Title insurance fees	1,035		1,503		1,992		3,123
Insurance agency income	45		—		45		—
Other non-interest income	2,106		1,956		4,139		3,697
Total in-scope non-interest income	4,635		4,317		8,795		8,516
Total out-of-scope non-interest income	3,034		10,074		5,915		14,470
Total non-interest income	$	7,669	$	14,391	$	14,710	$	22,986

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.

RSI Insurance Agency, Inc. performs the function of an insurance intermediary, by introducing the policyholder and insurer for life and health, and property and casualty insurance, and is compensated by a commission fee for placement of an insurance policy. Commission and fees are generally recognized as of the effective date of the insurance policy. Commission revenues related to installment billings are recognized on the invoice date. Subsequent commission adjustments are recognized upon the receipt of notification from insurance companies concerning matters necessitating such adjustments.

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

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

Out-of-scope non-interest income primarily consists of income from bank-owned life insurance, loan prepayment and servicing fees, net fees loan level swaps, gains and losses on the sale of loans and securities, credit card interchange income, 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 June 30, 2022 and through the financial statement issuance date of August 9, 2022, and concluded that no material events occurred that would require disclosure.

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, 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, higher inflation and its impact on national and local economic conditions, the Company's ability to successfully implement its business strategy, 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 June 30, 2022 and December 31, 2021

Total assets increased $527.3 million, or 5.7%, to $9.8 billion at June 30, 2022 from $9.2 billion at December 31, 2021. The increase in total assets was primarily attributable to an increase in cash and cash equivalents of $38.2 million, an increase in loans receivable, net of $634.3 million, an increase in bank-owned life insurance of $14.1 million, an increase in goodwill and intangibles of $37.4 million, and an increase in other assets of $11.2 million, partially offset by a decrease in debt securities available for sale of $213.2 million.

Cash and cash equivalents increased $38.2 million, or 53.8%, to $109.2 million at June 30, 2022 from $71.0 million at December 31, 2021. The increase was primarily attributable to $140.8 million in cash and cash equivalents acquired in the RSI Bank acquisition, repayments on loans and mortgage-backed securities, and proceeds from the sale $126.8 million of debt securities available for sale, partially offset by $137.0 million in purchases of debt securities available for sale, and $53.2 million in repurchases of common stock under our stock repurchase program.

Debt securities available for sale decreased $213.2 million, or 12.5%, to $1.5 billion at June 30, 2022 from $1.7 billion at December 31, 2021. The decrease was attributable to repayments on securities of $169.2 million, sales of securities of $126.8 million, and a decrease in the gross unrealized gain (loss) of $132.2 million, predominately due to rising interest rates, partially offset by purchases of securities of $137.0 million, primarily consisting of U.S government and agency obligations and mortgage-backed securities and $79.0 million of debt securities available for sale acquired due to the RSI Bank acquisition.

Loans receivable, net, increased $634.3 million, or 10.1%, to $6.9 billion at June 30, 2022 from $6.3 billion at December 31, 2021. One-to-four family real estate loans, multi-family real estate loans, commercial real estate loans, commercial business loans, and home equity loans and advances increased $419.4 million, $36.4 million, $136.4 million, $21.9 million, and $5.0 million, respectively, partially offset by a decrease in construction loans of $18.3 million. The Company acquired $335.5 million in loans from the RSI Bank acquisition during the second quarter of 2022. The allowance for credit losses for loans decreased $12.1 million to $50.6 million at June 30, 2022 from $62.7 million at December 31, 2021. A $16.8 million decrease in the allowance for credit losses for loans was recorded on January 1, 2022 upon adoption of the CECL standard. During the six months ended June 30, 2022, the allowance for credit losses increased $3.0 million, primarily due to an increase in the outstanding balance of loans, including $1.9 million in allowance for credit losses recorded on the loans acquired from RSI Bank. The June 30, 2022 methodology and impact of loss rates and qualitative factors remained consistent with those established upon initial adoption of the CECL standard.

Bank-owned life insurance increased $14.1 million, or 5.7%, to $261.6 million at June 30, 2022 from $247.5 million at December 31, 2021. The increase was mainly attributable to bank-owned life insurance of $13.0 million acquired due to the RSI Bank acquisition.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

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

Goodwill and intangibles increased $37.4 million, or 40.8%, to $129.1 million at June 30, 2022 from $91.7 million at December 31, 2021. The increase consisted of $28.0 million in goodwill and $10.3 million in core deposit intangibles recorded due to the RSI Bank acquisition.

Other assets increased $11.2 million, or 4.5%, to $260.8 million at June 30, 2022 from $249.6 million at December 31, 2021. The increase in other assets consisted of an increase of $30.5 million in net deferred tax assets, an increase of $5.2 million in a low income housing tax credit asset and an increase of $7.1 million in accounts receivable related to an unsettled investment security sold, partially offset by a decrease of $17.2 million in interest rate swap assets, and a decrease of $18.6 million in the Company's pension plan balance.

Total liabilities increased $532.1 million, or 6.5%, to $8.7 billion at June 30, 2022 from $8.1 billion at December 31, 2021. The increase was primarily attributable to an increase in total deposits of $462.8 million, or 6.1%, an increase in borrowings of $42.7 million, or 11.3%, and an increase in accrued expenses and other liabilities of $17.2 million, or 10.7%. The increase in total deposits primarily consisted of increases in non-interest bearing demand deposits, interest-bearing demand deposits, money market accounts, savings and club deposits, and certificates of deposit of $76.0 million, $107.0 million, $54.8 million, $162.1 million, and $62.9 million respectively. These increases included $502.7 million in deposits assumed in connection with the RSI Bank acquisition. The increase in borrowings was primarily driven by a $20.0 million increase in FHLB overnight borrowings and a $22.8 million increase in FHLB term advances, of which $5.8 million were acquired due to the RSI Bank acquisition. The increase in accrued expenses and other liabilities primarily consisted of $10.6 million in accrued expenses and other liabilities related to the RSI Bank acquisition, a $5.2 million increase in a low income housing tax credit liability, a $4.4 million increase in outstanding checks, and a $7.8 million increase in allowance for credit losses for unfunded commitments, partially offset by a $6.4 million decrease in interest rate swap liabilities and a $6.3 million decrease in accrued incentive compensation. Upon the initial adoption of the CECL standard on January 1, 2022, an allowance for credit losses for unfunded commitments of $7.7 million was recorded.

Total stockholders’ equity decreased $4.8 million, or 0.4%, with a balance of $1.1 billion at both June 30, 2022 and December 31, 2021. The decrease in equity was primarily attributable to an increase of $109.9 million in unrealized losses on debt securities available for sale and interest rate swap contracts, net of taxes, included in other comprehensive income, and the repurchase of 2,546,667 shares of common stock totaling $53.2 million, or $20.88 per share, under our stock repurchase program, partially offset by net income of $43.4 million and an increase in paid in capital of $102.7 million due to the issuance of 6,086,314 shares of Company common stock to Columbia Bank MHC in connection with the RSI Bank acquisition.

Comparison of Results of Operations for the Three Months Ended June 30, 2022 and June 30, 2021

Net income of $23.0 million was recorded for the quarter ended June 30, 2022, a decrease of $3.7 million, or 14.0%, compared to net income of $26.7 million for the quarter ended June 30, 2021, was partially due to the quarter ended June 30, 2021 including a $7.7 million gain on the sale of commercial business loans granted as part of the Small Business Administration PPP, in addition to recording $1.3 million in merger expenses and $1.8 million in provision for credit losses on the loans acquired from the RSI Bank acquisition during the quarter ended June 30, 2022. The decrease in net income was primarily attributable to a $3.3 million increase in provision for credit losses, a $6.7 million decrease in non-interest income, and a $4.1 million increase in non-interest expense, partially offset by a $8.4 million increase in net interest income and a $2.0 million decrease in income tax expense.

Net interest income was $66.5 million for the quarter ended June 30, 2022, an increase of $8.4 million, or 14.5%, from $58.1 million for the quarter ended June 30, 2021. The increase in net interest income was primarily attributable to a $3.2 million decrease in interest expense on deposits and borrowings, coupled with a $5.2 million increase in interest income. The decrease in interest expense on deposits was driven by an increase in lower costing demand deposits and the repricing of existing deposits at reduced rates as a result of the sustained lower interest rate environment until March 2022, when the Federal Reserve announced a 25 basis point increase in the federal funds rate. The subsequent 50 basis point increase in interest rates in May 2022 and the 75 basis point increase in interest rates in June 2022, did not significantly impact second quarter interest expense on deposits, as the repricing on deposit products lags in relation to increases in market interest rates. The increase in interest income for the quarter ended June 30, 2022 was due to an increase in the average balance of interest-earning assets coupled with the impact of the rise in interest rates during the quarter ended June 30, 2022. Prepayment penalties, which are included in interest income on loans, totaled $1.5 million for the quarter ended June 30, 2022, compared to $1.1 million for the quarter ended June 30, 2021.

The average yield on loans for the quarter ended June 30, 2022 decreased 4 basis points to 3.68%, as compared to 3.72% for the quarter ended June 30, 2021, but increased 6 basis points since March 31, 2022, as interest income grew due to rising interest rates and loan growth. The average yield on securities for the quarter ended June 30, 2022 increased 21 basis points to 2.14%, as compared to 1.93% for the quarter ended June 30, 2021, as $88.4 million of higher yielding securities were purchased, and a number of

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

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

adjustable rate securities tied to various indexes repriced higher during the quarter. The average yield on other interest-earning assets for the quarter ended June 30, 2022 increased 69 basis points to 1.93%, as compared to 1.24% for the quarter ended June 30, 2021, as the average cash balances in lower yielding bank accounts decreased for the quarter ended June 30, 2022.

Total interest expense was $6.6 million for the quarter ended June 30, 2022, a decrease of $3.2 million, or 33.0%, from $9.8 million for the quarter ended June 30, 2021. The decrease in interest expense was primarily attributable to a 26 basis point decrease in the average cost of interest-bearing deposits which was partially offset by the impact of the increase in the average balance of deposits. The decrease in interest expense on deposits was driven by an increase in lower costing demand deposits and the repricing of existing deposits at reduced rates as a result of the sustained lower interest rate environment as described above. Interest on borrowings decreased $46,000, or 2.4%, due to a decrease in the average balance of borrowings, partially offset by an increase in the cost of these borrowings.

The Company's net interest margin for the quarter ended June 30, 2022 increased 24 basis points to 3.01%, when compared to 2.77% for the quarter ended June 30, 2021. The weighted average yield on interest-earning assets increased 7 basis points to 3.31% for the quarter ended June 30, 2022 as compared to 3.24% for the quarter ended June 30, 2021. The average cost of interest-bearing liabilities decreased 22 basis points to 0.40% for the quarter ended June 30, 2022 as compared to 0.62% for the quarter ended June 30, 2021. The increase in yields for the quarter ended June 30, 2022, were due to the impact of the rise in interest rates during the quarter, while the decrease in costs were largely driven by the sustained lower interest rate environment until rates began to rise in March 2022. The net interest margin increased for the quarter ended June 30, 2022, as the repricing of interest-bearing liabilities lags in relation to the repricing of yields on interest-earning assets in a rising rate environment.

The provision for credit losses for the quarter ended June 30, 2022 was $1.5 million, an increase of $3.3 million, from a reversal of provision for loan loss expense of $1.8 million recorded for the quarter ended June 30, 2021. The increase in provision for credit losses during the quarter was primarily attributable to an increase in the balances of loans, including $1.8 million in provision for credit losses recorded on the loans acquired from RSI Bank, and the consideration of economic conditions.

Non-interest income was $7.7 million for the quarter ended June 30, 2022, a decrease of $6.7 million, or 46.7%, from $14.4 million for the quarter ended June 30, 2021. The decrease was primarily attributable to a decrease in income from the gain on the sale of loans of $8.5 million, and a decrease in income from title insurance fees of $468,000, partially offset by an increase in demand deposit fees of $591,000, an increase in BOLI income of $642,000 due to a death benefit claim, and an increase in the fair value of equity securities of $631,000. The quarter ended June 30, 2021 included a $7.7 million gain on the sale of commercial business loans granted as part of the Small Business Administration PPP.

Non-interest expense was $41.7 million for the quarter ended June 30, 2022, an increase of $4.1 million, or 10.9%, from $37.6 million for the quarter ended June 30, 2021. The increase was primarily attributable to an increase in compensation and employee benefits expense of $5.3 million and an increase in merger-related expenses of $1.3 million. The increase in compensation and employee benefits expense was due to an increase in staff levels and related personnel benefit costs, mainly due the acquisitions of Freehold Bank in December 2021 and RSI Bank in May 2022. The increase in merger-related expenses was related to the acquisition of RSI Bank. Other non-interest expense for the quarter ended June 30, 2022 included an increase in the credit for net periodic benefit cost of $2.1 million and a reversal of the provision for credit losses for unfunded commitments of $488,000.

Income tax expense was $8.0 million for the quarter ended June 30, 2022, a decrease of $2.0 million, as compared to $9.9 million for the quarter ended June 30, 2021, mainly due to a decrease in pre-tax income, and to a lesser extent, a decrease in the Company's effective tax rate. The Company's effective tax rate was 25.7% and 27.1% for the quarters ended June 30, 2022 and 2021, respectively.

Comparison of Results of Operations for the Six Months Ended June 30, 2022 and June 30, 2021

Net income of $43.4 million was recorded for the six months ended June 30, 2022, a decrease of $4.4 million, or 9.2%, compared to net income of $47.7 million for the six months ended June 30, 2021. The decrease in net income was primarily attributable to a $6.0 million increase in provision for credit losses, an $8.3 million decrease in non-interest income, and a $7.2 million increase in non-interest expense, partially offset by a $14.4 million increase in net interest income and a $2.7 million decrease in income tax expense.

Net interest income was $129.2 million for the six months ended June 30, 2022, an increase of $14.4 million, or 12.6%, from $114.8 million for the six months ended June 30, 2021. The increase in net interest income was primarily attributable to a $8.1 million decrease in interest expense, resulting from a decrease in interest expense on deposits and borrowings, coupled with a $6.3 million

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

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

increase in interest income. The decrease in interest expense on deposits was driven by an increase in lower costing demand deposits and the repricing of existing deposits at reduced rates as a result of the sustained lower interest rate environment until March 2022, when the Federal Reserve announced a 25 basis point increase in the federal funds rate. The subsequent 50 basis point increase in interest rates in May 2022 and the 75 basis point increase in interest rates in June 2022, did not significantly impact interest expense on deposits, as the repricing on deposit products lags in relation to increases in market interest rates. The increase in interest income for the six months ended June 30, 2022 was due to an increase in the average balance of interest-earning assets coupled with the impact of the rise in interest rates during 2022. Prepayment penalties, which are included in interest income on loans, totaled $2.8 million for the six months ended June 30, 2022, compared to $2.0 million for the six months ended June 30, 2021.

The average yield on loans for the six months ended June 30, 2022 decreased 14 basis points to 3.65%, as compared to 3.79% for the six months ended June 30, 2021, but increased 3 basis points since March 31, 2022, as interest income grew due to rising interest rates and loan growth. The average yield on securities for the six months ended June 30, 2022 increased 19 basis points to 2.17%, as compared to 1.98% for the six months ended June 30, 2021, as $135.8 million of higher yielding securities were purchased, and a number of adjustable rate securities tied to various indexes repriced higher during the period. The average yield on other interest-earning assets for the six months ended June 30, 2022 increased 151 basis points to 2.33%, as compared to 0.82% for the six months ended June 30, 2021, as the average cash balances in lower yielding bank accounts decreased during the six months ended June 30, 2022.

Total interest expense was $12.6 million for the six months ended June 30, 2022, a decrease of $8.1 million, or 39.2%, from $20.7 million for the six months ended June 30, 2021. The decrease in interest expense was primarily attributable to a 30 basis point decrease in the average cost of interest-bearing deposits which was partially offset by the impact of the increase in the average balance of deposits. The decrease in interest expense on deposits was driven by an increase in lower costing demand deposits and the repricing of existing deposits at reduced rates as a result of the sustained lower interest rate environment as described above. Interest on borrowings decreased $746,000, or 18.8%, due to a decrease in the average balance of borrowings, partially offset by an increase in cost of borrowings.

The Company's net interest margin for the six months ended June 30, 2022 increased 21 basis points to 3.00%, when compared to 2.79% for the six months ended June 30, 2021. The weighted average yield on interest-earning assets remained consistent at 3.29% for the six months ended June 30, 2022 and 2021. The average cost of interest-bearing liabilities decreased 28 basis points to 0.39% for the six months ended June 30, 2022 as compared to 0.67% for the six months ended June 30, 2021. The decrease in costs for the six months ended June 30, 2022 were largely driven by the sustained lower interest rate environment until rates began to rise in March 2022. The net interest margin increased for the six months ended June 30, 2022 as the cost of interest-bearing liabilities continued to reprice lower, while the total yield on interest-earning assets remained constant. The net interest margin increased for the six months ended June 30, 2022, as the repricing of interest-bearing liabilities lags in relation to the repricing of yields on interest-earning assets in a rising rate environment.

On January 1, 2022, the Company adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), also known as the Current Expected Credit Loss ("CECL") standard. CECL requires the measurement of all expected credit losses over the life of financial instruments held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. In connection with the adoption of CECL, the Company recognized a cumulative effect adjustment that increased stockholders' equity by $6.2 million, net of tax. At adoption and on a gross basis, the Company decreased its allowance for credit losses ("ACL") by $16.8 million for loans, increased its ACL for unfunded commitments, included in other liabilities, by $7.7 million, and established an ACL for debt securities available for sale of $490,000. The provision for credit losses for the six months ended June 30, 2022 was $3.0 million, an increase of $6.0 million, from a reversal of provision for loan loss of $3.0 million recorded for the six months ended June 30, 2021. The increase in provision for credit losses during the six months ended June 30, 2022 was primarily attributable to an increase in the balances of loans and the consideration of economic conditions.

Non-interest income was $14.7 million for the six months ended June 30, 2022, a decrease of $8.3 million, or 36.0%, from $23.0 million for the six months ended June 30, 2021. The decrease was primarily attributable to a decrease in income from the gain on the sale of loans of $10.6 million and a decrease in income from title insurance fees of $1.1 million, partially offset by an increase in the change in fair value of equity securities of $1.3 million and an increase in demand deposit fees of $923,000. The six months ended June 30, 2021 included a $7.7 million gain on the sale of commercial business loans granted as part of the Small Business Administration PPP.

Non-interest expense was $82.5 million for the six months ended June 30, 2022, an increase of $7.2 million, or 9.5%, from $75.3 million for the six months ended June 30, 2021. The increase was primarily attributable to an increase in compensation and employee benefits expense of $7.9 million and an increase in merger-related expenses of $1.4 million. The increase in compensation

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

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

and employee benefits expense was due to an increase in staff levels and related personnel benefit costs, mainly due the acquisitions of Freehold Bank in December 2021 and RSI Bank in May 2022. There was an increase of 110 full time equivalent employees from June 30, 2021 compared to June 30, 2022. The increase in merger-related expenses was related to the acquisition of RSI Bank.

Income tax expense was $15.1 million for the six months ended June 30, 2022, a decrease of $2.7 million, as compared to $17.8 million for the six months ended June 30, 2021, mainly due to a decrease in pre-tax income, and to a lesser extent, a decrease in the Company's effective tax rate. The Company's effective tax rate was 25.8% and 27.2% for the six months ended June 30, 2022 and 2021, respectively.

Asset Quality

The Company's non-performing loans at June 30, 2022 totaled $4.5 million, or 0.07% of total gross loans, as compared to $3.9 million, or 0.06% of total gross loans, at December 31, 2021. The $586,000 increase in non-performing loans was primarily attributable to an increase of $1.3 million in non-performing one-to-four family loans, partially offset by decreases of $442,000 and $275,000, respectively, in non-performing commercial business loans and commercial real estate loans. The increase in non-performing one-to-four family loans was due to an increase in the number of loans from seven non-performing loans at December 31, 2021 to 13 loans at June 30, 2022. The decrease in non-performing commercial business loans was due to a decrease in the number of loans from six non-performing loans at December 31, 2021 to two non-performing loans at June 30, 2022. There was one non-performing commercial real estate loan at both June 30, 2022 and December 31, 2021. Non-performing assets as a percentage of total assets totaled 0.05% at June 30, 2022 as compared to 0.04% at December 31, 2021.

For the quarter ended June 30, 2022, net recoveries totaled $105,000, as compared to $245,000 in net charge-offs for the quarter ended June 30, 2021. For the six months ended June 30, 2022, net recoveries totaled $216,000, as compared to $1.7 million for the six months ended June 30, 2021.

The Company's allowance for credit losses on loans was $50.6 million, or 0.73% of total gross loans, at June 30, 2022, compared to $62.7 million, or 0.99% of total gross loans, at December 31, 2021. The decrease in the allowance for credit losses for loans was primarily attributable to the impact of the initial adoption of the CECL standard on January 1, 2022, which resulted in a decrease to allowance for credit losses on loans of $16.8 million, partially offset by an increase in provision for credit losses of $3.0 million recorded during the six months ended June 30, 2022, due to an increase in the balance of loans and consideration of economic conditions.

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 credit losses

▪Valuation of deferred tax assets

▪Valuation of retirement and post-retirement benefits

The calculation of the allowance for credit losses is a critical accounting policy of the Company. The allowance for credit losses is a valuation account that reflects management’s evaluation of the current expected credit losses in the loan portfolio. The Company maintains the allowance for credit losses through provisions for credit losses that are charged to income. Charge-offs against the allowance for credit losses are taken on loans where management determines that the collection of loan principal and interest is unlikely. Recoveries made on loans that have been charged-off are credited to the allowance for credit losses.

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

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

collateral. These risk factors were assessed for reasonableness against the Company’s own loss experience and adjusted in certain cases when the relationship between the Company’s historical default and loss severity deviate from that of the wider industry. The historical probability of default ("PD") curves, together with corresponding economic conditions, establish a quantitative relationship between economic conditions and loan performance through an economic cycle.

Although management believes that the Company has established and maintained the allowance for credit losses at appropriate levels, reserve levels may change if future economic, organizational, and portfolio conditions differ 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 credit 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 credit losses remains an estimate that is subject to significant judgment.

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 projections of future taxable income. These 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. Management believes, based on current facts, that it is 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 June 30, 2022 and December 31, 2021, the Company's net deferred tax assets (liabilities) totaled $19.6 million and $(9.7) million, respectively, which included a valuation allowance totaling $2.0 million at both dates. Based upon projections of future taxable income and the ability to carryforward

COLUMBIA FINANCIAL, INC. AND SUBSIDIARIES

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

operating losses indefinitely, management believes it is more likely than not the Company will realize the remaining deferred tax 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) recognize 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) measure 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) recognizes 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.

The 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 our 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 June 30, 2022, the net portfolio value, the estimated changes in the 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 Freehold 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")
Change in Interest Rates (Basis Points)	Amount		Dollar Change		Percent of Change		Estimated NPV		Present Value Ratio		Percent Change
					(Dollars in thousands)
+300	$	268,863	$	(8,180)	(2.95)	%	$	1,271,466	15.18	%	(21.66)	%
+200	272,122		(4,921)		(1.78)		1,398,794		16.17		(13.82)
+100	274,874		(2,169)		(0.78)		1,515,793		16.97		(6.61)
Base	277,043		—		—		1,623,062		17.60		—
-100	267,735		(9,308)		(3.36)		1,663,307		17.46		2.48

As of June 30, 2022, based on the scenarios above, net interest income would decrease by approximately 1.78% if rates were to rise 200 basis points, and would decrease by 3.36% 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 June 30, 2022, 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 13.82%. If rates were to decrease 100 basis points, the model forecasts a 2.48% increase in the NPV.

Overall, our June 30, 2022 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 banks (Columbia Bank and Freehold 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 banks. 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 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 June 30, 2022 and December 31, 2021, each of the Company and the Banks exceeded all capital adequacy requirements to which it is subject.

The following tables presents the Company's, Columbia Bank's and Freehold Bank's actual capital amounts and ratios at June 30, 2022 and December 31, 2021 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
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount	Ratio
Company	(In thousands, except ratio data)
At June 30, 2022:
Total capital (to risk-weighted assets)	$	1,145,051	16.43	%	$	557,657	8.00	%	$	731,925	10.50	%	N/A	N/A
Tier 1 capital (to risk-weighted assets)	1,086,231		15.58		418,243		6.00		592,511		8.50		N/A	N/A
Common equity tier 1 capital (to risk-weighted assets)	1,079,014		15.48		313,682		4.50		487,950		7.00		N/A	N/A
Tier 1 capital (to adjusted total assets)	1,086,231		11.36		382,619		4.00		382,619		4.00		N/A	N/A

At December 31, 2021:
Total capital (to risk-weighted assets)	$	1,104,863	17.13	%	$	515,924	8.00	%	$	677,151	10.50	%	N/A	N/A
Tier 1 capital (to risk-weighted assets)	1,041,650		16.15		386,943		6.00		548,170		8.50		N/A	N/A
Common equity tier 1 capital (to risk-weighted assets)	1,034,433		16.04		290,207		4.50		451,434		7.00		N/A	N/A
Tier 1 capital (to adjusted total assets)	1,041,650		11.23		370,909		4.00		370,909		4.00		N/A	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
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Columbia Bank	(In thousands, except ratio data)
At June 30, 2022:
Total capital (to risk-weighted assets)	$	1,055,048	15.60	%	$	541,217	8.00	%	$	710,347	10.50	%	$	676,521	10.00	%
Tier 1 capital (to risk-weighted assets)	997,900		14.75		405,912		6.00		575,043		8.50		541,217		8.00
Common equity tier 1 capital (to risk-weighted assets)	997,900		14.75		304,434		4.50		473,565		7.00		439,739		6.50
Tier 1 capital (to adjusted total assets)	997,900		10.76		371,051		4.00		371,051		4.00		463,814		5.00

At December 31, 2021:
Total capital (to risk-weighted assets)	$	962,137	15.39	%	$	500,127	8.00	%	$	656,417	10.50	%	$	625,159	10.00	%
Tier 1 capital (to risk-weighted assets)	898,935		14.38		375,095		6.00		531,385		8.50		500,127		8.00
Common equity tier 1 capital (to risk-weighted assets)	898,935		14.38		281,322		4.50		437,611		7.00		406,353		6.50
Tier 1 capital (to adjusted total assets)	898,935		9.80		366,961		4.00		366,961		4.00		458,701		5.00


	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
Freehold Bank	(In thousands, except ratio data)
At June 30, 2022:
Total capital (to risk-weighted assets)	$	43,562	23.08	%	$	15,100	8.00	%	$	19,819	10.50	%	$	18,875	10.00	%
Tier 1 capital (to risk-weighted assets)	41,889		22.19		11,325		6.00		16,044		8.50		15,100		8.00
Common equity tier 1 capital (to risk-weighted assets)	41,889		22.19		8,494		4.50		13,212		7.00		12,269		6.50
Tier 1 capital (to adjusted total assets)	41,889		14.71		11,391		4.00		11,391		4.00		14,238		5.00

At December 31, 2021:
Total capital (to risk-weighted assets)	$	41,549	22.87	%	$	14,534	8.00	%	$	19,076	10.50	%	$	18,168	10.00	%
Tier 1 capital (to risk-weighted assets)	41,537		22.86		10,901		6.00		15,443		8.50		14,534		8.00
Common equity tier 1 capital (to risk-weighted assets)	41,537		22.86		8,176		4.50		12,717		7.00		11,809		6.50
Tier 1 capital (to adjusted total assets)	41,537		13.71		12,118		4.00		12,118		4.00		15,147		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 June 30, 2022. 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 June 30, 2022, 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, 2021 filed with the Securities and Exchange Commission. As of June 30, 2022, 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, 2021.

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 June 30, 2022:


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, 2022	292,587	$	21.23	290,855	3,499,565
May 1 - 31, 2022	711,574	20.14		710,900	2,788,665
June 1 - 30, 2022	524,169	21.10		521,393	2,267,272
Total	1,528,330	$	20.68	1,523,148

(1) On December 6, 2021, the Company announced that its Board of Directors authorized a new stock repurchase program to acquire up to 5,000,000 shares, or approximately 4.6%, of the Company's then issued and outstanding common stock, commencing upon the completion of the Company's stock repurchase program announced on February 1, 2021. On December 21, 2021, the Company completed the repurchases under the previous stock repurchase program.
(2) During the three months ended June 30, 2022, 5,182 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


10.1						Employment Agreement between Columbia Financial, Inc., Columbia Bank and Jenifer W. Walden

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

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

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

101.0						The following materials from the Company’s Quarterly Report to Stockholders on Form 10-Q for the quarter ended June 30, 2022, 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 (Loss), (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.

101. INS						The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document

101. SCH						Inline XBRL Taxonomy Extension Schema Document

101. CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101. DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document

101. LAB						Inline XBRL Taxonomy Extension Label Linkbase Document

101. PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document

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.

Columbia Financial, Inc.

Date:

August 9, 2022

/s/Thomas J. Kemly

Thomas J. Kemly

President and Chief Executive Officer

(Principal Executive Officer)

Date:

August 9, 2022

/s/Dennis E. Gibney

Dennis E. Gibney

Executive Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)