Columbia Financial, Inc Announces Financial Results for the Second Quarter Ended June 30, 2023.

FAIR LAWN, N.J: Columbia Financial, Inc. (the "Company") (NASDAQ: CLBK), the mid-tier holding company for Columbia Bank ("Columbia") and Freehold Bank ("Freehold"), reported net income of $1.7 million, or $0.02 per basic and diluted share, for the quarter ended June 30, 2023, as compared to net income of $23.0 million, or $0.22 per basic and diluted share, for the quarter ended June 30, 2022. The 2023 quarter was significantly impacted by the previously disclosed $9.6 million loss on the sale of available for sale securities and $1.6 million in severance expense recorded in June 2023, related to a reduction in workforce. Earnings for the quarter ended June 30, 2023 reflected lower net interest income, mainly due to an increase in interest expense, lower non-interest income, and higher non-interest expense, partially offset by a lower provision for credit losses and lower income tax expense. For the quarter ended June 30, 2023, the Company reported core net income of $11.7 million, a decrease of $12.1 million, or 50.7%, compared to core net income of $23.8 million for the quarter ended June 30, 2022.

For the six months ended June 30, 2023, the Company reported net income of $20.4 million, or $0.20 per basic and diluted share, as compared to net income of $43.4 million, or $0.41 per basic and diluted share, for the six months ended June 30, 2022. Earnings for the six months ended June 30, 2023 reflected lower net interest income, mainly due to an increase in interest expense, lower non-interest income, which was primarily due to a $10.8 million loss on the sale of available for sale securities included in the six months ended June 30, 2023, and higher non-interest expense, partially offset by a lower provision for credit losses and a lower income tax expense. For the six months ended June 30, 2023, the Company reported core net income of $31.5 million, a decrease of $14.5 million, or 31.4%, compared to core net income of $46.0 million for the six months ended June 30, 2022.

Mr. Thomas J. Kemly, President and Chief Executive Officer commented: "The Bank maintains a solid balance sheet, with strong liquidity, asset quality and capital levels. Net income has decreased as there is continued margin compression in the banking industry due to rising funding costs, as the Bank increased deposit rates in order to stabilize funding to support lending operations. During the second quarter, we sold $234.4 million of available for sale securities to reposition our balance sheet and executed various cost cutting strategies, including a reduction in workforce. We also announced our sixth share repurchase program in May 2023, as we remain committed to enhancing shareholder value."

Results of Operations for the Three Months Ended June 30, 2023 and June 30, 2022

Net income of $1.7 million was recorded for the quarter ended June 30, 2023, a decrease of $21.3 million, or 92.8%, compared to net income of $23.0 million for the quarter ended June 30, 2022. The decrease in net income was primarily attributable to a $15.4 million decrease in net interest income, an $8.2 million decrease in non-interest income, and a $5.9 million increase in non-interest expense, partially offset by a $461,000 decrease in provision for credit losses, and a $7.7 million decrease in income tax expense.

Net interest income was $51.2 million for the quarter ended June 30, 2023, a decrease of $15.4 million, or 23.1%, from $66.5 million for the quarter ended June 30, 2022. The decrease in net interest income was primarily attributable to a $38.4 million increase in interest expense on deposits and borrowings, partially offset by a $23.1 million increase in interest income. The increase in interest income was primarily due to an increase in the average balance of total interest-earning assets coupled with an increase in average yields due to multiple federal funds rate increases that occurred over the previous year. The increase in interest expense on deposits was driven by these same rate increases coupled with intense competition for deposits in the market and the repricing of existing deposits into higher cost products. The increase in interest expense on borrowings was also impacted by the significant increase in interest rates for new borrowings since interest rates began rising in March 2022, along with an increase in the average balance of borrowings. Prepayment penalties, which are included in interest income on loans, totaled $116,000 for the quarter ended June 30, 2023, compared to $1.5 million for the quarter ended June 30, 2022.

The average yield on loans for the quarter ended June 30, 2023 increased 68 basis points to 4.36%, as compared to 3.68% for the quarter ended June 30, 2022, as interest income was influenced by rising interest rates and loan growth. The average yield on securities for the quarter ended June 30, 2023 increased 19 basis points to 2.33%, as compared to 2.14% for the quarter ended June 30, 2022, as a number of 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, 2023 increased 415 basis points to 6.08%, as compared to 1.93% for the quarter ended June 30, 2022, due to the rise in average balances and interest rates paid on cash balances and an increase in the dividend rate paid on Federal Home Loan Bank stock.

Total interest expense was $45.0 million for the quarter ended June 30, 2023, an increase of $38.4 million, or 584.7%, from $6.6 million for the quarter ended June 30, 2022. The increase in interest expense was primarily attributable to a 305 basis point...