CLBK — Q2 2026 Financial Report Analysis

Columbia Financial earned $14.5 million, or $0.14 per share, in the second quarter of 2026, up 17.7% from $12.3 million a year earlier. The gain came almost entirely from cheaper funding: net interest income rose 17.2% to $62.9 million because the bank paid 28 basis points less on its interest-bearing deposits and borrowings, while the yield on its assets was flat. A larger loan provision, $819,000 of merger costs and a higher tax rate held back part of that gain. This is also the last quarter of the "old" Columbia: on July 20, 2026 it completed its second-step conversion (raising $1.7 billion of new equity) and its acquisition of Northfield Bancorp, so from the third quarter the company will be roughly 50% larger and not comparable with these numbers.

At a glance

• Net interest margin 2.44%, up from 2.19%. Net interest margin is what a bank earns on its loans and securities minus what it pays for deposits and borrowings, as a share of its earning assets. A quarter of a point is large for a bank this size: it added most of the $9.2 million increase in net interest income.
• Efficiency ratio 67.0%, from 70.3%. The bank spent 67 cents in operating costs for every dollar of revenue, versus 70 cents a year ago. Lower is better; costs rose 10.0% but revenue rose 15.5%.
• Core return on tangible equity 5.71%. Even after the improvement, the bank earns less than 6% a year on its shareholders' tangible capital, low for a bank. The new $1.7 billion of capital will push this ratio down further unless it is put to work.

Second-quarter results

Core figures exclude merger-related expenses (2026) and a securities gain, severance and litigation costs (2025), as defined in the company's reconciliation. The bank reports return on tangible equity only on this "core" basis. CET1 (common equity tier 1) is the regulators' main measure of loss-absorbing capital as a share of risk-weighted assets; the 10-Q gives it against December 31, 2025, not against June 2025.

Where the margin gain came from

The improvement is a funding story, not a lending story. The average yield on earning assets was 4.74%, versus 4.75% a year earlier: loans earned 5 basis points more (5.01% vs 4.96%), but securities and cash earned less, partly because the Federal Home Loan Bank cut its dividend rate by 50 basis points. On the other side, the average cost of interest-bearing liabilities fell 28 basis points to 2.90%. By product:

Total interest expense fell 5.5% to $59.3 million while interest income rose 4.9% to $122.3 million, as the average balance of earning assets grew to $10.3 billion from $9.8 billion. The margin has widened in each of the last four quarters: 2.19%, 2.29%, 2.36%, 2.42% and 2.44%. The step from the first quarter was only 2 basis points, so most of the repricing of older, expensive CDs has already happened.

What the headline numbers hide

• Part of the deposit growth and the cheaper funding is temporary. Deposits rose $1.06 billion in six months to $9.50 billion, but most of that is money investors sent in to buy shares in the stock offering. Interest-bearing demand deposits alone jumped $859.1 million, which the company attributes "mainly" to offering proceeds, and their weighted average rate fell to 1.37% at June 30 from 1.86% at March 31. The 10-Q says lower-cost subscription deposits contributed "to a lesser extent" to the fall in deposit costs. When the offering closed on July 20 those funds became equity, not deposits, so the June deposit total overstates the bank's ongoing deposit base.
• The provision rose because loans grew, not because credit got worse. The provision was $4.3 million versus $2.5 million, which the company attributes to $234.5 million of growth in gross loans in the quarter. Net charge-offs (loans written off, minus recoveries) were actually lower in dollars: $2.0 million against $3.2 million a year ago, when the figure included a $3.2 million charge-off on purchased equipment-finance loans. The allowance held steady at 0.84% of loans.
• One credit item to watch. Non-performing loans rose to $43.0 million (0.51% of loans) from $38.0 million at year-end, driven by a single $10.6 million commercial real estate loan on a six-story mixed-use apartment and commercial building. That is a single loan, not a broad trend, and the ratio barely moved from 0.50% in March.
• Small one-offs in fee income. Non-interest income of $10.8 million (+6.5%) included a $610,000 bank-owned life insurance death benefit. Without it, fee income would have been about flat year on year.
• Tax was a headwind, buybacks were not a factor. Pre-tax income rose 21.3%, but net income rose only 17.7% because the effective tax rate went to 27.6% from 25.4%, as merger costs are not tax-deductible. Diluted shares were 101.9 million versus 102.0 million, so none of the EPS growth came from buybacks. Under federal rules the company generally may not repurchase shares in the first year after its July 20 conversion, so that lever is unavailable until mid-2027.
• Cash conversion is fine. Operating cash flow for the first half was $23.1 million against net income of $27.6 million, with no sign that earnings are running ahead of cash.

Takeaway: Columbia's 17.7% profit increase came from paying less for deposits, not from earning more on loans. The margin gains are now slowing (2 basis points in the quarter), and the bank is about to absorb Northfield and $1.7 billion of new capital. Its profitability problem, a return on tangible equity under 6%, is the thing the merger has to fix.

The deal that changes everything from Q3

On July 20, 2026 two things closed at once:

• Second-step conversion. Columbia Bank MHC, the mutual holding company that owned most of the shares, was dissolved. The new Maryland holding company sold 167.2 million shares at $10.00, raising $1.7 billion gross, and each existing public share was converted into 2.2 new shares.
• Northfield Bancorp acquisition, valued at $580.3 million (70% stock, 30% cash), adding about $5.8 billion of assets and branches on Staten Island and in Brooklyn.

On a pro forma basis as of March 31, 2026, the combined company would have had $18.0 billion of assets, $12.5 billion of deposits and $11.9 billion of loans, against $12.2 billion of assets for Columbia alone at June 30. The board also started a quarterly cash dividend of $0.05 per share, its first.

Outlook

Management gave no numeric guidance for margin, expenses or earnings. What the filing does make clear:

• Third-quarter figures will not be comparable with this report or with a year ago. They will include Northfield for part of the quarter, purchase-accounting adjustments (marking acquired loans and deposits to fair value), more merger costs, and a much larger share count after the offering and the 2.2-for-1 exchange.
• The new capital should help the margin mechanically. About $1.7 billion of equity that costs no interest replaces deposits and borrowings that do. How much depends on how fast the bank lends or invests the money.
• New risk: New York rent-regulated apartments. Columbia held only about $846,000 of New York City rent-stabilized multifamily loans at June 30, but takes on about $415.1 million from Northfield. The 10-Q names recent rent freezes and expanded tenant protections in New York City as a risk factor. This exposure did not exist on Columbia's books before.

Our view: the standalone bank had a steady quarter, with funding costs doing the work and credit quality broadly stable. With buybacks off the table for a year and the margin gains slowing, the next leg of earnings growth depends on Northfield's lower-cost deposits and on using the new capital. The first clean read on whether that works will be the fourth quarter of 2026, once merger costs and the partial-quarter effect are out of the numbers.