plan to freeze rents<\/a> on the city’s multifamily real estate market.<\/p>\nProcessing Content<\/p>\n
The deal, announced Monday and expected to close in the third quarter, would give the $11 billion-asset Columbia its first presence in New York City. It comes with more than $400 million in rent-controlled multifamily loans, which have likely fallen in value since Mamdami’s election.<\/p>\n
Banking analysts are keeping close tabs on New York’s multifamily sector for signs of disruption amid concerns that the mayor’s rent-control policy could constrain properties’ ability to generate income and lead to heightened loan losses.\u00a0<\/p>\n
On Monday, however, investors appeared to focus more on the earnings power and growth potential of the combined company than any multifamily headaches. Columbia’s stock price popped after announcing the combination with the $5.8 billion-asset Northfield. Shares in Columbia closed nearly 9% higher Monday at $17.71.<\/p>\n
While Northfield is headquartered in Woodbridge, N.J., it was founded in 1887 in Staten Island, where it still ranks as the number-one community bank by deposits, holding approximately 10% of the $18.5 billion market, according to Federal Deposit Insurance Corp. statistics.<\/p>\n
Northfield operates a combined 20 branches in Staten Island and Brooklyn after entering the latter borough in 2007.<\/p>\n
On a conference call with analysts, Columbia CEO Thomas Kemly described the merger as “financially attractive,” saying it will move Columbia into “new opportunistic markets,” while simultaneously adding density in New Jersey.<\/p>\n
As part of the purchase, Columbia plans to raise as much as $1.9 billion in fresh capital by completing a second-step conversion, selling the 73% ownership stake it still holds. Columbia, which was founded in 1927 as a depositor-owned mutual thrift, sold a minority ownership stake as part of a first-step transaction in 2018, raising $498 million.\u00a0<\/p>\n
Columbia is estimating the second-step conversion, along with the acquisition of Northfield, will push its return on assets to 1.06% in 2027, up from 0.49% for full-year 2025. The pro forma company is expected to have assets of $18 billion, deposits of $13 billion and earn an estimated $200 million of net income in 2027, according to Kemly.<\/p>\n
Northfield Chairman and CEO Steven Klein said on the Monday conference call that the company’s management team and board were “thrilled” by the deal. The sale price amounts to $14.25 per Northfield share, a nearly 16% premium to the stock’s Jan. 30 closing price, Klein said.<\/p>\n
Klein has agreed to join Columbia’s management team as chief operating officer. Four Northfield directors, including Klein, will join Columbia’s board.\u00a0<\/p>\n
Columbia conducted thorough due diligence on Northfield’s loan portfolio, including reviews by its own staff and a third-party consultant, according to Columbia Chief Banking Officer Dennis Gibney. As Columbia gauged potential losses in the acquired loan portfolio, the overall result was a credit mark of $81 million \u2014 about 2.1% of Northfield’s total loans.<\/p>\n
But the mark on the rent-controlled multifamily portfolio was significantly higher, 14% split evenly between credit risk and interest-rate risk, according to Gibney.<\/p>\n
Kemly characterized Northfield’s multifamily credits as “a very high-quality portfolio,” noting less than 1% of them are classed as nonaccrual, and saying that cumulative chargeoffs over the past decade totaled just $414,000. Kemly did not rule out multifamily loan sales, adding that any discount “should be well within the mark we have on the portfolio.”<\/p>\n
Neither Columbia nor Northfield are major commercial real estate lenders, so the combined company’s ratio of CRE loans to total risk-based capital would be 211% \u2014 well below the 300% regulatory threshold.<\/p>\n","protected":false},"excerpt":{"rendered":"Key insight: Acquiring Northfield Bancorp and completing a second-step stock sale would more than double Columbia Financial’s return…\n","protected":false},"author":2,"featured_media":121458,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[53205,51784,2008,9,24,55,54,56],"class_list":{"0":"post-121457","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-new-york-city","8":"tag-community-banking","9":"tag-ma","10":"tag-multifamily","11":"tag-new-york","12":"tag-new-york-city","13":"tag-new-york-city-headlines","14":"tag-new-york-city-news","15":"tag-ny"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/121457","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=121457"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/121457\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/121458"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=121457"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=121457"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=121457"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}