- Key insight: Acquiring Northfield Bancorp and completing a second-step stock sale would more than double Columbia Financial’s return on assets.
- Supporting data: Columbia established a 2.1% credit mark on Northfield’s loan portfolio, though its mark on the selling bank’s $419 million rent-controlled multifamily book is much higher.
- Expert quote: The deal will move the 99-year-old Columbia into “opportunistic new markets.” — Columbia Chairman and CEO Thomas Kemly
Columbia Financial in Fair Lawn, New Jersey, has agreed to pay $597 million to acquire Northfield Bancorp, which operates in New York City, in a deal that provides a window into the impact of Mayor Zohran Mamdani’s
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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.
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.
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.
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.
Northfield operates a combined 20 branches in Staten Island and Brooklyn after entering the latter borough in 2007.
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.
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.
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.
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.
Klein has agreed to join Columbia’s management team as chief operating officer. Four Northfield directors, including Klein, will join Columbia’s board.
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 — about 2.1% of Northfield’s total loans.
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.
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.”
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% — well below the 300% regulatory threshold.
