Columbia Financial in Fair Lawn, N.J. has repositioned its balance sheet at a pretax loss of about $38 million.
The $10.7 billion-asset company said in a press release that it sold about $321 million of available-for-sale debt securities that were mostly purchased during the pandemic.
Proceeds were used to fund $85 million of loan growth, buy $66 million of higher-yielding debt securities and prepay $170 million of higher-cost borrowings. The repositioning is immediately accretive to net interest income.
“Given the decline in interest rates, we believe this is a well-timed transaction that is expected to improve future earnings while allowing the company to continue to maintain a strong capital position,” Thomas Kemly, Columbia’s president and CEO, said in the release. “It accelerates our strategy to realign the company’s balance sheet towards higher-yielding assets and enhances the flexibility of our funding.”
The effort should increase 2025 earnings by about 24% and expand the net interest margin by about 15 basis points relative to the current consensus estimates. Columbia should earn back the loss in about three years.