Columbia Financial will buy Northfield Bancorp in a $597 million transaction meant to create the third-largest regional bank based in the Garden State, the holding companies said Monday.
The Fair Lawn-based Columbia Bank parent and Woodbridge-based Northfield Bank parent will create a bank with $18 billion in combined assets.
It will also extend Columbia’s footprint into New York for the first time, with 19% of branches post-merger based in New York City boroughs.
Alongside the deal’s announcement, Columbia plans to convert to a public company through a plan in which shares of the mutual holding company will be sold at $10 per share. As part of a second-step conversion, the combined bank will become a wholly-owned subsidiary of a new holding company formed through the transaction.
“The simultaneous merger allows us to immediately leverage a portion of the capital raised and materially augment financial results,” Columbia CEO Thomas Kemly said in a prepared statement. “Northfield has built an excellent deposit franchise with a conservative credit culture, which makes it an ideal fit with Columbia and provides great opportunities for future growth.”
Northfield CEO Steven Klein said he expects the transaction to create value for its customers and stockholders.
Under the conversion plan, shares of Columbia common stock held by those other than the mutual holding company will be converted into common stock of the new holding company. Shares held by the MHC, which owns roughly 73.1% of Columbia’s outstanding common shares, will be canceled.
The number of common stock shares issued by the new holding company will be based on the aggregate pro forma market value of the holding company’s common stock as determined by an independent appraisal.
Northfield will merge into the holding company following the second-step conversion, and each outstanding share of Northfield common stock will be converted either to shares of holding company common stock or cash. Northfield shareholders will receive 1.425 to 1.465 Columbia shares per outstanding Northfield share, depending on the appraisal.
At the midpoint of the estimated valuation range for the second-step conversion, Columbia expects the transaction to be 50% accretive to Columbia’s 2027 earnings per share.
Following the merger, Kemly will be president and CEO of the new holding company and bank, Columbia Chief Banking Officer Dennis Gibney and Columbia CFO Thomas Splaine Jr. will retain their roles. Klein will be the chief operating officer for the new holding company and bank.
This is the second New Jersey bank deal in the past six weeks, after Red Bank-based OceanFirst announced plans in late December to buy Uniondale, New York-based Flushing Financial for $579 million. OceanFirst counts five branches in the Empire State, but buying Flushing would give it 30 additional locations in New York.
Columbia’s last acquisition was a nonbank deal: Its wholly-owned subsidiary Columbia Insurance Services bought Jeanne S. Frey Insurance Agency in September. Columbia completed its acquisition of Freehold Bank the prior year, three years after its 2021 announcement; and completed its acquisition of RSI Bank in 2022.
The Columbia-Northfield deal is subject to the satisfaction of the completion of the second-step conversion, the receipt of required regulatory approvals and approval by shareholders.
