What Happened?
Shares of community banking company Columbia Financial (NASDAQ: CLBK) jumped 8.6% in the afternoon session after the company announced it would acquire Northfield Bancorp, Inc. in a deal valued at approximately $597 million.
The merger was set to create the third-largest regional bank headquartered in New Jersey. Columbia anticipated the deal would be about 50% accretive to its 2027 earnings per share, suggesting a significant boost to future profits. In connection with the merger, Columbia's board also adopted a plan to reorganize into a fully public stock holding company, a move described as a “second-step” conversion aimed at unlocking shareholder value.
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What Is The Market Telling Us
Columbia Financial’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 4.5% on the news that disclosures from two lenders raised concerns about deteriorating loan quality across the industry. The drop was triggered by specific incidents that have spooked investors. Zions Bancorp announced a $50 million charge-off—a debt the bank doesn't expect to collect—on a single loan. Separately, Western Alliance Bancorp revealed it was dealing with a borrower who had failed to provide proper collateral. These events are compounding existing anxieties about the regional banking sector, which is already under pressure from elevated interest rates and declining commercial real estate values. The news has heightened investor concerns that more cracks could appear in borrowers' creditworthiness, potentially leading to increased loan losses and reduced profitability for other banks in the sector.
Columbia Financial is up 13.3% since the beginning of the year, and at $17.48 per share, has set a new 52-week high. Investors who bought $1,000 worth of Columbia Financial’s shares 5 years ago would now be looking at an investment worth $1,102.
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