Columbia in N.J. lines up mutual merger with Freehold

Columbia Financial in Fair Lawn, N.J., has agreed to buy Freehold Bancorp in Freehold, N.J.

The $9 billion-asset Columbia said in a press release Thursday that the $300 million-asset Freehold will convert to a federal savings bank and operate as a wholly-owned subsidiary. Freehold Bank will be merged into Columbia Bank two years after the holding companies have merged. 

The deal is expected to close in the fourth quarter. 

Freehold has two branches, $156 million of loans and $197 million of deposits.

One Freehold director will join Columbia’s board.

“The transaction will broaden our footprint into Monmouth County,” Thomas Kemly, Columbia’s president and CEO, said in the release. “As two community-minded banks, we are proud to strengthen our local impact and support new markets.”

The transaction is expected to be accretive to Columbia’s 2022 net income, but 2% dilutive to earnings per share because of shares to be issued to Columbia’s mutual holding company. The transaction is projected to be about 3% accretive to fully converted tangible book value.

Columbia expects to incur $6.3 million of merger-related expenses. It plans to cut 40% of Freehold’s annual noninterest expenses beginning in 2024. 

"We think this is exactly the kind of deal that the company should be doing, and [we] continue to believe that management is focused on smartly building the franchise, further leveraging capital and bringing Columbia closer to an eventual second-step," Mark Fitzgibbon, an analyst at Piper Sandler, wrote in a client note.

Columbia was advised by Boenning & Scattergood and Kilpatrick Townsend & Stockton. Freehold was advised by FinPro Capital Advisors and Stevens & Lee.