Northfield Bancorp surges 12% on earnings beat, Columbia merger
Regional bank beat adjusted EPS estimates by 30.8% despite $41M goodwill impairment, NIM expands 16 bps to 2.70%
Northfield Bancorp shares surged nearly 12% on Monday after the New Jersey-based regional bank reported stronger-than-expected quarterly earnings and announced a strategic merger with Columbia Financial that will create the state's third-largest lender by assets.
The stock climbed 11.9% to $13.79 on heavy volume of 1.7 million shares, as investors looked past a $41 million non-cash goodwill impairment charge that pushed the bank to report a net loss of $27.4 million, or $0.69 per share, for the fourth quarter ended December 31, 2025. According to the company's earnings release, adjusted earnings of $0.34 per share comfortably exceeded analyst estimates of $0.26, representing a 30.8% earnings beat.
The merger agreement with Columbia Financial, valued at approximately $597 million, will create a combined institution with pro forma total assets of roughly $18 billion as of December 31, 2025. Northfield Bank will merge into Columbia Bank, which will operate as the surviving entity, with the transaction expected to close in the third quarter of 2026.
"This combination represents a compelling opportunity to create significant value for our stockholders," Northfield's board indicated in the announcement, as Columbia Financial projects the merger will be approximately 50% accretive to its 2027 earnings per share.
Underlying operating metrics showed improvement across Northfield's core business. Net interest margin expanded by 16 basis points to 2.70%, up from 2.54% in the prior quarter and 2.18% in the fourth quarter of 2024. Net interest income increased 6.2% sequentially to $36.7 million, while revenue for the quarter totaled $68.3 million.
Asset quality strengthened during the period, with non-performing loans declining to 0.42% of total loans from 0.49% at the end of the third quarter. Deposits excluding brokered deposits grew by $31.5 million, representing 3.2% annualized growth, while the cost of those deposits decreased to 1.75% from 1.85% in September.
Northfield's Board of Directors maintained its commitment to returning capital to shareholders, declaring a quarterly cash dividend of $0.13 per share payable February 25, 2026 to stockholders of record as of February 12, 2026. Trading at approximately 0.71 times book value, the bank has seen its shares trade in a 52-week range of $9.06 to $13.99.
The goodwill impairment charge reflects the impact of rising interest rates on asset valuations across the banking sector, though Northfield's ability to grow core deposits and expand net interest margins suggests resilience despite challenging conditions. The merger with Columbia Financial addresses the imperative for scale in an increasingly competitive regional banking environment, where technology investments and compliance costs continue to pressure smaller institutions.
Analysts will be watching for regulatory approval progress in the coming months, particularly as the combined entity will emerge as a significant player in the New Jersey market. The transaction structure and integration plan will be closely scrutinized given recent merger challenges in the regional banking sector.