Since March 2025, Columbia Financial has been in a holding pattern, posting a small return of 0.9% while floating around $15.51. The stock also fell short of the S&P 500’s 15.6% gain during that period.
Is now the time to buy Columbia Financial, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.
Why Do We Think Columbia Financial Will Underperform?
We're cautious about Columbia Financial. Here are three reasons why CLBK doesn't excite us and a stock we'd rather own.
1. Net Interest Income Hits a Plateau
Net interest income commands greater market attention due to its reliability and consistency, whereas one-time fees are often seen as lower-quality revenue that lacks the same dependable characteristics.
Columbia Financial’s net interest income was flat over the last five years, much worse than the broader banking industry. This shows that lending underperformed its other business lines.
2. Net Interest Margin Dropping
Net interest margin (NIM) serves as a critical gauge of a bank's fundamental profitability by showing the spread between interest income and interest expenses. It's essential for understanding whether a firm can sustainably generate returns from its lending operations.
Over the past two years, Columbia Financial’s net interest margin averaged 2%. Its margin also contracted by 54 basis points (100 basis points = 1 percentage point) over that period.
This decline was a headwind for its net interest income. While prevailing rates are a major determinant of net interest margin changes over time, the decline could mean that Columbia Financial either faced competition for loans and deposits or experienced a negative mix shift in its balance sheet composition.
3. EPS Trending Down
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Sadly for Columbia Financial, its EPS declined by 3.7% annually over the last five years while its revenue grew by 2.3%. This tells us the company became less profitable on a per-share basis as it expanded.
Final Judgment
Columbia Financial doesn’t pass our quality test. With its shares underperforming the market lately, the stock trades at 1.4× forward P/B (or $15.51 per share). This valuation tells us a lot of optimism is priced in - we think other companies feature superior fundamentals at the moment. We’d suggest looking at one of our top software and edge computing picks.
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