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Fitch Affirms Columbia Financial, Inc.; Outlook Stable.

NEW YORK -- Fitch has affirmed the ratings of Columbia Financial, Inc. (CF) and its subsidiaries. The Rating Outlook remains Stable. A list of ratings follows this release. CFI's ratings are based on strong asset quality, solid capital position and consistent operating performance. Conversely, the company's limited revenue diversity and geographic concentration are rating constraints. Columbia Bank (CB), the main subsidiary of CFI, maintains a loan portfolio consisting mostly of real estate loans secured by properties in New Jersey.

Operating performance has been consistent and earnings generation is respectable when compared to similarly rated peers. Revenue is driven by spread revenue and supported by low credit costs. During this challenging interest rate environment, the company's ROA and NIM trended downward, however the increase in higher yielding loans has kept the compression manageable. Further, CFI's mutual ownership structure affords management to target longer-term profitability goals versus a focus on immediate shareholder return.

The company maintains strong asset quality, as reflected by its low level of non-performing loans and net charge-offs. Moreover, Fitch considers CB's reserves adequate given the company's loan mix. Nonetheless, Fitch notes CB's loan portfolio exhibits exposure to some large real estate secured loans that are concentrated by borrower and geographic area. While these loans are performing well, CFI is exposed to event risk. The bank's capital position is sound and provides a solid foundation for asset growth and financial stability.

Columbia Bank, which is regulated by the OTS, and headquartered in Fair Lawn, New Jersey, has 40 full service branches, which are located in ten counties throughout Northern, Southern, and Central New Jersey. The Bank, whose customer base is overwhelmingly New Jersey residents and businesses, offers consumer and commercial saving, loan, investment and retirement products. The mutual holding company structure affords the bank the ability to remain independent, and at the same time allows the bank flexibility to issue debt and stock, as needed.

The following ratings have been affirmed:

Columbia Financial Inc.

--Issuer Default Rating (IDR) at 'BBB';

--Short-term debt at 'F2';

--Subordinated debt at 'BBB-';

--Individual at 'B/C';

--Support at '5';

--The Rating Outlook is Stable.

Columbia Bank

--Long-term deposits at 'BBB+';

--Issuer Default Rating at 'BBB';

--Short-term deposits at 'F2';

--Short-term debt at 'F2';

--Individual at B/C';

--Support at '5';

--The Rating Outlook is Stable.

Columbia Financial Capital Trust I

-- Preferred Stock at 'BBB-'

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
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Publication:Business Wire
Date:Oct 12, 2006
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