Columbia Bank MHC, Columbia Financial, Inc. (Nasdaq: CLBK) — the "Company" — and Columbia Bank, collectively known as "Columbia," have announced the completion of their acquisition of Freehold MHC, Freehold Bancorp and Freehold Bank, a transaction defined in the announcement as the "Merger." The deal was executed pursuant to the Agreement and Plan of Merger, dated as of June 17, 2021, by and between Freehold MHC, Freehold Bancorp and Freehold Bank (collectively, "Freehold") and the MHC, the Company and the Bank (the "Merger Agreement").

Columbia Financial, headquartered in Fair Lawn, New Jersey, is the holding company for Columbia Bank, while Freehold Bank is a community savings institution based in Freehold, New Jersey, making the deal a combination of two Garden State depository franchises. The transaction is also a mutual holding company merger — a structure used among U.S. mutual thrift institutions in which the surviving MHC holds the majority stake on behalf of its members, and newly issued shares are delivered to that MHC rather than paid out as cash to public shareholders. MHC combinations of this kind remain a recurring consolidation route for community banks seeking added scale in technology, compliance and lending capacity.

Merger Structure

At the effective time of the Merger, two structural steps occurred: (i) Freehold MHC merged with and into the MHC, with the MHC continuing as the surviving entity, and (ii) Freehold Bancorp merged with and into the Company, with the Company continuing as the surviving entity.

In connection with the Merger, Freehold Bank has converted to a federal savings bank and will operate as a wholly owned subsidiary of the Company for at least two years following the effective time of the Merger, or no later than December 31, 2023. After such time, Freehold Bank will be merged with and into the Bank, with the Bank continuing as the surviving institution — a step referred to as the "Bank Merger" — unless the parties mutually agree to complete the Bank Merger earlier in accordance with the terms of the Merger Agreement. The staged sequence sets a defined runway, running through at least late 2023, for integrating Freehold's operations ahead of full consolidation into Columbia Bank.

Stock Issuance

As part of the transaction, on December 1, 2021, the Company also issued 2,591,007 shares of its common stock to the MHC in accordance with the terms of the Merger Agreement. Directing the new shares to the MHC rather than to public investors is characteristic of this deal structure, in which the mutual holding company holds the majority of the Company's stock on behalf of its members.

Advisors

Columbia was advised on the transaction by the investment banking firm of Boenning & Scattergood, Inc. and represented by the law firm of Kilpatrick Townsend & Stockton LLP. Freehold was advised by the investment banking firm of FinPro Capital Advisors, Inc. and represented by the law firm of Stevens & Lee, PC.

Source: GlobalFinTechSeries