Fair-lending advocates are turning up the heat on Columbia Financial’s plan to acquire Northfield Bancorp, warning the deal could hit a serious regulatory wall after watchdogs flagged stark racial gaps in 2024 mortgage data. Fair Finance Watch has asked the Federal Reserve for an evidentiary hearing, arguing that Home Mortgage Disclosure Act numbers show unusually high denial rates for Black applicants at both banks.
Columbia and Northfield first unveiled the merger in February, describing a straightforward growth play. The twist: the whole transaction depends on Columbia’s planned mutual-to-stock conversion and a series of federal regulatory approvals that suddenly look a lot less routine.
Watchdog Lays Out HMDA Findings
In a comment filed with the Fed and reproduced by Inner City Press, Fair Finance Watch said Columbia’s 2024 HMDA records showed four mortgage originations to white borrowers in New York with one denial and effectively no originations to African American applicants.
The group also pointed to Columbia’s New Jersey book of business: 612 loans to white borrowers with 164 denials, versus just 82 loans to African American borrowers and 18 denials. On paper, that is exactly the sort of gap fair-lending advocates want examiners to dig into.
Northfield Numbers And Income Gaps
FFW wrote, and Inner City Press reported, that “an evidentiary hearing is needed” to probe Northfield’s record as well. The group said Northfield made only 10 mortgage loans to African American borrowers in New York in 2024 while denying 21 applications.
FFW also highlighted how denial rates shifted by income: according to the group, Northfield’s denials ran at 86.2% for applicants earning under $50,000, compared with 51.8% for those with incomes above $200,000.
Banks Frame Deal As Strategic Growth Move
Columbia and Northfield, for their part, have pitched the transaction as a strategic expansion that would immediately fold Northfield’s Staten Island and Brooklyn deposit base into a larger regional bank headquartered in New Jersey. The companies also announced that Columbia will pursue a second-step conversion and a stock offering tied to the deal, according to Columbia Financial.
In other words, the merger and the corporate restructuring are tightly linked, and both now sit squarely in the sights of federal regulators and community advocates.
Regulatory Road Could Be Rocky
The merger agreement and Columbia’s subsequent SEC filings spell out that the deal cannot close without approvals from the Board of Governors of the Federal Reserve and the Office of the Comptroller of the Currency, among other conditions. Columbia’s Form 8-K and related disclosures detail the closing requirements, including the potential for public comment and heightened regulatory review of the application tied to the transaction, as laid out in the company’s SEC filing.
Those are the same channels Fair Finance Watch is now using to urge the Fed to slow things down and examine the banks’ lending records in public.
Why HMDA Numbers Matter
Under HMDA, lenders must report applications, originations and denials by race and income so regulators and advocates can spot patterns in who is getting approved or turned away. The CFPB notes that regulators use these data as a basic screening tool for possible fair-lending problems.
On the ground, reporting has shown that Black borrowers in New York often face higher denial rates and more expensive loans, a backdrop advocates say cannot be ignored as the Fed weighs this merger. The City and others have documented how HMDA data are used to surface those disparities.
What Comes Next
Fair Finance Watch has formally asked the Fed to hold an evidentiary hearing. If the Board agrees, that proceeding could delay the closing or result in conditions being placed on the transaction, according to advocates.
Columbia’s public materials state that the banks expect the conversion and merger activity to wrap up in the early third quarter of 2026. For now, that timetable is subject to one big variable: how regulators respond to the HMDA concerns and whether they take the rare step of putting the Staten Island-centric deal on the public hearing calendar.
