Market Overview

Northfield Bancorp, Inc. Announces Second Quarter 2018 Results

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NOTABLE ITEMS INCLUDE:

  • DILUTED EARNINGS PER SHARE INCREASED 27.8% TO $0.23 FOR THE SECOND QUARTER OF 2018, COMPARED TO $0.18 FOR THE SECOND QUARTER OF 2017, AND 4.5% COMPARED TO $0.22 FOR THE FIRST QUARTER OF 2018, BENEFITING FROM TAX REFORM
  • TOTAL ASSETS INCREASED TO $4.19 BILLION, OR 4.9%, FROM YEAR END 2017, DRIVEN BY:
      -- STRONG LOAN ORIGINATIONS, AS ORIGINATED LOANS, NET, INCREASED $122.6 MILLION, OR 5%
      -- AN INCREASE IN OUR SECURITIES PORTFOLIO OF $111.9 MILLION, OR 21%
  • DEPOSITS, EXCLUDING BROKERED, INCREASED 4.1% FROM YEAR END 2017
  • NET INTEREST MARGIN DECREASED TO 2.85%, OR 12 BASIS POINTS, FOR THE SECOND QUARTER OF 2018, AS COMPARED TO 2.97% FOR THE SECOND QUARTER OF 2017, AND EIGHT BASIS POINTS COMPARED TO 2.93% FOR THE FIRST QUARTER OF 2018, DRIVEN BY THE INCREASED COST OF DEPOSITS
  • EFFICIENCY RATIO IMPROVED TO 56.4% IN THE SECOND QUARTER OF 2018 AS COMPARED TO 56.6% FOR THE SECOND QUARTER OF 2017 AND 57.2% FOR THE FIRST QUARTER OF 2018
  • ASSET QUALITY CONTINUES TO REMAIN STRONG WITH NON-PERFORMING ASSETS AT 0.17% OF TOTAL ASSETS AND NON-PERFORMING LOANS AT 0.20% OF TOTAL LOANS
  • CASH DIVIDEND DECLARED OF $0.10 PER SHARE OF COMMON STOCK, PAYABLE AUGUST 22, 2018, TO STOCKHOLDERS OF RECORD AS OF AUGUST 8, 2018

WOODBRIDGE, N.J., July 25, 2018 (GLOBE NEWSWIRE) -- NORTHFIELD BANCORP, INC. (NASDAQ:NFBK), the holding company for Northfield Bank, reported basic and diluted earnings per common share of $0.23 and $0.45, respectively, for the quarter and six months ended June 30, 2018, compared to basic and diluted earnings per common share of $0.18 and $0.39, respectively, for the quarter and six months ended June 30, 2017. Earnings for the quarter and six months ended June 30, 2018, benefited from a lower effective tax rate due to the impact of recently enacted federal tax reform (the "Tax Reform Act"), which reduced the federal statutory corporate tax rate to 21% from 35% effective January 1, 2018. Earnings for the three and six months ended June 30, 2018, also benefited from excess tax benefits of $1.3 million, or $0.03 per diluted share, and $2.1 million, or $0.05 per diluted share, respectively. Earnings for the three and six months ended June 30, 2017, benefited from excess tax benefits of $593,000, or $0.01 per diluted share, and $2.3 million, or $0.05 per diluted share, respectively, related to the exercise or vesting of equity awards. Earnings for the six months ended June 30, 2017, also reflect $1.5 million, or $0.03, per diluted share of tax-exempt income from bank-owned life insurance proceeds in excess of the cash surrender value of the policies.

Commenting on the second quarter 2018 results, Steven M. Klein, the Company's President and Chief Executive Officer, noted, "Earnings continued to increase in the second quarter as growth in loans and securities, funded through deposit growth and borrowings, provided us the opportunity to further leverage our significant capital base."  Mr. Klein commented further, "In addition to our successes in growing loans and deposits, we achieved increases in both net interest income and non-interest income, while reducing our efficiency ratio.  The rise in market interest rates, while increasing competition for deposits and placing downward pressure on our net interest margin, also presents opportunities to invest in higher yielding, shorter term, high quality securities to increase our earnings and liquidity, while maintaining an appropriate interest rate risk position."

Mr. Klein further noted, "I'm pleased to announce that the Board of Directors has declared a dividend of $0.10 per common share, payable on August 22, 2018, to stockholders of record on August 8, 2018."

Results of Operations

Comparison of Operating Results for the Six Months Ended June 30, 2018 and 2017

Net income was $21.1 million and $18.4 million for the six months ended June 30, 2018, and June 30, 2017, respectively. Significant variances from the comparable prior year period are as follows: a $1.7 million increase in net interest income, a $1.7 million decrease in non-interest income, and a $2.5 million decrease in income tax expense.

Net interest income for the six months ended June 30, 2018, increased $1.7 million, or 3.2%, to $55.3 million, from $53.6 million for the six months ended June 30, 2017, primarily due to a $266.1 million, or 7.4%, increase in our average interest-earning assets, partially offset by a 12 basis point decrease in our net interest margin to 2.89% from 3.01% for the six months ended June 30, 2017. The increase in average interest-earning assets was due to increases in average loans outstanding of $144.7 million, average mortgage-backed securities of $64.0 million, average other securities of $49.4 million, and average interest-earning deposits in financial institutions of $9.3 million, partially offset by a decrease in average Federal Home Loan Bank of New York ("FHLBNY") stock of $1.3 million. The increase in average loans was primarily due to strong originated loan growth as well as loan pool purchases during the first quarter of 2018. Net interest income for the six months ended June 30, 2018, included loan prepayment income of $1.1 million as compared to $520,000 for the six months ended June 30, 2017. Yields earned on interest-earning assets increased six basis points to 3.69% for the six months ended June 30, 2018, from 3.63% for the six months ended June 30, 2017, driven by higher yields on all asset classes. The cost of interest-bearing liabilities increased 23 basis points to 1.03% for the six months ended June 30, 2018, from 0.80% for the six months ended June 30, 2017, due to higher rates on interest-bearing deposits and borrowed funds, attributable to the rising rate environment.

The provision for loan losses decreased by $179,000 to $704,000 for the six months ended June 30, 2018, from $883,000 for the six months ended June 30, 2017, primarily due to improving asset quality trends, including a decrease in criticized loans, and an improvement in historical loss rates. Net recoveries for the six months ended June 30, 2018, were $18,000, as compared to net recoveries of $127,000 for the six months ended June 30, 2017.

Non-interest income decreased $1.7 million, or 26.4%, to $4.8 million for the six months ended June 30, 2018, from $6.6 million for the six months ended June 30, 2017, primarily due to a decrease of $1.6 million in income on bank owned life insurance, attributable to insurance proceeds in excess of the related cash surrender value of the policies, received in the first quarter of 2017, and a decrease of $191,000 in gains on securities transactions, net. Securities gains, net, during the six months ended June 30, 2018, included gains of $302,000 related to the Company's trading portfolio, compared to gains of $668,000 in the comparative prior year period. The trading portfolio is utilized to fund the Company's deferred compensation obligation to certain employees and directors of the Company's deferred compensation plan (the Plan). The participants of this Plan, at their election, defer a portion of their compensation. Gains and losses on trading securities have no effect on net income since participants benefit from, and bear the full risk of, changes in the trading securities market values. Therefore, the Company records an equal and offsetting amount in compensation expense, reflecting the change in the Company's obligations under the Plan.

Non-interest expense remained level at $34.2 million for both six-month periods ended June 30, 2018 and June 30, 2017.

The Company recorded income tax expense of $4.2 million for the six months ended June 30, 2018, compared to $6.8 million for the six months ended June 30, 2017. The effective tax rate for the six months ended June 30, 2018, was 16.8% compared to 26.9% for the six months ended June 30, 2017, reflecting the reduction of the federal statutory corporate tax rate to 21% from 35% by the Tax Reform Act, partially offset by lower excess tax benefits. Excess tax benefits were $2.1 million for the current period as compared to $2.3 million for the prior year period. Excess tax benefits will fluctuate throughout the year based on the Company's stock price and timing of employee stock option exercises and vesting of other share-based awards. The Company has approximately 335,000 options outstanding at June 30, 2018, from its 2009 grants which expire on January 30, 2019, at a weighted average price of $7.09 per share and a weighted average grant date fair value of $2.30 per share. To the extent these options are exercised during the remainder of 2018, this will result in additional tax benefits which will have a positive effect on our effective tax rate. The effective tax rate for the six months ended June 30, 2017, benefited from $1.5 million of tax-exempt income from bank owned life insurance proceeds in excess of the cash surrender value of the policies.

On July 1, 2018, the State of New Jersey enacted new legislation that created a temporary surtax effective for tax years 2018 through 2021 and will require companies to file combined tax returns beginning in 2019. Management is currently evaluating the effect of this new legislation on our net deferred tax asset and future tax expense.  We anticipate that we will realize a tax benefit during the third quarter of 2018 due to the write up of our net deferred tax asset and, prospectively, our state tax expense will increase.

Comparison of Operating Results for the Three Months Ended June 30, 2018 and 2017

Net income was $10.6 million and $8.4 million for the quarters ended June 30, 2018, and June 30, 2017, respectively. Significant variances from the comparable prior year quarter are as follows: an $861,000 increase in net interest income, a $159,000 increase in the provision for loan losses, a $422,000 increase in non-interest expense, and a $1.9 million decrease in income tax expense.

Net interest income for the quarter ended June 30, 2018, increased $861,000, or 3.2%, primarily due to a $276.9 million, or 7.6%, increase in our average interest-earning assets, partially offset by a 12 basis point decrease in our net interest margin to 2.85% from 2.97% for the quarter ended June 30, 2017. The increase in average interest-earning assets was due to increases in average loans outstanding of $132.0 million, average mortgage-backed securities of $93.3 million, and average other securities of $65.6 million, partially offset by decreases of $12.9 million in average interest-earning deposits in financial institutions and $1.1 million in average FHLBNY stock. The increase in average loans was primarily due to originated loan growth. Net interest income for the quarter ended June 30, 2018 included loan prepayment income of $479,000, as compared to $193,000 for the quarter ended June 30, 2017. Yields earned on interest-earning assets increased eight basis points to 3.69% for the quarter ended June 30, 2018, from 3.61% for the quarter ended June 30, 2017, driven by higher yields on all asset classes. The cost of interest-bearing liabilities increased 26 basis points to 1.08% for the current quarter as compared to 0.82% for the comparable prior year quarter, due to higher rates on interest-bearing deposits and borrowed funds, attributable to the rising rate environment.

The provision for loan losses increased by $159,000 to $670,000 for the quarter ended June 30, 2018, from $511,000 for the quarter ended June 30, 2017, primarily due to originated loan growth, partially offset by improving asset quality trends, including a decrease in criticized loans, and an improvement in historical loss rates. Net recoveries were $40,000 for the quarter ended June 30, 2018, compared to net charge-offs of $190,000 for the quarter ended June 30, 2017.

Non-interest income remained level at $2.4 million for both quarters ended June 30, 2018 and June 30, 2017.

Non-interest expense increased $422,000, or 2.5%, to $17.0 million for the quarter ended June 30, 2018, from $16.6 million for the quarter ended June 30, 2017. The increase was due primarily to increases of $496,000 in other expense, primarily due to higher advertising expense and higher directors' fees and equity award expense; $314,000 in professional fees; and $254,000 in occupancy costs, primarily due to higher rent expense attributable to a new branch office and expanded space in our corporate offices. Partially offsetting these increases was a decrease of $653,000 in employee compensation and benefits.

The Company recorded income tax expense of $1.9 million for the quarter ended June 30, 2018, compared to $3.8 million for the quarter ended June 30, 2017. The effective tax rate for the quarter ended June 30, 2018, was 15.1% compared to 31.2% for the quarter ended June 30, 2017, reflecting the reduction of the federal statutory corporate tax rate to 21% from 35%, and higher excess tax benefits of $1.3 million for the current quarter as compared to $593,000 for the comparable prior year quarter.

Comparison of Operating Results for the Three Months Ended June 30, 2018, and March 31, 2018

Net income was $10.6 million and $10.4 million for the quarters ended June 30, 2018, and March 31, 2018, respectively. Significant variances from the prior quarter are as follows: a $226,000 increase in net interest income, a $636,000 increase in the provision for loan losses, and a $451,000 decrease in income tax expense.

Net interest income for the quarter ended June 30, 2018, increased by $226,000, or 0.8%, primarily due to an $88.5 million, or 2.3%, increase in our average interest-earning assets, partially offset by an eight basis point decrease in our net interest margin to 2.85% from 2.93% for the quarter ended March 31, 2018. The increase in average interest-earning assets was due to increases in average loans outstanding of $41.6 million, average mortgage-backed securities of $36.0 million, average other securities of $35.6 million, and average FHLBNY stock of $667,000, partially offset by a decrease of $25.3 million in average interest-earning deposits in financial institutions. Net interest income for the quarter ended June 30, 2018 included loan prepayment income of $479,000, as compared to $628,000 for the quarter ended March 31, 2018. Yields earned on interest-earning assets remained level at 3.69% for both the current and prior quarters while the cost of interest-bearing liabilities increased by 10 basis points to 1.08% from 0.98% for the quarter ended March 31, 2018.

The provision for loan losses increased by $636,000 to $670,000 for the quarter ended June 30, 2018, from $34,000 for the quarter ended March 31, 2018, primarily due to originated loan growth in the current quarter.

Non-interest income remained level at $2.4 million for both quarters ended June 30, 2018 and March 31, 2018. Non-interest expense also remained level at $17.0 million and $17.1 million for the quarters ended June 30, 2018, and March 31, 2018, respectively.

The Company recorded income tax expense of $1.9 million for the quarter ended June 30, 2018, compared to $2.3 million for the quarter ended March 31, 2018. The effective tax rate for the quarter ended June 30, 2018 was 15.1% compared to 18.3% for the quarter ended March 31, 2018, the decrease being primarily due to higher excess tax benefits of $1.3 million for the current quarter as compared to $869,000 for the prior quarter.

Financial Condition

Total assets increased $196.7 million, or 4.9%, to $4.19 billion at June 30, 2018, from $3.99 billion at December 31, 2017. The increase was primarily due to an increase in our available-for sale debt securities portfolio of $111.5 million and an increase in loans held-for-investment, net, of $79.3 million.

As of June 30, 2018, we estimate that our non-owner occupied commercial real estate concentration (as defined by regulatory guidance issued in 2006) to total risk-based capital was approximately 411%. Management believes that Northfield Bank (the Bank) has implemented appropriate risk management practices including risk assessments, board approved underwriting policies and related procedures which include, monitoring bank portfolio performance, performing market analysis (economic and real estate), and stressing of the Bank's commercial real estate portfolio under severe adverse economic conditions. Although management believes the Bank has implemented appropriate policies and procedures to manage our commercial real estate concentration risk, the Bank's regulators could require us to implement additional policies and procedures or could require us to maintain higher levels of regulatory capital, which might adversely affect our loan originations, ability to pay dividends, and profitability.

Loans held-for-investment, net, increased $79.3 million to $3.22 billion at June 30, 2018, from $3.14 billion at December 31, 2017. Originated loans held-for-investment, net, totaled $2.55 billion at June 30, 2018, as compared to $2.43 billion at December 31, 2017. The increase was primarily due to an increase in multifamily real estate loans of $64.7 million, or 3.7%, to $1.80 billion at June 30, 2018, from $1.74 billion at December 31, 2017, and an increase in commercial real estate loans of $54.3 million, or 12.2%, to $499.5 million at June 30, 2018, from $445.2 million at December 31, 2017, partially offset by decreases in acquired loans and purchased credit-impaired ("PCI") loans.

The following tables detail our multifamily real estate originations for the six months ended June 30, 2018 and 2017 (dollars in thousands):

 
For the Six Months Ended June 30, 2018
Multifamily
Originations
  Weighted Average
Interest Rate
  Weighted Average
Loan-to-Value Ratio
  Weighted Average Months to Next
Rate Change or Maturity for Fixed
Rate Loans
  (F)ixed or
(V)ariable
  Amortization Term
$ 159,649     3.77 %   69 %   77   V   25 to 30 Years
6,615     4.07 %   38 %   180   F   15 Years
$ 166,264     3.78 %   68 %            


For the Six Months Ended June 30, 2017
Multifamily
Originations
  Weighted Average
Interest Rate
  Weighted Average
Loan-to-Value Ratio
  Weighted Average Months to Next
Rate Change or Maturity for Fixed
Rate Loans
  (F)ixed or
(V)ariable
  Amortization Term
$ 192,407     3.55 %   60 %   80   V   15 to 30 Years
750     5.00 %   48 %   1   V   Line of Credit (2-Year Term)
7,640     3.89 %   27 %   180   F   15 Years
$ 200,797     3.57 %   59 %            
                             

Acquired loans decreased by $41.9 million to $650.9 million at June 30, 2018, from $692.8 million at December 31, 2017, primarily due to paydowns, partially offset by purchases of one-to-four family residential mortgage loan pools during the first quarter of 2018, totaling $37.5 million.

PCI loans totaled $21.3 million at June 30, 2018, as compared to $22.7 million at December 31, 2017. The majority of the PCI loan balance consists of loans acquired as part of a Federal Deposit Insurance Corporation-assisted transaction. The Company accreted interest income of $1.0 million and $2.1 million attributable to PCI loans for the three and six months ended June 30, 2018, respectively, as compared to $1.3 million and $2.8 million for the three and six months ended June 30, 2017, respectively.

The Company's available-for-sale debt securities portfolio increased by $111.5 million, or 21.7%, to $625.3 million at June 30, 2018, from $513.8 million at December 31, 2017. The increase was primarily attributable to purchases of mortgage-backed and corporate securities, partially offset by paydowns and sales. At June 30, 2018, $515.8 million of the portfolio consisted of residential mortgage-backed securities issued or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. In addition, the Company held $109.1 million in corporate bonds, all of which were considered investment grade at June 30, 2018, and $279,000 in municipal bonds.

Total liabilities increased $186.0 million, or 5.5%, to $3.54 billion at June 30, 2018, from $3.35 billion at December 31, 2017. The increase was primarily attributable to an increase in deposits of $130.3 million, an increase in other borrowings of $54.8 million, and an increase in advance payments by borrowers for taxes and insurance of $3.2 million, partially offset by a decrease in securities sold under agreements to repurchase of $2.0 million.

Deposits increased $130.3 million, or 4.6%, to $2.97 billion at June 30, 2018, as compared to $2.84 billion at December 31, 2017.  The increase was attributable to an increase of $233.5 million in certificates of deposit, partially offset by decreases of $39.8 million in transaction accounts, and $63.4 million in savings and money market accounts. The following table shows the distribution of our deposits by account type at June 30, 2018, March 31, 2018, and December 31, 2017 (dollars in thousands):

                 
    June 30, 2018     March 31, 2018     December 31, 2017
Transaction:                
Non-interest bearing checking                
Business customers $ 230,851   $ 221,942   $ 225,629
Municipal customers   14,638     16,088     18,682
Retail customers   165,938     167,887     162,956
Total non-interest bearing checking   411,427     405,917     407,267
Negotiable orders of withdrawal                
Business customers   135,733     138,173     137,705
Municipal customers   247,750     302,758     285,122
Retail customers   37,684     39,535     42,313
Total negotiable orders of withdrawal   421,167     480,466     465,140
Total transaction   832,594     886,383     872,407
Savings:                
Savings   417,665     415,443     424,789
Money market                
Business customers   102,701     92,139     84,384
Municipal customers   34,187     38,036     41,777
Retail customers   607,665     645,254     674,693
Total money market   744,553     775,429     800,854
Total savings   1,162,218     1,190,872     1,225,643
Certificates of deposit:                
Brokered deposits   170,835     144,279     150,639
Under $250,000   149,507     134,003     110,964
$250,000 or more   652,127     549,539     477,326
Total certificates of deposit   972,469     827,821     738,929
Total deposits $ 2,967,281   $ 2,905,076   $ 2,836,979
                 

Borrowings and securities sold under agreements to repurchase increased by $52.8 million, or 11.2%, to $524.3 million at June 30, 2018, from $471.5 million at December 31, 2017. Management utilizes borrowings to mitigate interest rate risk, for short-term liquidity, and to a lesser extent as part of leverage strategies.

The following is a table of term borrowing maturities (excluding capitalized leases and overnight borrowings) and the weighted average rate by year at June 30, 2018 (dollars in thousands):

         
Year   Amount   Weighted Average Rate
2018   $97,080   1.75%
2019   123,502   1.48%
2020   90,000   1.65%
2021   70,000   1.80%
2022   20,000   1.97%
Thereafter   75,000   2.85%
    $475,582   1.85%
         

Total stockholders' equity increased by $10.8 million to $649.7 million at June 30, 2018, from $638.9 million at December 31, 2017. The increase was primarily attributable to net income of $21.1 million for the six months ended June 30, 2018, and to a lesser extent a $5.2 million increase related to ESOP and equity award activity. These increases were partially offset by dividend payments of $9.3 million and a $6.2 million increase in unrealized losses on our securities available-for-sale portfolio as a result of the increased interest rate environment.

Asset Quality

The following table details total originated and acquired (excluding PCI) non-accrual loans, non-performing loans, non-performing assets, troubled debt restructurings on which interest is accruing, and accruing loans 30 to 89 days delinquent at June 30, 2018, and December 31, 2017 (dollars in thousands):

       
  June 30, 2018   December 31, 2017
Non-accrual loans:      
Held-for-investment      
Real estate loans:      
Commercial $ 4,620     $ 4,087  
One-to-four family residential 964     774  
Multifamily 568     417  
Home equity and lines of credit 154     156  
Commercial and industrial 72     74  
Total non-accrual loans 6,378     5,508  
Loans delinquent 90 days or more and still accruing:      
Held-for-investment      
Real estate loans:      
One-to-four family residential     27  
Other     1  
  Total loans delinquent 90 days or more and still accruing     28  
Total non-performing loans 6,378     5,536  
Other real estate owned 850     850  
Total non-performing assets $ 7,228     $ 6,386  
Non-performing loans to total loans 0.20 %   0.18 %
Non-performing assets to total assets 0.17 %   0.16 %
Loans subject to restructuring agreements and still accruing $ 16,758     $ 18,003  
Accruing loans 30 to 89 days delinquent $ 14,552     $ 12,044  
               

Accruing Loans 30 to 89 Days Delinquent

Loans 30 to 89 days delinquent and on accrual status totaled $14.6 million and $12.0 million at June 30, 2018, and December 31, 2017, respectively. The following table sets forth delinquencies for accruing loans by type and by amount at June 30, 2018, and December 31, 2017 (dollars in thousands):

       
  June 30, 2018   December 31, 2017
Held-for-investment      
Real estate loans:      
Commercial $ 6,633     $ 4,347  
One-to-four family residential 6,154     4,162  
Multifamily 1,596     3,298  
Construction and land 2     6  
Home equity and lines of credit 114      
Commercial and industrial loans 44     202  
Other loans 9     29  
Total delinquent accruing loans held-for-investment $ 14,552     $ 12,044  
               


PCI Loans (Held-for-Investment)

At June 30, 2018, 7.1% of PCI loans were past due 30 to 89 days, and 24.1% were past due 90 days or more, as compared to 10.8% and 17.1%, respectively, at December 31, 2017.

About Northfield Bank

Northfield Bank, founded in 1887, operates 39 full-service banking offices in Staten Island and Brooklyn, New York, and Hunterdon, Middlesex, Mercer, and Union counties, New Jersey. For more information about Northfield Bank, please visit www.eNorthfield.com.

Forward-Looking Statements: This release may contain certain "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and may be identified by the use of such words as "may," "believe," "expect," "anticipate," "should," "plan," "estimate," "predict," "continue," and "potential" or the negative of these terms or other comparable terminology.  Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of Northfield Bancorp, Inc.  Any or all of the forward-looking statements in this release and in any other public statements made by Northfield Bancorp, Inc. may turn out to be wrong.  They can be affected by inaccurate assumptions Northfield Bancorp, Inc. might make or by known or unknown risks and uncertainties as described in our SEC filings, including, but not limited to, those related to general economic conditions, particularly in the market areas in which the Company operates, competition among depository and other financial institutions, changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements, inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments, our ability to successfully integrate acquired entities, and adverse changes in the securities markets.  Consequently, no forward-looking statement can be guaranteed.  Northfield Bancorp, Inc. does not intend to update any of the forward-looking statements after the date of this release, or conform these statements to actual events.

(Tables to follow)


 
NORTHFIELD BANCORP, INC.
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
(Dollars in thousands, except per share amounts) (unaudited)
 
  At or For the Three Months Ended   At or For the Six Months Ended
  June 30,   March 31   June 30,
  2018    2017    2018    2018    2017 
Selected Financial Ratios:                            
Performance Ratios(1)                            
Return on assets (ratio of net income to average total assets) (7) (8) 1.03 %   0.86 %   1.04 %   1.04 %   0.95 %
Return on equity (ratio of net income to average equity) (7) (8) 6.58     5.30     6.61     6.59     5.86  
Average equity to average total assets 15.61     16.26     15.79     15.70     16.28  
Interest rate spread 2.61     2.79     2.71     2.66     2.83  
Net interest margin 2.85     2.97     2.93     2.89     3.01  
Efficiency ratio(2) (8) 56.40     56.63     57.18     56.79     56.78  
Non-interest expense to average total assets 1.65     1.70     1.71     1.68     1.78  
Non-interest expense to average total interest-earning assets 1.75     1.84     1.82     1.78     1.92  
Average interest-earning assets to average interest-bearing liabilities 128.83     128.63     128.55     128.69     128.67  
Asset Quality Ratios:                  
Non-performing assets to total assets 0.17     0.19     0.16     0.17     0.19  
Non-performing loans(3) to total loans(4) 0.20     0.21     0.18     0.20     0.21  
Allowance for loan losses to non-performing loans held-for-investment 421.48     441.01     463.05     421.48     441.01  
Allowance for loan losses to originated loans held-for-investment, net(5) 1.02     1.07     1.04     1.02     1.07  
Allowance for loan losses to total loans held-for-investment, net(6) 0.83     0.84     0.83     0.83     0.84  

(1) Annualized when appropriate.
(2) The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income.
(3) Non-performing loans consist of non-accruing loans and loans 90 days or more past due and still accruing (excluding PCI loans), and are included in total loans held-for-investment, net.
(4) Includes originated loans held-for-investment, PCI loans, and acquired loans.
(5) Excludes PCI loans and acquired loans held-for-investment, and related reserve balances.
(6) Includes PCI and acquired loans held-for-investment.
(7) The three months ended June 30, 2018, March 31, 2018, and June 30, 2017, include excess tax benefits of $1.3 million, $869,000, and $593,000, respectively, related to the exercise or vesting of equity awards. The six months ended June 30, 2018 and June 30, 2017, include excess tax benefits of $2.1 million and $2.3 million, respectively, related to the exercise or vesting of equity awards. Excess tax benefits will fluctuate based on the Company's stock price and timing of employee stock option exercises and vesting of other share-based awards.
(8) The six months ended June 30, 2017, includes $1.5 million of tax-exempt income from bank owned life insurance proceeds in excess of the cash surrender value of the policies.


 
NORTHFIELD BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share amounts) (unaudited)
 
  June 30, 2018   March 31, 2018   December 31, 2017
ASSETS:          
Cash and due from banks $ 13,538     $ 16,269     $ 17,446  
Interest-bearing deposits in other financial institutions 45,195     36,305     40,393  
Total cash and cash equivalents 58,733     52,574     57,839  
Trading securities 10,167     9,822     9,597  
Debt securities available-for-sale, at estimated fair value 625,279     592,574     513,782  
Debt securities held-to-maturity, at amortized cost 9,819     9,873     9,931  
Equity securities 1,301     1,194     1,339  
Originated loans held-for-investment, net 2,547,920     2,427,755     2,425,275  
Loans acquired 650,875     696,695     692,803  
Purchased credit-impaired (PCI) loans held-for-investment 21,331     22,084     22,741  
Loans held-for-investment, net 3,220,126     3,146,534     3,140,819  
Allowance for loan losses (26,882 )   (26,172 )   (26,160 )
Net loans held-for-investment 3,193,244     3,120,362     3,114,659  
Accrued interest receivable 11,413     11,125     10,713  
Bank owned life insurance 152,298     151,386     150,604  
Federal Home Loan Bank of New York stock, at cost 27,718     24,433     25,046  
Premises and equipment, net 25,058     25,285     25,746  
Goodwill 38,411     38,411     38,411  
Other real estate owned 850     850     850  
Other assets 33,867     31,320     32,900  
Total assets $ 4,188,158     $ 4,069,209     $ 3,991,417  
           
LIABILITIES AND STOCKHOLDERS' EQUITY:          
Deposits $ 2,967,281     $ 2,905,076     $ 2,836,979  
Securities sold under agreements to repurchase         2,000  
Federal Home Loan Bank advances and other borrowings 524,335     456,272     469,549  
Advance payments by borrowers for taxes and insurance 18,009     18,206     14,798  
Accrued expenses and other liabilities 28,878     46,837     29,214  
Total liabilities 3,538,503     3,426,391     3,352,540  
Total stockholders' equity 649,655     642,818     638,877  
Total liabilities and stockholders' equity $ 4,188,158     $ 4,069,209     $ 3,991,417  
           
Total shares outstanding 49,481,589     49,126,879     48,803,885  
Tangible book value per share (1) $ 12.33     $ 12.28     $ 12.28  

(1) Tangible book value per share is calculated based on total stockholders' equity, excluding intangible assets (goodwill and core deposit intangibles), divided by total shares outstanding as of the balance sheet date. Core deposit intangibles were $1.2 million, $1.3 million, and $1.4 million at June 30, 2018, March 31, 2018, and December 31, 2017, respectively, and are included in other assets.


 
NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands, except share and per share amounts) (unaudited)
 
  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,
  2018   2017   2018   2018   2017
Interest income:                  
Loans $ 31,456     $ 29,653     $ 30,787     $ 62,243     $ 58,661  
Mortgage-backed securities 3,068     2,260     2,726     5,794     4,616  
Other securities 821     283     502     1,323     535  
Federal Home Loan Bank of New York dividends 398     325     414     812     696  
Deposits in other financial institutions 192     139     253     445     221  
Total interest income 35,935     32,660     34,682     70,617     64,729  
Interest expense:                  
Deposits 6,050     3,899     5,211     11,261     7,519  
Borrowings 2,115     1,852     1,927     4,042     3,624  
Total interest expense 8,165     5,751     7,138     15,303     11,143  
Net interest income 27,770     26,909     27,544     55,314     53,586  
Provision for loan losses 670     511     34     704     883  
Net interest income after provision for loan losses 27,100     26,398     27,510     54,610     52,703  
Non-interest income:                  
Fees and service charges for customer services 1,147     1,107     1,214     2,361     2,325  
Income on bank owned life insurance 914     1,010     954     1,868     3,468  
Gains on securities transactions, net 313     256     161     473     664  
Other 71     64     76     147     127  
Total non-interest income 2,445     2,437     2,405     4,849     6,584  
Non-interest expense:                  
Compensation and employee benefits 9,121     9,774     9,117     18,238     19,746  
Occupancy 2,950     2,696     3,096     6,046     5,653  
Furniture and equipment 252     287     256     508     592  
Data processing 1,150     1,120     1,224     2,374     2,281  
Professional fees 909     595     763     1,672     1,465  
FDIC insurance 274     258     297     571     516  
Other 2,384     1,888     2,373     4,757     3,909  
Total non-interest expense 17,040     16,618     17,126     34,166     34,162  
Income before income tax expense 12,505     12,217     12,789     25,293     25,125  
Income tax expense(1) 1,893     3,807     2,344     4,237     6,767  
Net income $ 10,612     $ 8,410     $ 10,445     $ 21,056     $ 18,358  
Net income per common share:                  
Basic $ 0.23     $ 0.19     $ 0.23     $ 0.46     $ 0.41  
Diluted $ 0.23     $ 0.18     $ 0.22     $ 0.45     $ 0.39  
Basic average shares outstanding 46,184,918     45,252,136     45,780,027     45,983,895     45,137,791  
Diluted average shares outstanding 47,109,977     46,831,362     46,999,775     47,056,299     46,879,259  
                             


 
NORTHFIELD BANCORP, INC.
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands) (unaudited)
 
  For the Three Months Ended
  June 30, 2018   March 31, 2018   June 30, 2017
  Average
Outstanding
Balance
  Interest   Average
Yield/
Rate (1)
  Average
Outstanding
Balance
  Interest   Average
Yield/
Rate (1)
  Average
Outstanding
Balance
  Interest   Average
Yield/
Rate (1)
Interest-earning assets:                                  
Loans (2) $ 3,173,787     $ 31,456     3.98 %   $ 3,132,162     $ 30,787     3.99 %   $ 3,041,774     $ 29,653     3.91 %
Mortgage-backed securities (3) 522,009     3,068     2.36     486,045     2,726     2.27     428,757     2,260     2.11  
Other securities (3) 126,823     821     2.60     91,268     502     2.23     61,202     283     1.85  
Federal Home Loan Bank of New York stock 25,487     398     6.26     24,820     414     6.76     26,600     325     4.90  
Interest-earning deposits in financial institutions 57,061     192     1.35     82,341     253     1.25     69,928     139     0.80  
Total interest-earning assets 3,905,167     35,935     3.69     3,816,636     34,682     3.69     3,628,261     32,660     3.61  
Non-interest-earning assets 238,225               243,054               282,492            
Total assets $ 4,143,392               $ 4,059,690               $ 3,910,753            
                                         
Interest-bearing liabilities:                                        
Savings, NOW, and money market accounts $ 1,655,819     $ 2,312     0.56 %   $ 1,682,346     $ 2,143     0.52 %   $ 1,731,451     $ 2,079     0.48 %
Certificates of deposit 900,437     3,738     1.67     821,860     3,068     1.51     593,492     1,820     1.23  
Total interest-bearing deposits 2,556,256     6,050     0.95     2,504,206     5,211     0.84     2,324,943     3,899     0.67  
Borrowed funds 475,067     2,115     1.79     464,750     1,927     1.68     495,656     1,852     1.50  
Total interest-bearing liabilities 3,031,323     8,165     1.08     2,968,956     7,138     0.98     2,820,599     5,751     0.82  
Non-interest bearing deposits 414,792               404,990               382,353            
Accrued expenses and other liabilities 50,589               44,608               71,853            
Total liabilities 3,496,704               3,418,554               3,274,805            
Stockholders' equity 646,688               641,136               635,948            
Total liabilities and stockholders' equity $ 4,143,392               $ 4,059,690               $ 3,910,753            
                                         
Net interest income     $ 27,770               $ 27,544               $ 26,909        
Net interest rate spread (4)         2.61 %           2.71 %           2.79 %
Net interest-earning assets (5) $ 873,844               $ 847,680               $ 807,662            
Net interest margin (6)         2.85 %           2.93 %           2.97 %
Average interest-earning assets to interest-bearing liabilities         128.83 %           128.55 %           128.63 %

(1)   Average yields and rates are annualized.
(2)   Includes non-accruing loans.
(3)   Securities available-for-sale and other securities are reported at amortized cost.
(4)   Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(5)   Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6)   Net interest margin represents net interest income divided by average total interest-earning assets.


   
  For the Six Months Ended
  June 30, 2018   June 30, 2017
  Average
Outstanding
Balance
  Interest   Average
Yield/
Rate (1)
  Average
Outstanding
Balance
  Interest   Average
Yield/
Rate (1)
Interest-earning assets:                      
Loans (2) $ 3,153,089     $ 62,243     3.98 %   $ 3,008,361     $ 58,661     3.93 %
Mortgage-backed securities (3) 504,126     5,794     2.32     440,111     4,616     2.12  
Other securities (3) 109,144     1,323     2.44     59,723     535     1.81  
Federal Home Loan Bank of New York stock 25,155     812     6.51     26,476     696     5.30  
Interest-earning deposits in financial institutions 69,631     445     1.29     60,381     221     0.74  
Total interest-earning assets 3,861,145     70,617     3.69     3,595,052     64,729     3.63  
Non-interest-earning assets 240,627                   283,165            
Total assets $ 4,101,772                   $ 3,878,217            
                               
Interest-bearing liabilities:                              
Savings, NOW, and money market accounts $ 1,669,009     $ 4,455     0.54 %   $ 1,733,794     $ 4,109     0.48 %
Certificates of deposit 861,366     6,806     1.59     563,902     3,410     1.22  
Total interest-bearing deposits 2,530,375     11,261     0.90     2,297,696     7,519     0.66  
Borrowed funds 469,937     4,042     1.73     496,301     3,624     1.47  
Total interest-bearing liabilities 3,000,312     15,303     1.03     2,793,997     11,143     0.80  
Non-interest bearing deposits 409,918                   382,689            
Accrued expenses and other liabilities 47,615                   70,237            
Total liabilities 3,457,845                   3,246,923            
Stockholders' equity 643,927                   631,294            
Total liabilities and stockholders' equity $ 4,101,772                   $ 3,878,217            
                               
Net interest income     $ 55,314               $ 53,586        
Net interest rate spread (4)         2.66 %           2.83 %
Net interest-earning assets (5) $ 860,833               $ 801,055            
Net interest margin (6)         2.89 %           3.01 %
Average interest-earning assets to interest-bearing liabilities         128.69 %           128.67 %

(1)   Average yields and rates are annualized.
(2)   Includes non-accruing loans.
(3)   Securities available-for-sale and other securities are reported at amortized cost.
(4)   Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(5)   Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6)   Net interest margin represents net interest income divided by average total interest-earning assets.

Company Contact:
William R. Jacobs
Chief Financial Officer
Tel: (732) 499-7200 ext. 2519

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