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Northfield Bancorp, Inc. Announces First Quarter 2021 Results

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NOTABLE ITEMS FOR THE QUARTER INCLUDE:

  • DILUTED EARNINGS PER SHARE INCREASED OVER 46% TO $0.38 AS COMPARED TO $0.26 FOR THE TRAILING QUARTER, AND OVER 280% COMPARED TO $0.10 FOR THE FIRST QUARTER OF 2020.

  • NET INTEREST INCOME INCREASED $3.1 MILLION, OR 8.5%, OVER THE TRAILING QUARTER, AND $10.2 MILLION, OR 34.2%, COMPARED TO THE FIRST QUARTER OF 2020.

  • NET INTEREST MARGIN INCREASED 27 BASIS POINTS TO 3.10% AS COMPARED TO 2.83% FOR THE TRAILING QUARTER, AND 53 BASIS POINTS AS COMPARED TO 2.57% FOR THE FIRST QUARTER OF 2020.

  • LOANS HELD-FOR-INVESTMENT, NET, INCREASED $109.8 MILLION, OR 11.5% ANNUALIZED.

  • DEPOSITS, EXCLUDING BROKERED, INCREASED $25.2 MILLION, OR 2.6%, ANNUALIZED.

  • THE COMPANY ADOPTED THE CURRENT EXPECTED CREDIT LOSSES (“CECL”) ACCOUNTING STANDARD AS OF JANUARY 1, 2021.

  • INCREASED QUARTERLY CASH DIVIDEND BY 18.2% TO $0.13 PER SHARE OF COMMON STOCK, PAYABLE MAY 26, 2021, TO STOCKHOLDERS OF RECORD AS OF MAY 12, 2021.

  • REPURCHASED 742,323 SHARES TOTALING APPROXIMATELY $10.1 MILLION.

WOODBRIDGE, N.J., April 28, 2021 (GLOBE NEWSWIRE) -- NORTHFIELD BANCORP, INC. (Nasdaq:NFBK), the holding company for Northfield Bank, reported diluted earnings per common share of $0.38 for quarter ended March 31, 2021, as compared to $0.26 per diluted share for the quarter ended December 31, 2020, and $0.10 per diluted share for the quarter ended March 31, 2020. Earnings for the quarter ended March 31, 2021, included a negative provision for loan losses of $2.4 million, reflecting an improvement in the forecasted economic outlook during the quarter, as compared to provisions for loan losses of $2.5 million and $8.2 million for the quarters ended December 31, 2020, and March 31, 2020, respectively, under the incurred loss methodology. The provision for loan losses for the quarter ended March 31, 2020, included incremental loss provisions of $6.2 million ($4.6 million after-tax), related to additional factors considered for economic uncertainties related to the Coronavirus Disease 2019 (“COVID-19”) pandemic. Earnings for the quarter ended March 31, 2021, also included approximately $1.9 million of accretable income related to the payoffs of purchased credit deteriorated (“PCD”) loans. Earnings for the quarter ended December 31, 2020, included $2.2 million ($1.6 million after-tax) in occupancy costs attributable to branch consolidations.

Commenting on the quarter, Steven M. Klein, the Company’s President and Chief Executive Officer noted, “Our strong financial results for the first quarter reflect our continued commitment to and execution on the fundamentals of community-based banking. With a strategic focus on prudent loan and low-cost deposit growth we have increased net interest margins, and related net interest income, while maintaining strong asset quality due to our prudent lending standards. Throughout this past year we also have been proactive, assisting our customers affected by the pandemic. These actions, among others, continue to produce positive results for our stockholders, customers, and communities.”

Mr. Klein further noted, “I am pleased to announce that the Board of Directors has declared a $0.13 per share cash dividend, an increase of $0.02, or 18.2%, per share, payable May 26, 2021, to stockholders of record on May 12, 2021.”

Results of Operations

Comparison of Operating Results for the Three Months Ended March 31, 2021 and 2020

Net income was $18.7 million and $4.6 million for the three months ended March 31, 2021 and March 31, 2020, respectively. Significant variances from the comparable prior year period are as follows: a $10.2 million increase in net interest income, a $10.6 million decrease in the provision for loan losses, a $2.5 million increase in non-interest income, a $3.9 million increase in non-interest expense, and a $5.3 million increase in income tax expense.

Net interest income for the three months ended March 31, 2021, increased $10.2 million, or 34.2%, to $40.2 million, from $29.9 million for the three months ended March 31, 2020, primarily due to a $569.6 million, or 12.2%, increase in average interest-earning assets and a 53 basis point increase in net interest margin to 3.10% from 2.57% for the three months ended March 31, 2020. The increase in average interest-earning assets was due to increases in average loans outstanding of $402.5 million, average mortgage-backed securities of $161.3 million and average interest-earning deposits in financial institutions of $63.0 million, partially offset by decreases in average other securities of $54.6 million and average Federal Home Loan Bank of New York (“FHLBNY”) stock of $2.6 million.

The increase in net interest margin was primarily due to the decrease in the cost of interest-bearing liabilities outpacing the decrease in yields on interest earning assets. Yields on interest earning assets decreased 19 basis points to 3.48% for the three months ended March 31, 2021, from 3.67% for the three months ended March 31, 2020. The cost of interest bearing liabilities decreased by 86 basis points to 0.50% for the three months ended March 31, 2021, from 1.36% for the three months ended March 31, 2020, primarily driven by lower costs of deposits. Net interest income for the three months ended March 31, 2021, included loan prepayment income of $860,000 as compared to $627,000 for the three months ended March 31, 2020. The Company accreted interest income related to PCD loans of $2.4 million for the three months ended March 31, 2021, as compared to $803,000 for three months ended March 31, 2020. The increase in accretable interest income was related to payoffs of PCD loans. Also contributing to the increase in net interest income for the current quarter were fees related to loans originated under the Paycheck Protection Program ("PPP") of approximately $1.3 million.

The provision for loan losses decreased by $10.6 million to a negative provision of $2.4 million for the three months ended March 31, 2021, compared to $8.2 million for the three months ended March 31, 2020. The higher provision for loan losses in the first quarter of 2020 was primarily due to increases in the qualitative factors used in determining the adequacy of the allowance for loan losses related to unemployment, loan risk rating changes and increased risks related to loans on forbearance, resulting from economic uncertainty attributable to the beginning of the COVID-19 pandemic, under the incurred loss methodology. On January 1, 2021, the Company adopted ASU 2016-13, Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”). CECL requires the measurement of all expected credit losses over the life of financial instruments held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. In connection with the adoption of CECL, the Company recognized a cumulative effect adjustment that reduced stockholders’ equity by $3.1 million, net of tax. At adoption, the Company increased its allowance for credit losses by $11.1 million, comprised of $10.3 million and $737,000, respectively, for loans and unfunded commitments, including $6.8 million related to PCD loans. For PCD loans, the allowance for credit losses recorded is recognized through a gross-up that increases the amortized cost basis of loans with a corresponding increase to the allowance for credit losses, and therefore results in no impact to shareholders' equity. For the for three months ended March 31, 2021, the Company recorded a negative provision of $2.4 million, driven primarily by an improvement in economic forecasts for the current quarter. Net charge-offs were $2.4 million for the three months ended March 31, 2021, primarily related to PCD loans, as compared to $90,000 for the three months ended March 31, 2020.

Non-interest income increased $2.5 million to $2.6 million for the three months ended March 31, 2021, from $108,000 for the three months ended March 31, 2020, primarily due to an increase of $2.4 million in gains on trading securities, net. For the three months ended March 31, 2021, gains on trading securities were $364,000 as compared to losses of $2.0 million for the three months ended March 31, 2020. 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 increased $3.9 million, or 24.7%, to $19.6 million for the three months ended March 31, 2021, compared to $15.7 million for the three months ended March 31, 2020. This is due primarily to a $3.2 million increase in employee compensation and benefits, $2.4 million of which is attributable to the increase in the Company's deferred compensation plan expense which as discussed above has no effect on net income, as well as increases in salary and medical benefit expenses associated with increased personnel from our acquisition of VSB Bancorp, Inc. (“Victory”) on July 1, 2020. Additionally occupancy expense increased by $641,000, primarily attributable to higher snow removal costs.

The Company recorded income tax expense of $6.9 million for the three months ended March 31, 2021, compared to $1.6 million for the three months ended March 31, 2020. The effective tax rate for the three months ended March 31, 2021, was 27.1% compared to 26.3% for the three months ended March 31, 2020. The higher effective tax rate is primarily due to higher taxable income. On April 19, 2021, the Governor of New York signed into law an increase in the tax rate from 6.5% to 7.25%. This would have increased our tax expense by approximately $45,000 if enacted in the first quarter of 2021.

Comparison of Operating Results for the Three Months Ended March 31, 2021 and December 31, 2020

Net income was $18.7 million and $13.1 million for the three months ended March 31, 2021, and December 31, 2020, respectively. Significant variances from the prior quarter are as follows: a $3.1 million increase in net interest income, a $4.8 million decrease in the provision for loan losses, a $1.5 million decrease in non-interest income, a $1.6 million decrease in non-interest expense, and a $2.5 million increase in income tax expense.

Net interest income for the three months ended March 31, 2021, increased $3.1 million, or 8.5%, primarily due to a 27 basis point increase in net interest margin to 3.10% from 2.83% for the three months ended December 31, 2020 and a $48.2 million, or 0.9%, increase in average interest-earning assets. The increase in average interest-earning assets was primarily due to increases in average loans outstanding of $166.6 million, partially offset by decreases in average mortgage-backed securities of $23.5 million, average interest-earning deposits in financial institutions of $78.8 million, and average other securities of $15.4 million. The increase in net interest margin was primarily due to higher yields on interest-earning assets which increased by 19 basis points to 3.48% for the three months ended March 31, 2021, from 3.29% for the three months ended December 31, 2020, and a decrease in the cost of interest-bearing liabilities, which decreased 10 basis points to 0.50% for the three months ended March 31, 2021, from 0.60% for the three months ended December 31, 2020. Net interest income for the three months ended March 31, 2021, included loan prepayment income of $860,000 as compared to $1.1 million for the three months ended December 31, 2020. The Company accreted interest income related to PCD loans of $2.4 million for the three months ended March 31, 2021, as compared to $689,000 for three months ended December 31, 2020. The increase in accretable interest income was related to payoffs of PCD loans. Net interest income for the three months ended March 31, 2021, and December 31, 2020, included PPP fee income of approximately $1.3 million and $1.1 million, respectively.

The provision for loan losses decreased by $4.8 million to a negative provision of $2.4 million for the three months ended March 31, 2021, from a provision of $2.5 million for the three months ended December 31, 2020. The decrease was primarily due to an improvement in economic forecasts for the quarter. Net charge-offs were $2.4 million for the three months ended March 31, 2021, primarily related to PCD loans, as compared to net charge-offs of $3.6 million for the three months ended December 31, 2020. Net charge-offs for the three months ended December 31, 2020, were primarily related to commercial real estate and multifamily loans, that were modified in the form of interest and/or principal payment deferrals due to COVID-19 related hardships and were transferred to held-for-sale.

Non-interest income decreased by $1.5 million to $2.6 million for the three months ended March 31, 2021, from $4.1 million for the three months ended December 31, 2020. The decrease was primarily due to decreases of $840,000 in gains on trading securities, net, $291,000 in income on bank owned life insurance, and $236,000 in other income. For the three months ended March 31, 2021, gains on trading securities, net, included gains of $364,000 related to the Company’s trading portfolio, compared to gains of $1.2 million for the three months ended December 31, 2020. As previously noted, 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, and 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.

Non-interest expense decreased $1.6 million, or 7.7%, to $19.6 million for the three months ended March 31, 2021, from $21.2 million for the three months ended December 31, 2020, primarily due to a $1.8 million decrease in occupancy, related to costs associated with branch consolidations in the quarter ended December 31, 2020, and a $361,000 decrease in data processing costs. Partially offsetting the decreases was an increase of $134,000 in compensation and employee benefits, which included an $840,000 decrease in the Company's deferred compensation plan expense which as previously discussed has no effect on net income, offset by higher salary expense and medical benefits, an increase of $135,000 in professional fees, and an increase of $248,000 in other expenses.

The Company recorded income tax expense of $6.9 million for the three months ended March 31, 2021, compared to $4.4 million for the three months ended December 31, 2020. The effective tax rate for the three months ended March 31, 2021 was 27.1%, compared to 25.3% for the three months ended and December 31, 2020. The higher effective tax rate is primarily due to higher taxable income.

Financial Condition

Total assets increased $62.4 million, or 1.1%, to $5.58 billion at March 31, 2021, from $5.51 billion at December 31, 2020. The increase was primarily due to increases in cash and cash equivalents of $40.0 million, or 45.7%, and total loans of $89.9 million, or 2.3%. Partially offsetting these increases was a decrease in available-for sale debt securities of $57.6 million, or 4.6%, a decrease in other assets of $3.3 million, or 12.9%, and an increase in the allowance for credit losses of $5.6 million, or 14.9%. The Company adopted the CECL accounting standard effective January 1, 2021, and recorded an increase in the allowance for credit losses of $11.1 million, comprised of $10.3 million and $737,000, respectively, for loans and unfunded commitments, including $6.8 million related to PCD loans. For PCD loans, the allowance for credit losses recorded is recognized through a gross-up that increases the amortized cost basis of loans with a corresponding increase to the allowance for credit losses, and therefore results in no impact to shareholders' equity. The remaining increase to the allowance for credit losses of $4.3 million was offset in stockholders' equity and deferred tax assets.

As of March 31, 2021, we estimate that our non-owner occupied commercial real estate concentration (as defined by regulatory guidance) to total risk-based capital was approximately 488.0%. 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.

Cash and cash equivalents increased by $40.0 million, or 45.7%, to $127.6 million at March 31, 2021, from $87.5 million at December 31, 2020. Balances fluctuate based on the timing of receipt of security and loan repayments and the redeployment of cash into higher-yielding assets such as loans and securities, or the funding of deposit outflows or borrowing maturities.

Loans held-for-investment, net, increased $109.8 million to $3.93 billion at March 31, 2021, from $3.82 billion at December 31, 2020, primarily due to an increase in multifamily real estate loans of $58.4 million, or 2.3%, to $2.57 billion at March 31, 2021, from $2.51 billion at December 31, 2020, commercial and industrial loans of $45.0 million, or 23.1%, to $239.3 million at March 31, 2021, from $194.4 million at December 31, 2020, and commercial real estate loans of $16.6 million, or 2.3% to $733.6 million at March 31, 2021, from $717.0 million at December 31, 2020.

The increase in commercial and industrial loans is primarily due to loans originated under the PPP as authorized by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The PPP loans are administered by the Small Business Administration, which provides 100% federally guaranteed loans for small businesses to cover payroll, utilities, rent and interest. These small business loans may be forgiven if borrowers maintain their payrolls and satisfy certain other conditions for a period of time during the COVID-19 pandemic. The Company began accepting and funding loans under this program in April 2020. There were 1,756 PPP loans totaling $167.9 million at March 31, 2021, compared to 1,275 loans totaling $126.5 million at December 31, 2020. During the first quarter of 2021, the Company originated, and the SBA approved, funding for $68.2 million PPP loans. PPP provides for lender processing fees that range from 1 to 5% of the final disbursement made to individual borrowers. As of March 31, 2021, we have received loan processing fees of $8.8 million, of which $3.1 million has been recognized in earnings, including $1.2 million recognized in the quarter ended March 31, 2021. The remaining unearned fees will be recognized in income over the remaining term of the loans.

The following tables detail multifamily real estate originations for the three months ended March 31, 2021 and 2020 (dollars in thousands):

For the Three Months Ended March 31, 2021

Multifamily
Originations

Weighted Average
Interest Rate

Weighted Average
LTV Ratio

Weighted Average Months to Next Rate
Change or Maturity for Fixed Rate
Loans

(F)ixed or
(V)ariable

Amortization Term

$

161,087

3.11

%

57

%

75

V

10 to 30 Years

For the Three Months Ended March 31, 2020

Multifamily
Originations

Weighted Average
Interest Rate

Weighted Average
LTV Ratio

Weighted Average Months to Next Rate
Change or Maturity for Fixed Rate
Loans

(F)ixed or
(V)ariable

Amortization Term

$

181,511

3.67

%

60

%

94

V

30 Years

1,500

4.40

%

47

%

180

F

15 Years

$

183,011

3.68

%

60

%

There were no loans held-for-sale at March 31, 2021, compared to $19.9 million at December 31, 2020. At December 31, 2020, loans held-for-sale were comprised of commercial real estate and multifamily loans, primarily accommodation loans that were modified in the form of interest and/or principal payment deferrals due to COVID-19 related hardships, and had not returned to contractual payments after 180 days of relief. The sale of these loans was completed in March 2021.

PCD loans totaled $18.0 million at March 31, 2021, and $18.5 million at December 31, 2020. Upon adoption of the CECL accounting standard on January 1, 2021, the allowance for credit losses related to PCD loans was recorded through a gross-up that increased the amortized cost-basis of PCD loans by $6.8 million with a corresponding increase to the allowance for credit losses. The decrease in the PCD loan balance at March 31, 2021, is due to 10 PCD loan sold during the quarter. The majority of the remaining PCD loan balance consists of loans acquired as part of a Federal Deposit Insurance Corporation-assisted transaction. The Company accreted interest income of $2.4 million attributable to PCD loans for the three months ended March 31, 2021, as compared to $803,000 for the three months ended March 31, 2020. The increase in income accreted for the quarter was related to the payoff of PCD loans. PCD loans had an allowance for credit losses of approximately $5.3 million at March 31, 2021.

The Company’s available-for-sale debt securities portfolio decreased by $57.6 million, or 4.6%, to $1.21 billion at March 31, 2021, from $1.26 billion at December 31, 2020. The decrease was primarily attributable to paydowns, maturities, calls, and sales. At March 31, 2021, $1.08 billion 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 $2.7 million in U.S. Government agency securities, $124.4 million in corporate bonds, all of which were considered investment grade at March 31, 2021, $103,000 in municipal bonds, and $747,000 in other debt securities.

Total liabilities increased $61.8 million, or 1.3%, to $4.82 billion at March 31, 2021, from $4.76 billion at December 31, 2020. The increase was primarily attributable to an increase in deposits of $59.2 million and an increase in advance payments by borrowers for taxes and insurance of $4.4 million, partially offset by a decrease in accrued expenses and other liabilities of $1.4 million.

Deposits increased $59.2 million, or 1.5%, to $4.14 billion at March 31, 2021, as compared to $4.08 billion at December 31, 2020. The increase was attributable to increases of $88.8 million in transaction accounts, $9.7 million in savings accounts, and $108.6 million in certificates of deposit, partially offset by a decrease of $147.8 million in money market accounts.

Deposit account balances are summarized as follows (dollars in thousands):

March 31, 2021

December 31, 2020

Transaction:

Non-interest bearing checking

$

771,432

$

695,831

Negotiable orders of withdrawal and interest-bearing checking

918,367

905,208

Total transaction

1,689,799

1,601,039

Savings and Money market:

Savings

1,150,383

1,140,717

Money market

665,344

713,168

Brokered money market

100,000

Total savings

1,815,727

1,953,885

Certificates of deposit:

Brokered deposits

181,827

47,827

$250,000 and under

357,803

374,344

Over $250,000

90,560

99,456

Total certificates of deposit

630,190

521,627

Total deposits

$

4,135,716

$

4,076,551

Included in the table above are business and municipal deposit account balances as follows (dollars in thousands):

March 31, 2021

December 31, 2020

Business customers

$

1,023,970

$

977,778

Municipal customers

$

514,653

$

501,040

Borrowings and securities sold under agreements to repurchase increased to $592.2 million at March 31, 2021, from $591.8 million at December 31, 2020. 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 March 31, 2021 (dollars in thousands):

Year

Amount

Weighted Average Rate

2021

$170,000

1.98%

2022

120,000

2.29%

2023

87,500

2.89%

2024

50,000

2.47%

2025

112,500

1.48%

Thereafter

45,000

1.45%

$585,000

2.08%

Total stockholders’ equity increased by $584,000 to $754.6 million at March 31, 2021, from $754.0 million at December 31, 2020. The increase was attributable to net income of $18.7 million for the three months ended March 31, 2021, and a $1.5 million increase in equity award activity, partially offset by an $893,000 decrease in accumulated other comprehensive income associated with unrealized gains on our debt securities available-for-sale portfolio, $5.5 million in dividend payments, and $10.1 million in stock repurchases. The Company repurchased 742,323 shares of its common stock outstanding at an average price of $13.64 for a total of $10.1 million during the first quarter of 2021, pursuant to the approved stock repurchase plans. In connection with the adoption of CECL, effective January 1, 2021, the Company recognized a cumulative effect adjustment that reduced stockholders’ equity by $3.1 million, net of tax, to establish initial allowances against credit losses on loans and off-balance sheet credit exposures.

The Company continues to maintain a strong liquidity and capital position, despite the economic uncertainties presented by the COVID-19 pandemic. The Company's most liquid assets are cash and cash equivalents, corporate bonds, and unpledged mortgage-related securities issued or guaranteed by the U.S. Government, Fannie Mae, or Freddie Mac, that we can either borrow against or sell. We also have the ability to surrender bank-owned life insurance contracts. The surrender of these contracts would subject the Company to income taxes and penalties for increases in the cash surrender values over the original premium payments. We also have the ability to obtain additional funding from the FHLB and Federal Reserve Bank utilizing unencumbered and unpledged securities and multifamily loans. The Company expects to have sufficient funds available to meet current commitments in the normal course of business.

The Company had the following primary sources of liquidity at March 31, 2021 (dollars in thousands):

Cash and cash equivalents(1)

$

111,650

Corporate bonds

$

112,800

Multifamily loans(2)

$

1,337,379

Mortgage-backed securities (issued or guaranteed by the U.S. Government, Fannie Mae, or Freddie Mac)(2)

$

493,733

(1) Excludes $15,920 of cash at Northfield Bank.
(2) Represents remaining borrowing potential.

The Company and the Bank elected to opt into the Community Bank Leverage Ratio (“CBLR”) framework, effective for the first quarter of 2020. The CBLR replaces the risk-based and leverage capital requirements in the generally applicable capital rules. At March 31, 2021, the Company and the Bank's estimated CBLR ratios were 12.68% and 10.92% respectively, which exceeded the minimum requirement to be considered well-capitalized of 8%. As a result of the COVID-19 pandemic the Federal Regulators have lowered the CBLR ratio to 8%, which will phase back to the original legislation of 9% by 2022.

Asset Quality

The following table details total non-accrual loans (excluding PCD), non-performing loans, non-performing assets, troubled debt restructurings on which interest is accruing, and accruing loans 30 to 89 days delinquent at March 31, 2021, and December 31, 2020 (dollars in thousands):

March 31, 2021

December 31, 2020

Non-accrual loans:

Held-for-investment

Real estate loans:

Commercial

$

4,961

$

6,229

One-to-four family residential

805

906

Construction and land

1,150

Multifamily

1,145

1,153

Home equity and lines of credit

187

191

Commercial and industrial

198

37

Total non-accrual loans

8,446

8,516

Loans delinquent 90 days or more and still accruing:

Held-for-investment

Real estate loans:

Commercial

219

500

One-to-four family residential

172

174

Multifamily

516

Commercial and industrial

738

436

Other

3

3

Total loans held-for-investment delinquent 90 days or more and still accruing

1,648

1,113

Non-performing loans held-for-sale

19,895

Total non-performing loans

10,094

29,524

Other real estate owned

100

Total non-performing assets

$

10,194

$

29,524

Non-performing loans to total loans

0.26

%

0.77

%

Non-performing assets to total assets

0.18

%

0.54

%

Loans subject to restructuring agreements and still accruing

$

7,326

$

7,697

Accruing loans 30 to 89 days delinquent

$

14,148

$

13,982

Other Real Estate Owned

Other real estate owned is comprised of one property acquired during the three months ended March 31, 2021, as a result of foreclosure. The property is located in New Jersey and had a carrying value of approximately $100,000 and is included in other assets on the consolidated balance sheet at March 31, 2021.

Accruing Loans 30 to 89 Days Delinquent

Loans 30 to 89 days delinquent and on accrual status totaled $14.1 million and $14.0 million at March 31, 2021 and December 31, 2020, respectively. The following table sets forth delinquencies for accruing loans by type and by amount at March 31, 2021 and December 31, 2020 (dollars in thousands):

March 31, 2021

December 31, 2020

Held-for-investment

Real estate loans:

Commercial

$

4,457

$

8,792

One-to-four family residential

4,023

1,152

Multifamily

2,419

1,893

Construction and land

390

994

Home equity and lines of credit

372

380

Commercial and industrial loans

2,480

760

Other loans

7

11

Total delinquent accruing loans held-for-investment

$

14,148

$

13,982

PCD Loans (Held-for-Investment)

Under the new CECL standard, the Company will continue to account for PCD loans at estimated fair value using discounted expected future cash flows deemed to be collectible on the date acquired. Based on its detailed review of PCD loans and experience in loan workouts, management believes it has a reasonable expectation about the amount and timing of future cash flows and accordingly has classified PCD loans ($18.0 million at March 31, 2021 and $18.5 million at December 31, 2020) as accruing, even though they may be contractually past due. At March 31, 2021, 2.9% of PCD loans were past due 30 to 89 days, and 19.7% were past due 90 days or more, as compared to 9.6% and 35.2%, respectively, at December 31, 2020.

COVID-19 Exposure

Management continues to evaluate the Company's exposure to increased loan losses related to the COVID-19 pandemic, in particular the commercial real estate and multifamily loan portfolios. During the second quarter of 2020, the Company implemented a customer relief program to assist borrowers that may be experiencing financial hardship due to COVID-19 related challenges. The relief program grants principal and/or interest payment deferrals typically for a period of 90 days, which management may choose to extend for additional 90 days periods. At the peak of forbearance, June 2020, the Company had 286 loans approved for payment deferral representing $360.2 million, or approximately 10% of the Company's loan portfolio. As of March 31, 2021, the Company had approximately $28.8 million, or 24 outstanding loans, (excluding PCD loans) remaining in deferral, representing approximately 0.7% of the Company’s outstanding loan portfolio (excluding PCD loans) as of that date. Loans currently in deferment status (“COVID-19 Modified Loans”) will continue to accrue interest during the deferment period unless otherwise classified as nonperforming. COVID-19 Modified Loans are required to make escrow payments for real estate taxes and insurance, if applicable. The COVID-19 Modified Loan agreements also require loans to be brought back to their fully contractual terms within 12 to 18 months and include covenants that prohibit distributions, bonuses, or payments of management fees to related entities until all deferred payments are made. Consistent with industry regulatory guidance, borrowers that were otherwise current on loan payments that were granted COVID-19 related financial hardship payment deferrals will continue to be reported as current loans throughout the agreed upon deferral period. Borrowers, which were delinquent in their payments to the Bank, prior to requesting a COVID-19 related financial hardship payment deferral are reviewed on a case by case basis for TDR classification and non-performing loan status.

The following table sets forth the property types collateralizing our loans held-for-investment (excluding PCD) in forbearance as of March 31, 2021 (dollars in thousands):

Loan Portfolio by Property Type at March 31, 2021

Loans in Forbearance for COVID Relief as of March 31, 2021

Number
of Loans

Amount

Average
Loan Size

Weighted
Average
LTV Ratio

% of
Total
Loans

Number of
Loans
(2)

Amount

Average
Loan Size

Weighted
Average
LTV Ratio

% of Portfolio
by Property
Type

Commercial Real Estate and Multifamily

Multifamily(1)

1,122

$

2,571,409

$

2,292

53

%

65.8

%

7

$

17,988

$

2,570

46

%

0.70

%

Mixed use (majority of space is non-residential)

227

151,604

668

46

%

3.9

%

4

7,550

1,888

46

%

4.98

%

Retail

88

147,484

1,676

47

%

3.8

%

1

607

607

55

%

0.41

%

Office buildings

111

107,263

966

46

%

2.7

%

%

%

Accommodations

9

52,277

5,809

37

%

1.3

%

1

155

16

%

0.30

%

Nursing Home

5

27,608

5,522

58

%

0.7

%

%

%

Medical Office Buildings

24

26,765

1,115

64

%

0.7

%

%

%

Industrial and Manufacturing (Office and Plant)

23

18,608

809

44

%

0.5

%

%

%

Warehousing

30

23,907

797

46

%

0.6

%

%

%

Restaurant

22

13,045

593

51

%

0.3

%

%

%

Religious

16

10,716

670

39

%

0.3

%

%

%

Bank Branch

7

5,516

788

44

%

0.1

%

%

%

Schools/Child Day care

6

5,604

934

36

%

0.1

%

%

%

Automobile

18

6,482

360

52

%

0.2

%

%

%

Funeral Home

2

1,771

885

63

%

%

%

%

Leisure

4

4,011

1,003

47

%

0.1

%

1

79

79

7

%

1.97

%

Car Wash

1

509

509

19

%

%

%

%

Other

138

130,942

949

59

%

3.3

%

%

%

Total commercial real estate and multifamily

1,853

3,305,521

1,784

52

%

84.4

%

14

26,379

1,884

46

%

0.80

%

One-to-four family residential

648

202,948

313

35

%

5.2

%

5

2,300

460

39

%

1.13

%

Home equity and lines of credit

1,741

93,119

53

47

%

2.4

%

1

32

32

67

%

0.03

%

Construction and land

43

77,205

1,795

38

%

2.0

%

%

%

Commercial and industrial loans

2,544

234,518

92

NM

6.0

%

4

129

32

NM

0.06

%

Other

125

1,659

13

NM

%

%

%

Total loans (excluding PCD)

6,954

$

3,914,970

563

100.0

%

24

$

28,840

1,202

0.74

%

(1) Property type is apartment units equal or greater than five units.

Of the loans currently in deferral as of March 31, 2021, seven loans totaling $11.8 million are in their first deferral period and 17 loans totaling $17.0 million are repeat deferrals. As of April 26, 2021, one multifamily loan in the table above totaling $2.4 million returned to contractual payments and a further six loans totaling $2.1 million were granted additional relief, the majority being repeat deferrals.

About Northfield Bank

Northfield Bank, founded in 1887, operates 38 full-service banking 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, the effects of the COVID-19 pandemic, including the effects of the steps taken to address the pandemic and their impact on the Company’s market and employees, 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, including Victory, 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 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

March 31,

December 31,

2021

2020

2020

Selected Financial Ratios:

Performance Ratios (1)

Return on assets (ratio of net income to average total assets) (5)

1.36

%

0.37

%

0.94

%

Return on equity (ratio of net income to average equity) (5) (6) (8) (9)

10.03

2.60

6.83

Average equity to average total assets

13.57

14.14

13.75

Interest rate spread

2.98

2.31

2.69

Net interest margin

3.10

2.57

2.83

Efficiency ratio (2) (5)

45.70

52.20

51.50

Non-interest expense to average total assets

1.43

1.27

1.52

Non-interest expense to average total interest-earning assets

1.51

1.35

1.62

Average interest-earning assets to average interest-bearing liabilities

132.26

123.41

131.32

Asset Quality Ratios:

Non-performing assets to total assets

0.18

0.19

0.54

Non-performing loans (3) to total loans (4)

0.26

0.27

0.77

Allowance for credit losses to non-performing loans (6)

427.95

390.37

390.56

Allowance for credit losses to total loans held-for-investment, net (4) (6) (7) (8)

1.10

1.05

0.98

(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 PCD loans), and are included in total loans held-for-investment, net, and total loans held-for-sale.
(4) Includes originated loans held-for-investment, PCD loans, acquired loans, and loans held-for-sale.
(5) The three months ended March 31, 2020, included merger-related expenses of $179,000.
(6) The three months ended March 31, 2020, included an allowance for loan losses of $6.2 million ($4.6 million after-tax) related to additional factors considered for COVID-19.
(7) Excluding PPP loans of $167.9 million, which are fully government guaranteed and do not carry any provision for losses, the allowance for loan losses to total loans held for investment, net, totaled 1.15% and 1.00%, respectively, at December 31, 2020. There were no PPP loans at March 31, 2020.
(8) The Company adopted the CECL accounting standard effective January 1, 2021, and recorded a $10.3 million increase to its allowance for loan losses, including reserves of $6.8 million related to PCD loans. Ratios as of December 31, 2020 and March 31, 2020 do not reflect the adoption of CECL.
(9) In connection with the adoption of CECL, the Company recognized a cumulative effect adjustment that reduced stockholders’ equity by $3.1 million, net of tax.

NORTHFIELD BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share amounts) (unaudited)

March 31, 2021

December 31, 2020

ASSETS:

Cash and due from banks

$

15,920

$

16,115

Interest-bearing deposits in other financial institutions

111,650

71,429

Total cash and cash equivalents

127,570

87,544

Trading securities

12,142

12,291

Debt securities available-for-sale, at estimated fair value

1,207,238

1,264,805

Debt securities held-to-maturity, at amortized cost

6,913

7,234

Equity securities

473

253

Loans held-for-sale

19,895

Loans held-for-investment, net

3,933,015

3,823,238

Allowance for credit losses

(43,197

)

(37,607

)

Net loans held-for-investment

3,889,818

3,785,631

Accrued interest receivable

14,753

14,690

Bank-owned life insurance

162,771

161,924

Federal Home Loan Bank ("FHLB") of New York stock, at cost

28,641

28,641

Operating lease right-of-use assets

35,662

36,741

Premises and equipment, net

27,509

28,188

Goodwill

41,320

41,320

Other assets

22,114

25,387

Total assets

$

5,576,924

$

5,514,544

LIABILITIES AND STOCKHOLDERS’ EQUITY:

LIABILITIES:

Deposits

$

4,135,716

$

4,076,551

Securities sold under agreements to repurchase

75,000

75,000

FHLB advances and other borrowings

517,170

516,789

Lease liabilities

42,067

42,734

Advance payments by borrowers for taxes and insurance

24,027

19,677

Accrued expenses and other liabilities

28,379

29,812

Total liabilities

4,822,359

4,760,563

STOCKHOLDERS’ EQUITY:

Total stockholders’ equity

754,565

753,981

Total liabilities and stockholders’ equity

$

5,576,924

$

5,514,544

Total shares outstanding

51,638,582

52,209,897

Tangible book value per share (1)

$

13.80

$

13.64

(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 $590,000 and $640,000 at March 31, 2021 and December 31, 2020, 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

March 31,

December 31,

2021

2020

2020

Interest income:

Loans

$

41,277

$

35,337

$

38,865

Mortgage-backed securities

2,959

5,622

3,224

Other securities

424

1,024

529

FHLB of New York dividends

370

577

382

Deposits in other financial institutions

37

172

45

Total interest income

45,067

42,732

43,045

Interest expense:

Deposits

1,870

9,279

2,835

Borrowings

3,021

3,520

3,173

Total interest expense

4,891

12,799

6,008

Net interest income

40,176

29,933

37,037

(Credit)/provision for loan losses

(2,374

)

8,183

2,473

Net interest income after provision for loan losses

42,550

21,750

34,564

Non-interest income:

Fees and service charges for customer services

1,197

1,120

1,172

Income on bank-owned life insurance

848

876

1,139

Gains (losses) on available-for-sale debt securities, net

97

(13

)

222

Gains (losses) on trading securities, net

364

(1,992

)

1,204

Other

130

117

366

Total non-interest income

2,636

108

4,103

Non-interest expense:

Compensation and employee benefits

10,532

7,289

10,398

Occupancy

3,701

3,060

5,534

Furniture and equipment

437

333

412

Data processing

1,632

1,460

1,993

Professional fees

906

1,109

771

Advertising

465

818

503

Federal Deposit Insurance Corporation insurance

375

309

Other

1,515

1,613

1,267

Total non-interest expense

19,563

15,682

21,187

Income before income tax expense

25,623

6,176

17,480

Income tax expense

6,946

1,625

4,418

Net income

$

18,677

$

4,551

$

13,062

Net income per common share:

Basic

$

0.38

$

0.10

$

0.26

Diluted

$

0.38

$

0.10

$

0.26

Basic average shares outstanding

49,528,419

46,791,768

50,514,632

Diluted average shares outstanding

49,633,644

46,983,466

50,534,643

NORTHFIELD BANCORP, INC.
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands) (unaudited)

For the Three Months Ended

March 31, 2021

December 31, 2020

March 31, 2020

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)

$

3,873,884

$

41,277

4.32

%

$

3,707,263

$

38,865

4.17

%

$

3,471,367

$

35,337

4.09

%

Mortgage-backed securities (3)

1,116,281

2,959

1.08

1,139,755

3,224

1.13

955,024

5,622

2.37

Other securities (3)

101,523

424

1.69

116,919

529

1.80

156,074

1,024

2.64

Federal Home Loan Bank of New York stock

28,640

370

5.24

29,472

382

5.16

31,263

577

7.42

Interest-earning deposits in financial institutions

133,208

37

0.11

211,970

45

0.08

70,225

172

0.99

Total interest-earning assets

5,253,536

45,067

3.48

5,205,379

43,045

3.29

4,683,953

42,732

3.67

Non-interest-earning assets

310,681

326,924

289,925

Total assets

$

5,564,217

$

5,532,303

$

4,973,878

Interest-bearing liabilities:

Savings, NOW, and money market accounts

$

2,768,816

$

932

0.14

%

$

2,734,973

$

1,251

0.18

%

$

2,002,066

$

4,073

0.82

%

Certificates of deposit

611,267

938

0.62

618,785

1,584

1.02

1,114,043

5,206

1.88

Total interest-bearing deposits

3,380,083

1,870

0.22

3,353,758

2,835

0.34

3,116,109

9,279

1.20

Borrowed funds

591,993

3,021

2.07

610,182

3,173

2.07

679,476

3,520

2.08

Total interest-bearing liabilities

3,972,076

4,891

0.50

3,963,940

6,008

0.60

3,795,585

12,799

1.36

Non-interest bearing deposits

739,064

713,478

382,044

Accrued expenses and other liabilities

98,261

94,373

93,129

Total liabilities

4,809,401

4,771,791

4,270,758

Stockholders' equity

754,816

760,512

703,120

Total liabilities and stockholders' equity

$

5,564,217

$

5,532,303

$

4,973,878

Net interest income

$

40,176

$

37,037

$

29,933

Net interest rate spread (4)

2.98

%

2.69

%

2.31

%

Net interest-earning assets (5)

$

1,281,460

$

1,241,439

$

888,368

Net interest margin (6)

3.10

%

2.83

%

2.57

%

Average interest-earning assets to interest-bearing liabilities

132.26

%

131.32

%

123.41

%

(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