U.S. Markets closed

Northfield Bancorp, Inc. Announces Fourth Quarter and Year End 2018 Results

NOTABLE ITEMS INCLUDE:

FOURTH QUARTER 2018

  • DILUTED EARNINGS PER COMMON SHARE INCREASED 10.5% TO $0.21, COMPARED TO $0.19 FOR THE PRIOR QUARTER, AND A LOSS OF $0.04 PER SHARE, FOR THE FOURTH QUARTER OF 2017
  • ORIGINATED LOANS INCREASED $81.1 MILLION, OR 12.5% ANNUALIZED
  • DEPOSITS, EXCLUDING BROKERED, INCREASED $69.8 MILLION, OR 9.5% ANNUALIZED
  • NET INTEREST MARGIN DECREASED THREE BASIS POINTS TO 2.72%,  COMPARED TO 2.75% FOR THE PRIOR QUARTER, AND 24 BASIS POINTS COMPARED TO 2.96% FOR THE FOURTH QUARTER OF 2017
  • ASSET QUALITY REMAINS STRONG WITH NON-PERFORMING LOANS TO TOTAL LOANS AT 0.28% AND NON-PERFORMING ASSETS TO TOTAL ASSETS AT 0.21%
  • CASH DIVIDEND OF $0.10 PER SHARE OF COMMON STOCK DECLARED PAYABLE FEBRUARY 27, 2019, TO STOCKHOLDERS OF RECORD AS OF FEBRUARY 13, 2019

FULL YEAR 2018

  • DILUTED EARNINGS PER COMMON SHARE OF $0.85, COMPARED TO $0.53 IN 2017
  • ORIGINATED LOANS INCREASED $253.6 MILLION, OR 10.5%
  • DEPOSITS, EXCLUDING BROKERED, INCREASED $324.8 MILLION, OR 12.1%

WOODBRIDGE, N.J., Jan. 30, 2019 (GLOBE NEWSWIRE) -- NORTHFIELD BANCORP, INC. (the “Company”) (NFBK), the holding company for Northfield Bank, reported diluted earnings per common share of $0.21 and $0.85 for the quarter and year ended December 31, 2018, compared with a loss per common share of $0.04 for the quarter ended December 31, 2017, and diluted earnings per common share of $0.53 for the year ended December 31, 2017. Earnings for the quarter and year ended December 31, 2018, benefited from the effects of federal tax reform (the "Tax Reform Act") enacted in December 2017, which reduced the federal corporate tax rate to 21% from 35% effective January 1, 2018. Earnings for the quarter and year ended December 31, 2018, also benefited from excess tax benefits of $514,000, or $0.01 per diluted share, and $2.7 million, or $0.06 per diluted share, respectively, related to the exercise or vesting of equity awards. Earnings for the quarter and year ended December 31, 2017, include a tax charge of $10.5 million, or $0.23 per diluted share, related to the Tax Reform Act, which as a result of the lowering of the federal corporate tax rate, resulted in the Company reducing its net deferred tax assets by $10.5 million, with a corresponding charge to income tax expense in the fourth quarter of 2017. In addition, earnings for the year ended December 31, 2017, benefited from excess tax benefits of $2.3 million, or $0.05 per diluted share, related to the exercise or vesting of equity awards, and $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 fourth quarter and annual results, Steven M. Klein, the Company’s President and Chief Executive Officer noted, “Earnings per share for the quarter increased by 10.5% as compared to the prior quarter, and 60.4% for the year. Our positive financial results for the fourth quarter reflect our continued focus on building franchise value through loan and deposit generation. Originated loans grew in the fourth quarter by $81 million, or 12.5%, on an annualized basis, supported by core deposit growth of $94 million, or 13.5%, on an annualized basis, despite strong competition in our marketplace.”

Mr. Klein further noted, “I’m pleased to announce that the Board of Directors has declared a cash dividend of $0.10 per common share payable on February 27, 2019, to stockholders of record on February 13, 2019.”

Results of Operations

Comparison of Operating Results for the Years Ended December 31, 2018 and 2017

Net income was $40.1 million and $24.8 million for the years ended December 31, 2018 and 2017, respectively. Significant variances from the prior year are as follows: a $2.3 million increase in net interest income, a $1.2 million increase in the provision for loan losses, a $3.5 million decrease in non-interest income, a $335,000 decrease in non-interest expense, and a $17.3 million decrease in income tax expense. The 2018 increase in net income benefited from federal tax reform. Net income for the year ended December 31, 2017 includes a tax charge of $10.5 million, related to the Tax Reform Act which resulted in the Company reducing its net deferred tax assets by $10.5 million, with a corresponding charge to income tax expense.

Net interest income for the year ended December 31, 2018, increased $2.3 million, or 2.2%, to $111.2 million, from $108.9 million for the year ended December 31, 2017, primarily due to a $313.0 million, or 8.6%, increase in our average interest-earning assets, partially offset by an 18 basis point decrease in our net interest margin to 2.81% from 2.99% for the year ended December 31, 2017. The increase in average interest-earning assets was attributable to increases in average loans outstanding of $124.6 million, average mortgage-backed securities of $106.7 million, and average other securities of $84.2 million, partially offset by decreases in average Federal Home Loan Bank of New York ("FHLBNY") stock of $1.4 million and average interest-earning deposits in financial institutions of $1.0 million. The increase in average loans was primarily due to originated loan growth. Net interest income for the year ended December 31, 2018, included loan prepayment income of $2.0 million, compared to $1.4 million for the year ended December 31, 2017. Yields earned on interest-earning assets increased eight basis points to 3.72% for the year ended December 31, 2018, from 3.64% for the year ended December 31, 2017, driven by higher yields on all asset classes. The cost of interest-bearing liabilities increased 31 basis points to 1.16% for the year ended December 31, 2018, as compared to 0.85% for the year ended December 31, 2017, due to the increased cost of deposits and borrowed funds in conjunction with increased market interest rates.

The provision for loan losses increased $1.2 million to $2.6 million for the year ended December 31, 2018, from $1.4 million for the year ended December 31, 2017, primarily due to originated loan growth and an increase in net charge-offs. Net charge-offs for the year ended December 31, 2018 were $1.3 million as compared to net recoveries of $154,000 for the year ended December 31, 2017. The increase in net charge-offs was primarily due to a $1.2 million charge-off on an impaired commercial real estate loan.

Management is monitoring the effects of the recent U.S. government partial shutdown to the Company's business, and working with customers affected by it. A segment of the Company’s multifamily loan portfolio has tenants that are subject to government rent subsidies. As of December 31, 2018, the Company had 46 multifamily loans, with an aggregate outstanding balance of approximately $118 million, subject to some level of government rent subsidies. To date, these loans have performed in accordance with their contractual terms.

Non-interest income decreased $3.5 million, or 30.2%, to $8.1 million for the year ended December 31, 2018, from $11.6 million for the year ended December 31, 2017, primarily due to a decrease in income on bank owned life insurance, attributable to $1.5 million of insurance proceeds in excess of the related cash surrender value of the policies, received in the first quarter of 2017, and a $2.0 million increase in losses on securities, net. Securities losses, net, during the year ended December 31, 2018, included losses of $879,000 related to the Company’s trading portfolio, compared to gains of $1.1 million in the prior year. 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 decreased $335,000, or 0.5%, to $67.0 million for the year ended December 31, 2018, from $67.4 million for the year ended December 31, 2017. The decrease was primarily attributable to a $3.4 million reduction in compensation and employee benefits, $2.0 million of which is related to the mark-to-market adjustment on trading securities in the Company’s deferred compensation plan which is described above, and had no effect on net income, as well as a decrease in stock compensation expense. Partially offsetting the decrease in compensation and benefits was an increase of $826,000 in occupancy costs, primarily due to higher rent and real estate taxes related to two new branch offices and the expansion of our corporate office space, as well as higher repairs and maintenance costs; a $426,000 increase in data processing fees, primarily attributable to increased core system costs associated with higher levels of customer account activity, as well as implementation costs related to telecommunication upgrades; a $708,000 increase in professional fees; and an $865,000 increase in advertising expense, associated with rate driven deposit promotions.

The Company recorded income tax expense of $9.6 million for the year ended December 31, 2018, compared to $27.0 million for the year ended December 31, 2017. The effective tax rate for the year ended December 31, 2018, was 19.4%, compared to 52.1% for the year ended December 31, 2017. The effective tax rate for the year ended December 31, 2018, reflects the reduction of the federal corporate tax rate to 21% from 35% effective January 1, 2018, and excess tax benefits of $2.7 million related to the exercise or vesting of equity awards. The effective tax rate for the year ended December 31, 2017 reflects: (i) a tax charge of $10.5 million related to the enactment of the Tax Reform Act in the fourth quarter of 2017, as discussed above; (ii) excess tax benefits of $2.3 million related to the exercise or vesting of equity awards; and (iii) $1.5 million of tax-exempt income from bank owned life insurance proceeds in excess of the cash surrender value of the policies. 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.

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. The new legislation did not result in a material change to our net deferred tax asset or state tax expense. Management continues to evaluate the effect of this new legislation, including the issuance of regulations by the New Jersey Division of Taxation, on our net deferred tax asset and future tax expense.

Comparison of Operating Results for the Three Months Ended December 31, 2018, and 2017

The Company recorded net income of $9.9 million for the quarter ended December 31, 2018 as compared to a net loss of $1.7 million for the quarter ended December 31, 2017. Significant variances from the comparable prior year quarter are as follows: a $567,000 increase in the provision for loan losses, a $1.8 million decrease in non-interest income, a $611,000 decrease in non-interest expense, and a $13.4 million decrease in income tax expense.

Net interest income for the quarter ended December 31, 2018, increased by $49,000, or 0.2%, primarily due to an increase in our average interest-earning assets of $348.4 million, or 9.3%, partially offset by a 24 basis point decrease in our net interest margin to 2.72%. The increase in average interest-earning assets was due to increases in average loans outstanding of $72.0 million, average mortgage-backed securities of $145.2 million, and average other securities of $153.0 million, partially offset by decreases in average FHLBNY stock of $2.1 million and average interest-earning deposits in financial institutions of $19.8 million. The increase in average loans was primarily due to originated loan growth. The quarter ended December 31, 2018, included loan prepayment income of $503,000 as compared to $558,000 for the quarter ended December 31, 2017. Yields earned on interest-earning assets increased 11 basis points to 3.78% for the quarter ended December 31, 2018, from 3.67% for the quarter ended December 31, 2017, driven by higher yields on all asset classes. The cost of interest-bearing liabilities increased 44 basis points to 1.35% for the current quarter as compared to 0.91% for the comparable prior year quarter, due to the increased cost of deposits and borrowed funds in conjunction with increased market interest rates.

The provision for loan losses increased by $567,000 to $607,000 for the quarter ended December 31, 2018, from $40,000 for the quarter ended December 31, 2017, primarily due to originated loan growth and an increase in net charge-offs. Net charge-offs were $797,000 for the quarter ended December 31, 2018, compared to net recoveries of $21,000 for the quarter ended December 31, 2017. The increase in net charge-offs was primarily due to an $813,000 charge-off on an impaired commercial real estate loan, $500,000 of which was provided for as a specific reserve in the prior quarter.

Non-interest income decreased by $1.8 million or 73.8%, to $640,000 for the quarter ended December 31, 2018, from $2.4 million for the quarter ended December 31, 2017, primarily due to a $1.9 million increase in losses on securities, net. Securities losses, net, during the quarter ended December 31, 2018, included losses of $1.6 million related to the Company’s trading portfolio, compared to losses of $109,000 in the comparative prior year quarter.

Non-interest expense decreased by $611,000, or 3.7%, to $15.8 million for the quarter ended December 31, 2018, as compared to $16.4 million for the comparable prior year quarter, primarily due to a $1.8 million decrease in compensation and employee benefits, largely related to the mark-to-market adjustment on trading securities in the Company’s deferred compensation plan which as previously discussed has no effect on net income. Partially offsetting the decrease in compensation and employee benefits were increases in occupancy costs of $225,000, related to the opening of two new branch offices and the expansion of our corporate office space, data processing costs of $335,000, primarily attributable to increased core system costs associated with higher customer account activity, as well as implementation costs related to telecommunication upgrades, and advertising expense of $278,000.

The Company recorded income tax expense of $2.3 million for the quarter ended December 31, 2018, compared to $15.7 million for the quarter ended December 31, 2017. The effective tax rate for the quarter ended December 31, 2018, was 18.9%, as compared to 112.3% for the quarter ended December 31, 2017. The decrease in the effective tax rate for 2018 was due to the reduction of the corporate tax rate from 35% to 21%, effective January 1, 2018, and a charge of $10.5 million recorded in the quarter ended December 31, 2017, related to the Tax Reform Act, as noted previously.

Comparison of Operating Results for the Three Months Ended December 31, 2018, and September 30, 2018

The Company recorded net income of $9.9 million for the quarter ended December 31, 2018, as compared to net income of $9.1 million for the quarter ended September 30, 2018. Significant variances from the prior quarter are as follows: a $697,000 decrease in the provision for loan losses, a $2.0 million decrease in non-interest income, a $1.3 million decrease in non-interest expense, and a $767,000 decrease in income tax expense.

Net interest income for the quarter ended December 31, 2018, increased by $80,000, or 0.3%, primarily due to an increase in our average interest-earning assets of $65.5 million, or 1.6%, partially offset by a three basis point decrease in our net interest margin to 2.72%. The increase in average interest-earning assets was primarily attributable to increases in average mortgage-backed securities of $22.4 million and average other securities of $71.9 million, partially offset by decreases in average loans outstanding of $4.3 million, average FHLBNY stock of $2.4 million, and average interest-earning deposits in financial institutions of $22.1 million. The quarter ended December 31, 2018, included loan prepayment income of $503,000 as compared to $367,000 for the quarter ended September 30, 2018. Yields earned on interest-earning assets increased six basis points to 3.78% for the quarter ended December 31, 2018, from 3.72% for the quarter ended September 30, 2018, driven by higher yields on all asset classes. The cost of interest-bearing liabilities increased 12 basis points to 1.35% for the current quarter as compared to 1.23% for the quarter ended September 30, 2018, attributable to higher rates on deposits and borrowed funds in conjunction with increased market interest rates.

The provision for loan losses decreased by $697,000 to $607,000 for the quarter ended December 31, 2018, from $1.3 million for the quarter ended September 30, 2018, primarily due to lower specific reserves in the current quarter as compared to the prior quarter, partially offset by higher loan growth. Net charge-offs were $797,000 for the quarter ended December 31, 2018 ($500,000 of which was provided as a specific reserve in the prior quarter), compared to net charge-offs of $499,000 for the quarter ended September 30, 2018.

Non-interest income decreased by $2.0 million or 75.7%, to $641,000 for the quarter ended December 31, 2018, from $2.6 million for the quarter ended September 30, 2018, primarily due to an increase of $2.0 million in losses on securities, net. Securities losses, net, during the quarter ended December 31, 2018, included losses of $1.6 million related to the Company’s trading portfolio, compared to gains of $412,000 for the quarter ended September 30, 2018.

Non-interest expense decreased by $1.3 million, or 7.7%, to $15.8 million for the quarter ended December 31, 2018, as compared to $17.1 million for the quarter ended September 30, 2018, primarily due to a decrease in compensation and employee benefits of $2.3 million, largely related to the mark-to-market adjustment on trading securities in the Company’s deferred compensation plan; partially offset by increases in data processing costs of $331,000, primarily attributable to implementation costs related to telecommunication upgrades, and advertising expense of $350,000.

The Company recorded income tax expense of $2.3 million for the quarter ended December 31, 2018, compared to $3.1 million for the quarter ended September 30, 2018. The effective tax rate for the quarter ended December 31, 2018, was 18.9%, as compared to 25.3% for the quarter ended September 30, 2018, the decrease due in part to higher excess tax benefits related to the exercise or vesting of equity awards. Excess tax benefits were $514,000 for the quarter ended December 31, 2018, as compared to $101,000 for the quarter ended September 30, 2018.

Financial Condition

Total assets increased $417.0 million, or 10.4%, to $4.41 billion at December 31, 2018, from $3.99 billion at December 31, 2017. The increase was primarily attributable to increases in our available-for-sale debt securities portfolio of $294.2 million, or 57.3%, loans held-for-investment, net, of $104.4 million, or 3.3%, and cash and cash equivalents of $19.9 million or 34.4%.

As of December 31, 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 415.3%. 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 $104.4 million to $3.25 billion at December 31, 2018, as compared to $3.14 billion at December 31, 2017, primarily due to an increase in originated loans held-for-investment, net, partially offset by declines in acquired and purchased credit-impaired loans. Originated loans held-for-investment, net, totaled $2.68 billion at December 31, 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 $194.8 million, or 11.2%, to $1.93 billion at December 31, 2018, from $1.74 billion at December 31, 2017, and to a lesser extent, a $54.1 million, or 12.1%, increase in commercial real estate loans to $499.3 million at December 31, 2018, from $445.2 million at December 31, 2017.

The following tables detail our multifamily real estate originations for the years ended December 31, 2018 and 2017 (dollars in thousands):

Year Ended December 31, 2018
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
$ 383,062     4.01 %   62 %   79   V   15-30 Years
16,230     4.23 %   36 %   181   F   15 Years
$ 399,292     4.02 %   61 %            


Year Ended December 31, 2017
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
$ 352,031     3.64 %   61 %   80   V   15-30 Years
750     5.07 %   48 %   1   V   25 Years
16,640     3.95 %   44 %   180   F   15 Years
$ 369,421     3.65 %   60 %            

Acquired loans decreased by $146.7 million to $546.2 million at December 31, 2018, from $692.8 million at December 31, 2017, primarily due to paydowns of lower yield one-to-four family residential and multifamily loans with weighted average interest rates (net of the servicing fee retained by the originating bank) ranging from 2.63% to 2.86%, partially offset by purchases of one-to-four family residential mortgage loan pools totaling $37.5 million.

Purchased credit-impaired (PCI) loans totaled $20.1 million at December 31, 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 $4.2 million attributable to PCI loans for the three months and year ended December 31, 2018, respectively, as compared to $1.4 million and $5.5 million for the three months and year-ended December 31, 2017, respectively.

The Company’s debt securities available-for-sale portfolio increased by $294.2 million, or 57.3%, to $808.0 million at December 31, 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 December 31, 2018, $565.0 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 $242.7 million in corporate bonds, all of which were considered investment grade at December 31, 2018, and municipal bonds of $273,000.

Total liabilities increased $389.5 million, or 11.6%, to $3.74 billion at December 31, 2018, from $3.35 billion at December 31, 2017.  The increase was primarily attributable to increases in deposits of $449.5 million and advance payments by borrowers for taxes and insurance of $3.2 million, partially offset by a decrease in other borrowings of $62.7 million.
               
Deposits increased $449.5 million, or 15.8%, to $3.29 billion at December 31, 2018, as compared to $2.84 billion at December 31, 2017. The increase was primarily attributable to increases of $358.0 million in certificate of deposit accounts and $169.5 million in savings accounts, partially offset by decreases of $19.0 million in transaction accounts and $58.9 million in money market accounts.

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

  December 31, 2018   September 30, 2018   December 31, 2017
Transaction:          
Non-interest bearing checking $ 395,375     $ 395,500     $ 407,267  
Negotiable orders of withdrawal 458,012     425,722     465,140  
Total transaction 853,387     821,222     872,407  
Savings:          
Savings 594,290     513,220     424,789  
Money market 741,939     751,894     800,854  
Total savings 1,336,229     1,265,114     1,225,643  
Certificates of deposit:          
Brokered deposits 275,398     199,945     150,639  
$250,000 and under 696,957     705,925     477,326  
Over $250,000 124,541     149,062     110,964  
Total certificates of deposit 1,096,896     1,054,932     738,929  
Total deposits $ 3,286,512     $ 3,141,268     $ 2,836,979  

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

  December 31, 2018   September 30, 2018   December 31, 2017
           
Business customers $ 468,166     $ 483,674     $ 447,718  
Municipal customers $ 337,053     $ 303,672     $ 345,581  

Borrowings and securities sold under agreements to repurchase decreased by $62.7 million, or 13.3%, to $408.9 million at December 31, 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 December 31, 2018 (dollars in thousands):

Year   Amount   Weighted Average Rate
2019   $ 123,502   1.48 %
2020     90,000   1.65 %
2021     70,000   1.80 %
2022     20,000   1.97 %
2023     87,500   2.89 %
Thereafter     12,500   3.00 %
    $ 403,502   1.95 %

Total stockholders’ equity increased by $27.6 million to $666.4 million at December 31, 2018, from $638.9 million at December 31, 2017. This increase was primarily attributable to net income of $40.1 million for year ended December 31, 2018, and a $9.9 million increase related to ESOP and equity award activity. These increases were partially offset by dividend payments of $18.7 million and a $3.7 million increase in unrealized losses on our debt securities available-for-sale portfolio as a result of the increased interest rate environment.

Asset Quality

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

  December 31, 2018   September 30, 2018   December 31, 2017
Non-accrual loans:          
Held-for-investment          
Real estate loans:          
Commercial $ 7,291     $ 8,128     $ 4,087  
One-to-four family residential 1,129     1,140     774  
Multifamily 566     567     417  
Home equity and lines of credit 151     152     156  
Commercial and industrial 25         74  
Total non-accrual loans: 9,162     9,987     5,508  
Loans delinquent 90 days or more and still accruing:          
Held-for-investment          
Real estate loans:          
One-to-four family residential 33     33     27  
Other loans         1  
Total loans delinquent 90 days or more and still accruing 33     33     28  
Total non-performing loans 9,195     10,020     5,536  
Other real estate owned         850  
Total non-performing assets $ 9,195     $ 10,020     $ 6,386  
Non-performing loans to total loans held-for-investment, net 0.28 %   0.31 %   0.18 %
Non-performing assets to total assets 0.21 %   0.23 %   0.16 %
Loans subject to restructuring agreements and still accruing $ 16,390     $ 16,575     $ 18,003  
Accruing loans 30-89 days delinquent $ 8,562     $ 11,926     $ 12,044  

Accruing Loans 30 to 89 Days Delinquent

Loans 30 to 89 days delinquent and on accrual status totaled $8.6 million and $12.0 million at December 31, 2018, and December 31, 2017, respectively. The following table sets forth delinquencies for accruing loans by type and by amount at December 31, 2018, September 30, 2018, and December 31, 2017 (dollars in thousands):

  December 31, 2018   September 30, 2018   December 31, 2017
Real estate loans:          
Commercial $ 2,377     $ 3,810     $ 4,347  
One-to-four family residential 4,120     5,623     4,162  
Multifamily 2,018     2,117     3,298  
Construction and land         6  
Home equity and lines of credit     80      
Commercial and industrial loans 45     296     202  
Other loans 2         29  
Total delinquent accruing loans $ 8,562     $ 11,926     $ 12,044  

PCI Loans (Held-for-Investment)

At December 31, 2018, based on contractual principal, 10.0% of PCI loans were past due 30 to 89 days, and 23.3% 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 40 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," "adjust" "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, if any, and adverse changes in the securities markets. In addition, the recent federal government shutdown presents risk and uncertainty to the Company. 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
 
  At or For the Three Months Ended   At or For the Year
Ended
  December 31,   September 30,   December 31,
  2018     2017     2018     2018     2017  
Selected Financial Ratios:                  
Performance Ratios(1):                  
Return on assets (ratio of net income (loss) to average total assets) (7) (8) 0.91 %   (0.17 )%   0.84 %   0.95 %   0.63 %
Return on equity (ratio of net income (loss) to average equity) (7) (8) 6.00     (1.05 )   5.51     6.17     3.88  
Average equity to average total assets 15.18     16.22     15.32     15.47     16.31  
Interest rate spread 2.43     2.76     2.49     2.56     2.79  
Net interest margin 2.72     2.96     2.75     2.81     2.99  
Efficiency ratio(2) (8) 55.08     53.91     55.95     56.16     55.90  
Non-interest expense to average total assets 1.44     1.63     1.59     1.60     1.72  
Non-interest expense to average total interest-earning assets 1.53     1.74     1.69     1.69     1.85  
Average interest-earning assets to average interest-bearing liabilities 126.72     128.99     127.37     127.84     128.71  
Asset Quality Ratios:                  
Non-performing assets to total assets 0.21     0.16     0.23     0.21     0.16  
Non-performing loans(3) to total loans(4) 0.28     0.18     0.31     0.28     0.18  
Allowance for loan losses to non-performing loans held-for-investment(5) 299.06     472.63     276.31     299.06     472.63  
Allowance for loan losses to originated loans held-for-investment, net(6) 0.99     1.04     1.03     0.99     1.04  
Allowance for loan losses to total loans held-for-investment, net(7) 0.85     0.83     0.86     0.85     0.83  

(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, acquired loans and non-performing loans held-for-sale (where applicable).
(5) Excludes PCI loans, acquired loans held-for-investment and loans held-for-sale (where applicable) and related reserve balances.
(6) Includes PCI and acquired loans held-for-investment.
(7) The three months ended December 31, 2018 and September 30, 2018, include excess tax benefits of $514,000 and $101,000, respectively. The years ended December 31, 2018 and 2017, include excess tax benefits of $2.7 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. The three months and year ended December 31, 2017, includes a tax charge of $10.5 million related to the enactment of the Tax Reform Act in the fourth quarter of 2017, which resulted in the revaluation of our net deferred tax assets at the lower federal corporate income tax rate of 21%.
(8) The year ended December 31, 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)
 
  December 31,
2018
  September 30,
2018
  December 31,
2017
ASSETS:          
Cash and due from banks $ 15,147     $ 13,332     $ 17,446  
Interest-bearing deposits in other financial institutions 62,615     45,403     40,393  
Total cash and cash equivalents 77,762     58,735     57,839  
Trading securities 8,968     10,670     9,597  
Debt securities available-for-sale, at estimated fair value 808,031     740,518     513,782  
Debt securities held-to-maturity, at amortized cost 9,505     9,560     9,931  
Equity securities 1,280     1,183     1,339  
Originated loans held-for-investment, net 2,678,877     2,597,816     2,425,275  
Loans acquired 546,150     588,517     692,803  
Purchased credit-impaired (PCI) loans held-for-investment 20,143     20,535     22,741  
Loans held-for-investment, net 3,245,170     3,206,868     3,140,819  
Allowance for loan losses (27,497 )   (27,687 )   (26,160 )
Net loans held-for-investment 3,217,673     3,179,181     3,114,659  
Accrued interest receivable 12,959     11,984     10,713  
Bank owned life insurance 154,135     153,218     150,604  
Federal Home Loan Bank of New York stock, at cost 22,517     23,960     25,046  
Premises and equipment, net 25,605     25,229     25,746  
Goodwill 38,411     38,411     38,411  
Other real estate owned         850  
Other assets 31,586     33,766     32,900  
Total assets $ 4,408,432     $ 4,286,415     $ 3,991,417  
           
LIABILITIES AND STOCKHOLDERS’ EQUITY:          
Deposits $ 3,286,512     $ 3,141,268     $ 2,836,979  
Securities sold under agreements to repurchase         2,000  
Federal Home Loan Bank advances and other borrowings 408,891     441,191     469,549  
Advance payments by borrowers for taxes and insurance 18,007     16,999     14,798  
Accrued expenses and other liabilities 28,583     32,537     29,214  
Total liabilities 3,741,993     3,631,995     3,352,540  
           
Total stockholders’ equity 666,439     654,420     638,877  
Total liabilities and stockholders’ equity $ 4,408,432     $ 4,286,415     $ 3,991,417  
           
Total shares outstanding 49,635,673     49,534,744     48,803,885  
Tangible book value per share (1) $ 12.63     $ 12.41     $ 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 $1.0 million, $1.1 million, and $1.4 million at December 31, 2018, September 30, 2018, and December 31, 2017, respectively, and are included in other assets.

 
NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Dollars in thousands, except share and per share amounts) (unaudited)
 
  Three Months Ended   Year Ended
  December 31,   September 30,   December 31,
  2018   2017   2018   2018   2017
Interest income:                  
Loans $ 32,905     $ 31,255     $ 32,443     $ 127,591     $ 120,340  
Mortgage-backed securities 3,718     2,383     3,475     12,987     9,174  
Other securities 1,685     405     1,104     4,112     1,310  
Federal Home Loan Bank of New York dividends 443     400     428     1,683     1,461  
Deposits in other financial institutions 197     172     277     919     584  
Total interest income 38,948     34,615     37,727     147,292     132,869  
Interest expense:                  
Deposits 8,887     4,699     7,593     27,741     16,386  
Borrowings 2,057     1,961     2,210     8,309     7,590  
Total interest expense 10,944     6,660     9,803     36,050     23,976  
Net interest income 28,004     27,955     27,924     111,242     108,893  
Provision for loan losses 607     40     1,304     2,615     1,411  
Net interest income after provision for loan losses 27,397     27,915     26,620     108,627     107,482  
Non-interest income:                  
Fees and service charges for customer services 1,275     1,139     1,241     4,877     4,702  
Income on bank owned life insurance 918     948     919     3,705     5,386  
(Losses) gains on securities, net (1,593 )   282     419     (701 )   1,283  
Other 40     74     58     246     271  
Total non-interest income 640     2,443     2,637     8,127     11,642  
Non-interest expense:                  
Compensation and employee benefits 7,121     8,898     9,443     34,802     38,237  
Occupancy 3,035     2,810     3,015     12,096     11,270  
Furniture and equipment 257     270     239     1,004     1,141  
Data processing 1,484     1,149     1,153     5,011     4,585  
Professional fees 924     740     886     3,482     2,774  
Advertising 911     633     561     2,726     1,861  
FDIC insurance 253     269     241     1,065     1,064  
Other 1,792     1,619     1,562     6,857     6,446  
Total non-interest expense 15,777     16,388     17,100     67,043     67,378  
Income before income tax expense 12,260     13,970     12,157     49,711     51,746  
Income tax expense(1) 2,314     15,686     3,081     9,632     26,978  
Net income (loss) $ 9,946     $ (1,716 )   $ 9,076     $ 40,079     $ 24,768  
Net income (loss) per common share:                  
Basic $ 0.21     $ (0.04 )   $ 0.19     $ 0.87     $ 0.55  
Diluted $ 0.21     $ (0.04 )   $ 0.19     $ 0.85     $ 0.53  
Basic average shares outstanding 46,698,667     45,528,498     46,604,051     46,319,760     45,325,445  
Diluted average shares outstanding 47,013,958     45,528,498     47,294,645     47,107,433     46,875,730  

(1) Income tax expense for the quarter and year ended December 31, 2017, includes a charge of $10.5 million recorded in the fourth quarter of 2017 as a result of the enactment of the Tax Reform Act, which was signed into law on December 22, 2017.

 
NORTHFIELD BANCORP, INC.
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands) (unaudited)
 
  For the Three Months Ended
  December 31, 2018   September 30, 2018   December 31, 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) $ 3,198,288     $ 32,905     4.08 %   $ 3,202,616     $ 32,443     4.02 %   $ 3,126,273     $ 31,255     3.97 %
Mortgage-backed securities (3) 588,201     3,718     2.51     565,783     3,475     2.44     443,012     2,383     2.13  
Other securities (3) 232,777     1,685     2.87     160,877     1,104     2.72     79,728     405     2.02  
Federal Home Loan Bank of New York stock 23,128     443     7.60     25,499     428     6.66     25,256     400     6.28  
Interest-earning deposits in financial institutions 47,190     197     1.66     69,327     277     1.59     66,958     172     1.02  
Total interest-earning assets 4,089,584     38,948     3.78     4,024,102     37,727     3.72     3,741,227     34,615     3.67  
Non-interest-earning assets 243,019             244,191             254,238          
Total assets $ 4,332,603             $ 4,268,293             $ 3,995,465          
                                   
Interest-bearing liabilities:                                  
Savings, NOW, and money market accounts $ 1,767,276     $ 3,907     0.88 %   $ 1,620,562     $ 2,691     0.66 %   $ 1,701,835     $ 2,091     0.49 %
Certificates of deposit 1,037,437     4,980     1.90     1,064,005     4,902     1.83     716,958     2,608     1.44  
Total interest-bearing deposits 2,804,713     8,887     1.26     2,684,567     7,593     1.12     2,418,793     4,699     0.77  
Borrowed funds 422,422     2,057     1.93     474,773     2,210     1.85     481,665     1,961     1.62  
Total interest-bearing liabilities 3,227,135     10,944     1.35     3,159,340     9,803     1.23     2,900,458     6,660     0.91  
Non-interest bearing deposits 397,022             404,570             399,888          
Accrued expenses and other liabilities 50,820             50,527             46,903          
Total liabilities 3,674,977             3,614,437             3,347,249          
Stockholders' equity 657,626             653,856             648,216          
Total liabilities and stockholders' equity $ 4,332,603             $ 4,268,293             $ 3,995,465          
                                   
Net interest income     $ 28,004             $ 27,924             $ 27,955      
Net interest rate spread (4)         2.43 %           2.49 %           2.76 %
Net interest-earning assets (5) $ 862,449             $ 864,762             $ 840,769          
Net interest margin (6)         2.72 %           2.75 %           2.96 %
Average interest-earning assets to interest-bearing liabilities         126.72 %           127.37 %           128.99 %

(1) Average yields and rates are annualized.
(2) Includes non-accruing loans.
(3) Debt securities available-for-sale 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.

 
NORTHFIELD BANCORP, INC.
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands) (unaudited)
 
  For the Years Ended
  December 31, 2018   December 31, 2017
  Average
Outstanding
Balance
  Interest   Average
Yield/
Rate
  Average
Outstanding
Balance
  Interest   Average
Yield/
Rate
Interest-earning assets:                      
Loans (1) $ 3,176,965     $ 127,591     4.02 %   $ 3,052,410     $ 120,340     3.94 %
Mortgage-backed securities (2) 540,859     12,987     2.40     434,166     9,174     2.11  
Other securities (2) 153,346     4,112     2.68     69,163     1,310     1.89  
Federal Home Loan Bank of New York stock 24,731     1,683     6.81     26,155     1,461     5.59  
Interest-earning deposits in financial institutions 63,898     919     1.44     64,868     584     0.90  
Total interest-earning assets 3,959,799     147,292     3.72     3,646,762     132,869     3.64  
Non-interest-earning assets 242,128             270,161          
Total assets $ 4,201,927             $ 3,916,923          
                       
Interest-bearing liabilities:                      
Savings, NOW, and money market accounts $ 1,681,567     $ 11,053     0.66 %   $ 1,713,863     $ 8,233     0.48 %
Certificates of deposit 956,821     16,688     1.74     625,067     8,153     1.30  
Total interest-bearing deposits 2,638,388     27,741     1.05     2,338,930     16,386     0.70  
Borrowed funds 459,180     8,309     1.81     494,361     7,590     1.54  
Total interest-bearing liabilities 3,097,568     36,050     1.16     2,833,291     23,976     0.85  
Non-interest bearing deposits 405,319             385,891          
Accrued expenses and other liabilities 49,157             59,034          
Total liabilities 3,552,044             3,278,216          
Stockholders' equity 649,883             638,707          
Total liabilities and stockholders' equity $ 4,201,927             $ 3,916,923          
                       
Net interest income     $ 111,242             $ 108,893      
Net interest rate spread (3)         2.56 %           2.79 %
Net interest-earning assets (4) $ 862,231             $ 813,471          
Net interest margin (5)         2.81 %           2.99 %
Average interest-earning assets to interest-bearing liabilities         127.84 %           128.71 %
                       

(1) Includes non-accruing loans.
(2) Debt securities available-for-sale are reported at amortized cost.
(3) 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.
(4) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(5) 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