EXHIBIT 99.1
 
PRESS RELEASE DATED OCTOBER 24, 2018




Company Contact:
William R. Jacobs
Chief Financial Officer
Tel: (732) 499-7200 ext. 2519
FOR IMMEDIATE RELEASE
 
 
NORTHFIELD BANCORP, INC. ANNOUNCES
THIRD QUARTER 2018 RESULTS
 
NOTABLE ITEMS FOR THE QUARTER INCLUDE:

NET INCOME WAS $9.1 MILLION, OR $0.19 PER DILUTED SHARE, FOR THE THIRD QUARTER OF 2018 COMPARED TO $10.6 MILLION, OR 0.23 PER DILUTED SHARE, FOR THE SECOND QUARTER OF 2018 AND $8.1 MILLION, OR $0.17 PER DILUTED SHARE, FOR THIRD QUARTER 2017
Current quarter over prior quarter decrease reflects the benefit of higher excess tax benefits of $1.3 million, or $0.03 per diluted share, in the second quarter of 2018
Current quarter over comparable prior year quarter increase reflects the benefit of corporate tax reform
SECURITIES INCREASED $115.4 MILLION, OR 17.84% FROM JUNE 30, 2018
TOTAL LOANS REMAINED LEVEL COMPARED TO JUNE 30, 2018
Originated loans increased 1.96% (7.78% annualized)
Acquired loans decreased 9.58%, driven by paydowns
DEPOSITS (NON-BROKERED), INCREASED $144.9 MILLION, OR 5.18%, FROM JUNE 30, 2018
EFFICIENCY RATIO IMPROVED TO 55.95% FOR THE THIRD QUARTER OF 2018 COMPARED TO 56.40% FOR THE SECOND QUARTER OF 2018 AND 56.16% FOR THE 2017 THIRD QUARTER
ASSET QUALITY REMAINS STRONG WITH NON-PERFORMING LOANS TO TOTAL LOANS AT 0.31% AND NON-PERFORMING ASSETS TO TOTAL ASSETS AT 0.23%
NET INTEREST MARGIN DECREASED TO 2.75%, OR 10 BASIS POINTS, FOR THE THIRD QUARTER OF 2018, AS COMPARED TO 2.85% FOR THE SECOND QUARTER OF 2018, AND 22 BASIS POINTS COMPARED TO 2.97% FOR THE 2017 THIRD QUARTER, DRIVEN BY THE RISING COST OF DEPOSITS
CASH DIVIDEND DECLARED OF $0.10 PER SHARE OF COMMON STOCK, PAYABLE NOVEMBER 21, 2018, TO STOCKHOLDERS OF RECORD AS OF NOVEMBER 7, 2018

WOODBRIDGE, N.J., OCT. 24, 2018....NORTHFIELD BANCORP, INC. (Nasdaq:NFBK), the holding company for Northfield Bank, reported basic and diluted earnings per common share of $0.19 and $0.64, respectively, for the quarter and nine months ended September 30, 2018, compared to basic and diluted earnings per common share of $0.17 and $0.57, respectively, for the quarter and nine months ended September 30, 2017. Earnings for the quarter and nine months ended September 30, 2018, benefited from the effects of federal tax reform (the “Tax Reform Act”), which reduced the federal statutory corporate tax rate to 21% from 35% effective January 1, 2018. Earnings for the nine months ended September 30, 2018, also benefited from excess tax benefits of $2.2 million, or $0.05 per diluted share, related to the exercise or vesting of equity awards. Earnings for the nine months ended September 30, 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 third quarter 2018 results, Steven M. Klein, the Company's President and Chief Executive Officer, noted, “The Company continued to focus on defending and increasing its deposit market share, while investing in shorter-term high quality securities in a rising rate environment, resulting in stable net interest income, improving liquidity, and a positive net interest spread on incremental deposit growth. While the rising interest rate environment and the competition for deposits in our marketplace puts upward pressure on our cost of deposits, we continue to be successful in growing our originated loan portfolio and improving our efficiency ratio.”
Mr. Klein further noted, “I'm pleased to announce that the Board of Directors has declared a dividend of $0.10 per common share, payable on November 21, 2018, to stockholders of record on November 7, 2018.”

1



Results of Operations
Comparison of Operating Results for the Nine Months Ended September 30, 2018 and 2017
 
Net income was $30.1 million and $26.5 million for the nine months ended September 30, 2018, and September 30, 2017, respectively. Significant variances from the comparable prior year period are as follows: a $2.3 million increase in net interest income, a $637,000 increase in the provision for loan losses, a $1.7 million decrease in non-interest income, and a $4.0 million decrease in income tax expense.
 
Net interest income for the nine months ended September 30, 2018increased $2.3 million, or 2.8%, to $83.2 million, from $80.9 million for the nine months ended September 30, 2017, primarily due to a $301.1 million, or 8.3%, increase in our average interest-earning assets, partially offset by a 15 basis point decrease in our net interest margin to 2.84% from 2.99% for the nine months ended September 30, 2017. The increase in average interest-earning assets was due to increases in average loans outstanding of $142.3 million, average mortgage-backed securities of $93.7 million, average other securities of $61.0 million, and average interest-earning deposits in financial institutions of $5.4 million, partially offset by a decrease in average Federal Home Loan Bank of New York (“FHLBNY”) stock of $1.2 million. The increase in average loans was primarily due to originated loan growth as well as loan pool purchases during the first quarter of 2018. Net interest income for the nine months ended September 30, 2018, included loan prepayment income of $1.5 million as compared to $886,000 for the nine months ended September 30, 2017. Yields earned on interest-earning assets increased seven basis points to 3.70% for the nine months ended September 30, 2018, from 3.63% for the nine months ended September 30, 2017, driven by higher yields on all asset classes. The cost of interest-bearing liabilities increased 28 basis points to 1.10% for the nine months ended September 30, 2018, from 0.82% for the nine months ended September 30, 2017, due to the rising cost of deposits and borrowed funds, attributed in large part to higher rates offered on savings and certificates of deposit accounts to remain competitive in the rising rate environment.

The provision for loan losses increased by $637,000 to $2.0 million for the nine months ended September 30, 2018, from $1.4 million for the nine months ended September 30, 2017, primarily due to an increase in net charge-offs and an increase in the specific reserve on an impaired loan, partially offset by less loan growth for the nine months ended September 30, 2018, as compared to the comparable prior year period. Net charge-offs for the nine months ended September 30, 2018, were $482,000, as compared to net recoveries of $133,000 for the nine months ended September 30, 2017. The increase in net-charge-offs was primarily due to a $428,000 charge-off on an impaired commercial real estate loan in the current quarter.

Non-interest income decreased $1.7 million, or 18.6%, to $7.5 million for the nine months ended September 30, 2018, from $9.2 million for the nine months ended September 30, 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 decrease of $109,000 in gains on securities transactions, net. Securities gains, net, during the nine months ended September 30, 2018, included gains of $714,000 related to the Company’s trading portfolio, compared to gains of $1.0 million in the comparative prior year period. The trading portfolio is utilized to fund the Company’s deferred compensation obligation to certain employees and directors of the Company's deferred compensation plan (the Plan). The participants of this Plan, at their election, defer a portion of their compensation. Gains and losses on trading securities have no effect on net income since participants benefit from, and bear the full risk of, changes in the trading securities market values. Therefore, the Company records an equal and offsetting amount in compensation expense, reflecting the change in the Company’s obligations under the Plan.
    
Non-interest expense remained relatively stable at $51.3 million for the nine months ended September 30, 2018, compared to $51.0 million for the nine months ended September 30, 2017.
 
The Company recorded income tax expense of $7.3 million for the nine months ended September 30, 2018, compared to $11.3 million for the nine months ended September 30, 2017. The effective tax rate for the nine months ended September 30, 2018, was 19.5% compared to 29.9% for the nine months ended September 30, 2017, reflecting the reduction of the federal statutory corporate tax rate to 21% from 35% by the Tax Reform Act, partially offset by lower excess tax benefits. Excess tax benefits were $2.2 million for the current period as compared to $2.3 million for the comparative prior year period. Excess tax benefits will fluctuate throughout the year based on the Company's stock price and timing of employee stock option exercises and vesting of other share-based awards. The Company has approximately 319,000 options outstanding at September 30, 2018, from its 2009 grants which expire on January 30, 2019, at a weighted average price of $7.09 per share and a weighted average grant date fair value of $2.30 per share. To the extent these options are exercised during the remainder of 2018, this will result in additional tax benefits which will have a positive effect on our effective tax rate. The effective tax rate for the nine months ended September 30, 2017, benefited from $1.5 million of tax-exempt income from bank owned life insurance proceeds in excess of the cash surrender value of the policies.


2



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 in the current quarter. 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 September 30, 2018 and 2017
 
Net income was $9.1 million and $8.1 million for the quarters ended September 30, 2018, and September 30, 2017, respectively. Significant variances from the comparable prior year quarter are as follows: a $572,000 increase in net interest income, an $816,000 increase in the provision for loan losses, a $272,000 increase in non-interest expense, and a $1.4 million decrease in income tax expense.
 
Net interest income for the quarter ended September 30, 2018increased $572,000, or 2.1%, primarily due to a $370.1 million, or 10.1%, increase in our average interest-earning assets, partially offset by a 22 basis point decrease in our net interest margin to 2.75% from 2.97% for the quarter ended September 30, 2017. The increase in average interest-earning assets was due to increases in average loans outstanding of $137.4 million, average mortgage-backed securities of $152.2 million, and average other securities of $83.7 million, partially offset by decreases of $2.3 million in average interest-earning deposits in financial institutions and $923,000 in average FHLBNY stock. The increase in average loans was primarily due to originated loan growth. Net interest income for the quarter ended September 30, 2018 included loan prepayment income of $367,000, relatively consistent to $366,000 recorded for the quarter ended September 30, 2017. Yields earned on interest-earning assets increased eight basis points to 3.72% for the quarter ended September 30, 2018, from 3.64% for the quarter ended September 30, 2017, driven by higher yields on all asset classes. The cost of interest-bearing liabilities increased 37 basis points to 1.23% for the current quarter as compared to 0.86% for the comparable prior year quarter, due to the rising cost of deposits and borrowed funds, attributed in large part to higher rates offered on savings and certificates of deposit accounts to remain competitive in the rising rate environment.

The provision for loan losses increased by $816,000 to $1.3 million for the quarter ended September 30, 2018, from $488,000 for the quarter ended September 30, 2017, primarily due to an increase in net charge-offs and an increase in the specific reserve on an impaired loan, partially offset by less loan growth in the current quarter as compared to the comparable prior year quarter. Net charge-offs were $498,000 for the quarter ended September 30, 2018, compared to net recoveries of $6,000 for the quarter ended September 30, 2017. The increase in net-charge-offs was primarily due to a charge-off of $428,000 on an impaired commercial real estate loan in the current quarter.

Non-interest income remained level at $2.6 million for both quarters ended September 30, 2018 and September 30, 2017.
 
Non-interest expense increased $272,000, or 1.6%, to $17.1 million for the quarter ended September 30, 2018, from $16.8 million for the quarter ended September 30, 2017. The increase was due primarily to increases of $208,000 in occupancy costs, attributed in large part to higher rent expense associated with a new branch office and expanded space in our corporate offices, and $317,000 in professional fees, partially offset by a decrease of $150,000 in employee compensation and benefits.

The Company recorded income tax expense of $3.1 million for the quarter ended September 30, 2018, compared to $4.5 million for the quarter ended September 30, 2017. The effective tax rate for the quarter ended September 30, 2018, was 25.3% compared to 35.8% for the quarter ended September 30, 2017, reflecting the reduction of the federal statutory corporate tax rate to 21% from 35%.

Comparison of Operating Results for the Three Months Ended September 30, 2018, and June 30, 2018
 
Net income was $9.1 million and $10.6 million for the quarters ended September 30, 2018, and June 30, 2018, respectively. Significant variances from the prior quarter are as follows: a $154,000 increase in net interest income, a $634,000 increase in the provision for loan losses, a $192,000 increase in non-interest income, and a $1.2 million increase in income tax expense.
 
Net interest income for the quarter ended September 30, 2018, increased by $154,000, or 0.6%, primarily due to a $118.9 million, or 3.0%, increase in our average interest-earning assets, partially offset by a 10 basis point decrease in our net interest margin to 2.75% from 2.85% for the quarter ended June 30, 2018. The increase in average interest-earning assets was due to increases in average loans outstanding of $28.8 million, average mortgage-backed securities of $43.8 million, average other securities of $34.1 million, and average interest-earning deposits in financial institutions of $12.3 million. Net interest income for the quarter ended September 30, 2018 included loan prepayment income of $367,000, as compared to $479,000 for the quarter ended June 30, 2018. Yields earned on interest-earning assets increased three basis points to 3.72% for the quarter ended September 30, 2018, from 3.69% for the quarter ended June 30, 2018, driven by higher yields on all asset classes. The cost of interest-bearing liabilities

3



increased 15 basis points to 1.23% for the current quarter as compared to 1.08% for the prior quarter, due to the rising cost of deposits and borrowed funds.

The provision for loan losses increased by $634,000 to $1.3 million for the quarter ended September 30, 2018, from $670,000 for the quarter ended June 30, 2018, primarily due to an increase in net charge-offs in the current quarter and an increase in the specific reserve of an impaired loan, partially offset by a decrease in loan growth from the trailing quarter. Net charge-offs were $498,000 for the quarter ended September 30, 2018, compared to net recoveries of $40,000 for the quarter ended June 30, 2018.

Non-interest income increased $192,000, or 7.9%, to $2.6 million for the quarter ended September 30, 2018, from $2.4 million for the quarter ended June 30, 2018. This increase was primarily due to an increase of $106,000 in gains on securities transactions, net, and a $94,000 increase in fees and service charges for customer services. Securities gains, net, during the quarter ended September 30, 2018, included gains of $412,000 related to the Company’s trading portfolio, compared to gains of $197,000 in the prior quarter. The trading portfolio is utilized to fund the Company’s deferred compensation obligation to certain employees and directors of 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.

The Company recorded income tax expense of $3.1 million for the quarter ended September 30, 2018, compared to $1.9 million for the quarter ended June 30, 2018. The effective tax rate for the quarter ended September 30, 2018 was 25.3% compared to 15.1% for the quarter ended June 30, 2018, the increase being primarily due to lower excess tax benefits. Excess tax benefits were $101,000 in the current quarter as compared to $1.3 million in the quarter ended June 30, 2018.

Financial Condition
Total assets increased $295.0 million, or 7.4%, to $4.29 billion at September 30, 2018, from $3.99 billion at December 31, 2017. The increase was primarily due to an increase in our available-for sale debt securities portfolio of $226.7 million and an increase in loans held-for-investment, net, of $66.0 million.
 
As of September 30, 2018, we estimate that our non-owner occupied commercial real estate concentration (as defined by regulatory guidance issued in 2006) to total risk-based capital was approximately 406%. 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 $66.0 million to $3.21 billion at September 30, 2018, from $3.14 billion at December 31, 2017. Originated loans held-for-investment, net, totaled $2.60 billion at September 30, 2018, as compared to $2.43 billion at December 31, 2017. The increase was primarily due to an increase in multifamily real estate loans of $112.2 million, or 6.5%, to $1.85 billion at September 30, 2018, from $1.74 billion at December 31, 2017, and an increase in commercial real estate loans of $57.5 million, or 12.9%, to $502.7 million at September 30, 2018, from $445.2 million at December 31, 2017, partially offset by decreases in acquired loans and purchased credit-impaired (PCI) loans.

The following tables detail our multifamily real estate originations for the nine months ended September 30, 2018 and 2017 (dollars in thousands): 
For the Nine Months Ended September 30, 2018
Multifamily Originations
 
Weighted Average Interest Rate
 
Weighted Average Loan-to-Value Ratio
 
Weighted Average Months to Next Rate Change or Maturity for Fixed Rate Loans
 
(F)ixed or (V)ariable
 
Amortization Term
$
256,442

 
3.88%
 
64%
 
78
 
V
 
25 to 30 Years
12,365

 
4.17%
 
39%
 
181
 
F
 
15 Years
$
268,807

 
3.89%
 
63%
 
 
 
 
 
 


4



For the Nine Months Ended September 30, 2017
Multifamily Originations
 
Weighted Average Interest Rate
 
Weighted Average Loan-to-Value Ratio
 
Weighted Average Months to Next Rate Change or Maturity for Fixed Rate Loans
 
(F)ixed or (V)ariable
 
Amortization Term
$
247,421

 
3.61%
 
60%
 
80
 
V
 
15 to 30 Years
750

 
5.07%
 
48%
 
1
 
V
 
25 Years
16,640

 
3.95%
 
44%
 
180
 
F
 
15 Years
$
264,811

 
3.63%
 
59%
 
 
 
 
 
 
Acquired loans decreased by $104.3 million to $588.5 million at September 30, 2018, from $692.8 million at December 31, 2017, primarily due to paydowns of 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 2.45% to 3.05%, partially offset by purchases of one-to-four family residential loan pools during the first quarter of 2018, totaling $37.5 million.
PCI loans totaled $20.5 million at September 30, 2018, as compared to $22.7 million at December 31, 2017. The majority of the PCI loan balance consists of loans acquired as part of a Federal Deposit Insurance Corporation-assisted transaction. The Company accreted interest income of $1.0 million and $3.1 million attributable to PCI loans for the three and nine months ended September 30, 2018, respectively, as compared to $1.4 million and $4.1 million for the three and nine months ended September 30, 2017, respectively.
 
The Company’s available-for-sale debt securities portfolio increased by $226.7 million, or 44.1%, to $740.5 million at September 30, 2018, from $513.8 million at December 31, 2017. The increase was primarily attributable to purchases of mortgage-backed and corporate securities, partially offset by paydowns and sales. At September 30, 2018, $556.7 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 $183.5 million in corporate bonds, all of which were considered investment grade at September 30, 2018, and $278,000 in municipal bonds.
  
Total liabilities increased $279.5 million, or 8.3%, to $3.63 billion at September 30, 2018, from $3.35 billion at December 31, 2017. The increase was primarily attributable to an increase in deposits of $304.3 million, partially offset by a decrease in other borrowings of $30.4 million.
 
Deposits increased $304.3 million, or 10.7%, to $3.14 billion at September 30, 2018, as compared to $2.84 billion at December 31, 2017. The increase was attributable to increases of $39.5 million in savings and money market accounts and $316.0 million in certificates of deposit, partially offset by decreases of $51.2 million in transaction accounts. Deposit account balances are summarized as follows (dollars in thousands):
 
September 30, 2018
 
June 30, 2018
 
December 31, 2017
Transaction:
 
 
 
 
 
Non-interest bearing checking
$
395,500

 
$
411,427

 
$
407,267

Negotiable orders of withdrawal
425,722

 
421,167

 
465,140

Total transaction
821,222

 
832,594

 
872,407

Savings:
 
 
 
 
 
Savings
513,220

 
417,665

 
424,789

Money market
751,894

 
744,553

 
800,854

Total savings
1,265,114

 
1,162,218

 
1,225,643

Certificates of deposit:
 
 
 
 
 
Brokered deposits
199,945

 
170,835

 
150,639

$250,000 and under
705,925

 
652,127

 
477,326

Over $250,000
149,062

 
149,507

 
110,964

Total certificates of deposit
1,054,932

 
972,469

 
738,929

Total deposits
$
3,141,268

 
$
2,967,281

 
$
2,836,979



5



Included in the table above are business and municipal deposit account balances as follows (dollars in thousands):
 
September 30, 2018
 
June 30, 2018
 
December 31, 2017
 
 
 
 
 
 
Business customers
$
483,674

 
$
469,285

 
$
447,718

Municipal customers
$
303,672

 
$
296,575

 
$
345,581


Borrowings and securities sold under agreements to repurchase decreased by $30.4 million, or 6.4%, to $441.2 million at September 30, 2018, from $471.5 million at December 31, 2017. Management utilizes borrowings to mitigate interest rate risk, for short-term liquidity, and to a lesser extent as part of leverage strategies. 

The following is a table of term borrowing maturities (excluding capitalized leases and overnight borrowings) and the weighted average rate by year at September 30, 2018 (dollars in thousands):
Year
 
Amount
 
Weighted Average Rate
2018
 
$32,080
 
1.67%
2019
 
123,502
 
1.48%
2020
 
90,000
 
1.65%
2021
 
70,000
 
1.80%
2022
 
20,000
 
1.97%
Thereafter
 
100,000
 
2.91%
 
 
$435,582
 
1.93%
 
Total stockholders’ equity increased by $15.5 million to $654.4 million at September 30, 2018, from $638.9 million at December 31, 2017. The increase was primarily attributable to net income of $30.1 million for the nine months ended September 30, 2018, and a $7.5 million increase related to ESOP and equity award activity. These increases were partially offset by dividend payments of $14.0 million and an $8.1 million increase in unrealized losses on our debt securities available-for-sale portfolio as a result of the increased interest rate environment.

6



Asset Quality
 
The following table details total originated and acquired (excluding PCI) non-accrual loans, non-performing loans, non-performing assets, troubled debt restructurings on which interest is accruing, and accruing loans 30 to 89 days delinquent at September 30, 2018, June 30, 2018, and December 31, 2017 (dollars in thousands):
 
September 30, 2018
 
June 30, 2018
 
December 31, 2017
Non-accrual loans:
 
 
 
 
 
Held-for-investment
 
 
 
 
 
Real estate loans:
 
 
 
 
 
Commercial
$
8,128

 
$
4,620

 
$
4,087

One-to-four family residential
1,140

 
964

 
774

Multifamily
567

 
568

 
417

Home equity and lines of credit
152

 
154

 
156

Commercial and industrial

 
72

 
74

Total non-accrual loans
9,987

 
6,378

 
5,508

Loans delinquent 90 days or more and still accruing:
 
 
 
 
 
Held-for-investment
 
 
 
 
 
Real estate loans:
 
 
 
 
 
One-to-four family residential
33

 

 
27

Other

 

 
1

Total loans delinquent 90 days or more and still accruing
33

 

 
28

Total non-performing loans
10,020

 
6,378

 
5,536

Other real estate owned

 
850

 
850

Total non-performing assets
$
10,020

 
$
7,228

 
$
6,386

Non-performing loans to total loans
0.31
%
 
0.20
%
 
0.18
%
Non-performing assets to total assets
0.23
%
 
0.17
%
 
0.16
%
Loans subject to restructuring agreements and still accruing
$
16,575

 
$
16,758

 
$
18,003

Accruing loans 30 to 89 days delinquent
$
11,926

 
$
14,552

 
$
12,044


The increase in non-accrual loans during the quarter was primarily attributable to two commercial real estate loans totaling approximately $4.0 million (originated $1.1 million and acquired $2.9 million) being placed on non-accrual status during the third quarter of 2018. The originated loan collateral consists of a funeral home located in New Jersey and the acquired loan collateral consists of a religious school and administrative offices located in New Jersey. The loans have been individually evaluated for impairment and no specific reserve was deemed necessary as the loans are adequately secured by collateral with an aggregate fair value of approximately $5.2 million.

Accruing Loans 30 to 89 Days Delinquent
 
Loans 30 to 89 days delinquent and on accrual status totaled $11.9 million and $12.0 million at September 30, 2018, and December 31, 2017, respectively. The following table sets forth delinquencies for accruing loans by type and by amount at September 30, 2018, June 30, 2018, and December 31, 2017 (dollars in thousands):     

 
September 30, 2018
 
June 30, 2018
 
December 31, 2017
Held-for-investment
 
 
 
 
 
Real estate loans:
 
 
 
 
 
Commercial
$
3,810

 
$
6,633

 
$
4,347

One-to-four family residential
5,623

 
6,154

 
4,162

Multifamily
2,117

 
1,596

 
3,298

Construction and land

 
2

 
6

Home equity and lines of credit
80

 
114

 

Commercial and industrial loans
296

 
44

 
202

Other loans

 
9

 
29

Total delinquent accruing loans held-for-investment
$
11,926

 
$
14,552

 
$
12,044



7



PCI Loans (Held-for-Investment)

At September 30, 2018, 11.7% of PCI loans were past due 30 to 89 days, and 23.9% were past due 90 days or more, as compared to 10.8% and 17.1%, respectively, at December 31, 2017.  
 
About Northfield Bank

Northfield Bank, founded in 1887, operates 39 full-service banking offices in Staten Island and Brooklyn, New York, and Hunterdon, Middlesex, Mercer, and Union counties, New Jersey. For more information about Northfield Bank, please visit www.eNorthfield.com.
Forward-Looking Statements: This release may contain certain "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and may be identified by the use of such words as "may," "believe," "expect," "anticipate," "should," "plan," "estimate," "predict," "continue," and "potential" or the negative of these terms or other comparable terminology.  Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of Northfield Bancorp, Inc.  Any or all of the forward-looking statements in this release and in any other public statements made by Northfield Bancorp, Inc. may turn out to be wrong.  They can be affected by inaccurate assumptions Northfield Bancorp, Inc. might make or by known or unknown risks and uncertainties as described in our SEC filings, including, but not limited to, those related to general economic conditions, particularly in the market areas in which the Company operates, competition among depository and other financial institutions, changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements, inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments, our ability to successfully integrate acquired entities, and adverse changes in the securities markets.  Consequently, no forward-looking statement can be guaranteed.  Northfield Bancorp, Inc. does not intend to update any of the forward-looking statements after the date of this release, or conform these statements to actual events.
 
(Tables to follow)


8



NORTHFIELD BANCORP, INC.
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
(Dollars in thousands, except per share amounts) (unaudited)
 
 
At or For the Three Months Ended
 
At or For the Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
2018
 
2017
 
2018
 
2018
 
2017
Selected Financial Ratios:
 
 
 
 
 
 
 
 
 
Performance Ratios(1)
 
 
 
 
 
 
 
 
 
Return on assets (ratio of net income to average total assets) (7) (8)
0.84%
 
0.82%
 
1.03%
 
0.97
%
 
0.91
%
Return on equity (ratio of net income to average equity) (7) (8)
5.51
 
5.01
 
6.58
 
6.22

 
5.57

Average equity to average total assets
15.32
 
16.42
 
15.61
 
15.57

 
16.33

Interest rate spread
2.49
 
2.78
 
2.61
 
2.60

 
2.81

Net interest margin
2.75
 
2.97
 
2.85
 
2.84

 
2.99

Efficiency ratio(2) (8)
55.95
 
56.16
 
56.40
 
56.51

 
56.57

Non-interest expense to average total assets 
1.59
 
1.70
 
1.65
 
1.65

 
1.75

Non-interest expense to average total interest-earning assets 
1.69
 
1.83
 
1.75
 
1.75

 
1.89

Average interest-earning assets to average interest-bearing liabilities
127.37
 
128.51
 
128.83
 
128.23

 
128.62

Asset Quality Ratios:
 
 
 
 
 
 
 
 
 
Non-performing assets to total assets
0.23
 
0.16
 
0.17
 
0.23

 
0.16

Non-performing loans(3) to total loans(4)
0.31
 
0.18
 
0.20
 
0.31

 
0.18

Allowance for loan losses to non-performing loans held-for-investment
276.31
 
463.40
 
421.48
 
276.31

 
463.40

Allowance for loan losses to originated loans held-for-investment, net(5)
1.03
 
1.07
 
1.02
 
1.03

 
1.07

Allowance for loan losses to total loans held-for-investment, net(6)
0.86
 
0.83
 
0.83
 
0.86

 
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, and acquired loans.
(5)
Excludes PCI loans and acquired loans held-for-investment, and related reserve balances.
(6)
Includes PCI and acquired loans held-for-investment.
(7) The three months ended June 30, 2018, includes excess tax benefits of $1.3 million related to the exercise or vesting of equity awards. The nine months ended September 30, 2018 and 2017, include excess tax benefits of $2.2 million and $2.3 million, respectively, related to the exercise or vesting of equity awards. Excess tax benefits will fluctuate based on the Company's stock price and timing of employee stock option exercises and vesting of other share-based awards.
(8) The nine months ended September 30, 2017, includes $1.5 million of tax-exempt income from bank owned life insurance proceeds in excess of the cash surrender value of the policies.




9



NORTHFIELD BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share amounts) (unaudited)
 
September 30, 2018
 
June 30, 2018
 
December 31, 2017
ASSETS:
 
 
 
 
 
Cash and due from banks
$
13,332

 
$
13,538

 
$
17,446

Interest-bearing deposits in other financial institutions
45,403

 
45,195

 
40,393

Total cash and cash equivalents
58,735

 
58,733

 
57,839

Trading securities
10,670

 
10,167

 
9,597

Debt securities available-for-sale, at estimated fair value
740,518

 
625,279

 
513,782

Debt securities held-to-maturity, at amortized cost
9,560

 
9,819

 
9,931

Equity securities
1,183

 
1,301

 
1,339

Originated loans held-for-investment, net
2,597,816

 
2,547,920

 
2,425,275

Loans acquired
588,517

 
650,875

 
692,803

Purchased credit-impaired (PCI) loans held-for-investment
20,535

 
21,331

 
22,741

Loans held-for-investment, net
3,206,868

 
3,220,126

 
3,140,819

Allowance for loan losses
(27,687
)
 
(26,882
)
 
(26,160
)
Net loans held-for-investment
3,179,181

 
3,193,244

 
3,114,659

Accrued interest receivable
11,984

 
11,413

 
10,713

Bank owned life insurance
153,218

 
152,298

 
150,604

Federal Home Loan Bank of New York stock, at cost
23,960

 
27,718

 
25,046

Premises and equipment, net
25,229

 
25,058

 
25,746

Goodwill
38,411

 
38,411

 
38,411

Other real estate owned

 
850

 
850

Other assets
33,766

 
33,867

 
32,900

Total assets
$
4,286,415

 
$
4,188,158

 
$
3,991,417

 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY:
 
 
 
 
 
Deposits
$
3,141,268

 
$
2,967,281

 
$
2,836,979

Securities sold under agreements to repurchase

 

 
2,000

Federal Home Loan Bank advances and other borrowings
441,191

 
524,335

 
469,549

Advance payments by borrowers for taxes and insurance
16,999

 
18,009

 
14,798

Accrued expenses and other liabilities
32,537

 
28,878

 
29,214

Total liabilities
3,631,995

 
3,538,503

 
3,352,540

Total stockholders’ equity
654,420

 
649,655

 
638,877

Total liabilities and stockholders’ equity
$
4,286,415

 
$
4,188,158

 
$
3,991,417

 
 
 
 
 
 
Total shares outstanding
49,534,744

 
49,481,589

 
48,803,885

Tangible book value per share (1)
$
12.41

 
$
12.33

 
$
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 $1.1 million, $1.2 million, and $1.4 million at September 30, 2018, June 30, 2018, and December 31, 2017, respectively, and are included in other assets.




10



NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands, except share and per share amounts) (unaudited)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
2018
 
2017
 
2018
 
2018
 
2017
Interest income:
 
 
 
 
 
 
 
 
 
Loans
$
32,443

 
$
30,424

 
$
31,456

 
$
94,686

 
$
89,085

Mortgage-backed securities
3,475

 
2,175

 
3,068

 
9,269

 
6,791

Other securities
1,104

 
370

 
821

 
2,427

 
905

Federal Home Loan Bank of New York dividends
428

 
365

 
398

 
1,240

 
1,061

Deposits in other financial institutions
277

 
191

 
192

 
722

 
412

Total interest income
37,727

 
33,525

 
35,935

 
108,344

 
98,254

Interest expense:
 
 
 

 
 

 
 

 
 

Deposits
7,593

 
4,168

 
6,050

 
18,854

 
11,687

Borrowings
2,210

 
2,005

 
2,115

 
6,252

 
5,629

Total interest expense
9,803

 
6,173

 
8,165

 
25,106

 
17,316

Net interest income
27,924

 
27,352

 
27,770

 
83,238

 
80,938

Provision for loan losses
1,304

 
488

 
670

 
2,008

 
1,371

Net interest income after provision for loan losses
26,620

 
26,864

 
27,100

 
81,230

 
79,567

Non-interest income:
 
 
 

 
 

 
 

 
 

Fees and service charges for customer services
1,241

 
1,238

 
1,147

 
3,602

 
3,563

Income on bank owned life insurance
919

 
970

 
914

 
2,787

 
4,438

Gains on securities transactions, net
419

 
337

 
313

 
892

 
1,001

Other
58

 
70

 
71

 
205

 
197

Total non-interest income
2,637

 
2,615

 
2,445

 
7,486

 
9,199

Non-interest expense:
 
 
 

 
 

 
 

 
 

Compensation and employee benefits
9,443

 
9,593

 
9,121

 
27,681

 
29,339

Occupancy
3,015

 
2,807

 
2,950

 
9,061

 
8,460

Furniture and equipment
239

 
279

 
252

 
747

 
871

Data processing
1,153

 
1,155

 
1,150

 
3,527

 
3,436

Professional fees
886

 
569

 
909

 
2,558

 
2,034

FDIC insurance
241

 
279

 
274

 
812

 
795

Other
2,123

 
2,146

 
2,384

 
6,880

 
6,055

Total non-interest expense
17,100

 
16,828

 
17,040

 
51,266

 
50,990

Income before income tax expense
12,157

 
12,651

 
12,505

 
37,450

 
37,776

Income tax expense(1)
3,081

 
4,525

 
1,893

 
7,318

 
11,292

Net income
$
9,076

 
$
8,126

 
$
10,612

 
$
30,132

 
$
26,484

Net income per common share:
 
 
 
 
 
 
 
 
 
Basic
$
0.19

 
$
0.18

 
$
0.23

 
$
0.65

 
$
0.59

Diluted
$
0.19

 
$
0.17

 
$
0.23

 
$
0.64

 
$
0.57

Basic average shares outstanding
46,604,051

 
45,492,713

 
46,184,918

 
46,192,273

 
45,257,199

Diluted average shares outstanding
47,294,645

 
46,741,223

 
47,109,977

 
47,137,407

 
46,834,347



11



NORTHFIELD BANCORP, INC.
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands) (unaudited)
 
 
For the Three Months Ended
 
September 30, 2018
 
June 30, 2018
 
September 30, 2017
 
Average Outstanding Balance
 
Interest
 
Average Yield/ Rate (1)
 
Average Outstanding Balance
 
Interest
 
Average Yield/ Rate (1)
 
Average Outstanding Balance
 
Interest
 
Average Yield/ Rate (1)
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans (2)
$
3,202,616

 
$
32,443

 
4.02
%
 
$
3,173,787

 
$
31,456

 
3.98
%
 
$
3,065,206

 
$
30,424

 
3.94
%
Mortgage-backed securities (3)
565,783

 
3,475

 
2.44

 
522,009

 
3,068

 
2.36

 
413,627

 
2,175

 
2.09

Other securities (3)
160,877

 
1,104

 
2.72

 
126,823

 
821

 
2.60

 
77,170

 
370

 
1.90

Federal Home Loan Bank of New York stock
25,499

 
428

 
6.66

 
25,487

 
398

 
6.26

 
26,422

 
365

 
5.48

Interest-earning deposits in financial institutions
69,327

 
277

 
1.59

 
57,061

 
192

 
1.35

 
71,606

 
191

 
1.06

Total interest-earning assets
4,024,102

 
37,727

 
3.72

 
3,905,167

 
35,935

 
3.69

 
3,654,031

 
33,525

 
3.64

Non-interest-earning assets
244,191

 
 
 
 
 
238,225

 
 
 
 
 
265,652

 
 
 
 
Total assets
$
4,268,293

 
 
 
 
 
$
4,143,392

 
 
 
 
 
$
3,919,683

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Savings, NOW, and money market accounts
$
1,620,562

 
$
2,691

 
0.66
%
 
$
1,655,819

 
$
2,312

 
0.56
%
 
$
1,686,677

 
$
2,033

 
0.48
%
Certificates of deposit
1,064,005

 
4,902

 
1.83

 
900,437

 
3,738

 
1.67

 
653,512

 
2,135

 
1.30

Total interest-bearing deposits
2,684,567

 
7,593

 
1.12

 
2,556,256

 
6,050

 
0.95

 
2,340,189

 
4,168

 
0.71

Borrowed funds
474,773

 
2,210

 
1.85

 
475,067

 
2,115

 
1.79

 
503,240

 
2,005

 
1.58

Total interest-bearing liabilities
3,159,340

 
9,803

 
1.23

 
3,031,323

 
8,165

 
1.08

 
2,843,429

 
6,173

 
0.86

Non-interest bearing deposits
404,570

 
 
 
 
 
414,792

 
 
 
 
 
378,191

 
 
 
 
Accrued expenses and other liabilities
50,527

 
 
 
 
 
50,589

 
 
 
 
 
54,278

 
 
 
 
Total liabilities
3,614,437

 
 
 
 
 
3,496,704

 
 
 
 
 
3,275,898

 
 
 
 
Stockholders' equity
653,856

 
 
 
 
 
646,688

 
 
 
 
 
643,785

 
 
 
 
Total liabilities and stockholders' equity
$
4,268,293

 
 
 
 
 
$
4,143,392

 
 
 
 
 
$
3,919,683

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
27,924

 
 
 
 
 
$
27,770

 
 
 
 
 
$
27,352

 
 
Net interest rate spread (4)
 
 
 
 
2.49
%
 
 
 
 
 
2.61
%
 
 
 
 
 
2.78
%
Net interest-earning assets (5)
$
864,762

 
 
 
 
 
$
873,844

 
 
 
 
 
$
810,602

 
 
 
 
Net interest margin (6)
 
 
 
 
2.75
%
 
 
 
 
 
2.85
%
 
 
 
 
 
2.97
%
Average interest-earning assets to interest-bearing liabilities
 
 
 
 
127.37
%
 
 
 
 
 
128.83
%
 
 
 
 
 
128.51
%

(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.


12



 
For the Nine Months Ended
 
September 30, 2018
 
September 30, 2017
 
Average Outstanding Balance
 
Interest
 
Average Yield/ Rate (1)
 
Average Outstanding Balance
 
Interest
 
Average Yield/ Rate (1)
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
Loans (2)
$
3,169,780

 
$
94,686

 
3.99
%
 
$
3,027,517

 
$
89,085

 
3.93
%
Mortgage-backed securities (3)
524,904

 
9,269

 
2.36

 
431,186

 
6,791

 
2.11

Other securities (3)
126,578

 
2,427

 
2.56

 
65,603

 
905

 
1.84

Federal Home Loan Bank of New York stock
25,271

 
1,240

 
6.56

 
26,458

 
1,061

 
5.36

Interest-earning deposits in financial institutions
69,528

 
722

 
1.39

 
64,164

 
412

 
0.86

Total interest-earning assets
3,916,061

 
108,344

 
3.70

 
3,614,928

 
98,254

 
3.63

Non-interest-earning assets
241,828

 
 
 
 
 
277,263

 
 
 
 
Total assets
$
4,157,889

 
 
 
 
 
$
3,892,191

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
Savings, NOW, and money market accounts
$
1,652,683

 
$
7,146

 
0.58
%
 
$
1,717,916

 
$
6,142

 
0.48
%
Certificates of deposit
929,654

 
11,708

 
1.68

 
594,100

 
5,545

 
1.25

Total interest-bearing deposits
2,582,337

 
18,854

 
0.98

 
2,312,016

 
11,687

 
0.68

Borrowed funds
471,567

 
6,252

 
1.77

 
498,640

 
5,629

 
1.51

Total interest-bearing liabilities
3,053,904

 
25,106

 
1.10

 
2,810,656

 
17,316

 
0.82

Non-interest bearing deposits
408,116

 
 
 
 
 
381,173

 
 
 
 
Accrued expenses and other liabilities
48,596

 
 
 
 
 
64,858

 
 
 
 
Total liabilities
3,510,616

 
 
 
 
 
3,256,688

 
 
 
 
Stockholders' equity
647,273

 
 
 
 
 
635,503

 
 
 
 
Total liabilities and stockholders' equity
$
4,157,889

 
 
 
 
 
$
3,892,191

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
83,238

 
 
 
 
 
$
80,938

 
 
Net interest rate spread (4)
 
 
 
 
2.60
%
 
 
 
 
 
2.81
%
Net interest-earning assets (5)
$
862,157

 
 
 
 
 
$
804,272

 
 
 
 
Net interest margin (6)
 
 
 
 
2.84
%
 
 
 
 
 
2.99
%
Average interest-earning assets to interest-bearing liabilities
 
 
 
 
128.23
%
 
 
 
 
 
128.62
%

(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.




13

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