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Northfield Bancorp, Inc. Announces Second Quarter 2017 Results

NOTABLE ITEMS INCLUDE:

  • DILUTED EARNINGS PER SHARE INCREASED 20% OVER THE COMPARABLE 2016 QUARTER
  • NET INTEREST INCOME INCREASED $1.3 MILLION, OR 4.9%, OVER THE COMPARABLE 2016 QUARTER
  • ORIGINATED LOANS HELD-FOR-INVESTMENT, NET, INCREASED 7.3% YEAR-TO-DATE
  • ASSET QUALITY REMAINS STRONG WITH NONPERFORMING ASSETS AT 0.19% OF TOTAL ASSETS AND NON PERFORMING LOANS AT 0.21% OF TOTAL LOANS
  • CAPITAL REMAINS STRONG AT 16.5%
  • CASH DIVIDEND OF $0.08 PER SHARE OF COMMON STOCK DECLARED PAYABLE AUGUST 23, 2017 TO STOCKHOLDERS OF RECORD AS OF AUGUST 9, 2017

WOODBRIDGE, N.J., July 26, 2017 (GLOBE NEWSWIRE) -- NORTHFIELD BANCORP, INC. (Nasdaq:NFBK), the holding company for Northfield Bank, reported diluted earnings per common share of $0.18 and $0.39 for the quarter and six months ended June 30, 2017, respectively, compared to diluted earnings per common share of $0.15 and $0.23 for the quarter and six months ended June 30, 2016, respectively. In the first quarter of 2017, the Company adopted Accounting Standards Update No. 2016-09, Compensation - Stock Compensation (Topic 718) (“ASU 2016-09”) which resulted in a $593,000, or $0.01 per diluted share, and a $2.3 million, or $0.05 per diluted share, reduction in income tax expense for the quarter and six months ended June 30, 2017, respectively. Earnings for the six months ended June 30, 2017, also reflect $1.5 million, or $0.03 per diluted share, of tax-exempt income from bank owned life insurance proceeds in excess of the cash surrender value of the policies, recorded in the first quarter of 2017. Earnings for the six months ended June 30, 2016, included merger-related expenses associated with the acquisition of Hopewell Valley Community Bank (“Hopewell Valley”) of approximately $2.1 million, net of tax, or $0.05 per diluted share.

John W. Alexander, Chairman and Chief Executive Officer, commented, “Our solid financial performance for the quarter continues to be driven by the fundamentals of disciplined growth, pricing, and expense management. Originated loans held-for-investment have increased over seven percent for the year, asset quality continues to remain strong, our net interest margin experienced a slight increase over the comparable six month prior year period, and our efficiency ratio continues to improve. On the customer experience side, we continue to enhance our online banking system by now providing auto enrollment for mobile deposits and have added Android and Samsung Pay to our existing Apple Pay. Also, we have expanded our online account opening opportunities and added the ability for online customers to transfer funds between banks.”

Mr. Alexander further noted, “I am pleased to announce the declaration of a $0.08 per common share dividend by the Board of Directors. This dividend will be payable on August 23, 2017, to stockholders of record on August 9, 2017.”

Results of Operations

Comparison of Operating Results for the Six Months Ended June 30, 2017 and 2016

Net income was $18.4 million and $10.6 million for the six months ended June 30, 2017, and June 30, 2016, respectively. Significant variances from the comparable prior year period are as follows: a $3.2 million increase in net interest income, a $1.0 million increase in the provision for loan losses, a $1.8 million increase in non-interest income, a $4.8 million decrease in non-interest expense, and a $1.2 million increase in income tax expense.

Net interest income for the six months ended June 30, 2017, increased $3.2 million, or 6.4%, to $53.6 million, from $50.4 million for the six months ended June 30, 2016, primarily due to a $189.0 million, or 5.5%, increase in our average interest-earning assets and a four basis point increase in our net interest margin to 3.01%. The increase in average interest-earning assets was due primarily to an increase in average loans outstanding of $307.3 million, partially offset by decreases in average mortgage-backed securities of $105.3 million and interest-earning deposits in financial institutions of $15.9 million. The increase in average loans was primarily due to originated loan growth. Net interest income for the six months ended June 30, 2017, included loan prepayment income of $520,000 as compared to $935,000 for the six months ended June 30, 2016. Yields earned on interest-earning assets increased one basis point to 3.63% for the six months ended June 30, 2017, from 3.62% for the six months ended June 30, 2016. The cost of interest-bearing liabilities decreased three basis points to 0.80% for the six months ended June 30, 2017, as compared to 0.83% for the six months ended June 30, 2016, primarily due to lower rates on borrowed funds.

The provision for loan losses increased by $1.0 million to $883,000 for the six months ended June 30, 2017, from a negative provision of $117,000 for the six months ended June 30, 2016, primarily due to growth in the loan portfolio, partially offset by declines in non-performing loans and net recoveries during the six months ended June 30, 2017. Net recoveries, primarily resulting from insurance proceeds received related to a previously impaired loan, were $127,000 for the six months ended June 30, 2017, compared to net charge-offs of $336,000 for the six months ended June 30, 2016.

Non-interest income increased $1.8 million, or 38.3%, to $6.6 million for the six months ended June 30, 2017, from $4.8 million for the six months ended June 30, 2016, primarily due to an increase of $1.5 million in income on bank owned life insurance, attributable to insurance proceeds in excess of the related cash surrender value of the policies, and an increase of $415,000 in gains on securities transactions, net. Securities gains, net, during the six months ended June 30, 2017, included gains of $668,000 related to the Company’s trading portfolio, compared to gains of $44,000 in the comparative prior year period. The trading portfolio is utilized to fund the Company’s deferred compensation obligation to certain employees and directors of the Company's deferred compensation plan (the Plan). The participants of this Plan, at their election, defer a portion of their compensation. Gains and losses on trading securities have no effect on net income since participants benefit from, and bear the full risk of, changes in the trading securities market values. Therefore, the Company records an equal and offsetting amount in compensation expense, reflecting the change in the Company’s obligations under the Plan.

Non-interest expense decreased $4.8 million, or 12.4%, to $34.2 million for the six months ended June 30, 2017, from $39.0 million for the six months ended June 30, 2016. The decrease was primarily due to a $3.5 million reduction in merger-related expenses associated with the Hopewell Valley acquisition reflected in the first six months of 2016. Compensation and employee benefits expense decreased $1.6 million, due primarily to a reduction in severance, retention, and change-in-control compensation associated with the Hopewell Valley acquisition in the prior year period, partially offset by annual merit-related salary increases and an increase in expense related to the Company’s deferred compensation plan, which is described above, and which has no effect on net income. Data processing fees decreased $964,000, primarily due to non-recurring conversion costs associated with the Hopewell Valley acquisition incurred in the prior year period. Professional fees decreased $472,000 due to $557,000 of non-recurring merger-related professional fees associated with the Hopewell Valley acquisition incurred in the prior year period, partially offset by an increase in other professional fees. FDIC insurance expense decreased by $446,000 due to a reduction in the FDIC's assessment rates for depository institutions with less than $10.0 billion in assets, which became effective in the quarter ended September 30, 2016. Other expense decreased by $1.1 million, primarily due to lower Directors' equity award expense, related to the retirement of three directors, and lower advertising expense, due in part to lower printing and production costs associated with Hopewell Valley customer communications and data conversion mailings in the first six months of 2016.

The Company recorded income tax expense of $6.8 million for the six months ended June 30, 2017, compared to $5.6 million for the six months ended June 30, 2016. The effective tax rate for the six months ended June 30, 2017, was 26.9% compared to 34.5% for the six months ended June 30, 2016. The Company adopted ASU 2016-09 in the first quarter of 2017, which resulted in, among other things, a $2.3 million reduction in income tax expense related to the exercise or vesting of equity awards during the six months ended June 30, 2017. Previously, these tax benefits were recorded through equity as an adjustment to additional paid in capital. In addition, the effective tax rate for the six months ended June 30, 2017, also was affected by $1.5 million of tax-exempt income from bank owned life insurance proceeds in excess of the cash surrender value of the policies. In accordance with applicable accounting standards, the tax effect will be recognized evenly throughout the year.

Comparison of Operating Results for the Three Months Ended June 30, 2017 and 2016

Net income was $8.4 million and $7.0 million for the quarters ended June 30, 2017, and June 30, 2016, respectively. Significant variances from the comparable prior year quarter are as follows: a $1.3 million increase in net interest income, a $497,000 increase in the provision for loan losses, a $96,000 decrease in non-interest income, an $876,000 decrease in non-interest expense, and a $126,000 increase in income tax expense.

Net interest income for the quarter ended June 30, 2017, increased $1.3 million, or 4.9%, primarily due to a $193.1 million, or 5.6%, increase in our average interest-earning assets, partially offset by a three basis point decrease in our net interest margin to 2.97%. The increase in average interest-earning assets was primarily attributable to an increase in average loans outstanding of $320.8 million, partially offset by decreases in average mortgage-backed securities of $124.0 million and interest-earning deposits in financial institutions of $3.3 million. The increase in average loans was primarily due to originated loan growth. Net interest income for the quarter ended June 30, 2017, included loan prepayment income of $193,000 as compared to $691,000 for the quarter ended June 30, 2016. Yields earned on interest-earning assets decreased four basis points to 3.61% for the quarter ended June 30, 2017, from 3.65% for the quarter ended June 30, 2016. The cost of interest-bearing liabilities decreased one basis point to 0.82% for the current quarter as compared to 0.83% for the comparable prior year quarter.

The provision for loan losses increased by $497,000 to $511,000 for the quarter ended June 30, 2017, from $14,000 for the quarter ended June 30, 2016, primarily due to growth in the loan portfolio and higher net charge-offs, partially offset by declines in non-performing loans. Net charge-offs were $190,000 for the quarter ended June 30, 2017, compared to net charge-offs of $75,000 for the quarter ended June 30, 2016.

Non-interest income remained relatively stable at $2.4 million for the quarter ended June 30, 2017, as compared to $2.5 million for the quarter ended June 30, 2016.

Non-interest expense decreased $876,000, or 5.0%, to $16.6 million for the quarter ended June 30, 2017, from $17.5 million for the quarter ended June 30, 2016. The decrease was due primarily to decreases of $266,000 in data processing fees, $101,000 in other professional fees, $229,000 in FDIC insurance expense due to a reduction in the FDIC's assessment rates for depository institutions with less than $10.0 billion in assets, which became effective in the quarter ended September 30, 2016, and $332,000 in other expense, primarily due to lower Directors' equity award expense related to the retirement of three directors.

The Company recorded income tax expense of $3.8 million for the quarter ended June 30, 2017, compared to $3.7 million for the quarter ended June 30, 2016. The effective tax rate for the quarter ended June 30, 2017, was 31.2% compared to 34.5% for the quarter ended June 30, 2016. The Company adopted ASU 2016-09 in the first quarter of 2017, the effect of which was a $593,000 reduction in income tax expense related to the exercise or vesting of equity awards during the quarter ended June 30, 2017, which was previously recorded through equity as an adjustment to additional paid in capital.

Comparison of Operating Results for the Three Months Ended June 30, 2017, and March 31, 2017

Net income was $8.4 million and $9.9 million for the quarters ended June 30, 2017, and March 31, 2017, respectively. Significant variances from the prior quarter are as follows: a $232,000 increase in net interest income, a $139,000 increase in the provision for loan losses, a $1.7 million decrease in non-interest income, a $926,000 decrease in non-interest expense, and an $847,000 increase in income tax expense.

Net interest income for the quarter ended June 30, 2017, was relatively flat compared to the quarter ended March 31, 2017, as the increase in our average interest-earning assets of $66.8 million, or 1.9%, was offset by a decrease in our net interest margin of seven basis points to 2.97%. The increase in our average interest-earning assets was due primarily to increases in average loans outstanding of $67.2 million and interest-earning deposits in financial institutions of $19.2 million, partially offset by a decrease in average mortgage-backed securities of $22.8 million. Net interest income for the quarter ended June 30, 2017, included loan prepayment income of $193,000 as compared to $327,000 for the quarter ended March 31, 2017. Yields earned on interest-earning assets decreased four basis points to 3.61% for the quarter ended June 30, 2017, from 3.65% for the quarter ended March 31, 2017. The cost of interest-bearing liabilities increased three basis points to 0.82% for the quarter ended June 30, 2017, as compared to 0.79% for the quarter ended March 31, 2017, primarily due to higher rates on certificates of deposits and borrowed funds.

The provision for loan losses increased by $139,000 to $511,000 for the quarter ended June 30, 2017, from $372,000 for the quarter ended March 31, 2017, due primarily to growth in the portfolio and higher net charge-offs. Net charge-offs were $190,000 for the quarter ended June 30, 2017, compared to net recoveries of $317,000 for the quarter ended March 31, 2017.

Non-interest income decreased $1.7 million, or 41.2%, to $2.4 million for the quarter ended June 30, 2017, from $4.1 million for the quarter ended March 31, 2017. The decrease was primarily the result of a $1.5 million decrease in income on bank owned life insurance, attributable to insurance proceeds in excess of the related cash surrender value of the policies received in the quarter ended March 31, 2017, and, to a lesser extent, decreases of $152,000 in gains on securities transactions, net, and $111,000 in fees and service charges for customers.

Non-interest expense decreased $926,000, or 5.3%, to $16.6 million for the quarter ended June 30, 2017, from $17.5 million for the quarter ended March 31, 2017, due primarily to a decrease of $198,000 in compensation and employee benefits, the majority of which is due to a decrease in expense related to the Company’s deferred compensation plan, which is described above, and has no effect on net income, a decrease of $261,000 in occupancy costs, consisting primarily of lower repairs and maintenance costs associated with snow removal costs incurred in the first quarter, a decrease of $275,000 in other professional fees, related to lower recruiting fees and regulatory review fees, and a decrease of $133,000 in other expenses.

The Company recorded income tax expense of $3.8 million for the quarter ended June 30, 2017, compared to $3.0 million for the quarter ended March 31, 2017. The effective tax rate for the quarter ended June 30, 2017 was 31.2% compared to 22.9% for the quarter ended March 31, 2017. The Company adopted ASU 2016-09 in the first quarter of 2017, which resulted in a reduction in income tax expense of $593,000, and $1.7 million, for the quarters ended June 30, 2017, and March 31, 2017, respectively, related to the exercise or vesting of equity awards. Previously, these tax benefits were recorded through equity as an adjustment to additional paid in capital. In addition, the effective tax rate for the quarter ended March 31, 2017, was affected by $1.5 million of tax-exempt income from bank owned life insurance proceeds in excess of the cash surrender value of the policies. In accordance with applicable accounting standards, the tax effect will be recognized evenly throughout the year.

Financial Condition

Total assets increased $9.5 million, or 0.2%, to $3.86 billion at June 30, 2017, from $3.85 billion at December 31, 2016. The increase was primarily due to an increase in loans held-for-investment, net, of $79.8 million, partially offset by decreases in cash and cash equivalents of $45.8 million and securities available-for-sale of $25.9 million.

As of June 30, 2017, 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 386%. Management believes that Northfield Bank (the Bank) has implemented appropriate risk management practices including risk assessments, board approved underwriting policies and related procedures which include, monitoring bank portfolio performance, performing market analysis (economic and real estate), and stressing of the Bank’s commercial real estate portfolio under severe adverse economic conditions. Although management believes the Bank has implemented appropriate policies and procedures to manage our commercial real estate concentration risk, the Bank’s regulators could require us to implement additional policies and procedures or could require us to maintain higher levels of regulatory capital, which might adversely affect our loan originations, ability to pay dividends, and profitability.

Loans held-for-investment, net, increased $79.8 million to $3.05 billion at June 30, 2017, from $2.97 billion at December 31, 2016. Originated loans held-for-investment, net, totaled $2.30 billion at June 30, 2017, as compared to $2.14 billion at December 31, 2016. The increase was primarily due to an increase in multifamily real estate loans of $151.9 million, or 10.1%.

The following tables detail our multifamily real estate originations for the six months ended June 30, 2017 and 2016 (dollars in thousands):

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


For the Six Months Ended June 30, 2016
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
$110,265 3.46% 61% 82 V 30 Years
3,075 4.07% 36% 180 F 15 Years
$113,340 3.48% 60%

Acquired loans decreased by $74.0 million to $719.2 million at June 30, 2017, from $793.2 million at December 31, 2016. The decrease was primarily due to paydowns.

Purchased credit-impaired (PCI) loans totaled $28.0 million at June 30, 2017, as compared to $30.5 million at December 31, 2016. 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 $1.3 million and $2.8 million attributable to PCI loans for the three and six months ended June 30, 2017, respectively, as compared to $1.4 million and $2.7 million for the three and six months ended June 30, 2016, respectively.

The Company’s available-for-sale securities portfolio totaled $473.0 million at June 30, 2017, compared to $498.9 million at December 31, 2016, with the decrease being primarily attributable to paydowns. At June 30, 2017, $407.8 million of the portfolio consisted of residential mortgage-backed securities issued or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. In addition, the Company held $63.0 million in corporate bonds, all of which were considered investment grade at June 30, 2017, and other securities of $2.1 million (including $314,000 of equity investments in money market mutual funds).

Total liabilities decreased $7.8 million, or 0.2%, to $3.22 billion at June 30, 2017, from $3.23 billion at December 31, 2016. The decrease was primarily attributable to decreases in deposits of $35.1 million and securities sold under agreements to repurchase of $4.0 million, partially offset by an increase in other borrowings of $31.5 million.

Deposits decreased $35.1 million, or 1.3%, to $2.68 billion at June 30, 2017, as compared to $2.71 billion at December 31, 2016. The decrease was attributable to decreases of $95.0 million in transaction accounts and $38.4 million in savings accounts, partially offset by increases of $11.9 million in money market accounts and $86.4 million in certificates of deposit accounts.

Borrowings and securities sold under agreements to repurchase increased by $27.5 million, or 5.8%, to $500.7 million at June 30, 2017, from $473.2 million at December 31, 2016. Management utilizes borrowings to mitigate interest rate risk, for short-term liquidity, and to a lesser extent as part of leverage strategies. The following is a table of term borrowing maturities (excluding capitalized leases and overnight borrowings) and the weighted average rate by year at June 30, 2017 (dollars in thousands):

Year Amount Weighted Average Rate
2017 $85,000 1.27%
2018 140,715 1.64%
2019 123,502 1.48%
2020 90,000 1.65%
2021 46,725 1.80%
$485,942 1.55%

Total stockholders’ equity increased by $17.3 million to $638.5 million at June 30, 2017, from $621.2 million at December 31, 2016. The increase was primarily attributable to net income of $18.4 million for the six months ended June 30, 2017, and to a lesser extent a $4.4 million increase related to equity award activity, and a $1.9 million reduction in unrealized losses on our securities available-for-sale portfolio. These increases were partially offset by dividend payments of $7.4 million.

Asset Quality

The following table details total originated and acquired (excluding PCI) non-accrual loans, non-performing loans, non-performing assets, troubled debt restructurings on which interest is accruing, and accruing loans 30 to 89 days delinquent at June 30, 2017, and December 31, 2016 (dollars in thousands):

June 30, 2017 December 31, 2016
Non-accrual loans:
Held-for-investment
Real estate loans:
Commercial$4,154 $5,513
One-to-four family residential747 1,629
Multifamily422 43
Home equity and lines of credit117 127
Commercial and industrial76 9
Total non-accrual loans held-for-investment5,516 7,321
Held-for-sale
Commercial494
Total non-accrual loans6,010 7,321
Loans delinquent 90 days or more and still accruing:
Held-for-investment
Real estate loans:
Commercial84
One-to-four family residential157 52
Home equity and lines of credit3 8
Other47
Total loans delinquent 90 days or more and still accruing291 60
Total non-performing loans6,301 7,381
Other real estate owned850 850
Total non-performing assets$7,151 $8,231
Loans subject to restructuring agreements and still accruing$20,643 $20,628
Accruing loans 30 to 89 days delinquent$14,087 $10,100

Accruing Loans 30 to 89 Days Delinquent

Loans 30 to 89 days delinquent and on accrual status totaled $14.1 million and $10.1 million at June 30, 2017, and December 31, 2016, respectively. The following table sets forth delinquencies for accruing loans by type and by amount at June 30, 2017, and December 31, 2016 (dollars in thousands):

June 30, 2017 December 31, 2016
Held-for-investment
Real estate loans:
Commercial$5,895 $4,578
One-to-four family residential3,496 3,621
Multifamily2,584 1,440
Home equity and lines of credit301 263
Commercial and industrial loans296 148
Other loans 50
Total delinquent accruing loans held-for-investment$12,572 $10,100
Held-for-sale
Multifamily1,515
Total delinquent accruing loans$14,087 $10,100

PCI Loans (Held-for-Investment)

At June 30, 2017, 8.4% of PCI loans were past due 30 to 89 days, and 15.1% were past due 90 days or more, as compared to 6.6% and 19.3%, respectively, at December 31, 2016.

About Northfield Bank

Northfield Bank, founded in 1887, operates 38 full-service banking offices in Staten Island and Brooklyn, New York, and Hunterdon, Middlesex, Mercer, and Union counties, New Jersey. For more information about Northfield Bank, please visit www.eNorthfield.com.

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

(Tables to follow)

NORTHFIELD BANCORP, INC.
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
(Dollars in thousands, except per share amounts) (unaudited)
At or For the Three Months Ended At or For the Six
Months Ended
June 30, March 31, June 30,
2017 2016 2017 2017 2016
Selected Financial Ratios:
Performance Ratios(1):
Return on assets (ratio of net income to average total assets) (8) (9)0.86% 0.76% 1.05% 0.95% 0.59%
Return on equity (ratio of net income to average equity) (8) (9)5.30 4.64 6.44 5.86 3.54
Average equity to average total assets16.26 16.39 16.29 16.28 16.54
Interest rate spread2.79 2.82 2.86 2.83 2.79
Net interest margin2.97 3.00 3.04 3.01 2.97
Efficiency ratio(2) (10) (11)56.63 62.09 56.92 56.78 70.73
Non-interest expense to average total assets (10)1.70 1.91 1.85 1.78 2.15
Non-interest expense to average total interest-earning assets (10)1.84 2.05 2.00 1.92 2.30
Average interest-earning assets to average interest-bearing liabilities128.63 128.86 128.71 128.67 128.46
Asset Quality Ratios:
Non-performing assets to total assets0.19 0.29 0.19 0.19 0.29
Non-performing loans(3) to total loans(4)0.21 0.39 0.21 0.21 0.39
Allowance for loan losses to non-performing loans held-for-investment(5)441.01 221.71 392.18 441.01 221.71
Allowance for loan losses to originated loans held-for-investment, net(6)1.07 1.18 1.08 1.07 1.18
Allowance for loan losses to total loans held-for-investment, net(7)0.84 0.87 0.83 0.84 0.87

(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, and non-performing loans held-for-sale.
(4) Includes originated loans held-for-investment, PCI loans, acquired loans and non-performing loans held-for-sale (where applicable).
(5) Excludes nonperforming loans held-for-sale (where applicable), carried at lower of aggregate cost or estimated fair value, less costs to sell.
(6) Excludes PCI loans, acquired loans held-for-investment and loans held-for-sale (where applicable) and related reserve balances.
(7) Includes PCI and acquired loans held-for-investment.
(8) The three and six months ended June 30, 2017, include a $593,000 and $2.3 million tax benefit from the adoption of ASU 2016-09. The three months ended March 31, 2017, includes a $1.7 million tax benefit from the adoption of ASU 2016-09. The three months ended March 31, 2017, and the six months ended June 30, 2017, include tax-exempt income of $1.5 million from bank owned life insurance proceeds in excess of the cash surrender value of the policies.
(9) The three and six months ended June 30, 2016, includes charges of $155,000 and $2.1 million, net of tax, respectively, associated with the acquisition of Hopewell Valley.
(10) The three and six months ended June 30, 2016, includes pre-tax charges of $259,000 and $3.5 million, respectively, associated with the acquisition of Hopewell Valley.
(11) The three months ended March 31, 2017, includes tax-exempt income of $1.5 million from bank owned life insurance proceeds in excess of the cash surrender value of the policies.

NORTHFIELD BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share amounts) (unaudited)
June 30, 2017 December 31, 2016
ASSETS:
Cash and due from banks$15,136 $18,412
Interest-bearing deposits in other financial institutions35,163 77,673
Total cash and cash equivalents50,299 96,085
Trading securities8,808 7,857
Securities available-for-sale, at estimated fair value473,009 498,897
Securities held-to-maturity, at amortized cost10,039 10,148
(estimated fair value of $10,021 at June 30, 2017, and $10,118 at December 31, 2016)
Loans held-for-sale2,009
Originated loans held-for-investment, net2,300,632 2,144,346
Loans acquired719,248 793,240
Purchased credit-impaired (PCI) loans held-for-investment28,035 30,498
Loans held-for-investment, net3,047,915 2,968,084
Allowance for loan losses(25,605) (24,595)
Net loans held-for-investment3,022,310 2,943,489
Accrued interest receivable9,766 9,714
Bank owned life insurance148,695 148,047
Federal Home Loan Bank of New York stock, at cost26,855 25,123
Premises and equipment, net25,890 26,910
Goodwill38,411 38,411
Other real estate owned850 850
Other assets42,695 44,563
Total assets$3,859,636 $3,850,094
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Deposits$2,678,473 $2,713,587
Securities sold under agreements to repurchase4,000 8,000
Federal Home Loan Bank advances and other borrowings496,690 465,206
Advance payments by borrowers for taxes and insurance15,293 12,331
Accrued expenses and other liabilities26,661 29,774
Total liabilities3,221,117 3,228,898
Total stockholders’ equity638,519 621,196
Total liabilities and stockholders’ equity$3,859,636 $3,850,094
Total shares outstanding48,856,796 48,526,658
Tangible book value per share (1)$12.25 $11.97

(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 $1.6 million and $1.7 million at June 30, 2017, and December 31, 2016, respectively, and are included in other assets.

NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands, except share and per share amounts) (unaudited)
Three Months Ended Six Months Ended
June 30, March 31, June 30,
2017 2016 2017 2017 2016
Interest income:
Loans$29,653 $27,682 $29,008 $58,661 $54,570
Mortgage-backed securities2,260 2,888 2,356 4,616 5,657
Other securities283 237 252 535 410
Federal Home Loan Bank of New York dividends325 282 371 696 559
Deposits in other financial institutions139 79 82 221 141
Total interest income32,660 31,168 32,069 64,729 61,337
Interest expense:
Deposits3,899 3,703 3,620 7,519 7,127
Borrowings1,852 1,824 1,772 3,624 3,841
Total interest expense5,751 5,527 5,392 11,143 10,968
Net interest income26,909 25,641 26,677 53,586 50,369
Provision (recovery) for loan losses511 14 372 883 (117)
Net interest income after provision for loan losses26,398 25,627 26,305 52,703 50,486
Non-interest income:
Fees and service charges for customer services1,107 1,174 1,218 2,325 2,372
Income on bank owned life insurance1,010 1,004 2,458 3,468 1,993
Gains on securities transactions, net256 247 408 664 249
Other64 108 63 127 148
Total non-interest income2,437 2,533 4,147 6,584 4,762
Non-interest expense:
Compensation and employee benefits9,774 9,627 9,972 19,746 21,326
Occupancy2,696 2,707 2,957 5,653 5,769
Furniture and equipment287 371 305 592 725
Data processing1,120 1,386 1,161 2,281 3,245
Professional fees595 696 870 1,465 1,937
FDIC insurance258 487 258 516 962
Other1,888 2,220 2,021 3,909 5,029
Total non-interest expense16,618 17,494 17,544 34,162 38,993
Income before income tax expense12,217 10,666 12,908 25,125 16,255
Income tax expense3,807 3,681 2,960 6,767 5,610
Net income$8,410 $6,985 $9,948 $18,358 $10,645
Net income per common share:
Basic$0.19 $0.16 $0.22 $0.41 $0.24
Diluted$0.18 $0.15 $0.21 $0.39 $0.23
Basic average shares outstanding45,252,136 44,350,458 45,022,365 45,137,791 44,144,434
Diluted average shares outstanding46,831,362 45,653,198 46,926,074 46,879,259 45,471,577


NORTHFIELD BANCORP, INC.
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands) (unaudited)
For the Three Months Ended
June 30, 2017 March 31, 2017 June 30, 2016
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)$3,041,774 $29,653 3.91% $2,974,577 $29,008 3.95% $2,720,983 $27,682 4.09%
Mortgage-backed securities (3)428,757 2,260 2.11 451,590 2,356 2.12 552,738 2,888 2.10
Other securities (3)61,202 283 1.85 58,229 252 1.76 62,595 237 1.52
Federal Home Loan Bank of New York stock26,600 325 4.90 26,351 371 5.71 25,635 282 4.42
Interest-earning deposits in financial institutions69,928 139 0.80 50,728 82 0.66 73,211 79 0.43
Total interest-earning assets3,628,261 32,660 3.61 3,561,475 32,069 3.65 3,435,162 31,168 3.65
Non-interest-earning assets282,492 283,845 254,230
Total assets$3,910,753 $3,845,320 $3,689,392
Interest-bearing liabilities:
Savings, NOW, and money market accounts$1,731,451 $2,079 0.48% $1,736,163 $2,030 0.47% $1,606,415 $2,020 0.51%
Certificates of deposit593,492 1,820 1.23 533,984 1,590 1.21 573,081 1,683 1.18
Total interest-bearing deposits2,324,943 3,899 0.67 2,270,147 3,620 0.65 2,179,496 3,703 0.68
Borrowed funds495,656 1,852 1.50 496,953 1,772 1.45 486,252 1,824 1.51
Total interest-bearing liabilities2,820,599 5,751 0.82 2,767,100 5,392 0.79 2,665,748 5,527 0.83
Non-interest bearing deposits382,353 383,029 366,506
Accrued expenses and other liabilities71,853 68,603 52,264
Total liabilities3,274,805 3,218,732 3,084,518
Stockholders' equity635,948 626,588 604,874
Total liabilities and stockholders' equity$3,910,753 $3,845,320 $3,689,392
Net interest income $26,909 $26,677 $25,641
Net interest rate spread (4) 2.79% 2.86% 2.82%
Net interest-earning assets (5)$807,662 $794,375 $769,414
Net interest margin (6) 2.97% 3.04% 3.00%
Average interest-earning assets to interest-bearing liabilities 128.63% 128.71% 128.86%

(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.

NORTHFIELD BANCORP, INC.
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands) (unaudited)
For the Six Months Ended
June 30, 2017 June 30, 2016
Average
Outstanding
Balance
Interest Average
Yield/
Rate (1)
Average
Outstanding
Balance
Interest Average
Yield/
Rate (1)
Interest-earning assets:
Loans (2)$3,008,361 $58,661 3.93% $2,701,109 $54,570 4.06%
Mortgage-backed securities (3)440,111 4,616 2.12 545,450 5,657 2.09
Other securities (3)59,723 535 1.81 57,831 410 1.43
Federal Home Loan Bank of New York stock26,476 696 5.30 25,408 559 4.42
Interest-earning deposits in financial institutions60,381 221 0.74 76,278 141 0.37
Total interest-earning assets3,595,052 64,729 3.63 3,406,076 61,337 3.62
Non-interest-earning assets283,165 247,603
Total assets$3,878,217 $3,653,679
Interest-bearing liabilities:
Savings, NOW, and money market accounts$1,733,794 $4,109 0.48% $1,569,664 $3,896 0.50%
Certificates of deposit563,902 3,410 1.22 580,762 3,231 1.12
Total interest-bearing deposits2,297,696 7,519 0.66 2,150,426 7,127 0.67
Borrowed funds496,301 3,624 1.47 501,021 3,841 1.54
Total interest-bearing liabilities2,793,997 11,143 0.80 2,651,447 10,968 0.83
Non-interest bearing deposits382,689 354,001
Accrued expenses and other liabilities70,237 43,787
Total liabilities3,246,923 3,049,235
Stockholders' equity631,294 604,444
Total liabilities and stockholders' equity$3,878,217 $3,653,679
Net interest income $53,586 $50,369
Net interest rate spread (4) 2.83% 2.79%
Net interest-earning assets (5)$801,055 $754,629
Net interest margin (6) 3.01% 2.97%
Average interest-earning assets to interest-bearing liabilities 128.67% 128.46%

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

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

Source:Northfield Bancorp, Inc.