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Northfield Bancorp, Inc. Announces Third Quarter 2017 Results and a 25% Increase in the Cash Dividend

NOTABLE ITEMS INCLUDE:

  • DILUTED EARNINGS PER SHARE INCREASED 6.3% OVER THE COMPARABLE 2016 QUARTER
  • NET INTEREST INCOME INCREASED 4.2%, OVER THE COMPARABLE 2016 QUARTER
  • ORIGINATED LOANS HELD-FOR-INVESTMENT, NET, INCREASED 10.1% YEAR-TO-DATE
  • ASSET QUALITY REMAINS STRONG WITH NONPERFORMING ASSETS AT 0.16% OF TOTAL ASSETS AND NON PERFORMING LOANS AT 0.18% OF TOTAL LOANS
  • CAPITAL REMAINS STRONG AT 16.1% OF TOTAL ASSETS
  • INCREASED CASH DIVIDEND BY 25% TO $0.10 PER SHARE OF COMMON STOCK, PAYABLE NOVEMBER 22, 2017 TO STOCKHOLDERS OF RECORD AS OF NOVEMBER 8, 2017

WOODBRIDGE, N.J., Oct. 25, 2017 (GLOBE NEWSWIRE) -- NORTHFIELD BANCORP, INC. (Nasdaq:NFBK), the holding company for Northfield Bank, reported diluted earnings per common share of $0.17 and $0.57 for the quarter and nine months ended September 30, 2017, respectively, compared to diluted earnings per common share of $0.16 and $0.39 for the quarter and nine months ended September 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 $2.3 million, or $0.05 per diluted share, reduction in income tax expense for the nine months ended September 30, 2017. Earnings for the nine months ended September 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 nine months ended September 30, 2016, included merger-related expenses associated with the acquisition of Hopewell Valley Community Bank (“Hopewell Valley”) of approximately $2.4 million, net of tax, or $0.05 per basic and diluted share.

John W. Alexander, Chairman and Chief Executive Officer, commented, “Executing on fundamentals remains the key to continued solid performance. Originated loans held for investment, net, have increased over 2.6% for the quarter, and 10% year-to-date, while underwriting standards and asset quality remained strong with non-performing loans to total loans dropping to 18 basis points. Efficiency remains a driver of core operating performance as we continue to focus on managing our operating expenses while increasing our net interest and non-interest income, resulting in an efficiency ratio of 56.16% for the quarter as compared to 60.09% in the prior year quarter.”

Mr. Alexander further noted, “In recognition of our continued strong operating results and capital position, the Board of Directors determined that an increase in our quarterly dividend was warranted. Accordingly, the Board has declared a dividend of $0.10 per common share, a 25% increase in the quarterly dividend, to be payable on November 22, 2017, to stockholders of record on November 8, 2017.”

Results of Operations

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

Net income was $8.1 million and $7.3 million for the quarters ended September 30, 2017, and September 30, 2016, respectively. Significant variances from the comparable prior year quarter are as follows: a $1.1 million increase in net interest income, a $16,000 increase in the provision for loan losses, a $52,000 decrease in non-interest income, a $549,000 decrease in non-interest expense, and a $743,000 increase in income tax expense.

Net interest income for the quarter ended September 30, 2017, increased $1.1 million, or 4.2%, primarily due to a $151.1 million, or 4.3%, increase in our average interest-earning assets, partially offset by a one 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 $254.8 million, partially offset by a decrease in average mortgage-backed securities of $111.9 million. The increase in average loans was due to originated loan growth as well as loan pool purchases. Net interest income for the quarter ended September 30, 2017, included loan prepayment income of $366,000 as compared to $459,000 for the quarter ended September 30, 2016. Yields earned on interest-earning assets increased six basis points to 3.64% for the quarter ended September 30, 2017, from 3.58% for the quarter ended September 30, 2016, primarily driven by higher yields on average securities, Federal Home Loan Bank of New York stock and interest-earning deposits in financial institutions, partially offset by lower yields on average loans. The cost of interest-bearing liabilities increased eight basis points to 0.86% for the current quarter as compared to 0.78% for the comparable prior year quarter, due to higher rates across all interest-bearing deposits and borrowed funds.

The provision for loan losses increased by $16,000 to $488,000 for the quarter ended September 30, 2017, from $472,000 for the quarter ended September 30, 2016, primarily due to growth in the loan portfolio, partially offset by declines in non-performing loans and lower net charge-offs. Net recoveries were $6,000 for the quarter ended September 30, 2017, compared to net charge-offs of $449,000 for the quarter ended September 30, 2016.

Non-interest income remained relatively stable at $2.6 million for the quarter ended September 30, 2017, as compared to $2.7 million for the quarter ended September 30, 2016.

Non-interest expense decreased $549,000, or 3.2%, to $16.8 million for the quarter ended September 30, 2017, from $17.4 million for the quarter ended September 30, 2016. The decrease was due primarily to a decrease of $519,000 in data processing fees, related to a contract termination fee associated with the Hopewell Valley acquisition incurred in the comparable prior year quarter.

The Company recorded income tax expense of $4.5 million for the quarter ended September 30, 2017, compared to $3.8 million for the quarter ended September 30, 2016. The effective tax rate for the quarter ended September 30, 2017, was 35.8% compared to 34.2% for the quarter ended September 30, 2016.

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

Net income was $8.1 million and $8.4 million for the quarters ended September 30, 2017, and June 30, 2017, respectively. Significant variances from the prior quarter are as follows: a $443,000 increase in net interest income, a $23,000 decrease in the provision for loan losses, a $178,000 increase in non-interest income, a $210,000 increase in non-interest expense, and a $718,000 increase in income tax expense.

Net interest income for the quarter ended September 30, 2017, increased by $443,000, or 1.6%, primarily due to an increase in our average interest-earning assets of $25.8 million, or 0.7%, while net interest margin remained level at 2.97%. The increase in our average interest-earning assets was due primarily to an increase in average loans outstanding of $23.4 million. Net interest income for the quarter ended September 30, 2017, included loan prepayment income of $366,000 as compared to $193,000 for the quarter ended June 30, 2017. Yields earned on interest-earning assets increased three basis points to 3.64% for the quarter ended September 30, 2017, from 3.61% for the quarter ended June 30, 2017, driven by an increase in the yield on average loans. The cost of interest-bearing liabilities increased four basis points to 0.86% for the quarter ended September 30, 2017, as compared to 0.82% for the quarter ended June 30, 2017, primarily due to higher rates on certificates of deposit and borrowed funds.

The provision for loan losses decreased by $23,000 to $488,000 for the quarter ended September 30, 2017, from $511,000 for the quarter ended June 30, 2017. Net recoveries were $6,000 for the quarter ended September 30, 2017, compared to net charge-offs of $190,000 for the quarter ended June 30, 2017.

Non-interest income increased $178,000, or 7.3%, to $2.6 million for the quarter ended September 30, 2017, from $2.4 million for the quarter ended June 30, 2017. The increase was primarily due to a $131,000 increase in fees and service charges for customers and an $81,000 increase in gains on securities transactions, net.

Non-interest expense increased $210,000, or 1.3%, to $16.8 million for the quarter ended September 30, 2017, from $16.6 million for the quarter ended June 30, 2017, due primarily to an increase of $111,000 in occupancy expenses, due to higher seasonal costs, and an increase of $258,000 in other expenses, driven by higher advertising costs due to the timing of the Company's advertising campaigns, partially offset by a $181,000 decrease in compensation and employee benefits, primarily attributable to lower medical benefit costs.

The Company recorded income tax expense of $4.5 million for the quarter ended September 30, 2017, compared to $3.8 million for the quarter ended June 30, 2017. The effective tax rate for the quarter ended September 30, 2017 was 35.8% compared to 31.2% for the quarter ended June 30, 2017. The effective tax rate for the quarter ended June 30, 2017, was favorably impacted by the adoption of ASU 2016-09 which resulted in a $593,000 reduction in income tax expense related to the exercise or vesting of equity awards during that quarter which were previously recorded through equity as an adjustment to additional paid in capital. There was no exercise or vesting of equity awards during the quarter ended September 30, 2017.

Comparison of Operating Results for the Nine Months Ended September 30, 2017 and 2016

Net income was $26.5 million and $17.9 million for the nine months ended September 30, 2017, and September 30, 2016, respectively. Significant variances from the comparable prior year period are as follows: a $4.3 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 $5.4 million decrease in non-interest expense, and a $1.9 million increase in income tax expense.

Net interest income for the nine months ended September 30, 2017, increased $4.3 million, or 5.6%, to $80.9 million, from $76.6 million for the nine months ended September 30, 2016, primarily due to a $187.1 million, or 5.5%, increase in our average interest-earning assets, while the net interest margin remained level at 2.99%. The increase in average interest-earning assets was due primarily to an increase in average loans outstanding of $297.5 million, partially offset by decreases in average mortgage-backed securities of $107.4 million and interest-earning deposits in financial institutions of $12.9 million. The increase in average loans was primarily due to originated loan growth. Net interest income for the nine months ended September 30, 2017, included loan prepayment income of $886,000 as compared to $1.4 million for the nine months ended September 30, 2016. Yields earned on interest-earning assets increased one basis point to 3.63% for the nine months ended September 30, 2017, from 3.62% for the nine months ended September 30, 2016, primarily driven by higher yields on average securities, Federal Home Loan Bank of New York stock and interest-earning deposits in financial institutions, partially offset by lower yields on average loans. The cost of interest-bearing liabilities increased one basis point to 0.82% for the nine months ended September 30, 2017, as compared to 0.81% for the nine months ended September 30, 2016, primarily due to higher rates on certificates of deposit.

The provision for loan losses increased by $1.0 million to $1.4 million for the nine months ended September 30, 2017, from $355,000 for the nine months ended September 30, 2016, primarily due to growth in the loan portfolio, partially offset by declines in non-performing loans and net recoveries during the nine months ended September 30, 2017. Net recoveries for the nine months ended September 30, 2017, were $133,000, primarily relating to insurance proceeds received from a previously charged-off loan, as compared to net charge-offs of $785,000 for the comparative prior year period.

Non-interest income increased $1.8 million, or 23.8%, to $9.2 million for the nine months ended September 30, 2017, from $7.4 million for the nine months ended September 30, 2016, primarily due to an increase of $1.4 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 $389,000 in gains on securities transactions, net. Securities gains, net, during the nine months ended September 30, 2017, included gains of $1.0 million related to the Company’s trading portfolio, compared to gains of $389,000 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 $5.4 million, or 9.5%, to $51.0 million for the nine months ended September 30, 2017, from $56.4 million for the nine months ended September 30, 2016. The decrease was primarily due to a $3.9 million reduction in merger-related expenses associated with the Hopewell Valley acquisition reflected in the first nine 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 expenses related to the Company’s deferred compensation plan, which is described above, and which has no effect on net income. Data processing fees decreased $1.5 million, primarily due to non-recurring conversion costs and contract termination costs associated with the Hopewell Valley acquisition incurred in the prior year period. Professional fees decreased $587,000 due to non-recurring merger-related professional fees associated with the Hopewell Valley acquisition incurred in the prior year period. FDIC insurance expense decreased by $423,000 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 $1.0 million, primarily due to lower directors' equity award expense, related to the retirement of three directors.

The Company recorded income tax expense of $11.3 million for the nine months ended September 30, 2017, compared to $9.4 million for the nine months ended September 30, 2016. The effective tax rate for the nine months ended September 30, 2017, was 29.9% compared to 34.4% for the nine months ended September 30, 2016. The Company adopted ASU 2016-09 in the first quarter of 2017, which resulted in a $2.3 million reduction in income tax expense related to the exercise or vesting of equity awards during the nine months ended September 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 nine months ended September 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.

Financial Condition

Total assets increased $156.7 million, or 4.1%, to $4.01 billion at September 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 $163.8 million and an increase in cash and cash equivalents of $7.2 million, partially offset by a decrease in securities available-for-sale of $16.3 million.

As of September 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 401.3%. 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 $163.8 million to $3.13 billion at September 30, 2017, from $2.97 billion at December 31, 2016. Originated loans held-for-investment, net, totaled $2.36 billion at September 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 $183.7 million, or 12.2%, 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, 2017 and 2016 (dollars in thousands):

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%


For the Nine Months Ended September 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
$219,975 3.42% 63% 81 V 30 Years
7,075 3.66% 41% 131 F 15 Years
$227,050 3.43% 62%

Originated loans held-for-investment, net, include funded participations of $39.2 million for the nine months ended September 30, 2017, including $22.5 million in commercial real estate loans, and $16.7 million in construction loans. For the three months ended September 30, 2017, funded participations totaled $27.2 million.

Acquired loans decreased by $48.2 million to $745.1 million at September 30, 2017, from $793.2 million at December 31, 2016, primarily due to paydowns, partially offset by purchases of one-to-four family residential mortgage and multifamily real estate loan pools totaling $58.7 million in the nine months ended September 30, 2017. The geographic locations of the properties collateralizing the loans are as follows: 63.9% in New York, 10.0% in California, and 26.1% in other states. The following table provides the details of the loans pools purchased during the nine months ended September 30, 2017 (dollars in thousands):

Purchase Amount Loan Type Weighted Average
Interest
Rate(1)
Weighted Average
Loan-to-Value
Ratio
Weighted Average Months to
Next Rate Change or
Maturity for Fixed Rate
Loans
(F)ixed or (V)ariable Original
Amortization
Term
$29,286 Residential 2.89% 57% 1 V 30 Years
18,774 Multifamily 3.35% 55% 53 V 30 Years
3,399 Multifamily 3.40% 58% 46 F 30 Years
7,280 Multifamily 3.35% 51% 58 V 30 Years
$58,739 3.12% 56%
(1) Net of servicing fee retained by the originating bank

PCI loans totaled $26.0 million at September 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 $1.4 million and $4.1 million attributable to PCI loans for the three and nine months ended September 30, 2017, respectively, as compared to $1.3 million and $4.0 million for the three and nine months ended September 30, 2016, respectively.

The Company’s available-for-sale securities portfolio totaled $482.6 million at September 30, 2017, compared to $498.9 million at December 31, 2016, with the decrease being primarily attributable to paydowns, partially offset by purchases. At September 30, 2017, $407.6 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 $73.1 million in corporate bonds, all of which were considered investment grade at September 30, 2017, and other securities of $1.9 million (including $93,000 of equity investments in money market mutual funds).

Total liabilities increased $132.9 million, or 4.1%, to $3.36 billion at September 30, 2017, from $3.23 billion at December 31, 2016. The increase was primarily attributable to an increase in deposits of $21.8 million, and other borrowings of $114.5 million, partially offset by a decrease in securities sold under agreements to repurchase of $4.0 million.

Deposits increased $21.8 million, or 0.8%, to $2.74 billion at September 30, 2017, as compared to $2.71 billion at December 31, 2016. The increase was attributable to increases of $151.5 million in certificates of deposit, and $3.7 million in money market accounts, partially offset by decreases of $67.9 million in transaction accounts and $65.5 million in savings accounts.

Borrowings and securities sold under agreements to repurchase increased by $110.5 million, or 23.3%, to $583.7 million at September 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 September 30, 2017 (dollars in thousands):

Year Amount Weighted Average Rate
2017 $127,000 1.30%
2018 142,715 1.66%
2019 123,502 1.48%
2020 90,000 1.65%
2021 70,000 1.80%
Thereafter 20,000 1.97%
$573,217 1.57%

Total stockholders’ equity increased by $23.9 million to $645.0 million at September 30, 2017, from $621.2 million at December 31, 2016. The increase was primarily attributable to net income of $26.5 million for the nine months ended September 30, 2017, and to a lesser extent a $6.5 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 $11.0 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 September 30, 2017, and December 31, 2016 (dollars in thousands):

September 30, 2017 December 31, 2016
Non-accrual loans:
Held-for-investment
Real estate loans:
Commercial$4,116 $5,513
One-to-four family residential738 1,629
Multifamily418 43
Home equity and lines of credit112 127
Commercial and industrial75 9
Total non-accrual loans5,459 7,321
Loans delinquent 90 days or more and still accruing:
Held-for-investment
Real estate loans:
One-to-four family residential74 52
Home equity and lines of credit52 8
Other47
Total loans delinquent 90 days or more and still accruing173 60
Total non-performing loans5,632 7,381
Other real estate owned850 850
Total non-performing assets$6,482 $8,231
Non-performing loans to total loans0.18% 0.25%
Non-performing assets to total assets0.16% 0.21%
Loans subject to restructuring agreements and still accruing$20,164 $20,628
Accruing loans 30 to 89 days delinquent$11,380 $10,100

Accruing Loans 30 to 89 Days Delinquent

Loans 30 to 89 days delinquent and on accrual status totaled $11.4 million and $10.1 million at September 30, 2017, and December 31, 2016, respectively. The following table sets forth delinquencies for accruing loans by type and by amount at September 30, 2017, and December 31, 2016 (dollars in thousands):

September 30, 2017 December 31, 2016
Held-for-investment
Real estate loans:
Commercial$5,112 $4,578
One-to-four family residential4,015 3,621
Multifamily1,706 1,440
Home equity and lines of credit331 263
Commercial and industrial loans206 148
Other loans10 50
Total delinquent accruing loans held-for-investment $11,380 $10,100

PCI Loans (Held-for-Investment)

At September 30, 2017, 8.6% of PCI loans were past due 30 to 89 days, and 18.2% 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 Nine Months Ended
September 30, June 30, September 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) (11)0.82% 0.77% 0.86% 0.91% 0.65%
Return on equity (ratio of net income to average equity) (8) (9) (11)5.01 4.68 5.30 5.57 3.92
Average equity to average total assets16.42 16.35 16.26 16.33 16.55
Interest rate spread2.78 2.80 2.79 2.81 2.81
Net interest margin2.97 2.98 2.97 2.99 2.99
Efficiency ratio(2) (9) (10)56.16 60.09 56.63 56.57 67.07
Non-interest expense to average total assets (10)1.70 1.83 1.70 1.75 2.04
Non-interest expense to average total interest-earning assets (10)1.83 1.97 1.84 1.89 2.20
Average interest-earning assets to average interest-bearing liabilities128.51 129.51 128.63 128.62 128.74
Asset Quality Ratios:
Non-performing assets to total assets0.16 0.28 0.19 0.16 0.28
Non-performing loans(3) to total loans(4)0.18 0.36 0.21 0.18 0.36
Allowance for loan losses to non-performing loans held-for-investment(5) 463.40 229.21 441.01 463.40 229.23
Allowance for loan losses to originated loans held-for-investment, net(6)1.07 1.13 1.07 1.07 1.13
Allowance for loan losses to total loans held-for-investment, net(7)0.83 0.83 0.84 0.83 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, 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 months ended June 30, 2017, includes a $593,000 decrease in income tax expense from the adoption of ASU 2016-09 related to the exercise or vesting of equity awards which were previously recorded through equity as an adjustment to additional paid in capital. The nine months ended September 30, 2017, includes a $2.3 million decrease in income tax expense from the adoption of ASU 2016-09.
(9) 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.
(10) The three and nine months ended September 30, 2016, include pre-tax charges of $477,000 and $3.9 million, respectively, associated with the acquisition of Hopewell Valley.
(11) The three and nine months ended September 30, 2016, include charges of $286,000 and $2.4 million, net of tax, respectively, associated with the acquisition of Hopewell Valley.


NORTHFIELD BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share amounts) (unaudited)
September 30, 2017 December 31, 2016
ASSETS:
Cash and due from banks$15,007 $18,412
Interest-bearing deposits in other financial institutions88,234 77,673
Total cash and cash equivalents103,241 96,085
Trading securities9,225 7,857
Securities available-for-sale, at estimated fair value482,626 498,897
Securities held-to-maturity, at amortized cost9,983 10,148
(estimated fair value of $9,997 at September 30, 2017, and $10,118 at December 31, 2016)
Loans held-for-sale1,506
Originated loans held-for-investment, net2,360,864 2,144,346
Loans acquired745,063 793,240
Purchased credit-impaired (PCI) loans held-for-investment25,960 30,498
Loans held-for-investment, net3,131,887 2,968,084
Allowance for loan losses(26,099) (24,595)
Net loans held-for-investment3,105,788 2,943,489
Accrued interest receivable10,249 9,714
Bank owned life insurance149,657 148,047
Federal Home Loan Bank of New York stock, at cost29,771 25,123
Premises and equipment, net25,504 26,910
Goodwill38,411 38,411
Other real estate owned850 850
Other assets40,017 44,563
Total assets$4,006,828 $3,850,094
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Deposits$2,735,402 $2,713,587
Securities sold under agreements to repurchase4,000 8,000
Federal Home Loan Bank advances and other borrowings579,690 465,206
Advance payments by borrowers for taxes and insurance14,265 12,331
Accrued expenses and other liabilities28,422 29,774
Total liabilities3,361,779 3,228,898
Total stockholders’ equity645,049 621,196
Total liabilities and stockholders’ equity$4,006,828 $3,850,094
Total shares outstanding48,880,772 48,526,658
Tangible book value per share (1)$12.38 $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 $1.5 million and $1.7 million at September 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 Nine Months Ended
September 30, June 30, September 30,
2017 2016 2017 2017 2016
Interest income:
Loans$30,424 $28,222 $29,653 $89,085 $82,792
Mortgage-backed securities2,175 2,665 2,260 6,791 8,322
Other securities370 252 283 905 662
Federal Home Loan Bank of New York dividends365 302 325 1,061 861
Deposits in other financial institutions191 84 139 412 225
Total interest income33,525 31,525 32,660 98,254 92,862
Interest expense:
Deposits4,168 3,545 3,899 11,687 10,672
Borrowings2,005 1,729 1,852 5,629 5,570
Total interest expense6,173 5,274 5,751 17,316 16,242
Net interest income27,352 26,251 26,909 80,938 76,620
Provision for loan losses488 472 511 1,371 355
Net interest income after provision for loan losses26,864 25,779 26,398 79,567 76,265
Non-interest income:
Fees and service charges for customer services1,238 1,255 1,107 3,563 3,627
Income on bank owned life insurance970 1,008 1,010 4,438 3,001
Gains on securities transactions, net337 362 256 1,001 612
Other70 42 64 197 189
Total non-interest income2,615 2,667 2,437 9,199 7,429
Non-interest expense:
Compensation and employee benefits9,593 9,565 9,774 29,339 30,891
Occupancy2,807 2,828 2,696 8,460 8,597
Furniture and equipment279 349 287 871 1,074
Data processing1,155 1,674 1,120 3,436 4,919
Professional fees569 684 595 2,034 2,621
FDIC insurance279 256 258 795 1,218
Other2,146 2,021 1,888 6,055 7,050
Total non-interest expense16,828 17,377 16,618 50,990 56,370
Income before income tax expense12,651 11,069 12,217 37,776 27,324
Income tax expense4,525 3,782 3,807 11,292 9,392
Net income$8,126 $7,287 $8,410 $26,484 $17,932
Net income per common share:
Basic$0.18 $0.16 $0.19 $0.59 $0.40
Diluted$0.17 $0.16 $0.18 $0.57 $0.39
Basic average shares outstanding45,492,713 44,556,682 45,252,136 45,257,199 44,282,476
Diluted average shares outstanding46,741,223 45,720,752 46,831,362 46,834,347 45,555,262

NORTHFIELD BANCORP, INC.
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands) (unaudited)
For the Three Months Ended
September 30, 2017 June 30, 2017 September 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)$3,065,206 $30,424 3.94% $3,041,774 $29,653 3.91% $2,810,377 $28,222 3.99%
Mortgage-backed securities (3)413,627 2,175 2.09 428,757 2,260 2.11 525,487 2,665 2.02
Other securities (3)77,170 370 1.90 61,202 283 1.85 60,373 252 1.66
Federal Home Loan Bank of New York stock26,422 365 5.48 26,600 325 4.90 24,667 302 4.87
Interest-earning deposits in financial institutions71,606 191 1.06 69,928 139 0.80 82,016 84 0.41
Total interest-earning assets3,654,031 33,525 3.64 3,628,261 32,660 3.61 3,502,920 31,525 3.58
Non-interest-earning assets265,652 282,492 283,900
Total assets$3,919,683 $3,910,753 $3,786,820
Interest-bearing liabilities:
Savings, NOW, and money market accounts$1,686,677 $2,033 0.48% $1,731,451 $2,079 0.48% $1,654,778 $1,877 0.45%
Certificates of deposit653,512 2,135 1.30 593,492 1,820 1.23 583,488 1,668 1.14
Total interest-bearing deposits2,340,189 4,168 0.71 2,324,943 3,899 0.67 2,238,266 3,545 0.63
Borrowed funds503,240 2,005 1.58 495,656 1,852 1.50 466,476 1,729 1.47
Total interest-bearing liabilities2,843,429 6,173 0.86 2,820,599 5,751 0.82 2,704,742 5,274 0.78
Non-interest bearing deposits378,191 382,353 400,856
Accrued expenses and other liabilities54,278 71,853 62,104
Total liabilities3,275,898 3,274,805 3,167,702
Stockholders' equity643,785 635,948 619,118
Total liabilities and stockholders' equity$3,919,683 $3,910,753 $3,786,820
Net interest income $27,352 $26,909 $26,251
Net interest rate spread (4) 2.78% 2.79% 2.80%
Net interest-earning assets (5)$810,602 $807,662 $798,178
Net interest margin (6) 2.97% 2.97% 2.98%
Average interest-earning assets to interest-bearing liabilities 128.51% 128.63% 129.51%
(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.

NORTHFIELD BANCORP, INC.
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands) (unaudited)
For the Nine Months Ended
September 30, 2017 September 30, 2016
Average
Outstanding
Balance
Interest Average
Yield/
Rate (1)
Average
Outstanding
Balance
Interest Average
Yield/
Rate (1)
Interest-earning assets:
Loans (2)$3,027,517 $89,085 3.93% $2,730,006 $82,792 4.05%
Mortgage-backed securities (3)431,186 6,791 2.11 538,568 8,322 2.06
Other securities (3)65,603 905 1.84 57,030 662 1.55
Federal Home Loan Bank of New York stock26,458 1,061 5.36 25,159 861 4.57
Interest-earning deposits in financial institutions64,164 412 0.86 77,035 225 0.39
Total interest-earning assets3,614,928 98,254 3.63 3,427,798 92,862 3.62
Non-interest-earning assets277,263 262,748
Total assets$3,892,191 $3,690,546
Interest-bearing liabilities:
Savings, NOW, and money market accounts$1,717,916 $6,142 0.48% $1,594,088 $5,773 0.48%
Certificates of deposit594,100 5,545 1.25 579,227 4,899 1.13
Total interest-bearing deposits2,312,016 11,687 0.68 2,173,315 10,672 0.66
Borrowed funds498,640 5,629 1.51 489,300 5,570 1.52
Total interest-bearing liabilities2,810,656 17,316 0.82 2,662,615 16,242 0.81
Non-interest bearing deposits381,173 367,454
Accrued expenses and other liabilities64,859 49,825
Total liabilities3,256,688 3,079,894
Stockholders' equity635,503 610,652
Total liabilities and stockholders' equity$3,892,191 $3,690,546
Net interest income $80,938 $76,620
Net interest rate spread (4) 2.81% 2.81%
Net interest-earning assets (5)$804,272 $765,183
Net interest margin (6) 2.99% 2.99%
Average interest-earning assets to interest-bearing liabilities 128.62% 128.74%
(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.