NFBK Northfield Bancorp Inc

Northfield Bancorp, Inc., the holding company for Northfield Bank, reported net income of $482,000 for the three months ended December 31, 2007, compared to $3.1 million for the three months ended December 31, 2006. The Company also reported net income of $10.5 million for the year ended December 31, 2007, compared to $10.8 million for the year ended December 31, 2006. Operating results for the three months and year ended December 31, 2007, included a charge of $12.0 million ($7.8 million, net of tax) due to the Company�s contribution to the Northfield Bank Foundation, partially offset by net interest income of approximately $1.1 million ($625,000, net of tax) for the three months ended December 31, 2007 and $1.4 million ($795,000, net of tax) for the year ended December 31, 2007, related to short-term investment returns earned on subscription proceeds (net of interest paid during the stock offering), and the reversal of state and local tax liabilities of approximately $4.5 million, net of federal taxes. The Company concluded an audit by the State of New York with respect to the Company�s combined state tax returns for years 2000 through 2006. Net income for the year ended December 31, 2007, also includes a pre-tax gain of $4.3 million ($2.4 million, net of tax) as a result of the sale of two branch locations, and associated deposit relationships, during the first quarter of 2007. Net income for the year ended December 31, 2006, reflects a pre-tax charge of $1.6 million ($860,000, net of tax) related to a supplemental retirement agreement entered into by the Company with its former president. The Company completed its previously announced minority stock offering on November 7, 2007. Loss per share for the period from November 8, 2007 to December 31, 2007 was $0.03. Commenting on the quarter and year-end results, John W. Alexander, the Company�s Chairman, President, and Chief Executive Officer said, �We are pleased with our financial performance in a very challenging business environment and we remain focused on the communities and the markets we serve, prudently working to increase our loans and deposits, maintaining operating expense efficiencies, and evaluating profitable alternatives for the investment of our capital.� Results of Operations Net interest income for the three months ended December 31, 2007, increased to $11.2 million, from $8.6 million for the three months ended December 31, 2006, and increased to $36.9 million for the year ended December 31, 2007, from $36.5 million for the prior year. Net interest income increased approximately $1.1 million and $1.4 million for the three months and year ended December 31, 2007, respectively, as a result of the earnings on cash proceeds received from stock subscriptions. The net interest margin increased to 3.17% for the three months ended December 31, 2007, from 2.69% for the same prior-year period. The net interest margin increased to 2.87% for the year ended December 31, 2007 from 2.81% for the prior year. The margin for the three months and year ended December 31, 2007, included net interest income earned on stock subscription proceeds held in escrow at the Bank until the stock offering was completed. Average interest-earning assets increased by $138.4 million for the three months ended December 31, 2007, as compared to the same prior-year period, due primarily to $124.9 million in average subscription proceeds received, partially offset by the sale of two branch locations and related deposit liabilities of $26.6 million in the first quarter of 2007. Average interest-earning assets decreased by $12.2 million for the year ended December 31, 2007, as compared to the prior year due primarily to the sale of two branch locations and related deposit liabilities in the first quarter of 2007, and pay downs of mortgage-backed securities, partially offset by subscription proceeds received. The yield on interest-earning assets decreased to 5.07% for the three months ended December 31, 2007, compared to 5.08% for the same prior year period. The decrease in the yield earned on interest-earning assets was primarily attributable to a decrease in rates earned on loans indexed to the Prime Rate, due to the decreases in this index during the fourth quarter of 2007. The decrease in yield also was caused by lower yields earned on deposits in other financial institutions, where a majority of the stock subscription proceeds was invested pending the completion of the offering. The yield on interest-earning assets increased to 5.11%, for the year ended December 31, 2007, as compared to 5.00%, for the prior year. The yield on interest-earning assets increased primarily due to the change in the mix of average earning assets. Average balances of loans as a percent of average interest-earning assets increased to 33.0% for the year ended December 31, 2007, from 31.4% for the prior year. The cost of interest-bearing liabilities decreased to 2.52% for the three months ended December 31, 2007, as compared to 2.89%, for the same prior-year period. This decrease was primarily attributable to the subscription proceeds having a cost of 0.60%. The cost of interest-bearing liabilities increased to 2.77% for the year ended December 31, 2007, as compared to 2.60%, for the same prior year period due primarily to pricing competition on time deposits throughout 2007. Total non-interest income of $1.2 million remained substantially unchanged for the three months ended December 31, 2007, as compared to the same prior year period and increased to $9.5 million for the year ended December 31, 2007, as compared to $4.6 million for the prior year. The increase for the year ended December 31, 2007, was primarily attributable to the sale of two branch locations and deposit relationships in the first quarter of 2007, which resulted in a pre-tax gain of $4.3 million. Total non-interest expense amounted to $18.6 million and $36.0 million for the three months and year ended December 31, 2007, respectively, as compared to $5.3 million and $23.8 million, respectively, for the corresponding prior periods. This increase was primarily attributable to the recognition of a charge for the contribution of Company common stock and cash with a value of $12.0 million to the Northfield Bank Foundation, partially offset by a $1.6 million charge related to a supplemental retirement agreement entered into by the Company with its former president, during the third quarter of 2006. The provision (credit) for loan losses was $705,000 and $1.4 million, respectively, for the three months and year ended December 31, 2007, as compared to $(318,000) and $235,000, respectively, for the corresponding prior year periods. The increase in the provision for loan losses was primarily attributable to increases in loss reserves on impaired loans related to declines in estimated fair values of real estate securing these loans, as well as an increase in loan loss factors utilized in the calculation of loan loss reserves for commercial real estate, land, and construction loans. In evaluating loan loss factors utilized in the calculation of the allowance for loan losses, management evaluated relevant environmental factors present in its marketplace and loan portfolio. Significant factors considered included the current deterioration in economic and business conditions, as well as in commercial and construction real estate collateral values. The Company recorded a (benefit) provision for income taxes of $(7.4) million and $(1.6) million for the three months and the year ended December 31, 2007, respectively, as compared to provisions of $1.8 million and $6.2 million, respectively, in the corresponding prior year periods. The decline in income tax expense related to a decrease in pre-tax income, as well as the Company reversing $4.5 million in state and local income tax liabilities, net of federal taxes. The Company concluded an audit by the State of New York with respect to the Company�s combined state tax returns for years 2000 through 2006. Financial Condition Total assets increased to $1.4 billion at December 31, 2007, from $1.3 billion at December 31, 2006. The increase was primarily attributable to an increase in securities available for sale of $89.3 million funded, in part, by proceeds received in the Company�s initial public offering. The Company raised $192.7 million and utilized proceeds of approximately $3.0 million for direct offering expenses, $17.6 million for a loan to the employee stock ownership plan, and $3.0 million in cash for a contribution to the Northfield Bank Foundation. Of the $192.7 million raised in the stock offering, $82.4 million was funded with customer deposits held at Northfield Bank. The increase in total assets was also attributable to an increase in bank owned life insurance of $8.7 million, and an increase in net loans held for investment of $15.1 million. These increases were partially offset by decreases in securities held to maturity, Federal Home Loan Bank of New York stock, premises and equipment, and other assets. Total liabilities decreased to $1.0 billion at December 31, 2007, from $1.1 billion at December 31, 2006. The decrease was primarily attributable to a decrease in deposits of $112.6 million, a decrease in securities sold under agreements to repurchase of $4.0 million, and a decrease in accrued expenses of $5.0 million. The decrease in deposits was attributable primarily to the transfer of $82.4 million in deposits to stockholders� equity as part of the stock offering closing on November 7, 2007 and the sale of two branch locations and related deposit relationships of $26.6 million during the first quarter of 2007. Total stockholders� equity increased to $367.4 million at December 31, 2007, from $164.0 million at December 31, 2006. The increase was primarily attributable to stock offering capital of $192.7 million, net income of $10.5 million for the year ended December 31, 2007, a $500,000 capital contribution from Northfield Bancorp, MHC, $8.9 million of Company stock issued to the Northfield Bank Foundation, and a decrease of $10.7 million in accumulated other comprehensive loss, primarily due to a decrease in unrealized losses on securities available for sale. These increases were partially offset by $3.0 million in direct IPO expenses and $17.6 million for a loan to the employee stock ownership plan. Asset Quality The Company's non-performing loans totaled $9.8 million at December 31, 2007, an increase from $7.1 million at December 31, 2006, and a decrease from $10.4 million at September 30, 2007. For the year ended December 31, 2007, the Company recognized net loan charge-offs of $836,000, which were primarily related to one loan whose remaining outstanding loan balance was fully charged-off. The increase in non-performing loans from December 31, 2006, was primarily attributable to one loan that was placed on non-accrual status as of June 30, 2007, in the amount of $3.4 million, which management believes to be adequately collateralized by a first mortgage on commercial real estate. The Company does not have any lending programs commonly referred to as sub-prime lending. Sub-prime lending generally targets borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidence by low credit scores or high debt burden ratios. At December 31, 2007, approximately $87,000 of our mortgage-backed securities portfolio (not guaranteed by the Fannie Mae or Freddie Mac) was secured by sub-prime loans. The securities were rated AAA at December 31, 2007. Annual Meeting of Stockholders The 2008 Annual Meeting of Stockholders of Northfield Bancorp, Inc. has been set for 10:00 a.m., local time, on May 28, 2008. The 2008 Annual Meeting of Stockholders will be held at the Hilton Garden Inn, located at 1100 South Avenue, Staten Island, New York 10314. The voting record date will be April 8, 2008. 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. 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 to conform these statements to actual events. NORTHFIELD BANCORP, INC. SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA (Dollars in thousands, except per share amounts) (unaudited) � � At December 31, 2007 � At December 31, 2006 Selected Financial Condition Data: Total assets $ 1,386,918 $ 1,294,747 Cash and due from banks 49,588 65,824 Securities available for sale, at estimated fair value 802,817 713,498 Securities held to maturity 19,686 26,169 Trading securities 3,605 2,667 Loans held for sale 270 125 Loans held for investment, net 424,329 409,189 Allowance for loan losses (5,636 ) (5,030 ) Net loans held for investment 418,693 404,159 Bank owned life insurance 41,560 32,866 Non-performing loans(4) 9,834 7,115 Federal Home Loan Bank of New York stock, at cost 6,702 7,186 � Securities sold under agreements to repurchase 102,000 106,000 Other borrowings 22,420 22,534 Deposits 877,225 989,789 Total liabilities 1,019,532 1,130,753 Total stockholders� equity 367,386 163,994 � Three Months Ended December 31, � Year Ended December 31, 2007 � 2006 2007 � 2006 Selected Operating Data: Interest income $ 17,919 $ 16,191 $ 65,702 $ 64,867 Interest expense � 6,717 � � 7,629 � � 28,836 � � 28,406 Net interest income before provision for loan losses 11,202 8,562 36,866 36,461 Provision (credit) for loan losses 705 � � (318 ) � 1,442 � � 235 Net interest income after provision for loan losses 10,497 8,880 35,424 36,226 Non-interest income 1,218 1,226 9,478 4,600 Non-interest expense � 18,600 � � 5,292 � � 35,950 � � 23,818 (Loss) income before income tax (benefit) expense (6,885 ) 4,814 8,952 17,008 Income tax (benefit) expense � (7,367 ) � 1,754 � � (1,555 ) � 6,166 Net income $ 482 � $ 3,060 � $ 10,507 � $ 10,842 � Net loss per share (3) $ (0.03 ) $ N/A � $ (0.03 ) $ N/A � At or For the Three Months Ended December 31, (annualized) � At or For the Year Ended December 31, 2007 � 2006 2007 � 2006 Selected Financial Ratios: Performance Ratios(1): Return on assets (ratio of net income to average total assets) 0.13% 0.92% 0.78% 0.80% Return on equity (ratio of net income to average equity) 0.66% 7.45% 5.27% 7.01% Interest rate spread 2.55% 2.19% 2.34% 2.40% Net interest margin 3.17% 2.69% 2.87% 2.81% Efficiency ratio(2) 149.27% 54.07% 77.57% 58.01% Non-interest expense to average total assets 5.05% 1.59% 2.66% 1.77% Average interest-earning assets to average interest-bearing liabilities 132.82% 120.65% 123.33% 118.89% Average equity to average total assets 19.70% 12.37% 14.73% 11.47% Asset Quality Ratios: Non-performing loans to total assets 0.71% 0.55% 0.71% 0.55% Non-performing loans to total loans 2.32% 1.74% 2.32% 1.74% Allowance for loan losses to non-performing loans 57.31% 70.70% 57.31% 70.70% Allowance for loan losses to total loans 1.33% 1.23% 1.33% 1.23% (1) 2007 performance ratios include the after-tax effect of: a charge of $7.8 million due to the Company�s contribution to the Northfield Bank Foundation; a gain of $2.4 million as a result of the sale of two branch locations, and associated deposit relationships; net interest income of approximately $0.6 million for the three months ended December 31, 2007, and $0.8 million, for the year ended December 31, 2007, as it relates to short-term investment returns earned on subscription proceeds (net of interest paid during the stock offering); and the reversal of state and local tax liabilities of approximately $4.5 million, net of federal taxes. 2006 performance ratios include the after tax effect of a $0.9 million charge related to a supplemental retirement agreement entered into by the Company with its former president. (2) The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income. (3) Net loss per share is calculated for the period that the Company�s shares of common stock were outstanding (November 8, 2007 through December 31, 2007). The net loss for this period was $1,501,000 and the weighted average common shares outstanding were 43,076,586. (4) Non-performing loans are included in loans held for investment, net. Non-performing loans amounted to $9.8 million, $10.4 million, $11.7 million, $8.9 million, and $7.1 million, at December 31, 2007, September 30, 2007, June 30, 2007, March 31, 2007, and December 31, 2006, respectively. NORTHFIELD BANCORP, INC. ANALYSIS OF NET INTEREST INCOME � � For the Three Months Ended December 31, 2007 � 2006 Average Outstanding Balance � Interest � Average Yield/ Rate(1) Average Outstanding Balance � Interest � Average Yield/ Rate(1) (Dollars in thousands) � Interest-earning assets: Loans $ 427,042 $ 7,069 6.57 % $ 409,866 $ 7,048 6.82 % Mortgage-backed securities 744,918 8,228 4.38 734,645 7,534 4.07 Other securities 57,775 648 4.45 61,049 791 5.14 Federal Home Loan Bank of New York stock 6,166 132 8.49 7,934 138 6.90 Interest-earning deposits in financial institutions � 167,279 � 1,842 4.37 � 51,311 � 680 5.26 Total interest-earning assets 1,403,180 17,919 5.07 1,264,805 16,191 5.08 Non-interest-earning assets � 57,781 � 53,119 Total assets $ 1,460,961 $ 1,317,924 � Interest-bearing liabilities: NOW accounts $ 53,981 350 2.57 $ 37,235 136 1.45 Savings accounts 334,618 550 0.65 366,650 650 0.70 Subscription proceeds 124,973 189 0.60 - - - Certificates of deposit � 430,352 � 4,494 4.14 � 499,321 � 5,489 4.36 Total interest-bearing deposits 943,924 5,583 2.35 903,206 6,275 2.76 Repurchase agreements 88,266 909 4.09 122,630 1,138 3.68 Other borrowings � 24,239 � 225 3.68 � 22,528 � 216 3.80 Total interest-bearing liabilities 1,056,429 6,717 2.52 1,048,364 7,629 2.89 Non-interest bearing deposit accounts 102,834 94,565 Accrued expenses and other liabilities � 13,872 � 11,945 Total liabilities 1,173,135 1,154,874 Stockholders� equity � 287,826 � 163,050 Total liabilities and stockholders� equity $ 1,460,961 $ 1,317,924 � Net interest income $ 11,202 $ 8,562 Net interest rate spread (2) 2.55 % 2.19 % Net interest-earning assets (3) $ 346,751 $ 216,441 Net interest margin (4) 3.17 % 2.69 % Average interest-earning assets to interest-bearing liabilities 132.82 % 120.65 % (1) Average yields and rates for the three months ended December 31, 2007, and 2006 are annualized. (2) 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. (3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. (4) Net interest margin represents net interest income divided by average total interest-earning assets. NORTHFIELD BANCORP, INC. ANALYSIS OF NET INTEREST INCOME � � For the Year Ended December 31, 2007 � 2006 Average Outstanding Balance � Interest � Average Yield/ Rate Average Outstanding Balance � Interest � Average Yield/ Rate (Dollars in thousands) � Interest-earning assets: Loans $ 423,947 $ 28,398 6.70 % $ 407,068 $ 27,522 6.76 % Mortgage-backed securities 718,279 30,576 4.26 799,244 32,764 4.10 Other securities 45,077 2,100 4.66 51,883 2,397 4.62 Federal Home Loan Bank of New York stock 6,486 519 8.00 9,582 592 6.18 Interest-earning deposits in financial institutions � 92,202 � 4,109 4.46 � 30,435 � 1,592 5.23 Total interest-earning assets 1,285,991 65,702 5.11 1,298,212 64,867 5.00 Non-interest-earning assets � 66,614 � 49,564 Total assets $ 1,352,605 $ 1,347,776 � Interest-bearing liabilities: NOW accounts $ 49,209 951 1.93 $ 37,454 349 0.93 Savings accounts 351,503 2,303 0.66 398,852 2,788 0.70 Subscription proceeds 49,500 297 0.60 - - - Certificates of deposit � 464,552 � 20,212 4.35 � 474,313 � 18,797 3.96 Total interest-bearing deposits 914,764 23,763 2.60 910,619 21,934 2.41 Repurchase agreements 104,927 4,202 4.00 154,855 5,501 3.55 Other borrowings � 22,999 � 871 3.79 � 26,441 � 971 3.67 Total interest-bearing liabilities 1,042,690 28,836 2.77 1,091,915 28,406 2.60 Non-interest bearing deposit accounts 96,796 89,989 Accrued expenses and other liabilities � 13,905 � 11,261 Total liabilities 1,153,391 1,193,165 Stockholders� equity � 199,214 � 154,611 Total liabilities and stockholders� equity $ 1,352,605 $ 1,347,776 � Net interest income $ 36,866 $ 36,461 Net interest rate spread (1) 2.34 % 2.40 % Net interest-earning assets (2) $ 243,301 $ 206,297 Net interest margin (3) 2.87 % 2.81 % Average interest-earning assets to interest-bearing liabilities 123.33 % 118.89 % (1) 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. (2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. (3) Net interest margin represents net interest income divided by average total interest-earning assets.