NFBK Northfield Bancorp Inc

Northfield Bancorp, Inc., the holding company for Northfield Bank, reported net income of $5.6 million for the quarter ended March 31, 2008, compared to $4.7 million for the quarter ended March 31, 2007. Operating results for the current quarter included a $2.5 million, nontaxable, death benefit realized on bank owned life insurance. For the quarter ended March 31, 2007, operating results included a pre-tax gain of $4.3 million ($2.4 million, net of tax) related to the sale of two branch locations and associated deposit relationships. Earnings per share for the quarter ended March 31, 2008 was $0.13. Excluding the realized gain on the death benefit from bank owned life insurance of $0.06 per share, earnings per share for the quarter ended March 31, 2008 was $0.07 per share. Commenting on the current quarter�s results, John W. Alexander, the Company�s Chairman, President, and Chief Executive Officer said, �We remain focused on deploying capital into high quality commercial real estate, construction, and multifamily loans. We believe that continuing to offer competitive loan products, coupled with prompt credit decisions, will lead to profitable longer-term relationships.� Mr. Alexander also said, �The Company has also implemented, and net interest income has benefited from, securities leveraging strategies with acceptable levels of interest rate and credit risk.� Mr. Alexander continued, �Sadly, we recently lost a valued and long time member of the Northfield family. This person was dedicated to and exemplified Northfield�s commitment to supporting the community, and will be missed by all.� Results of Operations Net income for the first quarter of 2008 as compared to the first quarter of 2007 was positively affected by an increase in net interest income of $2.3 million, or 28.3%, and a decrease in income tax expense of $900,000 due to lower taxable income resulting in part from the realization of the nontaxable death benefit. Total non-interest expense declined slightly over the comparable prior year quarter. These items were partially offset by an increase in the provision for loan losses of $158,000 and a decrease in non-interest income of $2.2 million. The increase in the provision for loan losses was due primarily to loan growth, and deterioration in one impaired loan with a total outstanding principal balance of approximately $3.4 million at March 31, 2008. The decrease in non-interest income was due primarily to a gain of $4.3 million on the sale of deposits in two underperforming branches in March 2007. We had no similar transaction in 2008. The reduction in non-interest income was partially offset by the realized nontaxable death benefit of approximately $2.5 million in the quarter ended March 31, 2008. The increase in net interest income was primarily the result of an increase in average interest-earning assets of $146.4 million, or 11.9%, coupled with an increase in the net interest margin of 38 basis points, or 14.0%, from 2.72% to 3.10%. Average interest-earning assets increased in the first quarter of 2008 as compared to the first quarter of 2007, as average loans held-for-investment, net increased $16.3 million, or 3.9%. Average interest earning assets was also positively affected by an increase of $124.1 million, or 16.5%, in mortgage-backed securities and deposits in other financial institutions from leveraging strategies executed in the later part of 2007 and the first quarter of 2008. The decline in market interest rates resulted in the yield on our average interest-earning assets decreasing five basis points to 5.06% for the quarter ended March 31, 2008, as compared to 5.11% for the same prior year quarter. The cost of interest-bearing liabilities also decreased by 13 basis points to 2.77% for the quarter ended March 31, 2008 as compared to 2.90% for the same prior year quarter. Average interest-bearing deposits decreased by $121.3 million in the first quarter of 2008 as compared to the prior year quarter primarily as a result of the sale of $26.6 million of deposits in two branches at the end of the first quarter of 2007, and customers using $82.4 million in deposits to purchase common stock in the Company�s initial public offering. The cost of interest-bearing deposits decreased in the first quarter of 2008 to 2.51% from 2.77% in the first quarter of 2007, as higher yielding certificates of deposits matured and were replaced by lower cost borrowings. Financial Condition Total assets increased to $1.5 billion at March 31, 2008, from $1.4 billion at December 31, 2007. The increase was reflective of increases in securities available-for-sale of $33.2 million, cash and due from banks of $75.6 million, and loans held-for-investment, net of $22.1 million. Total liabilities increased to $1.1 billion at March 31, 2008, from $1.0 billion at December 31, 2007. The increase was primarily attributable to an increase in securities sold under agreements to repurchase of $126.0 million and an increase in other borrowings of $11.2 million partially offset by a decrease in deposits of $4.4 million. Although total deposits decreased during the first quarter of 2008 as compared to year-end 2007, the decrease related primarily to higher cost certificates of deposit, which decreased $19.8 million in the first quarter of 2008. This decrease was partially offset by an increase in lower cost core deposits, primarily money market and savings accounts which increased $21.0 million in the first quarter of 2008. The Company experienced a decrease in checking accounts of approximately $5.6 million in the first quarter of 2008. Total stockholders� equity increased to $378.0 million at March 31, 2008, from $367.3 million at December 31, 2007. The increase was primarily attributable to net income of $5.6 million for the quarter ended March 31, 2008, and an increase in other comprehensive income of $4.9 million, related primarily to unrealized gains on securities available for sale, net of tax. Asset Quality The Company's non-performing loans totaled $11.3 million at March 31, 2008, an increase from $9.8 million at December 31, 2007. The increase in non-performing loans from December 31, 2007, was primarily attributable to an increase in non-performing one- to four-family residential mortgage loans of $595,000, an increase of $213,000 in non-performing construction loans, and an increase of $896,000 in non-performing commercial real estate loans. These increases were partially offset by a decrease in non-performing commercial and industrial loans of $248,000. 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 evidenced by low credit scores or high debt burden ratios. At March 31, 2008, approximately $87,000 of our mortgage-backed securities portfolio (not guaranteed by Fannie Mae or Freddie Mac) was secured by sub-prime loans. The securities were rated AAA at March 31, 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 Selected Financial Condition Data: � March 31, 2008 � December 31, 2007 � � Total assets $ 1,522,249 $ 1,386,918 Cash and due from banks 125,145 49,588 Securities available-for-sale, at estimated fair value 836,061 802,817 Securities held-to-maturity 18,347 19,686 Trading securities 3,576 3,605 Loans held for sale 120 270 Loans held-for-investment, net 446,407 424,329 Allowance for loan losses (6,234) (5,636) Net loans held-for-investment 440,173 418,693 Bank owned life insurance 44,493 41,560 Non-performing loans(1) 11,313 9,834 Federal Home Loan Bank of New York stock, at cost 12,881 6,702 � Securities sold under agreements to repurchase 228,000 102,000 Other borrowings 33,668 22,420 Deposits 872,800 877,225 Total liabilities 1,144,293 1,019,578 Total stockholders� equity 377,956 367,340 � � � � For the Three Months Ended Selected Operating Data: � March 31, 2008 � March 31, 2007 � Interest income $ 17,315 $ 15,502 Interest expense 6,724 7,244 Net interest income before provision for loan losses 10,591 8,258 Provision for loan losses 598 440 Net interest income after provision for loan losses 9,993 7,818 Non-interest income 3,399 5,602 Non-interest expense 5,986 6,026 Income before income tax expense 7,406 7,394 Income tax expense 1,801 2,701 Net income 5,605 4,693 � Net income per common share(2) $ 0.13 $ n/a � � � At or For the Three Months Ended Selected Financial Ratios: � March 31, 2008 � March 31, 2007 Performance Ratios: Return on assets (ratio of net income to average total assets) (3) 1.54 % � 1.48 % Return on equity (ratio of net income to average equity) (3) 6.03 11.53 Interest rate spread (3) 2.29 2.21 Net interest margin (3) � 3.10 2.72 Efficiency ratio (4) 42.79 43.48 Non-interest expense to average total assets 1.65 1.90 Average interest-earning assets to average interest-bearing liabilities 141.09 121.46 Average equity to average total assets 25.60 12.84 Asset Quality Ratios: Non-performing loans to total assets 0.74 0.69 Non-performing loans to total loans 2.53 2.07 Allowance for loan losses to non-performing loans 55.10 61.57 Allowance for loan losses to total loans 1.40 1.28 (1) � Non-performing loans consist of non-accruing loans and loans 90 or more past due and still accruing, and are included in loans held-for-investment, net. (2) Net income per common share (calculated based on 43,111,876 shares outstanding for the quarter ended March 31, 2008) is not applicable prior to the Company's completion of its stock offering on November 7, 2007. (3) Annualized. (4) The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income. NORTHFIELD BANCORP, INC. ANALYSIS OF NET INTEREST INCOME (Dollars in thousands) � � � � � � � For the Three Months Ended March 31, 2008 2007 � � � Average Outstanding Balance � � Interest � Average Yield/ Rate (1) � � Average Outstanding Balance � � Interest � Average Yield/ Rate (1) � � � Interest-earning assets: Loans $ 433,166 $ 6,989 6.49 % $ 416,871 $ 6,913 6.73 % Mortgage-backed securities 760,018 8,425 4.46 700,608 7,199 4.17 Other securities 58,042 710 4.92 55,600 675 4.92 Federal Home Loan Bank of New York stock 10,524 131 5.01 � 6,922 140 8.20 Interest-earning deposits in financial institutions 114,137 1,060 3.74 49,445 575 4.72 Total interest-earning assets 1,375,887 17,315 5.06 1,229,446 15,502 5.11 Non-interest-earning assets 83,968 56,031 Total assets $ 1,459,855 $ 1,285,477 � Interest-bearing liabilities: Savings, NOW, and money market accounts $ 373,569 904 0.97 $ 391,041 746 0.77 Certificates of deposit 392,260 3,881 3.98 496,123 5,319 4.35 Total interest-bearing deposits 765,829 4,785 2.51 887,164 6,065 2.77 Repurchase agreements 178,923 1,650 3.71 102,577 968 3.83 Other borrowings 30,399 289 3.82 22,496 211 3.80 Total interest-bearing liabilities 975,151 6,724 2.77 1,012,237 7,244 2.90 Non-interest bearing deposit accounts 94,364 97,246 Accrued expenses and other liabilities 16,563 10,928 Total liabilities 1,086,078 1,120,411 Stockholders' equity 373,777 165,066 Total liabilities and stockholders' equity $ 1,459,855 $ 1,285,477 � � Net interest income � $ 10,591 $ 8,258 Net interest rate spread (2) 2.29 % 2.21 % Net interest-earning assets (3) $ 400,736 $ 217,209 Net interest margin (4) 3.10 % 2.72 % Average interest-earning assets to interest- bearing liabilities 141.09 % 121.46 % (1) � Average yields and rates for the three months ended March 31, 2008 and 2007 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.