NORTHFIELD BANCORP, INC. (Nasdaq:NFBK) (the
“Company”), the holding company for Northfield Bank,
reported net income of $11.7 million, or $0.26, per diluted share
for the three months ended March 31, 2023, as compared to $14.1
million, or $0.31 per diluted share for the three months ended
December 31, 2022, and $14.1 million, or $0.30 per diluted
share, for the three months ended March 31, 2022. The decrease in
net income for the current quarter as compared to the trailing and
comparable prior year quarters resulted primarily from a decrease
in net interest income driven by higher funding costs, partially
offset by higher yields on interest-earning assets.
Commenting on the quarter, Steven M. Klein, the
Company’s Chairman, President and Chief Executive Officer stated,
“The first quarter of 2023 brought continued macroeconomic
challenges from rapidly rising interest rates, inversion of the
yield curve, and upward pressure on deposit pricing. In addition,
the first quarter included the addition of systemic concerns
regarding the soundness of the banking system. Throughout the
quarter we continued to focus on managing our net interest margin,
while meeting the lending and deposit needs of our customers.” Mr.
Klein continued, “We delivered solid financial performance during
the quarter increasing loans outstanding in each category, except
for multifamily, and managing our deposit balances and related
interest costs. While significant risks remain, including recession
uncertainty, inflation and interest rate movements, we will
continue to prudently manage our strong capital and liquidity and
focus on serving our communities.”
Mr. Klein further noted, “I am pleased to
announce that the Board of Directors has declared a cash dividend
of $0.13 per common share, payable May 24, 2023, to stockholders of
record on May 10, 2023.”
Results of Operations
Comparison of Operating Results for the Three
Months Ended March 31, 2023 and 2022
Net income was $11.7 million and $14.1 million
for the three months ended March 31, 2023 and March 31,
2022, respectively. Significant variances from the comparable prior
year period are as follows: a $2.0 million decrease in net interest
income, a $461,000 increase in the provision for credit losses on
loans, a $1.6 million increase in non-interest income, a $2.4
million increase in non-interest expense, and an
$814,000 decrease in income tax expense.
Net interest income for the three months ended
March 31, 2023, decreased $2.0 million, or 5.4%, to $34.9
million, from $36.9 million for the three months ended
March 31, 2022, primarily due to a 24 basis point decrease in
net interest margin to 2.63% from 2.87% for the three months ended
March 31, 2022, partially offset by a $174.8 million, or 3.4%,
increase in the average balance of interest-earning assets. The
increase in the average balance of interest-earning assets was due
to increases in the average balance of loans outstanding of $396.7
million, the average balance of other securities of $20.0 million,
and the average balance of Federal Home Loan Bank of New York
(“FHLBNY”) stock of $15.9 million, partially offset by decreases in
the average balance of mortgage-backed securities of $191.7
million, and the average balance of interest-earning deposits in
financial institutions of $66.1 million.
The decrease in net interest margin was
primarily due to the cost of interest-bearing liabilities
increasing faster than the repricing of interest-earning assets.
The cost of interest-bearing liabilities increased by 117 basis
points to 1.53% for the three months ended March 31, 2023,
from 0.36% for the three months ended March 31, 2022, driven
by both higher cost of deposits and borrowed funds, reflective of
the rising interest rate environment. The increase in the cost of
borrowings was also due in part to the issuance of $60.9 million of
subordinated notes (net of issuance costs) in June 2022. The
increase in the cost of interest-bearing liabilities was partially
offset by an increase in yields on interest-earning assets which
increased 63 basis points to 3.76% for the three months ended
March 31, 2023, from 3.13% for the three months ended
March 31, 2022. The Company accreted interest income related
to PCD loans of $341,000 for the three months ended March 31,
2023, as compared to $391,000 for the three months ended
March 31, 2022. Fees recognized from PPP loans totaled $5,000
for the three months ended March 31, 2023, as compared to
$701,000 for the three months ended March 31, 2022. Net
interest income for the three months ended March 31, 2023,
included loan prepayment income of $961,000 as compared to $1.1
million for the three months ended March 31, 2022.
The provision for credit losses on loans
increased by $461,000 to $864,000 for the three months ended
March 31, 2023, compared to $403,000 for the three months
ended March 31, 2022. The increase in the provision for credit
losses for the current quarter, as compared to the comparable prior
year quarter, was primarily the result of a weakening macroeconomic
outlook and higher net charge-offs. At March 31, 2023,
management qualitatively adjusted the economic forecast to account
for uncertainty inherent in third party economic forecast scenarios
utilized. Net charge-offs were $2.0 million for the three months
ended March 31, 2023, as compared to net charge-offs of
$102,000 for the three months ended March 31, 2022, the
increase being due to charge-offs on small business unsecured
commercial and industrial loans. Management continues to monitor
the small business unsecured commercial and industrial loan
portfolio which totaled $39.6 million at March 31, 2023.
Non-interest income increased by $1.6 million,
or 94.5%, to $3.3 million for the three months ended March 31,
2023, from $1.7 million for the three months ended March 31,
2022, due primarily to a $1.3 million increase in mark to market
gains on trading securities, net, and a $488,000 increase in other
income, primarily an increase in swap fee income. For the three
months ended March 31, 2023, gains on trading securities were
$512,000, as compared to losses of $802,000 for the three months
ended March 31, 2022. 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 a minimal 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. Partially
offsetting the increases was a decrease of $263,000 in net realized
gains on available-for-sale debt securities.
Non-interest expense increased $2.4 million, or
12.9%, to $21.1 million for the three months ended March 31,
2023, compared to $18.7 million for the three months ended
March 31, 2022. The increase was primarily due to a $1.5
million increase in employee compensation and benefits,
attributable to a $1.3 million increase in the mark to market of
the Company's deferred compensation plan expense, which as
discussed above has no effect on net income, and to a lesser
extent, an increase in medical benefit costs and an increase in
equity award expense related to awards issued in the first quarter
of 2023. Additionally, data processing expense increased by
$530,000, due to continued investments in technology, increased
transaction costs related to an increase in the number of customer
accounts and related volume of transactions, and higher pricing
effective January 2023; Advertising expense increased by $414,000
due to the timing of certain programs and new promotions on deposit
products; and FDIC insurance expense increased by $247,000 due to
higher assessments and growth in the balance sheet. Partially
offsetting the increases was a decrease of $168,000 in credit loss
expense for off-balance sheet credit exposures, and a $189,000
decrease in other operating expense. The decrease in credit loss
expense for off-balance sheet credit exposures was due to a
provision of $111,000 recorded during the three months ended
March 31, 2023, compared to a provision of $279,000 for the
prior year period, attributed to a decrease in the pipeline of
loans committed and awaiting closing.
The Company recorded income tax expense of $4.5
million for the three months ended March 31, 2023, compared to
$5.3 million for the three months ended March 31, 2022, with
the decrease due to lower taxable income. The effective tax rate
for the three months ended March 31, 2023, was 27.9% compared
to 27.4% for the three months ended March 31, 2022.
Comparison of Operating Results for the Three
Months Ended March 31, 2023 and December 31, 2022
Net income was $11.7 million and $14.1 million
for the quarters ended March 31, 2023, and December 31,
2022, respectively. Significant variances from the prior quarter
are as follows: a $4.4 million decrease in net interest income, a
$363,000 decrease in the provision for credit losses on loans, a
$113,000 increase in non-interest income, a $528,000 decrease in
non-interest expense and a $1.0 million decrease in income tax
expense.
Net interest income for the quarter ended
March 31, 2023, decreased by $4.4 million, or 11.3%, primarily
due to a 26 basis point decrease in net interest margin to 2.63%
from 2.89% for the quarter ended December 31, 2022, and a
$21.4 million, or 0.4%, decrease in the average balance of
interest-earning assets. The decrease in the average balance of
interest-earning assets was primarily due to decreases in the
average balance of loans outstanding of $2.8 million, the average
balance of mortgage-backed securities of $38.9 million, and the
average balance of other securities of $16.5 million, partially
offset by increases in the average balance of FHLBNY stock of $13.5
million and the average balance of interest-earning deposits in
financial institutions of $23.3 million.
The decrease in net interest margin was
primarily due to the increase in the cost of interest-bearing
liabilities outpacing the increase in yields on interest-earning
assets. The cost of interest-bearing liabilities increased by 58
basis point to 1.53% for the quarter ended March 31, 2023,
from 0.95% for the quarter ended December 31, 2022, driven by
both higher costs of deposits and borrowed funds, reflective of the
rising interest rate environment, and was partially offset by
higher yields on interest-earning assets, which increased by 18
basis points to 3.76% for the quarter ended March 31, 2023,
from 3.58% for the quarter ended December 31, 2022. Net
interest income for the quarter ended March 31, 2023, included
loan prepayment income of $961,000 as compared to $287,000 for the
quarter ended December 31, 2022. The Company accreted interest
income related to PCD loans of $341,000 for the quarter ended
March 31, 2023, as compared to $355,000 for the quarter ended
December 31, 2022.
The provision for credit losses on loans
decreased by $363,000 to $864,000 for the quarter ended
March 31, 2023, from $1.2 million for the quarter ended
December 31, 2022. The decrease in the provision was primarily
due to an improvement in the macroeconomic outlook, from the
trailing quarter (which had already been qualitatively adjusted by
management in the fourth quarter to account for a weakening
economic outlook), partially offset by higher net charge-offs.
Furthermore, there were not significant changes in loan balances.
Net charge-offs were $2.0 million for the quarter ended
March 31, 2023, as compared to net charge-offs of $493,000 for
the quarter ended December 31, 2022.
Non-interest income increased by $113,000, or
3.5%, to $3.3 million for the quarter ended March 31, 2023,
from $3.2 million for the quarter ended December 31, 2022. The
increase was primarily due to a $495,000 increase in other income,
primarily higher swap fee income, partially offset by a $119,000
decrease in fees and service charges for customer services, a
$73,000 decrease in mark to market gains on trading securities,
net, and a $180,000 decrease in gains on sales of loans. For the
quarter ended March 31, 2023, gains on trading securities,
net, were $512,000, compared to gains of $585,000 for the quarter
ended December 31, 2022.
Non-interest expense decreased by $528,000, or
2.4%, to $21.1 million for the quarter ended March 31, 2023,
from $21.7 million for the quarter ended December 31, 2022.
The decrease was primarily due to a $1.2 million decrease in
compensation and employee benefits, primarily related to lower
incentive compensation expense due to higher bonus accruals in the
fourth quarter of 2022, partially offset by increases of $172,000
in occupancy expense, $150,000 in data processing expense, $165,000
in professional fees and $265,000 in FDIC insurance expense.
The Company recorded income tax expense of $4.5
million for the quarter ended March 31, 2023, compared to $5.5
million for the quarter ended December 31, 2022 with the
decrease due to lower taxable income. The effective tax rate for
the quarter ended March 31, 2023 was 27.9%, compared to 28.1%
for the quarter ended and December 31, 2022.
Financial Condition
Total assets increased by $61.9 million, or
1.1%, to $5.66 billion at March 31, 2023, from $5.60 billion
at December 31, 2022. The increase was primarily due to
increases in cash and cash equivalents of $113.2 million, or
247.1%, and FHLBNY stock of $10.7 million, or 35.3%, partially
offset by decreases in available-for-sale debt securities of $55.2
million, or 5.8%, and other assets of $5.5 million, or 10.1%.
As of March 31, 2023, we estimate that our
non-owner occupied commercial real estate loans (as defined by
regulatory guidance) to total risk-based capital was approximately
447.5%. 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 its commercial real estate concentration risk, the Bank’s
regulators could require it to implement additional policies and
procedures or could require it to maintain higher levels of
regulatory capital, which might adversely affect its loan
originations, ability to pay dividends, and profitability.
Cash and cash equivalents increased by $113.2
million, or 247.1%, to $159.0 million at March 31, 2023, from
$45.8 million at December 31, 2022, primarily due to an
increase in Federal Reserve Bank (“FRB”) balances. Balances
fluctuate based on the timing of receipt of security and loan
repayments and the redeployment of cash into higher-yielding assets
such as loans and securities, or the funding of deposit outflows or
borrowing maturities. In the current quarter, management believed
it was prudent to increase balance sheet liquidity given general
market volatility and uncertainty.
Loans held-for-investment, net, remained stable
at $4.24 billion at both March 31, 2023 and December 31,
2022, as increases in the commercial real estate, one-to-four
family residential, home equity and construction and land loan
portfolios were offset by decreases in the multifamily and
commercial and industrial portfolios. The Company continues to
focus on the credit needs of its customers, and to a lesser extent
the development of new business given the uncertain economic
environment. Commercial real estate loans increased
$20.3 million, or 2.3%, to $919.5 million at
March 31, 2023 from $899.2 million at December 31,
2022, one-to-four family residential loans increased
$1.7 million, or 1.0%, to $175.6 million at
March 31, 2023 from $173.9 million at December 31,
2022, home equity loans increased $3.1 million, or 2.1%, to
$155.7 million at March 31, 2023 from $152.6 million
at December 31, 2022, and construction and land loans
increased $576,000, or 2.3%, to $25.5 million at
March 31, 2023 from $24.9 million at December 31,
2022. The increases were offset by decreases in multifamily loans
of $24.5 million, or 0.9%, to $2.80 billion at March 31, 2023
from $2.82 billion at December 31, 2022, and commercial and
industrial loans of $2.8 million, or 1.9%, to
$146.8 million at March 31, 2023 from $149.6 million
at December 31, 2022.
At March 31, 2023, office-related loans
represented $213.3 million, or approximately 5%, of our total loan
portfolio, had an average balance of $1.7 million (although we have
originated these type of loans in amounts substantially greater
than this average) and a weighted average loan-to-value ratio of
58%. Approximately 46% were owner-occupied. The geographic
locations of the properties collateralizing our office-related
loans are as follows: 53.1% in New York, 46.6% in New Jersey and
0.3% in Pennsylvania. At March 31, 2023, our largest
office-related loan had a principal balance of $82.0 million (with
a net active principal balance of $27.3 million as we have a 33.3%
participation interest), was secured by an office facility located
in Staten Island, New York, and was performing in accordance with
its original contractual terms.
PCD loans totaled $11.6 million at
March 31, 2023, and $11.5 million at December 31, 2022.
The majority of the remaining PCD loan balance consists of loans
acquired as part of a Federal Deposit Insurance
Corporation-assisted transaction. The Company accreted interest
income of $341,000 attributable to PCD loans for the three months
ended March 31, 2023, as compared to $391,000 for the three months
ended March 31, 2022. PCD loans had an allowance for credit losses
of approximately $3.8 million at March 31, 2023.
Loan balances are summarized as follows (dollars
in thousands):
| |
March 31, 2023 |
|
December 31, 2022 |
| Real estate
loans: |
|
|
|
|
Multifamily |
$ |
2,800,079 |
|
$ |
2,824,579 |
|
Commercial mortgage |
|
919,503 |
|
|
899,249 |
|
One-to-four family residential mortgage |
|
175,640 |
|
|
173,946 |
|
Home equity and lines of credit |
|
155,683 |
|
|
152,555 |
|
Construction and land |
|
25,508 |
|
|
24,932 |
|
Total real estate loans |
|
4,076,413 |
|
|
4,075,261 |
| Commercial
and industrial loans |
|
146,751 |
|
|
149,557 |
| PPP
loans |
|
5,081 |
|
|
5,143 |
| Other
loans |
|
2,095 |
|
|
2,230 |
|
Total commercial and industrial, PPP, and other loans |
|
153,927 |
|
|
156,930 |
|
Loans held-for-investment, net (excluding PCD) |
|
4,230,340 |
|
|
4,232,191 |
| PCD
loans |
|
11,591 |
|
|
11,502 |
|
Total loans held-for-investment, net |
$ |
4,241,931 |
|
$ |
4,243,693 |
The Company’s available-for-sale debt securities
portfolio decreased by $55.2 million, or 5.8%, to $896.9 million at
March 31, 2023, from $952.2 million at December 31, 2022.
The decrease was primarily attributable to paydowns, maturities and
calls. At March 31, 2023, $662.2 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 $72.7 million in U.S. Government agency securities
and $162.0 million in corporate bonds, all of which were considered
investment grade at March 31, 2023. Unrealized losses, net of
tax, on available for sale debt securities and held to maturity
securities approximated $42.5 million and $246,000, respectively,
at March 31, 2023, and $48.6 million and $332,000, respectively, at
December 31, 2022.
Equity securities remained level at $10.4
million at March 31, 2023 and December 31, 2022. Equity
securities are primarily comprised of an investment in a Small
Business Administration Loan Fund. This investment is utilized by
the Bank as part of its Community Reinvestment Act program.
Total liabilities increased $65.1 million, or
1.3%, to $4.97 billion at March 31, 2023, from $4.90 billion
at December 31, 2022. The increase was primarily attributable
to an increase in FHLB advances and other borrowings of $365.1
million, partially offset by a decrease in deposits of $302.7
million, primarily due to a decrease in brokered deposits of $238.0
million. The Company routinely utilizes brokered deposits and
borrowed funds to manage interest rate risk, the cost of interest
bearing liabilities, and funding needs related to loan originations
and deposit activity.
Deposits decreased $302.7 million, or 7.3%, to
$3.85 billion at March 31, 2023, as compared to $4.15 billion
at December 31, 2022. Deposits, excluding brokered deposits,
decreased $64.7 million, or 1.7%. The decrease in deposits,
excluding brokered deposits, was attributable to decreases of $70.8
million in transaction accounts and $109.3 million in money market
accounts. These decreases were partially offset by increases of
$106.1 million in time deposits and $9.4 million in savings
accounts.
Deposit account balances are summarized as
follows (dollars in thousands):
| |
March 31, 2023 |
|
December 31, 2022 |
|
Transaction: |
|
|
|
|
Non-interest bearing checking |
$ |
804,784 |
|
$ |
852,660 |
|
Negotiable orders of withdrawal and interest-bearing checking |
|
1,109,364 |
|
|
1,132,290 |
|
Total transaction |
|
1,914,148 |
|
|
1,984,950 |
| Savings and
money market: |
|
|
|
|
Savings |
|
926,541 |
|
|
917,180 |
|
Money market |
|
398,730 |
|
|
508,067 |
|
Total savings |
|
1,325,271 |
|
|
1,425,247 |
|
Certificates of deposit: |
|
|
|
|
Brokered deposits |
|
152,049 |
|
|
390,035 |
|
$250,000 and under |
|
327,341 |
|
|
293,200 |
|
Over $250,000 |
|
128,688 |
|
|
56,787 |
|
Total certificates of deposit |
|
608,078 |
|
|
740,022 |
| Total
deposits |
$ |
3,847,497 |
|
$ |
4,150,219 |
| |
|
|
|
|
|
Included in the table above are business and
municipal deposit account balances as follows (dollars in
thousands):
| |
March 31, 2023 |
|
December 31, 2022 |
| |
|
|
|
|
Business customers |
$ |
1,071,469 |
|
$ |
1,146,803 |
| Municipal
(governmental) customers |
$ |
609,662 |
|
$ |
604,717 |
| |
|
|
|
|
|
Borrowed funds increased to $1.01 billion at
March 31, 2023, from $644.9 million at December 31, 2022.
The increase in borrowings for the period was due to an increase in
FHLB and FRB borrowings of $365.1 million, including $134.5 million
of borrowings under the Federal Reserve Bank Term Funding Program.
which included favorable terms and conditions as compared to FHLB
advances. Management utilizes borrowings to mitigate interest rate
risk, for short-term liquidity, and to a lesser extent from time to
time, as part of leverage strategies. During the quarter, the
Company increased borrowings to pay off higher-rate brokered
certificates of deposit, and, to a lesser extent, fund deposit
outflows of non-brokered deposits.
The following table sets forth borrowing
maturities (excluding overnight borrowings and subordinated debt)
and the weighted average rate by year at March 31, 2023
(dollars in thousands):
|
Year |
|
Amount (1) |
|
Weighted Average Rate |
|
2023 |
|
$90,000 |
|
3.62% |
| 2024 |
|
194,500 |
|
3.98% |
| 2025 |
|
182,500 |
|
2.59% |
| 2026 |
|
148,000 |
|
4.36% |
| 2027 |
|
173,000 |
|
3.19% |
|
Thereafter |
|
154,288 |
|
3.96% |
| |
|
$942,288 |
|
3.59% |
| |
|
|
|
|
|
__________________________________________________________(1)
Borrowings maturing in 2023 and 2024 include $40.0 million and
$94.5 million, respectively, of FRB borrowings that can be repaid
without any penalty. |
Total stockholders’ equity decreased by $3.2
million to $698.2 million at March 31, 2023, from $701.4
million at December 31, 2022. The decrease was attributable to
$16.0 million in stock repurchases and $5.9 million in dividend
payments, partially offset by net income of $11.7 million for the
three months ended March 31, 2023, a $6.0 million increase in
accumulated other comprehensive income associated with an increase
in the estimated fair value of our debt securities
available-for-sale portfolio, and a $1.0 million increase in equity
award activity. During the three months ended March 31, 2023,
the Company repurchased approximately 1.1 million of its common
stock outstanding at an average price of $14.68 for a total of
$16.0 million pursuant to approved stock repurchase plans. As of
March 31, 2023, the Company had approximately $6.5 million in
remaining capacity under its current repurchase program.
On April 18, 2023, the Bank received a
non-objection letter from the Federal Reserve Bank of Philadelphia
to pay a dividend of up to $40 million to Northfield Bancorp,
Inc.
The Company continues to maintain strong
liquidity and a strong capital position. The Company's most liquid
assets are cash and cash equivalents, corporate bonds, and
unpledged mortgage-related securities issued or guaranteed by the
U.S. Government, Fannie Mae, or Freddie Mac, that we can either
borrow against or sell. We also have the ability to surrender
bank-owned life insurance contracts. The surrender of these
contracts would subject the Company to income taxes and penalties
for increases in the cash surrender values over the original
premium payments. We also have the ability to obtain additional
funding from the FHLB and Federal Reserve Bank of New York
utilizing unencumbered and unpledged securities and multifamily
loans. The Company expects to have sufficient funds available to
meet current commitments in the normal course of business.
The Company had the following primary sources of
liquidity at March 31, 2023 (dollars in thousands):
|
Cash and cash equivalents(1) |
$ |
144,462 |
| Corporate
bonds(2) |
$ |
144,372 |
| Multifamily
loans(2) |
$ |
1,142,849 |
|
Mortgage-backed securities (issued or guaranteed by the U.S.
Government, Fannie Mae, or Freddie Mac)(2) |
$ |
128,754 |
| |
|
|
|
__________________________________________________________(1)
Excludes $14.5 million of cash at Northfield Bank. (2) Represents
estimated remaining borrowing potential. |
The Company and the Bank utilize the Community
Bank Leverage Ratio (“CBLR”) framework. The CBLR replaces the
risk-based and leverage capital requirements in the generally
applicable capital rules. At March 31, 2023, the Company
and the Bank's estimated CBLR ratios were 12.53% and 12.97%,
respectively, which exceeded the minimum requirement to be
considered well-capitalized of 9%.
Asset Quality
The following table details total non-accrual
loans (excluding PCD), non-performing loans, non-performing assets,
troubled debt restructurings on which interest is accruing, and
accruing loans 30 to 89 days delinquent at March 31, 2023
and December 31, 2022 (dollars in thousands):
| |
March 31, 2023 |
|
December 31, 2022 |
| Non-accrual
loans: |
|
|
|
|
Held-for-investment |
|
|
|
|
Real estate loans: |
|
|
|
|
Multifamily |
$ |
3,258 |
|
|
$ |
3,285 |
|
|
Commercial |
|
5,188 |
|
|
|
5,184 |
|
|
One-to-four family residential |
|
113 |
|
|
|
118 |
|
|
Home equity and lines of credit |
|
78 |
|
|
|
262 |
|
|
Commercial and industrial |
|
532 |
|
|
|
964 |
|
|
Total non-accrual loans |
|
9,169 |
|
|
|
9,813 |
|
| Loans
delinquent 90 days or more and still accruing: |
|
|
|
|
Held-for-investment |
|
|
|
|
Real estate loans: |
|
|
|
|
Multifamily |
|
225 |
|
|
|
233 |
|
|
Commercial |
|
— |
|
|
|
8 |
|
|
One-to-four family residential |
|
6 |
|
|
|
155 |
|
|
PPP loans |
|
— |
|
|
|
24 |
|
|
Other |
|
— |
|
|
|
5 |
|
| Total loans
held-for-investment delinquent 90 days or more and still
accruing |
|
231 |
|
|
|
425 |
|
|
Total non-performing loans |
$ |
9,400 |
|
|
$ |
10,238 |
|
|
Other real estate owned |
|
70 |
|
|
|
— |
|
|
Total non-performing assets |
$ |
9,470 |
|
|
$ |
10,238 |
|
|
Non-performing loans to total loans |
|
0.22 |
% |
|
|
0.24 |
% |
|
Non-performing assets to total assets |
|
0.17 |
% |
|
|
0.18 |
% |
|
Loans subject to restructuring agreements and still
accruing |
$ |
3,637 |
|
|
$ |
3,751 |
|
|
Accruing loans 30 to 89 days delinquent |
$ |
4,073 |
|
|
$ |
3,644 |
|
| |
|
|
|
|
|
|
|
Other Real Estate Owned
At March 31, 2023, other real estate owned
was comprised of one property located in New Jersey, which had a
carrying value of approximately $70,000. At December 31, 2022,
the Company had no assets acquired through foreclosure.
Accruing Loans 30 to 89 Days Delinquent
Loans 30 to 89 days delinquent and on accrual
status totaled $4.1 million and $3.6 million at March 31, 2023
and December 31, 2022, respectively. The following table sets
forth delinquencies for accruing loans by type and by amount at
March 31, 2023 and December 31, 2022 (dollars in
thousands):
| |
March 31, 2023 |
|
December 31, 2022 |
|
Held-for-investment |
|
|
|
|
Real estate loans: |
|
|
|
|
Multifamily |
$ |
185 |
|
$ |
189 |
|
Commercial |
|
804 |
|
|
900 |
|
One-to-four family residential |
|
567 |
|
|
672 |
|
Home equity and lines of credit |
|
665 |
|
|
830 |
|
Commercial and industrial loans |
|
1,842 |
|
|
1,048 |
|
Other loans |
|
10 |
|
|
5 |
|
Total delinquent accruing loans held-for-investment |
$ |
4,073 |
|
$ |
3,644 |
|
|
|
|
|
|
|
The increase in the commercial and industrial
loan delinquencies is primarily due to an increase in delinquencies
in unsecured small business loans. Unsecured small business loans
totaled $39.6 million and $43.3 million at March 31, 2023 and
December 31, 2022, respectively. Management continues to
monitor the small business unsecured commercial and industrial loan
portfolio.
PCD Loans (Held-for-Investment)
The Company accounts for PCD loans at estimated
fair value using discounted expected future cash flows deemed to be
collectible on the date acquired. Based on its detailed review of
PCD loans and experience in loan workouts, management believes it
has a reasonable expectation about the amount and timing of future
cash flows and accordingly has classified PCD loans ($11.6 million
at March 31, 2023 and $11.5 million at December 31, 2022)
as accruing, even though they may be contractually past
due. At March 31, 2023, 1.9% of PCD loans were past due
30 to 89 days, and 25.7% were past due 90 days or more, as compared
to 6.8% and 23.0%, respectively, at December 31, 2022.
About Northfield Bank
Northfield Bank, founded in 1887, operates 38
full-service banking 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,
including any potential recessionary conditions, changes in
liquidity, including the size and composition of our deposit
portfolio, including the percentage of uninsured deposits in the
portfolio, the effects of the COVID-19 pandemic, including the
effects of the steps taken to address the pandemic and their impact
on the Company’s market and employees, competition among depository
and other financial institutions, including with respect to
overdraft and other fees, changes in laws or government regulations
or policies affecting financial institutions, including changes in
the monetary policies of the U.S. Treasury and the Board of
Governors of the Federal Reserve System, changes in regulatory
fees, assessments and capital requirements, inflation and changes
in the interest rate environment that reduce our margins, reduce
the fair value of financial instruments or reduce our ability to
originate loans, the effects of war, conflict, and acts of
terrorism, 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 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 |
| |
March 31, |
|
December 31, |
| |
2023 |
|
2022 |
|
2022 |
|
Selected Financial Ratios: |
|
|
|
|
|
|
Performance Ratios (1) |
|
|
|
|
|
|
Return on assets (ratio of net income to average total assets) |
0.84 |
% |
|
1.04 |
% |
|
0.99 |
% |
| Return on
equity (ratio of net income to average equity) |
6.82 |
|
|
7.83 |
|
|
8.07 |
|
| Average
equity to average total assets |
12.39 |
|
|
13.34 |
|
|
12.31 |
|
| Interest
rate spread |
2.23 |
|
|
2.77 |
|
|
2.63 |
|
| Net interest
margin |
2.63 |
|
|
2.87 |
|
|
2.89 |
|
| Efficiency
ratio (2) |
55.27 |
|
|
48.49 |
|
|
50.88 |
|
| Non-interest
expense to average total assets |
1.52 |
|
|
1.38 |
|
|
1.52 |
|
| Non-interest
expense to average total interest-earning assets |
1.59 |
|
|
1.46 |
|
|
1.59 |
|
| Average
interest-earning assets to average interest-bearing
liabilities |
135.51 |
|
|
139.03 |
|
|
136.68 |
|
|
Asset Quality Ratios: |
|
|
|
|
|
|
Non-performing assets to total assets |
0.17 |
|
|
0.15 |
|
|
0.18 |
|
|
Non-performing loans (3) to total loans (4) |
0.22 |
|
|
0.21 |
|
|
0.24 |
|
| Allowance
for credit losses to non-performing loans |
440.81 |
|
|
481.24 |
|
|
416.26 |
|
| Allowance
for credit losses to total loans held-for-investment, net (5)
(6) |
0.98 |
|
|
1.01 |
|
|
1.00 |
|
|
(1) |
Annualized where 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 PCD loans), and
are included in total loans held-for-investment, net. |
| (4) |
Includes originated loans held-for-investment, PCD loans, acquired
loans and loans held-for-sale. |
| (5) |
Includes originated loans held-for-investment, PCD loans, and
acquired loans. |
| (6) |
Excluding PPP loans (which are fully government guaranteed and do
not carry any provision for losses) of $5.1 million, $24.3 million,
and $5.1 million at March 31, 2023, March 31, 2022, and
December 31, 2022, respectively, the allowance for credit
losses to total loans held for investment, net, totaled 0.98%,
1.01%, and 1.01%, respectively, at March 31, 2023,
March 31, 2022, and December 31, 2022. |
NORTHFIELD BANCORP, INC.
CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share and
per share amounts) (unaudited)
| |
March 31, 2023 |
|
December 31, 2022 |
|
ASSETS: |
|
|
|
|
Cash and due from banks |
$ |
14,490 |
|
|
$ |
14,530 |
|
|
Interest-bearing deposits in other financial institutions |
|
144,462 |
|
|
|
31,269 |
|
| Total cash
and cash equivalents |
|
158,952 |
|
|
|
45,799 |
|
| Trading
securities |
|
11,129 |
|
|
|
10,751 |
|
| Debt
securities available-for-sale, at estimated fair value |
|
896,948 |
|
|
|
952,173 |
|
| Debt
securities held-to-maturity, at amortized cost |
|
10,378 |
|
|
|
10,760 |
|
| Equity
securities |
|
10,443 |
|
|
|
10,443 |
|
| Loans
held-for-investment, net |
|
4,241,931 |
|
|
|
4,243,693 |
|
|
Allowance for credit losses |
|
(41,436 |
) |
|
|
(42,617 |
) |
| Net loans
held-for-investment |
|
4,200,495 |
|
|
|
4,201,076 |
|
| Accrued
interest receivable |
|
17,196 |
|
|
|
17,426 |
|
| Bank-owned
life insurance |
|
168,782 |
|
|
|
167,912 |
|
| Federal Home
Loan Bank of New York stock, at cost |
|
41,117 |
|
|
|
30,382 |
|
| Operating
lease right-of-use assets |
|
33,120 |
|
|
|
34,288 |
|
| Premises and
equipment, net |
|
24,674 |
|
|
|
24,844 |
|
|
Goodwill |
|
41,012 |
|
|
|
41,012 |
|
| Other
assets |
|
48,927 |
|
|
|
54,427 |
|
|
Total assets |
$ |
5,663,173 |
|
|
$ |
5,601,293 |
|
| |
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY: |
|
|
|
|
LIABILITIES: |
|
|
|
|
Deposits |
$ |
3,847,497 |
|
|
$ |
4,150,219 |
|
| Securities
sold under agreements to repurchase |
|
25,000 |
|
|
|
25,000 |
|
| Federal Home
Loan Bank advances and other borrowings |
|
923,983 |
|
|
|
558,859 |
|
| Subordinated
debentures, net of issuance costs |
|
61,052 |
|
|
|
60,996 |
|
| Lease
liabilities |
|
38,509 |
|
|
|
39,790 |
|
| Advance
payments by borrowers for taxes and insurance |
|
30,847 |
|
|
|
25,995 |
|
| Accrued
expenses and other liabilities |
|
38,119 |
|
|
|
39,044 |
|
|
Total liabilities |
|
4,965,007 |
|
|
|
4,899,903 |
|
| |
|
|
|
|
STOCKHOLDERS’ EQUITY: |
|
|
|
|
Total stockholders’ equity |
|
698,166 |
|
|
|
701,390 |
|
|
Total liabilities and stockholders’ equity |
$ |
5,663,173 |
|
|
$ |
5,601,293 |
|
| |
|
|
|
| Total shares
outstanding |
|
46,530,167 |
|
|
|
47,442,488 |
|
| Tangible
book value per share (1) |
$ |
14.12 |
|
|
$ |
13.91 |
|
|
(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 $247,000
and $266,000 at March 31, 2023 and December 31, 2022,
respectively, and are included in other assets. |
NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except
share and per share amounts) (unaudited)
| |
For the
Three Months Ended |
| |
March 31, |
|
December 31, |
| |
2023 |
|
2022 |
|
2022 |
|
Interest income: |
|
|
|
|
|
|
Loans |
$ |
43,707 |
|
$ |
36,721 |
|
|
$ |
42,881 |
|
Mortgage-backed securities |
|
3,792 |
|
|
2,475 |
|
|
|
3,659 |
|
Other securities |
|
1,385 |
|
|
695 |
|
|
|
1,440 |
|
Federal Home Loan Bank of New York dividends |
|
465 |
|
|
245 |
|
|
|
386 |
|
Deposits in other financial institutions |
|
578 |
|
|
58 |
|
|
|
394 |
| Total
interest income |
|
49,927 |
|
|
40,194 |
|
|
|
48,760 |
|
Interest expense: |
|
|
|
|
|
|
Deposits |
|
7,821 |
|
|
1,159 |
|
|
|
5,675 |
|
Borrowings |
|
6,391 |
|
|
2,166 |
|
|
|
2,908 |
|
Subordinated debt |
|
819 |
|
|
— |
|
|
|
836 |
| Total
interest expense |
|
15,031 |
|
|
3,325 |
|
|
|
9,419 |
| Net interest
income |
|
34,896 |
|
|
36,869 |
|
|
|
39,341 |
| Provision
for credit losses |
|
864 |
|
|
403 |
|
|
|
1,227 |
| Net interest
income after provision for credit losses |
|
34,032 |
|
|
36,466 |
|
|
|
38,114 |
|
Non-interest income: |
|
|
|
|
|
|
Fees and service charges for customer services |
|
1,380 |
|
|
1,331 |
|
|
|
1,499 |
|
Income on bank-owned life insurance |
|
870 |
|
|
839 |
|
|
|
866 |
|
Gains on available-for-sale debt securities, net |
|
1 |
|
|
264 |
|
|
|
15 |
|
Gains/(losses) on trading securities, net |
|
512 |
|
|
(802 |
) |
|
|
585 |
|
Gain on sale of loans |
|
— |
|
|
— |
|
|
|
180 |
|
Other |
|
569 |
|
|
81 |
|
|
|
74 |
| Total
non-interest income |
|
3,332 |
|
|
1,713 |
|
|
|
3,219 |
|
Non-interest expense: |
|
|
|
|
|
|
Compensation and employee benefits |
|
11,037 |
|
|
9,507 |
|
|
|
12,252 |
|
Occupancy |
|
3,372 |
|
|
3,408 |
|
|
|
3,200 |
|
Furniture and equipment |
|
454 |
|
|
426 |
|
|
|
440 |
|
Data processing |
|
2,243 |
|
|
1,713 |
|
|
|
2,093 |
|
Professional fees |
|
971 |
|
|
908 |
|
|
|
806 |
|
Advertising |
|
847 |
|
|
433 |
|
|
|
902 |
|
Federal Deposit Insurance Corporation insurance |
|
604 |
|
|
357 |
|
|
|
339 |
|
Credit loss expense for off-balance sheet exposures |
|
111 |
|
|
279 |
|
|
|
199 |
|
Other |
|
1,489 |
|
|
1,678 |
|
|
|
1,425 |
|
Total non-interest expense |
|
21,128 |
|
|
18,709 |
|
|
|
21,656 |
| Income
before income tax expense |
|
16,236 |
|
|
19,470 |
|
|
|
19,677 |
|
Income tax expense |
|
4,529 |
|
|
5,343 |
|
|
|
5,538 |
| Net
income |
$ |
11,707 |
|
$ |
14,127 |
|
|
$ |
14,139 |
| Net
income per common share: |
|
|
|
|
|
|
Basic |
$ |
0.26 |
|
$ |
0.30 |
|
|
$ |
0.31 |
|
Diluted |
$ |
0.26 |
|
$ |
0.30 |
|
|
$ |
0.31 |
|
Basic average shares outstanding |
|
44,784,228 |
|
|
46,811,331 |
|
|
|
45,486,423 |
|
Diluted average shares outstanding |
|
44,928,905 |
|
|
47,088,375 |
|
|
|
45,789,419 |
|
|
|
|
|
|
|
|
|
|
|
NORTHFIELD BANCORP, INC.
ANALYSIS OF NET INTEREST INCOME (Dollars in thousands)
(unaudited)
|
|
For the Three Months Ended |
|
|
March 31, 2023 |
|
December 31, 2022 |
|
March 31, 2022 |
|
|
AverageOutstandingBalance |
|
Interest |
|
AverageYield/Rate (1) |
|
AverageOutstandingBalance |
|
Interest |
|
AverageYield/Rate (1) |
|
AverageOutstandingBalance |
|
Interest |
|
AverageYield/Rate (1) |
|
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans (2) |
$ |
4,244,772 |
|
$ |
43,707 |
|
4.18 |
% |
|
$ |
4,247,576 |
|
$ |
42,881 |
|
4.01 |
% |
|
$ |
3,848,053 |
|
$ |
36,721 |
|
3.87 |
% |
|
Mortgage-backed securities (3) |
|
746,735 |
|
|
3,792 |
|
2.06 |
|
|
|
785,676 |
|
|
3,659 |
|
1.85 |
|
|
|
938,465 |
|
|
2,475 |
|
1.07 |
|
|
Other securities (3) |
|
275,957 |
|
|
1,385 |
|
2.04 |
|
|
|
292,413 |
|
|
1,440 |
|
1.95 |
|
|
|
255,980 |
|
|
695 |
|
1.10 |
|
|
Federal Home Loan Bank of New York stock |
|
38,066 |
|
|
465 |
|
4.95 |
|
|
|
24,609 |
|
|
386 |
|
6.22 |
|
|
|
22,198 |
|
|
245 |
|
4.48 |
|
|
Interest-earning deposits in financial institutions |
|
77,269 |
|
|
578 |
|
3.03 |
|
|
|
53,920 |
|
|
394 |
|
2.90 |
|
|
|
143,323 |
|
|
58 |
|
0.16 |
|
|
Total interest-earning assets |
|
5,382,799 |
|
|
49,927 |
|
3.76 |
|
|
|
5,404,194 |
|
|
48,760 |
|
3.58 |
|
|
|
5,208,019 |
|
|
40,194 |
|
3.13 |
|
|
Non-interest-earning assets |
|
239,984 |
|
|
|
|
|
|
237,074 |
|
|
|
|
|
|
279,508 |
|
|
|
|
|
Total assets |
$ |
5,622,783 |
|
|
|
|
|
$ |
5,641,268 |
|
|
|
|
|
$ |
5,487,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, NOW, and money market accounts |
$ |
2,523,620 |
|
|
3,843 |
|
0.62 |
% |
|
$ |
2,708,942 |
|
$ |
1,739 |
|
0.25 |
% |
|
$ |
2,954,133 |
|
$ |
571 |
|
0.08 |
% |
|
Certificates of deposit |
|
624,762 |
|
|
3,978 |
|
2.58 |
|
|
|
732,006 |
|
|
3,936 |
|
2.13 |
|
|
|
373,113 |
|
|
588 |
|
0.64 |
|
|
Total interest-bearing deposits |
|
3,148,382 |
|
|
7,821 |
|
1.01 |
|
|
|
3,440,948 |
|
|
5,675 |
|
0.65 |
|
|
|
3,327,246 |
|
|
1,159 |
|
0.14 |
|
|
Borrowed funds |
|
762,928 |
|
|
6,391 |
|
3.40 |
|
|
|
451,049 |
|
|
2,908 |
|
2.56 |
|
|
|
418,736 |
|
|
2,166 |
|
2.10 |
|
|
Subordinated debt |
|
61,015 |
|
|
819 |
|
5.44 |
|
|
|
61,947 |
|
|
836 |
|
5.35 |
|
|
|
— |
|
|
— |
|
— |
|
|
Total interest-bearing liabilities |
|
3,972,325 |
|
|
15,031 |
|
1.53 |
|
|
|
3,953,944 |
|
|
9,419 |
|
0.95 |
|
|
|
3,745,982 |
|
|
3,325 |
|
0.36 |
|
|
Non-interest bearing deposits |
|
848,098 |
|
|
|
|
|
|
890,633 |
|
|
|
|
|
|
909,787 |
|
|
|
|
|
Accrued expenses and other liabilities |
|
105,685 |
|
|
|
|
|
|
102,012 |
|
|
|
|
|
|
99,802 |
|
|
|
|
|
Total liabilities |
|
4,926,108 |
|
|
|
|
|
|
4,946,589 |
|
|
|
|
|
|
4,755,571 |
|
|
|
|
|
Stockholders' equity |
|
696,675 |
|
|
|
|
|
|
694,679 |
|
|
|
|
|
|
731,956 |
|
|
|
|
|
Total liabilities and stockholders' equity |
$ |
5,622,783 |
|
|
|
|
|
$ |
5,641,268 |
|
|
|
|
|
$ |
5,487,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
$ |
34,896 |
|
|
|
|
|
$ |
39,341 |
|
|
|
|
|
$ |
36,869 |
|
|
|
Net interest rate spread (4) |
|
|
|
|
2.23 |
% |
|
|
|
|
|
2.63 |
% |
|
|
|
|
|
2.77 |
% |
|
Net interest-earning assets (5) |
$ |
1,410,474 |
|
|
|
|
|
$ |
1,450,250 |
|
|
|
|
|
$ |
1,462,037 |
|
|
|
|
|
Net interest margin (6) |
|
|
|
|
2.63 |
% |
|
|
|
|
|
2.89 |
% |
|
|
|
|
|
2.87 |
% |
|
Average interest-earning assets to interest-bearing
liabilities |
|
|
|
|
135.51 |
% |
|
|
|
|
|
136.68 |
% |
|
|
|
|
|
139.03 |
% |
|
(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
Northfield Bancorp (NASDAQ:NFBK)
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From Apr 2024 to May 2024
Northfield Bancorp (NASDAQ:NFBK)
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From May 2023 to May 2024
