nfbk-202410230001493225false00014932252024-10-232024-10-23
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 23, 2024
Northfield Bancorp, Inc.
(Exact name of registrant as specified in its charter)
| | | | | | | | |
| Delaware | 001-35791 | 80-0882592 |
(State or other jurisdiction
of incorporation) | (Commission File No.) | (I.R.S. Employer
Identification No.) |
| | | | | | | | |
581 Main Street, Suite 810, Woodbridge, New Jersey | | 07095 |
| (Address of principal executive offices) | | (Zip code) |
Registrant’s telephone number, including area code: (732) 499-7200
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
| Title of each class | | Trading Symbol | | Name of exchange on which registered |
| Common stock, par value $0.01 per share | | NFBK | | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On October 23, 2024, Northfield Bancorp, Inc. (the "Company") issued a press release announcing its earnings for the quarter ended September 30, 2024. A copy of the press release is attached as Exhibit 99.1 to this report.
The press release attached as an exhibit to this Current Report pursuant to this Item 2.02 is being furnished to, and not filed with, the Securities and Exchange Commission.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Approval of Management Cash Incentive Plan
On October 23, 2024, the Board of Directors of the Company approved the Company’s 2025 Management Cash Incentive Plan. The 2025 Management Cash Incentive Plan is attached to this 8-K as Exhibit 10.1.
Item 8.01. Other Events.
The press release also announced the declaration of a $0.13 per common share cash dividend payable on November 20, 2024 to stockholders of record as of November 6, 2024.
Item 9.01. Financial Statements and Exhibits.
(a) Not Applicable.
(b) Not Applicable.
(c) Not Applicable.
(d) Exhibits.
| | | | | | | | |
| Exhibit Number | | Description |
| | 2025 Management Cash Incentive Plan |
| | Press release dated October 23, 2024 |
| 104 | | Cover Page Interactive Data File (embedded within Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | | NORTHFIELD BANCORP, INC. |
| DATE: October 24, 2024 | By: | | /s/ William R. Jacobs |
| | | | William R. Jacobs |
| | | | Chief Financial Officer |
| | | | (Principal Financial and Accounting Officer) |
NORTHFIELD BANK
2025 MANAGEMENT CASH INCENTIVE PLAN
GENERAL
Purpose of the Plan:
The purpose of the Northfield Bank 2025 Management Cash Incentive Plan (the “Plan”) is to attract, retain, motivate, recognize and reward Executives, Officers and Team Members who are selected by the Compensation Committee and/or Executive Management to participate in the Plan (“Participants”) for their individual, and collective contributions to Northfield Bank (“Northfield” or the “Company”).
Further, the Plan is designed to foster a culture of high performance and, within appropriate risk management objectives, reinforce achievement of the Company’s goals and objectives.
The Plan serves as a critical component that comprises a competitive total compensation package, with focus on stated measures critical to the Company’s short and long-term growth and profitability, while linking pay to performance for attainment of such.
Eligibility and Participation:
The Plan is designed for the benefit of those Participants whose responsibilities and high performance significantly influence Company results.
Executives eligible to participate in the Plan shall be selected by the Compensation Committee (the “Committee”) of the Board of Directors of the Company; and Officers and Team Members eligible to participate in the Plan shall be selected by Executive Management for each Performance Period prior to or on the Determination Date for such Performance Period. Participation in the Plan is on a Performance Period basis only. New employees must be hired by October 1 of the year for which the Performance Period has been set to be eligible to participate in the current year’s Plan. Incentive awards for employees hired between January 1 and October 1 will be pro-rated based on the employee’s date of hire. All Participants must maintain a satisfactory level of performance to be eligible for an incentive award.
Acknowledgement of Plan Participation:
Persons who are selected to participate in the Plan shall receive a “Notice of Participation Agreement” and will be required to acknowledge the terms and conditions for participation in the Plan.
Annual Performance Period:
The Performance Period and Plan operate on a calendar year basis (January 1 - December 31).
Incentive Award Opportunity:
A Participant is eligible to earn an incentive award in accordance with the Participant’s defined goals, and/or assessed performance and the provisions of the Plan. Each Executive will have a target cash incentive opportunity that is expressed as a percentage of their Base Salary. Other selected participants will have a target cash incentive compensation opportunity or range of opportunity, as appropriate. Note: Individual Participant goals and award potential are defined as applicable, in the Notice of Participation Agreement.
Board Approved: October 23, 2024
Achieving performance goals will generally result in a full award at target, as applicable, at the discretion of the Compensation Committee and/or Executive Management. Payouts will vary above and below the target to reflect actual performance relative to the goals, weightings, and performance of the Company. The Committee and Executive Management retain the discretion to determine awards relative to goals and may consider other factors in making the award (e.g., extraordinary events).
Goal Setting:
Performance goal(s), including performance ranges and associated weighting for Executives will be approved by the Committee. Performance goal(s), including performance ranges and associated weighting for Participants other than Executive Officers will be approved by the Executive Management, as applicable. Upon the approval of Executive goals, the Committee will present to and obtain final approval of the Board of Directors as part of the Board’s annual business planning process.
At the discretion of the Committee, or as delegated by the Committee, Executive Management may approve goals that have a defined specified threshold, target and stretch performance goal, if applicable, and payout range. The relationship between performance goals and payout ranges will be determined by the Committee, or Executive Management. Once threshold performance is achieved, the award will increase incrementally. Actual payouts will be interpolated on a straight-line basis between threshold, target, and stretch performance levels to reward incremental performance.
Individual/shared goals for Executive Management, will be approved by the Committee at the beginning of the Performance Period. Generally, individual goals should reflect critical financial and strategic objectives. Each individual goal is required to establish a target payout. In recognition that some individual goals may not be quantitative, the Committee, or as delegated by the Committee, Executive Management, retains the discretion to determine payouts in a manner that appropriately reflects performance.
In addition to quantitative goals, the overall target award may be determined based on the Committee’s, or as delegated by the Committee, Executive Management’s qualitative evaluation of performance. In determining the award under the qualitative component, consideration may be given to any factors deemed relevant, including but not limited to corporate, division and individual performance, progress on non-financial objectives, significant non-financial achievements or challenges during the year, performance outside of the enumerated quantitative goals, and other performance results.
Award Payouts and Discretion of the Compensation Committee and/or Executive Management:
If a Participant leaves voluntarily or is terminated by the Company before awards are paid, no incentive award will be owed. A Participant must be an active employee of the Company, and in good standing on the date the incentive award is paid to receive an award. In the event a Participant is not an active employee at the time awards are paid under the Plan, the Compensation Committee and/or, as applicable, Executive Management, may determine to pay such earned award, at their sole discretion. Such awards may be pro-rated for the period of time the Participant was an active employee during the Performance Period.
Payouts relative to the target will be recommended by the CEO (except for the CEO’s payout), certified by the Internal Audit Function (or other function as determined appropriate by the Committee), approved by the Committee, and ratified by the Board of Directors. In the case of the CEO, the payout will be determined by the Committee and ratified by the Board of Directors.
BOD Approved: October 23, 2024
Quarterly payouts, where applicable, will be made in cash within a reasonable time period after the close of each quarter. Generally, quarterly payouts will occur within six weeks following the close of the quarter.
Annual payouts will be made in cash within a reasonable time period after the Company’s independent registered public accounting firm has made its final report to the Audit Committee on the Company’s consolidated financial statements. Generally, payouts will occur within two and a half months following the close of the fiscal year. Awards are calculated based on actual performance and/or individual and team production relative to target as established at the beginning of the Performance Period. For those underlying plans that denominate payments as a percent of a Participant’s base salary utilized in the calculation, for the avoidance of doubt, payouts will be based on percentage of a Participant’s Base Salary in effect as of the last business day of the Performance Period.
All award payouts under the Plan are subject to the discretion of the Committee, or as applicable, Executive Management. In determining an award level based on either corporate or individual goals, consideration may be given to the overall performance of the Company, and the individual performance of each Participant. Considerations may also include, but are not limited to, audit and regulatory findings, internal control assessments and the amount and direction of risk being assumed by the Company. The Committee will take into consideration, extraordinary, unusual, and/or nonrecurring items of gain or loss in determining the extent to which performance has been achieved. The Committee, at its sole discretion, may consider the effect of “passed” audit adjustments proposed by the Company’s independent registered public accounting firm in determining the achievement of the corporate or individual goals established under the Plan.
Administration of the Plan:
The Plan is authorized by the Board of Directors of the Company and administered by the Compensation Committee (the “Committee”) of the Company who are “independent directors” as defined by the stock exchange rules to which the Company is subject. Notwithstanding anything to the contrary herein, all Awards made by the Committee and any performance criteria established by the Committee with respect to an Award, shall be subject to the ratification of the Board of Directors.
All Plan provisions, terms, or results will be interpreted by the Plan administrators at their sole discretion. The Committee shall have the authority to interpret or make a decision with respect to any situation or condition that is not specifically provided for in the Plan or an underlying plan. Any exceptions to this Plan will require the written approval of the Committee.
Reimbursements to the Company:
Participants of this Plan agree that the Company has the right to recoup or “clawback” awards paid under this Plan if the Compensation Committee concludes that such awards were based on information that was later found to be materially incorrect, including awards that were determined, in whole or in part, on financial statement information that is subsequently restated.
Recoupment or “clawback” of incentive awards are governed by all terms and conditions, for the Executives, of the October 25, 2023 “Northfield Bancorp, Inc. Clawback Policy”; and for all other Participants, of the “Northfield Bancorp, Inc. Equity and Cash Incentive Awards Clawback Policy” as adopted by the Board on November 28, 2018, as amended or restated from time to time.
BOD Approved: October 23, 2024
Employee Rights
Nothing in the Plan shall confer upon any Participant the right to continue in the employ of the Company or its Affiliates or shall interfere with or restrict in any way the rights of the Participant’s employer to discharge or change the terms of employment of any Participant at any time for any reason whatsoever, with or without cause.
Effect on Other Plans:
The adoption of the Plan shall not affect any other equity or other compensation or incentive plan in effect for the Company or any Affiliate, and the Plan shall not preclude the Board of Directors from establishing any other forms of incentive compensation for employees of the Company or its Affiliates.
This Plan shall be considered the prevailing document if the terms and conditions detailed herein are unclear or contradict any individual award agreements.
Governing Law:
The Plan shall be construed, administered, and enforced according to the laws of the State of New Jersey, without giving effect to the conflict of laws principles thereof, except to the extent that such laws are preempted by federal law.
Amendment, Suspension, or Termination of the Plan:
The Board of Directors, in its sole discretion, may alter, amend, or terminate the Plan, or any part thereof, at any time and for any reason.
Severability:
If any provision of the Plan is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan, such provision shall be stricken as to such jurisdiction, and the remainder of the Plan shall remain in full force and effect.
The Plan was developed based on existing business, market and economic conditions; current services; and staff assignments. If substantial changes occur that affect these conditions, services, assignments, or forecasts, the Company may add to, amend, modify, or discontinue any of the terms or conditions of the Plan at any time.
DEFINITIONS
•Affiliate means the Bank, or any other entity controlled by the Company.
•Award means a cash payment made to a Participant pursuant to the terms of this Plan.
•Base Salary means, as to a Performance Period, a Participant’s actual salary rate in effect as of the last business day of the Performance Period. Such salary shall be before (i) deductions for taxes and benefits, and (ii) deferrals of compensation pursuant to Company- or Affiliate-sponsored plans.
•Board means the Board of Directors of the Company.
BOD Approved: October 23, 2024
•Code means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code shall include such section, any valid regulation promulgated there under, and any comparable provision of any future legislation or regulation amending, supplementing or superseding, such section or regulation.
•Committee means the Compensation Committee of the Company’s Board of Directors, or any other committee appointed by the Board pursuant to of the Plan.
•Company means Northfield Bank.
•Determination Date means, as to a Performance Period, the date upon which the Committee sets forth in writing the Performance Measures attributable to a Participant or the Participants. The Determination Date shall be no later than the earlier of (i) 90 days after the commencement of the Performance Period or (ii) the date on which 25 percent of the Performance Period has elapsed, provided, in either case, that the outcome is substantially uncertain at the time the Committee actually establishes the Performance Measures.1
•Executive means any employee of the Company at the Executive Vice President level, including the Chief Executive Officer selected by the Compensation Committee to participate in the Plan.
•Executive Management means any employee of the Company at the Executive Vice President level including the Chief Executive Officer.
•Notice of Participation Agreement means an agreement between the Company and the employee of the Company selected by the Compensation Committee or Executive Management to participate in the Plan. An acknowledged Notice of Participation is required to participate in the Plan.
•Officer means any employee of the Company at the Assistant Vice President, Vice President or Senior Vice President selected by Executive Management to participate in the Plan.
•Participant means, as to any Performance Period, an officer of the Company or an Affiliate at the level of Assistant Vice President or above, or one who has been selected by Executive Management for participation in the Plan for such Performance Period.
•Performance Measure means the performance criteria set forth in the Plan or any other criteria approved by the Committee.
•Performance Period means a period of not less than 12 months and not greater than 36 months that is designated by the Committee for the purposes specified herein. The Committee may designate one or more Performance Periods which may or may not run concurrently.
•Team Member means any employee of the Company selected by Executive Management to participate in the Plan.
EFFECTIVE DATE
The Plan shall be effective upon adoption by the Board of Directors of the Company.
BOD Approved: October 23, 2024
EXHIBIT 99.1
PRESS RELEASE DATED OCTOBER 23, 2024
Company Contact:
William R. Jacobs
Chief Financial Officer
Tel: (732) 499-7200 ext. 2519
FOR IMMEDIATE RELEASE
NORTHFIELD BANCORP, INC. ANNOUNCES
THIRD QUARTER 2024 RESULTS
NOTABLE ITEMS FOR THE QUARTER INCLUDE:
•DILUTED EARNINGS PER SHARE WERE $0.16 FOR THE CURRENT QUARTER COMPARED TO $0.14 FOR THE TRAILING QUARTER, AND $0.19 FOR THE THIRD QUARTER OF 2023.
•NET INTEREST MARGIN REMAINED RELATIVELY STABLE AT 2.08% FOR THE CURRENT QUARTER AS COMPARED TO 2.09% FOR THE TRAILING QUARTER.
•AVERAGE YIELD ON INTEREST-EARNING ASSETS DECREASED ONE BASIS POINT TO 4.38%, WHILE THE AVERAGE COST OF INTEREST-BEARING LIABILITIES REMAINED STABLE AT 2.95% FOR THE CURRENT QUARTER AS COMPARED TO THE TRAILING QUARTER.
•DEPOSITS (EXCLUDING BROKERED) DECREASED MODESTLY BY $5.1 MILLION, OR LESS THAN 1% ANNUALIZED, COMPARED TO JUNE 30, 2024, AND INCREASED $15.0 MILLION, OR 0.5% ANNUALIZED, FROM DECEMBER 31, 2023. COST OF DEPOSITS AT SEPTEMBER 30, 2024 WAS 2.07% AS COMPARED TO 2.10% AT JUNE 30, 2024.
•LOAN BALANCES DECLINED BY $27.2 MILLION, OR 2.7% ANNUALIZED, FROM JUNE 30, 2024, WITH DECREASES IN COMMERCIAL, MULTIFAMILY AND RESIDENTIAL REAL ESTATE LOANS OFFSET BY INCREASES IN HOME EQUITY, CONSTRUCTION AND LAND, AND COMMERCIAL AND INDUSTRIAL LOANS.
•ASSET QUALITY REMAINS STRONG DESPITE AN INCREASE IN NON-PERFORMING LOANS IN THE CURRENT QUARTER. NON-PERFORMING LOANS TO TOTAL LOANS WAS 0.75% AT SEPTEMBER 30, 2024 AND 0.42% AT JUNE 30, 2024.
•THE COMPANY MAINTAINED STRONG LIQUIDITY WITH APPROXIMATELY $597 MILLION IN UNPLEDGED AVAILABLE-FOR-SALE SECURITIES AND LOANS READILY AVAILABLE-FOR-PLEDGE OF APPROXIMATELY $699 MILLION.
•THE COMPANY REPURCHASED 560,683 SHARES FOR A COST OF $6.3 MILLION. THERE IS NO REMAINING CAPACITY UNDER THE CURRENT REPURCHASE PROGRAM.
•CASH DIVIDEND DECLARED OF $0.13 PER SHARE OF COMMON STOCK, PAYABLE ON NOVEMBER 20, 2024, TO STOCKHOLDERS OF RECORD AS OF NOVEMBER 6, 2024.
WOODBRIDGE, N.J., OCTOBER 23, 2024 -- NORTHFIELD BANCORP, INC. (Nasdaq:NFBK) (the “Company”), the holding company for Northfield Bank, reported net income of $6.5 million, or $0.16 per diluted share for the three months ended September 30, 2024, compared to $6.0 million, or $0.14 per diluted share, for the three months ended June 30, 2024, and $8.2 million, or $0.19 per diluted share, for the three months ended September 30, 2023. For the nine months ended September 30, 2024, net income totaled $18.7 million, or $0.45 per diluted share, compared to $29.4 million, or $0.67 per diluted share, for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, net income reflected $795,000, or $0.02 per share, of additional tax expense related to options that expired in June 2024, and $683,000, or $0.01 per share, of severance expense related to staffing realignments. For the nine months ended September 30, 2023, net income reflected $440,000, or $0.01 per share of severance expense. The decrease in net income for the nine months ended September 30, 2024, compared to the comparable prior year period was primarily the result of a decrease in net interest income, which was negatively impacted by higher funding costs, partially offset by improved interest and non-interest income.
Commenting on the quarter, Steven M. Klein, the Company’s Chairman, President and Chief Executive Officer stated, “In the third quarter, the Northfield team continued to focus on financial performance, serving the businesses and consumers in our marketplace, and improving upon our operating efficiencies.” Mr. Klein continued, “We delivered solid financial performance for the quarter, increasing our net income, and earnings per share, as we manage our strong capital levels, core deposit and loan relationships, asset quality, and operating expenses. While significant risks remain, the decrease in short-term market interest rates late in the third quarter should provide increased economic activity in our marketplace and opportunities for our Company.”
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 on November 20, 2024 to stockholders of record on November 6, 2024.”
Results of Operations
Comparison of Operating Results for the Nine Months Ended September 30, 2024 and 2023
Net income was $18.7 million and $29.4 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. Significant variances from the comparable prior year period are as follows: a $10.9 million decrease in net interest income, a $1.3 million increase in the provision for credit losses on loans, a $1.5 million increase in non-interest income, a $3.2 million increase in non-interest expense, and a $3.1 million decrease in income tax expense.
Net interest income for the nine months ended September 30, 2024, decreased $10.9 million, or 11.4%, to $84.8 million, from $95.7 million for the nine months ended September 30, 2023 due to a $34.8 million increase in interest expense, which was partially offset by a $23.9 million increase in interest income. The increase in interest expense was largely driven by the cost of interest-bearing liabilities, which increased by 96 basis points to 2.93% for the nine months ended September 30, 2024, from 1.97% for the nine months ended September 30, 2023, driven primarily by a 114 basis point increase in the cost of interest-bearing deposits from 1.42% to 2.56% for the nine months ended September 30, 2024, and a 31 basis point increase in the cost of borrowings from 3.58% to 3.89% due to rising market interest rates and a shift in the composition of the deposit portfolio towards higher-costing certificates of deposit and a greater reliance on borrowings. The increase in interest expense was also due to a $277.1 million, or 7.0%, increase in the average balance of interest-bearing liabilities, including an increase of $149.8 million in the average balance of borrowed funds and a $127.1 million increase in average interest-bearing deposits. The increase in interest income was primarily due to a $156.1 million, or 2.9%, increase in the average balance of interest-earning assets coupled with a 47 basis point increase in the yield on interest-earning assets, which increased to 4.35% for the nine months ended September 30, 2024, from 3.88% for the nine months ended September 30, 2023, due to the rising rate environment. The increase in the average balance of interest-earning assets was primarily due to increases in the average balance of interest-earning deposits in financial institutions of $111.7 million, the average balance of other securities of $91.6 million, and the average balance of mortgage-backed securities of $88.5 million, partially offset by a decrease in the average balance of loans of $133.4 million.
Net interest margin decreased by 34 basis points to 2.07% for the nine months ended September 30, 2024, from 2.41% for the nine months ended September 30, 2023. The decrease in net interest margin was primarily due to interest-bearing liabilities repricing at a faster rate than interest-earning assets. The net interest margin was negatively affected by approximately 12 basis points due to a $300 million low risk leverage strategy implemented in the first quarter of 2024. In January 2024, the Company borrowed $300.0 million from the Federal Reserve Bank through the Bank Term Funding Program at favorable terms and conditions and invested the proceeds in interest-bearing deposits in other financial institutions and investment securities. The Company accreted interest income related to purchased credit-deteriorated (“PCD”) loans of $1.1 million for the nine months ended September 30, 2024, as compared to $1.0 million for the nine months ended September 30, 2023. Net interest income for the nine months ended September 30, 2024, included loan prepayment income of $648,000 as compared to $1.3 million for the nine months ended September 30, 2023.
The provision for credit losses on loans increased by $1.3 million to $2.3 million for the nine months ended September 30, 2024, compared to $1.1 million for the nine months ended September 30, 2023, primarily due to an increase in the specific reserve component of the allowance for credit losses, which was partially offset by a decrease in the general reserve component of the allowance for credit losses. The increase in the specific reserve was related to a single commercial and industrial relationship totaling $12.5 million that experienced credit deterioration and was placed on non-accrual during the current quarter, which has a specific reserve of $1.3 million and incurred a charge-off of $878,000. The decline in the general reserve component of the allowance for credit losses resulted from a decline in loan balances and an improvement in the macroeconomic forecast for the current period within our Current Expected Credit Loss (“CECL”) model, partially offset by an increase in reserves related to changes in model assumptions, including the slowing of prepayment speeds, and an increase in reserves in the commercial and industrial and home equity and lines of credit portfolios related to an increase in non-performing loans in these portfolios and higher loan balances. Net charge-offs were $4.7 million for the nine months ended September 30, 2024, primarily due to $3.9 million in net charge-offs on small business unsecured commercial and industrial loans, as compared to net charge-offs of $5.2 million for the nine months ended September 30, 2023. Management continues to closely monitor the small business unsecured commercial and industrial loan portfolio, which totaled $31.0 million at September 30, 2024.
Non-interest income increased by $1.5 million, or 18.7%, to $9.8 million for the nine months ended September 30, 2024, compared to $8.3 million for the nine months ended September 30, 2023. The increase was primarily due to increases of $790,000 in fees and service charges for customer services, related to an increase in overdraft fees and service charges on deposit accounts, $260,000 in income on bank owned life insurance, and $874,000 in gains on trading securities, net. Partially offsetting the increases was a $303,000 decrease in other income, primarily due to lower swap fee income. Gains on trading securities in the nine months ended September 30, 2024, were $1.6 million, as compared to $723,000 in the nine months ended September 30, 2023. The trading portfolio is utilized to fund the Company’s deferred compensation obligation to certain employees and directors of 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 increased $3.2 million, or 5.2%, to $65.7 million for the nine months ended September 30, 2024, compared to $62.5 million for the nine months ended September 30, 2023. The increase was primarily due to a $3.3 million increase in employee compensation and benefits, primarily attributable to higher salary expense, related to annual merit increases and higher medical expense, and an increase of $874,000 in deferred compensation expense, which is described above, and had no effect on net income. Employee compensation and benefits expense also includes severance expense of $683,000 for the nine months ended September 30, 2024, as compared to $440,000 for the nine months ended September 30, 2023. During the second quarter of 2024, due to current economic conditions, the Company implemented a workforce reduction plan which included modest layoffs and staffing realignments. The annual estimated cost savings of this plan is $2.0 million, pre-tax. Partially offsetting the increase was a $461,000 decrease in stock compensation expense related to performance stock awards not expected to vest. Additionally, non-interest expense included a $727,000 increase in credit loss expense/(benefit) for off-balance sheet exposure due to a provision of $337,000 recorded during the nine months ended September 30, 2024, as compared to a benefit of $390,000 for the comparative prior year period. The benefit in the prior year period was attributable to a decrease in the pipeline of loans committed and awaiting closing. Partially offsetting the increases was a $552,000 decrease in advertising expense due to a change in marketing strategy and the timing of specific deposit and lending campaigns.
The Company recorded income tax expense of $7.9 million for the nine months ended September 30, 2024, compared to $11.0 million for the nine months ended September 30, 2023, with the decrease due to lower taxable income partially offset by a higher effective tax rate. The effective tax rate for the nine months ended September 30, 2024, was 29.7% compared to 27.2% for the nine months ended September 30, 2023. In June 2024, options granted in 2014 expired and resulted in additional tax expense of $795,000, contributing to the higher effective tax rate for the nine months ended September 30, 2024.
Comparison of Operating Results for the Three Months Ended September 30, 2024 and 2023
Net income was $6.5 million and $8.2 million for the quarters ended September 30, 2024 and September 30, 2023, respectively. Significant variances from the comparable prior year quarter are as follows: a $1.5 million decrease in net interest income, a $2.4 increase in the provision for credit losses on loans, a $1.5 million increase in non-interest income, a $189,000 decrease in non-interest expense, and a $513,000 decrease in income tax expense.
Net interest income for the quarter ended September 30, 2024, decreased $1.5 million, or 4.9%, to $28.2 million, from $29.7 million for the quarter ended September 30, 2023, due to an $8.0 million increase in interest expense, partially offset by an $6.6 million increase in interest income. The increase in interest expense was largely driven by the impact of rising market interest rates and a $227.0 million, or 5.7%, increase in the average balance of interest-bearing liabilities, including increases of $158.4 million and $68.4 million in the average balance of interest-bearing deposits and borrowed funds, respectively. The increase in interest income was primarily due to a $155.1 million, or 3.0%, increase in the average balance of interest-earning assets coupled with a 38 basis point increase in yields on interest-earning assets due to the rising rate environment. The increase in the average balance of interest-earning assets was due to increases in the average balance of mortgage-backed securities of $240.3 million, the average balance of other securities of $64.0 million, and the average balance of interest-earning deposits in financial institutions of $26.8 million, partially offset by decreases in the average balance of loans outstanding of $172.8 million and the average balance of Federal Home Loan Bank of New York stock of $3.2 million.
Net interest margin decreased by 17 basis points to 2.08% for the quarter ended September 30, 2024, from 2.25% for the quarter ended September 30, 2023, 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 64 basis points to 2.95% for the quarter ended September 30, 2024, from 2.31% for the quarter ended September 30, 2023, driven primarily by a 77 basis point increase in the cost of interest-bearing deposits from 1.82% to 2.59%, and a 30 basis point increase in the cost of borrowings from 3.63% to 3.93%. The increase in the cost of interest-bearing liabilities was partially offset by an increase in the yield on interest-earning assets, which increased by 38 basis points to 4.38% for the quarter ended September 30, 2024, from 4.00% for the quarter ended September 30, 2023. Net interest income for the quarter ended September 30, 2024, included loan prepayment income of $87,000, as compared to $183,000 for the quarter ended September 30, 2023. The Company accreted interest income related to PCD loans of $327,000 for the quarter ended September 30, 2024, as compared to $325,000 for the quarter ended September 30, 2023.
The provision for credit losses on loans increased by $2.4 million to $2.5 million for the quarter ended September 30, 2024, from a provision of $188,000 for the quarter ended September 30, 2023, primarily due to an increase in the specific reserve component of the allowance for credit losses, which was partially offset by a decrease in the general reserve component of the allowance for credit losses. The increase in the specific reserve was related to a single commercial and industrial relationship that experienced credit deterioration and was placed on non-accrual during the current quarter, which has a specific reserve of $1.3 million and incurred a charge-off of $878,000. The decline in the general reserve component of the allowance for credit losses resulted from a decline in loan balances and an improvement in the macroeconomic forecast for the current period within our CECL model, partially offset by an increase in reserves related to changes in model assumptions, including the slowing of prepayment speeds, and an increase in reserves in the commercial and industrial portfolio related to an increase in non-performing loans and higher loan balances. Net charge-offs were $2.1 million for the quarter ended September 30, 2024, and included $1.4 million in net charge-offs on small business unsecured loans, as compared to net charge-offs of $2.9 million for the quarter ended September 30, 2023.
Non-interest income increased by $1.5 million, or 68.7%, to $3.6 million for the quarter ended September 30, 2024, from $2.1 million for the quarter ended September 30, 2023, primarily due to a $294,000 increase in fees and service charges, primarily related to higher overdraft fees, a $1.0 million increase in gains on trading securities, net, and a $185,000 increase in other income, primarily due to higher swap fee income. For the quarter ended September 30, 2024, gains on trading securities, net, were $710,000, compared to losses of $295,000 in the quarter ended September 30, 2023. 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 by $189,000, or 0.9%, to $20.4 million for the quarter ended September 30, 2024, from $20.6 million for the quarter ended September 30, 2023. The decrease was primarily due to decreases of $386,000 in occupancy expense, attributable to lower real estate taxes, common area maintenance and electricity costs, $214,000 in data processing costs, attributable to a decrease in ongoing core processing costs related to a prior technology-related contract renewed at favorable terms, and $132,000 in advertising expense. Partially offsetting the decreases was a $504,000 increase in compensation and employee benefits, which included a $1.0 million increase in expense related to the Company's deferred compensation plan which is described above, and had no effect on net income, that was offset by lower medical expense.
The Company recorded income tax expense of $2.4 million for the quarter ended September 30, 2024, compared to $2.9 million for the quarter ended September 30, 2023, with the decrease due to lower taxable income. The effective tax rate for the quarter ended September 30, 2024 was 26.6%, compared to 26.0% for the quarter ended September 30, 2023.
Comparison of Operating Results for the Three Months Ended September 30, 2024 and June 30, 2024
Net income was $6.5 million and $6.0 million for the quarters ended September 30, 2024, and June 30, 2024, respectively. Significant variances from the prior quarter are as follows: an $458,000 decrease in net interest income, a $3.2 million increase in the provision for credit losses on loans, a $719,000 increase in non-interest income, a $2.6 million decrease in non-interest expense, and an $850,000 decrease in income tax expense.
Net interest income for the quarter ended September 30, 2024, decreased by $458,000, or 1.6%, primarily due to a $902,000 decrease in interest income, partially offset by a $444,000 decrease in interest expense on deposits and borrowings. The decrease in interest income was primarily due to a $124.4 million 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 interest-earning deposits in financial institutions of $91.6 million, the average balance of other securities of $60.5 million, and the average balance of loans outstanding of $48.1 million, partially offset by an increase in the average balance of mortgage-backed securities of $76.5 million. The decrease in interest expense on deposits and borrowings was primarily due to a $105.8 million, or 2.5%, decrease in the average balance of interest-bearing liabilities attributable to a $73.2 million decrease in the average balance of interest-bearing deposits and a $32.7 million decrease in the average balance of borrowed funds.
Net interest margin decreased by one basis point to 2.08% from 2.09% for the quarter ended June 30, 2024, primarily due to a one basis point decrease in yields on interest-earning assets whereas the cost of interest-bearing liabilities remained level. Net interest income for the quarter ended September 30, 2024, included loan prepayment income of $87,000 as compared to $210,000 for the quarter ended June 30, 2024. The Company accreted interest income related to PCD loans of $327,000 for the quarter ended September 30, 2024, as compared to $321,000 for the quarter ended June 30, 2024.
The provision for credit losses on loans increased by $3.2 million to $2.5 million for the quarter ended September 30, 2024, from a benefit of $618,000 for the quarter ended June 30, 2024. The increase in the provision for the current quarter was primarily due to an increase in the specific reserve component of the allowance for credit losses, attributable to a single commercial and industrial relationship that experienced credit deterioration and was placed on non-accrual during the current quarter, higher reserves related to changes in model assumptions during the current quarter, including the slowing of prepayment speeds and higher net-charge-offs. Net charge-offs were $2.1 million for the quarter ended September 30, 2024, as compared to net charge-offs of $1.6 million for the quarter ended June 30, 2024.
Non-interest income increased by $719,000, or 25.1%, to $3.6 million for the quarter ended September 30, 2024, from $2.9 million for the quarter ended June 30, 2024. The increase was primarily due to a $522,000 increase in gains on sales of trading securities, net, and a $192,000 increase in other income, primarily due to higher swap fee income. For the quarter ended September 30, 2024, gains on trading securities, net, were $710,000, compared to gains of $188,000 for the quarter ended June 30, 2024.
Non-interest expense decreased by $2.6 million, or 11.4%, to $20.4 million for the quarter ended September 30, 2024, from $23.0 million for the quarter ended June 30, 2024. The decrease was primarily due to a $2.0 million decrease in compensation and employee benefits, primarily attributable to a decrease in salaries and medical expense due to lower employee headcount, partially offset by a $522,000 increase in expense related to the Company's deferred compensation plan which had no effect on net income. Also contributing to the decrease were decreases of $192,000 in occupancy expense, $397,000 in data processing costs, attributable to a decrease in ongoing core processing costs resulting from a prior technology-related contract renewed at favorable terms, $200,000 in advertising expense, and $122,000 in other non-interest expense. Partially offsetting the decreases was a $262,000 increase in professional fees, primarily due to an increase in outsourced audit services.
The Company recorded income tax expense of $2.4 million for the quarter ended September 30, 2024, compared to $3.2 million for the quarter ended June 30, 2024. The effective tax rate for the quarter ended September 30, 2024 was 26.6%, compared to 35.0% for the quarter ended June 30, 2024. During the quarter ended June 30, 2024, options granted in 2014 expired and resulted in additional tax expense of $795,000, contributing to the higher effective tax rate for the quarter ended June 30, 2024.
Financial Condition
Total assets increased by $132.5 million, or 2.4%, to $5.73 billion at September 30, 2024, from $5.60 billion at December 31, 2023. The increase was primarily due to increases in available-for-sale debt securities of $268.0 million, or 33.7%, and cash and cash equivalents of $3.4 million, or 1.5%, partially offset by a decrease in loans receivable of $139.7 million, or 3.3%.
Cash and cash equivalents increased by $3.4 million, or 1.5%, to $232.9 million at September 30, 2024, from $229.5 million at December 31, 2023. 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.
Loans held-for-investment, net, decreased by $139.7 million, or 3.3%, to $4.06 billion at September 30, 2024 from $4.20 billion at December 31, 2023, primarily due to decreases in multifamily, commercial and one-to-four family residential real estate loans, partially offset by increases in home equity and lines of credit, construction and land, and commercial and industrial loans. The decrease in loan balances reflects the Company remaining strategically focused on both managing the concentration of its commercial and multifamily real estate loan portfolios and disciplined loan pricing, as well as lower customer demand in the recent elevated interest rate environment. Multifamily loans decreased $110.1 million, or 4.0%, to $2.64 billion at September 30, 2024 from $2.75 billion at December 31, 2023, commercial real estate loans decreased $51.4 million, or 5.5%, to $878.2 million at September 30, 2024 from $929.6 million at December 31, 2023, one-to-four family residential loans decreased $11.1 million, or 6.9%, to $149.7 million at September 30, 2024 from $160.8 million at December 31, 2023, and other loans decreased $925,000, or 35.8%, to $1.7 million at September 30, 2024 from $2.6 million at December 31, 2023. Partially offsetting these decreases were increases in commercial and industrial loans of $19.1 million, or 12.3%, to $174.4 million at September 30, 2024 from $155.3 million at December 31, 2023, home equity and lines of credit of $8.4 million, or 5.2%, to $171.9 million at September 30, 2024 from $163.5 million at December 31, 2023, and construction and land loans of $2.1 million, or 6.6%, to $33.0 million at September 30, 2024 from $31.0 million at December 31, 2023.
As of September 30, 2024, non-owner occupied commercial real estate loans (as defined by regulatory guidance) to total risk-based capital was estimated at approximately 447%. Management believes that Northfield Bank (the “Bank”) maintains 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, the Company's ability to pay dividends, and overall profitability.
Our real estate portfolio includes credit risk exposure to loans collateralized by office buildings and multifamily properties in New York State subject to some form of rent regulation limiting rent increases for rent stabilized multifamily properties. At September 30, 2024, office-related loans represented $183.6 million, or 4.5% of our total loan portfolio, with 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 59%. Approximately 41% were owner-occupied. The geographic locations of the properties collateralizing our office-related loans are: 50.7% in New York, 47.8% in New Jersey and 1.5% in Pennsylvania. At September 30, 2024, our largest office-related loan had a principal balance of $90.0 million (with a net active principal balance for the Bank of $29.9 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. At September 30, 2024, multifamily loans that have some form of rent stabilization or rent control totaled approximately $447.5 million, or approximately 11% of our total loan portfolio, with 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 51%. At September 30, 2024, our largest rent-regulated loan had a principal balance of $16.9 million, was secured by an apartment building located in Staten Island, New York, and was performing in accordance with its original contractual terms. Management continues to closely monitor its office and rent-regulated portfolios. For further details on our rent-regulated multifamily portfolio see “Asset Quality”.
PCD loans totaled $9.3 million and $9.9 million at September 30, 2024 and December 31, 2023, respectively. 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 $327,000 and $1.1 million attributable to PCD loans for the three and nine months ended September 30, 2024, respectively, as compared to $325,000 and $1.0 million for the three and nine months ended September 30, 2023, respectively. PCD loans had an allowance for credit losses of approximately $2.9 million at September 30, 2024.
Loan balances are summarized as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | |
| September 30, 2024 | | June 30, 2024 | | December 31, 2023 |
| Real estate loans: | | | | | |
| Multifamily | $ | 2,640,944 | | | $ | 2,665,202 | | | $ | 2,750,996 | |
| Commercial mortgage | 878,173 | | | 896,157 | | | 929,595 | |
| One-to-four family residential mortgage | 149,682 | | | 151,948 | | | 160,824 | |
| Home equity and lines of credit | 171,946 | | | 167,852 | | | 163,520 | |
| Construction and land | 33,024 | | | 32,607 | | | 30,967 | |
| Total real estate loans | 3,873,769 | | | 3,913,766 | | | 4,035,902 | |
| Commercial and industrial loans | 174,253 | | | 165,586 | | | 154,984 | |
| PPP loans | 160 | | | 202 | | | 284 | |
| Other loans | 1,660 | | | 2,322 | | | 2,585 | |
| Total commercial and industrial, PPP, and other loans | 176,073 | | | 168,110 | | | 157,853 | |
| Loans held-for-investment, net (excluding PCD) | 4,049,842 | | | 4,081,876 | | | 4,193,755 | |
| PCD loans | 9,264 | | | 9,344 | | | 9,899 | |
| Total loans held-for-investment, net | $ | 4,059,106 | | | $ | 4,091,220 | | | $ | 4,203,654 | |
The Company’s available-for-sale debt securities portfolio increased by $268.0 million, or 33.7%, to $1.06 billion at September 30, 2024, from $795.5 million at December 31, 2023. The increase was primarily attributable to purchases of securities, partially offset by paydowns, maturities and calls. At September 30, 2024, $869.4 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 $74.9 million in U.S. Government agency securities, $118.5 million in corporate bonds, substantially all of which were investment grade, and $684,000 in municipal bonds at September 30, 2024. Unrealized losses, net of tax, on available-for-sale debt securities and held-to-maturity securities approximated $19.6 million and $219,000, respectively, at September 30, 2024, and $32.5 million and $279,000, respectively, at December 31, 2023.
Equity securities were $10.7 million at September 30, 2024 and $10.6 million at December 31, 2023. 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 $132.3 million, or 2.7%, to $5.03 billion at September 30, 2024, from $4.90 billion at December 31, 2023. The increase was primarily attributable to an increase in borrowings of $131.6 million, partially offset by a decrease in total deposits of $2.9 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 $2.9 million, or 0.1%, to $3.88 billion at September 30, 2024 as compared to December 31, 2023. Brokered deposits decreased by $17.9 million, or 17.9%, due to maturities that were replaced by borrowings. Deposits, excluding brokered deposits, increased $15.0 million, or 0.4%. The increase in deposits, excluding brokered deposits, was primarily attributable to increases of $80.9 million in time deposits, partially offset by decreases of $14.9 million in transaction accounts, $14.7 million in savings accounts, and $36.3 million in money market accounts. Growth in time deposits was attributable to the current interest rate environment and offering competitive interest rates to attract deposits. Estimated gross uninsured deposits at September 30, 2024 were $1.71 billion. This total includes fully collateralized uninsured governmental deposits and intercompany deposits of $859.3 million, leaving estimated uninsured deposits of approximately $852.2 million, or 22.0%, of total deposits. At December 31, 2023, estimated uninsured deposits totaled $869.9 million, or 22.4% of total deposits.
Deposit account balances are summarized as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | |
| September 30, 2024 | | June 30, 2024 | | December 31, 2023 |
| Transaction: | | | | | |
| Non-interest bearing checking | $ | 681,741 | | | $ | 685,574 | | | $ | 694,903 | |
| Negotiable orders of withdrawal and interest-bearing checking | 1,230,176 | | | 1,251,342 | | | 1,231,943 | |
| Total transaction | 1,911,917 | | | 1,936,916 | | | 1,926,846 | |
| Savings and money market: | | | | | |
| Savings | 911,067 | | | 916,598 | | | 925,744 | |
| Money market | 265,800 | | | 255,550 | | | 302,122 | |
| Brokered money market | — | | | — | | | 50,000 | |
| Total savings | 1,176,867 | | | 1,172,148 | | | 1,277,866 | |
| Certificates of deposit: | | | | | |
| $250,000 and under | 585,606 | | | 568,809 | | | 525,454 | |
| Over $250,000 | 119,033 | | | 120,601 | | | 98,269 | |
| Brokered | 82,146 | | | — | | | 50,000 | |
| Total certificates of deposit | 786,785 | | | 689,410 | | | 673,723 | |
| Total deposits | $ | 3,875,569 | | | $ | 3,798,474 | | | $ | 3,878,435 | |
Included in the table above are business and municipal deposit account balances as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | |
| September 30, 2024 | | June 30, 2024 | | December 31, 2023 |
| | | | | |
| Business customers | $ | 869,990 | | | $ | 866,403 | | | $ | 893,296 | |
| Municipal (governmental) customers | $ | 799,249 | | | $ | 815,086 | | | $ | 768,556 | |
Borrowed funds increased to $1.05 billion at September 30, 2024, from $920.5 million at December 31, 2023. The increase in borrowings for the period was primarily due to a $205.5 million increase in 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.
The following table sets forth borrowing maturities (excluding overnight borrowings and subordinated debt) and the weighted average rate by year at September 30, 2024 (dollars in thousands):
| | | | | | | | | | | | | | |
| Year | | Amount (1) | | Weighted Average Rate |
| 2024 | | $25,000 | | 4.71% |
| 2025 | | 483,184 | | 4.00% |
| 2026 | | 148,000 | | 4.36% |
| 2027 | | 173,000 | | 3.19% |
| 2028 | | 154,288 | | 3.96% |
| | | | |
| | $983,472 | | 3.92% |
| | | | |
(1) Borrowings maturing in 2025 include $300.0 million of FRB borrowings that can be repaid without any penalty.
Total stockholders’ equity increased by $119,000 to $699.6 million at September 30, 2024, from $699.4 million at December 31, 2023. The increase was attributable to net income of $18.7 million for the nine months ended September 30, 2024, a $14.1 million increase in accumulated other comprehensive income, associated with an increase in the estimated fair value of our debt securities available-for-sale portfolio due to the increase in market interest rates, and a $1.9 million increase in equity award activity, partially offset by $18.1 million in stock repurchases and $16.5 million in dividend payments. On April 24, 2024, the Board of Directors of the Company approved a $5.0 million stock repurchase program, which was completed in May 2024, and on June 14, 2024, the Board of Directors of the Company approved a $10.0 million stock repurchase program. During the nine months ended September 30, 2024, the Company repurchased 1.8 million of its common stock outstanding at an average price of $10.03 for a total of $18.1 million pursuant to the approved stock repurchase programs. As of September 30, 2024, the Company had no remaining capacity under its current repurchase program.
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's on-hand liquidity ratio as of September 30, 2024 was 16.4%.
The Company had the following primary sources of liquidity at September 30, 2024 (dollars in thousands):
| | | | | | | | |
Cash and cash equivalents(1) | | $ | 218,733 | |
Corporate bonds(2) | | $ | 104,633 | |
Multifamily loans(2) | | $ | 699,343 | |
Mortgage-backed securities (issued or guaranteed by the U.S. Government, Fannie Mae, or Freddie Mac)(2) | | $ | 491,985 | |
| | |
(1) Excludes $14.2 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 September 30, 2024, the Company and the Bank's estimated CBLR ratios were 12.03% and 12.26%, 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 assets, loans over 90 days delinquent on which interest is accruing, and accruing loans 30 to 89 days delinquent at September 30, 2024, June 30, 2024, and December 31, 2023 (dollars in thousands):
| | | | | | | | | | | | | | | | | |
| | September 30, 2024 | | June 30, 2024 | | December 31, 2023 |
| Non-accrual loans: | | | | | |
| Held-for-investment | | | | | |
| Real estate loans: | | | | | |
| Multifamily | $ | 2,651 | | | $ | 2,691 | | | $ | 2,709 | |
| Commercial | 8,823 | | | 10,244 | | | 6,491 | |
| One-to-four family residential | 66 | | | 69 | | | 104 | |
| | | | | |
| Home equity and lines of credit | 1,123 | | | 1,124 | | | 499 | |
| Commercial and industrial | 15,117 | | | 2,570 | | | 305 | |
| Other | 6 | | | 6 | | | 7 | |
| | | | | |
| Total non-accrual loans | 27,786 | | | 16,704 | | | 10,115 | |
| Loans delinquent 90 days or more and still accruing: | | | | | |
| Held-for-investment | | | | | |
| Real estate loans: | | | | | |
| Multifamily | — | | | — | | | 201 | |
| Commercial | 1,161 | | | — | | | — | |
| One-to-four family residential | 304 | | | 136 | | | 406 | |
| Home equity and lines of credit | 343 | | | 467 | | | 711 | |
| Commercial and industrial | 835 | | | — | | | — | |
| | | | | |
| | | | | |
| Total loans held-for-investment delinquent 90 days or more and still accruing | 2,643 | | | 603 | | | 1,318 | |
| | | | | |
| | | | | |
| | | | | |
| Total non-performing loans/assets | $ | 30,429 | | | $ | 17,307 | | | $ | 11,433 | |
| Non-performing loans to total loans | 0.75 | % | | 0.42 | % | | 0.27 | % |
| Non-performing assets to total assets | 0.53 | % | | 0.30 | % | | 0.20 | % |
| | | | | |
| Accruing loans 30 to 89 days delinquent | $ | 16,057 | | | $ | 6,265 | | | $ | 8,683 | |
The Company's non-performing loans at September 30, 2024 totaled $30.4 million, or 0.75%, of total loans as compared to $11.4 million, or 0.27%, at December 31, 2023. The $19.0 million increase in non-performing loans was primarily attributable to an increase in non-performing commercial and industrial loans of $15.6 million and an increase of $3.5 million in non-performing commercial real estate loans. One commercial and industrial relationship with an outstanding balance of $12.5 million at September 30, 2024, experienced credit deterioration and was placed on non-accrual status during the third quarter of 2024. The loan is currently in the process of being restructured and we expect to receive a partial payment of $10.0 million on or before October 31, 2024, with the remaining $2.5 million to be repaid over three years. The loan was individually evaluated for impairment, we charged off $878,000 and provided a specific reserve of $1.3 million. Additionally, management evaluated the collateral from the Company and assets subject to personal guarantees and, based on current estimates, believes there is adequate collateral and assets to support the current value of the loan absent the expected repayment of $10.0 million. Another commercial and industrial relationship with an outstanding balance of $750,000 is in the process of maturity extension. Additionally, there was an increase in non-performing unsecured small business loans. Unsecured small business loans totaled $31.0 million and $37.4 million at September 30, 2024 and December 31, 2023, respectively. Management continues to closely monitor the small business unsecured commercial and industrial loan portfolio.
The increase in non-performing commercial real estate loans was primarily attributable to one loan with a balance of $4.4 million, which was put on non-accrual status during the first quarter of 2024. Based on the results of the impairment analysis for this loan, no impairment reserve was necessary as the loan is adequately covered by collateral (a private residence and retail property, both located in New Jersey), with aggregate appraised values totaling $8.7 million.
Accruing Loans 30 to 89 Days Delinquent
Loans 30 to 89 days delinquent and on accrual status totaled $16.1 million, $6.3 million and $8.7 million at September 30, 2024, June 30, 2024, and December 31, 2023, respectively. The following table sets forth delinquencies for accruing loans by type and by amount at September 30, 2024, June 30, 2024, and December 31, 2023 (dollars in thousands):
| | | | | | | | | | | | | | | | | |
| | September 30, 2024 | | June 30, 2024 | | December 31, 2023 |
| Held-for-investment | | | | | |
| Real estate loans: | | | | | |
| Multifamily | $ | 2,259 | | | $ | 168 | | | $ | 740 | |
| Commercial | 5,689 | | | 1,557 | | | 1,010 | |
| One-to-four family residential | 2,286 | | | 1,769 | | | 3,339 | |
| Home equity and lines of credit | 1,369 | | | 786 | | | 817 | |
| | | | | |
| Commercial and industrial loans | 4,450 | | | 1,977 | | | 2,767 | |
| | | | | |
| Other loans | 4 | | | 8 | | | 10 | |
| Total delinquent accruing loans held-for-investment | $ | 16,057 | | | $ | 6,265 | | | $ | 8,683 | |
The increase in multifamily delinquent loans was primarily due to two relationships totaling $1.5 million that became current subsequent to September 30, 2024. The increase in commercial real estate delinquent loans was primarily due to two participation loans totaling $5.6 million that matured and the lead bank is in the process of extending their maturity and should become current in the fourth quarter of 2024. The increase in commercial and industrial delinquent loans from December 31, 2023, was primarily due to two loans to one borrower totaling $1.5 million which we expect to become current in the fourth quarter of 2024, and, to a lesser extent, an increase in delinquencies in unsecured small business loans.
Subsequent to the quarter end, $1.1 million of home equity and lines of credit loans, $1.5 million of one-to-four family residential loans, and $1.5 million of commercial and industrial loans became current.
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 ($9.3 million at September 30, 2024 and $9.9 million at December 31, 2023, respectively) as accruing, even though they may be contractually past due. At September 30, 2024, 2.1% of PCD loans were past due 30 to 89 days, and 24.6% were past due 90 days or more, as compared to 2.9% and 27.1%, respectively, at December 31, 2023.
Our multifamily loan portfolio at September 30, 2024 totaled $2.64 billion, or 65% of our total loan portfolio, of which $447.5 million, or 11%, included loans collateralized by properties in New York with units subject to some percentage of rent regulation. The table below sets forth details about our multifamily loan portfolio in New York (dollars in thousands).
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| % Rent Regulated | | Balance | | % Portfolio Total NY Multifamily Portfolio | | Average Balance | | Largest Loan | | LTV* | | | | Debt Service Coverage Ratio (DSCR)* | | 30-89 Days Delinquent | | Non-Accrual | | Special Mention | | Substandard | | |
| 0 | | $ | 286,728 | | | 39.1 | % | | $ | 1,166 | | | $ | 16,603 | | | 51.0% | | | | 1.57x | | $ | 1,709 | | | $ | 534 | | | $ | 782 | | | $ | 874 | | | |
| >0-10 | | 4,745 | | | 0.7 | | | 1,582 | | | 2,128 | | | 51.4 | | | | 1.46 | | — | | | — | | | — | | | — | | | |
| >10-20 | | 18,681 | | | 2.5 | | | 1,437 | | | 2,865 | | | 49.2 | | | | 1.59 | | — | | | — | | | — | | | — | | | |
| >20-30 | | 19,585 | | | 2.7 | | | 2,176 | | | 5,512 | | | 54.1 | | | | 1.64 | | — | | | — | | | — | | | — | | | |
| >30-40 | | 15,183 | | | 2.1 | | | 1,265 | | | 3,088 | | | 48.3 | | | | 1.63 | | — | | | — | | | — | | | — | | | |
| >40-50 | | 22,208 | | | 3.0 | | | 1,306 | | | 2,740 | | | 48.2 | | | | 1.84 | | — | | | — | | | — | | | — | | | |
| >50-60 | | 9,452 | | | 1.3 | | | 1,575 | | | 2,341 | | | 39.9 | | | | 2.03 | | — | | | — | | | — | | | — | | | |
| >60-70 | | 19,201 | | | 2.6 | | | 3,200 | | | 11,339 | | | 53.0 | | | | 1.46 | | — | | | — | | | — | | | — | | | |
| >70-80 | | 22,405 | | | 3.1 | | | 2,489 | | | 4,914 | | | 48.0 | | | | 1.53 | | — | | | — | | | — | | | — | | | |
| >80-90 | | 20,820 | | | 2.8 | | | 1,157 | | | 3,148 | | | 46.6 | | | | 1.71 | | — | | | — | | | — | | | — | | | |
| >90-100 | | 295,256 | | | 40.1 | | | 1,779 | | | 16,909 | | | 52.6 | | | | 1.65 | | — | | | 2,117 | | | 1,204 | | | 4,482 | | | |
| Total | | $ | 734,264 | | | 100.0% | | $ | 1,454 | | | $ | 16,909 | | | 51.2% | | | | 1.62x | | $ | 1,709 | | | $ | 2,651 | | | $ | 1,986 | | | $ | 5,356 | | | |
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The table below sets forth our New York rent-regulated loans by county (dollars in thousands).
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| County | | Balance | | LTV* | | | | DSCR* | | |
| Bronx | | $ | 118,400 | | | 51.7% | | | | 1.64x | | |
| Kings | | 191,745 | | | 51.5% | | | | 1.66 | | |
| Nassau | | 2,176 | | | 36.2% | | | | 1.88 | | |
| New York | | 49,871 | | | 47.3% | | | | 1.64 | | |
| Queens | | 38,864 | | | 44.3% | | | | 1.81 | | |
| Richmond | | 28,790 | | | 60.6% | | | | 1.64 | | |
| Westchester | | 17,689 | | | 61.8% | | | | 1.37 | | |
| Total | | $ | 447,535 | | | 51.4% | | | | 1.65x | | |
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* Weighted Average
None of the loans that are rent-regulated in New York are interest only. During the remainder of 2024, one loan with an aggregate principal balance of $1.8 million will re-price.
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, changes in liquidity, the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio, competition among depository and other financial institutions, including with respect to fees and interest rates, 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 asset quality, prepayment speeds, charge-offs and/or credit loss provisions, our ability to access cost-effective funding, changes in the value of our goodwill or other intangible assets, 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, cyber security and fraud risks against our information technology and those of our third-party providers and vendors, the effects of war, conflict, and acts of terrorism, our ability to successfully integrate acquired entities, adverse changes in the securities markets, and the effects of the COVID-19 pandemic. 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)
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| | | | | | | At or For the |
| | At or For the Three Months Ended | | Nine Months Ended |
| | September 30, | | June 30 | | September 30, |
| | 2024 | | 2023 | | 2024 | | 2024 | | 2023 |
| Selected Financial Ratios: | | | | | | | | | |
Performance Ratios (1) | | | | | | | | | |
| Return on assets (ratio of net income to average total assets) | 0.46 | % | | 0.59 | % | | 0.41 | % | | 0.43 | % | | 0.71 | % |
| Return on equity (ratio of net income to average equity) | 3.74 | | | 4.74 | | | 3.45 | | | 3.59 | | | 5.69 | |
| Average equity to average total assets | 12.24 | | | 12.49 | | | 12.00 | | | 12.09 | | | 12.44 | |
| Interest rate spread | 1.42 | | | 1.69 | | | 1.44 | | | 1.42 | | | 1.91 | |
| Net interest margin | 2.08 | | | 2.25 | | | 2.09 | | | 2.07 | | | 2.41 | |
Efficiency ratio (2) | 64.07 | | | 64.65 | | | 72.89 | | | 69.44 | | | 60.06 | |
Non-interest expense to average total assets | 1.43 | | | 1.49 | | | 1.60 | | | 1.53 | | | 1.50 | |
Non-interest expense to average total interest-earning assets | 1.50 | | | 1.56 | | | 1.68 | | | 1.60 | | | 1.57 | |
| Average interest-earning assets to average interest-bearing liabilities | 128.75 | | | 132.21 | | | 128.47 | | | 128.63 | | | 133.66 | |
| Asset Quality Ratios: | | | | | | | | | |
| Non-performing assets to total assets | 0.53 | | | 0.19 | | | 0.30 | | | 0.53 | | | 0.19 | |
Non-performing loans (3) to total loans (4) | 0.75 | | | 0.24 | | | 0.42 | | | 0.75 | | | 0.24 | |
| Allowance for credit losses to non-performing loans | 115.67 | | | 378.67 | | | 200.96 | | | 115.67 | | | 378.67 | |
Allowance for credit losses to total loans held-for-investment, net (5) | 0.87 | | | 0.91 | | | 0.85 | | | 0.87 | | | 0.91 | |
(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.
NORTHFIELD BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share amounts) (unaudited)
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| | September 30, 2024 | | June 30, 2024 | | December 31, 2023 |
| ASSETS: | | | | | |
| Cash and due from banks | $ | 14,193 | | | $ | 14,575 | | | $ | 13,889 | |
| Interest-bearing deposits in other financial institutions | 218,733 | | | 138,914 | | | 215,617 | |
| Total cash and cash equivalents | 232,926 | | | 153,489 | | | 229,506 | |
| Trading securities | 13,759 | | | 12,939 | | | 12,549 | |
| Debt securities available-for-sale, at estimated fair value | 1,063,486 | | | 1,119,439 | | | 795,464 | |
| Debt securities held-to-maturity, at amortized cost | 9,681 | | | 9,749 | | | 9,866 | |
| Equity securities | 10,699 | | | 13,964 | | | 10,629 | |
| Loans held-for-sale | 4,897 | | | — | | | — | |
| Loans held-for-investment, net | 4,059,106 | | | 4,091,220 | | | 4,203,654 | |
| Allowance for credit losses | (35,197) | | | (34,780) | | | (37,535) | |
| Net loans held-for-investment | 4,023,909 | | | 4,056,440 | | | 4,166,119 | |
| Accrued interest receivable | 19,299 | | | 19,343 | | | 18,491 | |
| Bank-owned life insurance | 174,482 | | | 173,483 | | | 171,543 | |
| Federal Home Loan Bank of New York stock, at cost | 37,269 | | | 41,785 | | | 39,667 | |
| Operating lease right-of-use assets | 28,943 | | | 29,305 | | | 30,202 | |
| Premises and equipment, net | 22,973 | | | 23,628 | | | 24,771 | |
| Goodwill | 41,012 | | | 41,012 | | | 41,012 | |
| Other assets | 47,516 | | | 51,785 | | | 48,577 | |
| Total assets | $ | 5,730,851 | | | $ | 5,746,361 | | | $ | 5,598,396 | |
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| LIABILITIES AND STOCKHOLDERS’ EQUITY: | | | | | |
| LIABILITIES: | | | | | |
| Deposits | $ | 3,875,569 | | | $ | 3,798,474 | | | $ | 3,878,435 | |
| Securities sold under agreements to repurchase | — | | | — | | | 25,000 | |
| Federal Home Loan Bank advances and other borrowings | 990,871 | | | 1,089,727 | | | 834,272 | |
| Subordinated debentures, net of issuance costs | 61,386 | | | 61,331 | | | 61,219 | |
| Lease liabilities | 33,529 | | | 34,035 | | | 35,205 | |
| Advance payments by borrowers for taxes and insurance | 22,492 | | | 26,113 | | | 25,102 | |
| Accrued expenses and other liabilities | 47,440 | | | 43,657 | | | 39,718 | |
| Total liabilities | 5,031,287 | | | 5,053,337 | | | 4,898,951 | |
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| STOCKHOLDERS’ EQUITY: | | | | | |
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| Total stockholders’ equity | 699,564 | | | 693,024 | | | 699,445 | |
| Total liabilities and stockholders’ equity | $ | 5,730,851 | | | $ | 5,746,361 | | | $ | 5,598,396 | |
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| Total shares outstanding | 42,904,342 | | | 43,466,961 | | | 44,524,929 | |
Tangible book value per share (1) | $ | 15.35 | | | $ | 15.00 | | | $ | 14.78 | |
(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 $90, $111, and $154 at September 30, 2024, June 30, 2024, and December 31, 2023, respectively, and are included in other assets.
NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except share and per share amounts) (unaudited)
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| | For the Three Months Ended | | For the Nine Months Ended |
| September 30, | | June 30, | | September 30, |
| | 2024 | | 2023 | | 2024 | | 2024 | | 2023 |
| Interest income: | | | | | | | | | |
| Loans | $ | 46,016 | | | $ | 46,213 | | | $ | 45,967 | | | $ | 138,030 | | | $ | 135,220 | |
| Mortgage-backed securities | 8,493 | | | 3,664 | | | 7,355 | | | 20,246 | | | 11,170 | |
| Other securities | 2,684 | | | 1,095 | | | 3,506 | | | 10,031 | | | 3,593 | |
| Federal Home Loan Bank of New York dividends | 914 | | | 933 | | | 935 | | | 2,819 | | | 2,125 | |
| Deposits in other financial institutions | 1,211 | | | 831 | | | 2,457 | | | 7,060 | | | 2,225 | |
| Total interest income | 59,318 | | | 52,736 | | | 60,220 | | | 178,186 | | | 154,333 | |
| Interest expense: | | | | | | | | | |
| Deposits | 20,304 | | | 13,614 | | | 20,664 | | | 60,241 | | | 31,918 | |
| Borrowings | 9,949 | | | 8,593 | | | 10,041 | | | 30,653 | | | 24,182 | |
| Subordinated debt | 836 | | | 837 | | | 828 | | | 2,492 | | | 2,484 | |
| Total interest expense | 31,089 | | | 23,044 | | | 31,533 | | | 93,386 | | | 58,584 | |
| Net interest income | 28,229 | | | 29,692 | | | 28,687 | | | 84,800 | | | 95,749 | |
| Provision/(benefit) for credit losses | 2,542 | | | 188 | | | (618) | | | 2,339 | | | 1,082 | |
| Net interest income after (benefit)/provision for credit losses | 25,687 | | | 29,504 | | | 29,305 | | | 82,461 | | | 94,667 | |
| Non-interest income: | | | | | | | | | |
| Fees and service charges for customer services | 1,611 | | | 1,317 | | | 1,570 | | | 4,796 | | | 4,006 | |
| Income on bank-owned life insurance | 999 | | | 920 | | | 976 | | | 2,939 | | | 2,679 | |
| (Losses)/gains on available-for-sale debt securities, net | (7) | | | — | | | 1 | | | (6) | | | (17) | |
| Gains/(losses) on trading securities, net | 710 | | | (295) | | | 188 | | | 1,597 | | | 723 | |
| Gain on sale of loans | — | | | 99 | | | 51 | | | 51 | | | 134 | |
| Other | 265 | | | 80 | | | 73 | | | 441 | | | 744 | |
| Total non-interest income | 3,578 | | | 2,121 | | | 2,859 | | | 9,818 | | | 8,269 | |
| Non-interest expense: | | | | | | | | | |
| Compensation and employee benefits | 11,424 | | | 10,920 | | | 13,388 | | | 37,577 | | | 34,310 | |
| Occupancy | 3,030 | | | 3,416 | | | 3,222 | | | 9,805 | | | 10,032 | |
| Furniture and equipment | 450 | | | 479 | | | 477 | | | 1,411 | | | 1,393 | |
| Data processing | 1,780 | | | 1,994 | | | 2,177 | | | 6,104 | | | 6,308 | |
| Professional fees | 943 | | | 883 | | | 681 | | | 2,433 | | | 2,622 | |
| Advertising | 282 | | | 414 | | | 482 | | | 1,282 | | | 1,834 | |
| Federal Deposit Insurance Corporation insurance | 626 | | | 591 | | | 649 | | | 1,863 | | | 1,763 | |
| Credit loss expense/(benefit) for off-balance sheet exposures | 151 | | | 160 | | | 103 | | | 337 | | | (390) | |
| Other | 1,692 | | | 1,710 | | | 1,814 | | | 4,891 | | | 4,598 | |
| Total non-interest expense | 20,378 | | | 20,567 | | | 22,993 | | | 65,703 | | | 62,470 | |
| Income before income tax expense | 8,887 | | | 11,058 | | | 9,171 | | | 26,576 | | | 40,466 | |
| Income tax expense | 2,364 | | | 2,877 | | | 3,214 | | | 7,882 | | | 11,019 | |
| Net income | $ | 6,523 | | | $ | 8,181 | | | $ | 5,957 | | | $ | 18,694 | | | $ | 29,447 | |
| Net income per common share: | | | | | | | | | |
| Basic | $ | 0.16 | | | $ | 0.19 | | | $ | 0.14 | | | $ | 0.45 | | | $ | 0.67 | |
| Diluted | $ | 0.16 | | | $ | 0.19 | | | $ | 0.14 | | | $ | 0.45 | | | $ | 0.67 | |
| Basic average shares outstanding | 41,028,213 | | | 42,866,246 | | | 41,999,541 | | | 41,794,149 | | | 43,848,873 | |
| Diluted average shares outstanding | 41,088,637 | | | 42,918,174 | | | 42,002,650 | | | 41,829,230 | | | 43,927,350 | |
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NORTHFIELD BANCORP, INC.
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands) (unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended |
| | September 30, 2024 | | June 30, 2024 | | September 30, 2023 |
| | 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) | $ | 4,079,974 | | | $ | 46,016 | | | 4.49 | % | | $ | 4,128,105 | | | $ | 45,967 | | | 4.48 | % | | $ | 4,252,752 | | | $ | 46,213 | | | 4.31 | % |
Mortgage-backed securities (3) | 901,042 | | | 8,493 | | | 3.75 | | | 824,498 | | | 7,355 | | | 3.59 | | | 660,753 | | | 3,664 | | | 2.20 | |
Other securities (3) | 273,312 | | | 2,684 | | | 3.91 | | | 333,855 | | | 3,506 | | | 4.22 | | | 209,341 | | | 1,095 | | | 2.08 | |
| Federal Home Loan Bank of New York stock | 38,044 | | | 914 | | | 9.56 | | | 38,707 | | | 935 | | | 9.72 | | | 41,278 | | | 933 | | | 8.97 | |
| Interest-earning deposits in financial institutions | 99,837 | | | 1,211 | | | 4.83 | | | 191,470 | | | 2,457 | | | 5.16 | | | 73,005 | | | 831 | | | 4.52 | |
| Total interest-earning assets | 5,392,209 | | | 59,318 | | | 4.38 | | | 5,516,635 | | | 60,220 | | | 4.39 | | | 5,237,129 | | | 52,736 | | | 4.00 | |
| Non-interest-earning assets | 275,342 | | | | | | | 265,702 | | | | | | | 248,315 | | | | | |
| Total assets | $ | 5,667,551 | | | | | | | $ | 5,782,337 | | | | | | | $ | 5,485,444 | | | | | |
| | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | | | | | | | | |
| Savings, NOW, and money market accounts | $ | 2,417,725 | | | $ | 12,717 | | | 2.09 | % | | $ | 2,490,372 | | | $ | 13,183 | | | 2.13 | % | | $ | 2,408,218 | | | $ | 8,865 | | | 1.46 | % |
| Certificates of deposit | 700,763 | | | 7,587 | | | 4.31 | | | 701,272 | | | 7,481 | | | 4.29 | | | 551,904 | | | 4,749 | | | 3.41 | |
| Total interest-bearing deposits | 3,118,488 | | | 20,304 | | | 2.59 | | | 3,191,644 | | | 20,664 | | | 2.60 | | | 2,960,122 | | | 13,614 | | | 1.82 | |
| Borrowed funds | 1,008,338 | | | 9,949 | | | 3.93 | | | 1,041,035 | | | 10,041 | | | 3.88 | | | 939,922 | | | 8,593 | | | 3.63 | |
| Subordinated debt | 61,350 | | | 836 | | | 5.42 | | | 61,294 | | | 828 | | | 5.43 | | | 61,127 | | | 837 | | | 5.43 | |
| Total interest-bearing liabilities | 4,188,176 | | | 31,089 | | | 2.95 | | | 4,293,973 | | | 31,533 | | | 2.95 | | | 3,961,171 | | | 23,044 | | | 2.31 | |
| Non-interest bearing deposits | 683,283 | | | | | | | 691,384 | | | | | | | 739,266 | | | | | |
| Accrued expenses and other liabilities | 102,233 | | | | | | | 103,082 | | | | | | | 100,103 | | | | | |
| Total liabilities | 4,973,692 | | | | | | | 5,088,439 | | | | | | | 4,800,540 | | | | | |
| Stockholders' equity | 693,859 | | | | | | | 693,898 | | | | | | | 684,904 | | | | | |
| Total liabilities and stockholders' equity | $ | 5,667,551 | | | | | | | $ | 5,782,337 | | | | | | | $ | 5,485,444 | | | | | |
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| Net interest income | | | $ | 28,229 | | | | | | | $ | 28,687 | | | | | | | $ | 29,692 | | | |
Net interest rate spread (4) | | | | | 1.42 | % | | | | | | 1.44 | % | | | | | | 1.69 | % |
Net interest-earning assets (5) | $ | 1,204,033 | | | | | | | $ | 1,222,662 | | | | | | | $ | 1,275,958 | | | | | |
Net interest margin (6) | | | | | 2.08 | % | | | | | | 2.09 | % | | | | | | 2.25 | % |
| Average interest-earning assets to interest-bearing liabilities | | | | | 128.75 | % | | | | | | 128.47 | % | | | | | | 132.21 | % |
(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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended |
| | September 30, 2024 | | September 30, 2023 |
| | Average Outstanding Balance | | Interest | | Average Yield/ Rate (1) | | Average Outstanding Balance | | Interest | | Average Yield/ Rate (1) |
| Interest-earning assets: | | | | | | | | | | | |
Loans (2) | $ | 4,127,409 | | | $ | 138,030 | | | 4.47 | % | | $ | 4,260,827 | | | $ | 135,220 | | | 4.24 | % |
Mortgage-backed securities (3) | 791,850 | | | 20,246 | | | 3.42 | | | 703,320 | | | 11,170 | | | 2.12 | |
Other securities (3) | 332,831 | | | 10,031 | | | 4.03 | | | 241,280 | | | 3,593 | | | 1.99 | |
| Federal Home Loan Bank of New York stock | 38,781 | | | 2,819 | | | 9.71 | | | 41,093 | | | 2,125 | | | 6.91 | |
| Interest-earning deposits in financial institutions | 184,420 | | | 7,060 | | | 5.11 | | | 72,683 | | | 2,225 | | | 4.09 | |
| Total interest-earning assets | 5,475,291 | | | 178,186 | | | 4.35 | | | 5,319,203 | | | 154,333 | | | 3.88 | |
| Non-interest-earning assets | 269,180 | | | | | | | 244,319 | | | | | |
| Total assets | $ | 5,744,471 | | | | | | | $ | 5,563,522 | | | | | |
| | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | | |
| Savings, NOW, and money market accounts | $ | 2,457,320 | | | $ | 38,231 | | | 2.08 | % | | $ | 2,443,400 | | | $ | 19,194 | | | 1.05 | % |
| Certificates of deposit | 685,510 | | | 22,010 | | | 4.29 | | | 572,283 | | | 12,724 | | | 2.97 | |
| Total interest-bearing deposits | 3,142,830 | | | 60,241 | | | 2.56 | | | 3,015,683 | | | 31,918 | | | 1.42 | |
| Borrowed funds | 1,052,589 | | | 30,653 | | | 3.89 | | | 902,802 | | | 24,182 | | | 3.58 | |
| Subordinated debt | 61,294 | | | 2,492 | | | 5.43 | | | 61,164 | | | 2,484 | | | 5.43 | |
| Total interest-bearing liabilities | $ | 4,256,713 | | | 93,386 | | | 2.93 | | | $ | 3,979,649 | | | 58,584 | | | 1.97 | |
| Non-interest bearing deposits | 691,406 | | | | | | | 788,991 | | | | | |
| Accrued expenses and other liabilities | 101,639 | | | | | | | 102,765 | | | | | |
| Total liabilities | 5,049,758 | | | | | | | 4,871,405 | | | | | |
| Stockholders' equity | 694,713 | | | | | | | 692,117 | | | | | |
| Total liabilities and stockholders' equity | $ | 5,744,471 | | | | | | | $ | 5,563,522 | | | | | |
| | | | | | | | | | | |
| Net interest income | | | $ | 84,800 | | | | | | | $ | 95,749 | | | |
Net interest rate spread (4) | | | | | 1.42 | % | | | | | | 1.91 | % |
Net interest-earning assets (5) | $ | 1,218,578 | | | | | | | $ | 1,339,554 | | | | | |
Net interest margin (6) | | | | | 2.07 | % | | | | | | 2.41 | % |
| Average interest-earning assets to interest-bearing liabilities | | | | | 128.63 | % | | | | | | 133.66 | % |
| | | | | | | | | | | |
(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.