Results Also Reflect Strong Deposit and Loan Growth
Financial Highlights:
* Cash Dividend of $0.04 Per Common Share Payable November 26, 2008
* Loans Grow Over 31% to a Record $556.7 Million From Year End
* Deposits Increase $57.4 Million, or 6.5%, From Year End
* Stockholders' Equity Grows to $378.5 Million, or 23%
of Total Assets
AVENEL, N.J., Oct. 29, 2008 (GLOBE NEWSWIRE) -- Northfield Bancorp, Inc. (Nasdaq:NFBK), the holding company for Northfield Bank, reported net income of $3.3 million for the quarter ended September 30, 2008, and $12.4 million, for the nine months ended September 30, 2008, compared to $3.1 million for the quarter ended September 30, 2007, and $10.0 million for the nine months ended September 30, 2007. Operating results for the nine months ended September 30, 2008, included a $2.5 million, nontaxable, death benefit realized on bank owned life insurance. For the nine months ended September 30, 2007, operating results included a pre-tax gain of $4.3 million ($2.4 million, net of tax) related to the sale of two branch locations and associated deposit relationships. Earnings per common share for the quarter and nine months ended September 30, 2008, was $0.08 and $0.29, respectively. Excluding the realized gain on the death benefit from bank owned life insurance of $0.06 per share, earnings per share for the nine months ended September 30, 2008, was $0.23 per common share.
Commenting on the current quarter and nine-month results, John W. Alexander, the Company's Chairman, and Chief Executive Officer said, "Our conservative and disciplined operating model, coupled with our strong capital and liquidity, have allowed us to remain focused on the financial needs of the communities we serve. Our financial strength allows us to continue to lend, within our underwriting guidelines, to businesses that need financing to grow and has opened our doors to many new businesses and retail customers seeking financing as credit markets have tightened."
Continuing, Mr. Alexander commented, "We appreciate the confidence and support of our loyal customers, many of whom are stockholders, and welcome the many new customers who have recently joined us. We will continue to apply the guiding principles that have served us for over 120 years and have never been more important than they are today: superior customer service, strong underwriting, prudent investing, and disciplined pricing."
Mr. Alexander added, "Following the reporting of solid earnings for the first three full quarters of our existence as a public company, I'm pleased to announce that our board of directors has declared our first cash dividend of $0.04 per common share. This dividend will be payable on November 26, 2008, to stockholders of record as of November 12, 2008."
Financial Condition
Total assets increased to $1.6 billion at September 30, 2008, from $1.4 billion at December 31, 2007. The increase reflected increases in loans held for investment, net of $132.4 million, securities available-for-sale of $65.1 million, cash and cash equivalents of $24.7 million (primarily funds held at the Federal Reserve Bank of New York), and certificates of deposit in other financial institutions, subject to full FDIC insurance coverage, of $35.1 million.
The Company's securities portfolio totaled $886.7 million at September 30, 2008 as compared to $825.7 million at year end, and consisted of $749.7 in mortgage-backed debt securities issued or guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. At September 30, 2008, we had approximately $87.6 million in mortgage-backed securities (not guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae) with approximately $74,000, or 0.08%, of those securities comprised of subprime loans. These securities were rated AAA at September 30, 2008. The Company has no investment in Fannie Mae or Freddie Mac common or preferred stock, nor does it have any investment in trust preferred securities.
Loans held-for-investment, net totaled $556.7 million at September 30, 2008, and increased 31.2% over the December 31, 2007, balance of $424.3 million. The increase in loans was primarily the result of an increase in multi-family loans of $85.3 million and an increase in commercial real estate loans of $27.5 million.
At September 30, 2008, non-performing assets totaled $13.2 million (0.80% of total assets), and consisted of $12.1 million in non-performing loans (2.18% of loans held for investment, net), and $1.1 million in other real estate owned. At December 31, 2007, non-performing assets, consisting solely of non-performing loans, totaled $9.8 million (0.71% of total assets, and 2.32% of loans held for investment, net). There was no other real estate owned at December 31, 2007.
The increase in non-performing assets from December 31, 2007, was primarily attributable to an increase in non-accruing one- to four-family residential mortgage loans of $866,000, an increase in non-performing commercial real estate loans of $441,000, and an increase in non-accruing commercial and industrial loans of $229,000. Non-performing assets also includes loans 90 days or more past due and accruing, which increased $1.8 million and consisted primarily of commercial real estate, land, and constructions loans paying in accordance with their original contractual terms but which are past maturity, and are currently in the process of renewal.
The Company does not have any lending programs commonly referred to as sub-prime lending. Sub-prime lending generally targets borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt burden ratios.
Total liabilities increased to $1.3 billion at September 30, 2008, from $1.0 billion at December 31, 2007. The increase was primarily attributable to increases in deposits of $57.4 million, securities sold under agreements to repurchase of $152.5 million, and other borrowings of $31.2 million. The increase in total borrowings was due primarily to the execution of leverage strategies with investment securities and certificates of deposits, with acceptable levels of credit and interest rate risk. The increase in deposits during the nine months ended September 30, 2008, was primarily due to an increase of $105.8 million in money market deposits and statement savings accounts, and $13.7 million in checking accounts, partially offset by a $62.1 million decrease in certificates of deposit.
Total stockholders' equity increased to $378.5 million at September 30, 2008, from $367.3 million at December 31, 2007. The increase was primarily attributable to net income of $12.4 million for the nine months ended September 30, 2008, partially offset by an increase in other comprehensive loss of $1.8 million, related primarily to unrealized losses on securities available for sale, net of tax. The increase in unrealized losses on securities available for sale is due primarily to an increase in longer-term market interest rates, resulting in a decrease in estimated fair values of investment securities.
Northfield Bank's Tier 1 (core) capital ratio was 16.9% at September 30, 2008. This ratio continues to significantly exceed the required regulatory capital necessary to be considered "well capitalized" under federal capital regulations for financial institutions.
Results of Operations
Net income for the quarter and nine months ended September 30, 2008, increased $210,000 and $2.4 million, respectively, as compared to the same prior year periods and resulted from increases in net interest income of $3.1 million and $8.7 million, respectively. These increases were partially offset by increases in the provision for loan losses of $1.1 million and $2.4 million for the quarter and nine months ended September 30, 2008, as compared to the same prior year periods. The increase in the provision for loan losses was due primarily to loan growth, provisions for impaired loans, and increases in certain general loss factors utilized in management's calculation of the allowance for loan losses in response to continued deterioration in general real estate collateral values and weakness in the overall economy.
Net income was also negatively affected by a decrease in non interest income of $454,000 and $2.8 million for the quarter and nine months ended September 30, 2008, respectively, as compared to the same prior year periods. The decrease in non interest income was primarily due to increases in market losses on trading securities, primarily equity and bond mutual funds, that are utilized to fund the Company's employee and director deferred compensation plan of $513,000 and $1.1 million, respectively. The participants in the plan bear the risk and rewards of the trading securities return performance, and consequently, non interest expense, specifically compensation expense, is reduced for any trading losses experienced in the portfolio. The decrease in non-interest income for the nine months ended September 30, 2008, was due primarily to a pre-tax gain of $4.3 million on the sale of two underperforming branch locations, and associated deposit relationships, recognized in March 2007. We had no similar transaction in 2008. The reduction in non-interest income for the first nine months of 2008 was partially offset by the realized nontaxable death benefit of approximately $2.5 million in the quarter ended March 31, 2008. We had no similar transaction in 2007.
Total non-interest expense increased $1.4 million and $1.3 million for the quarter and nine months ended September 30, 2008, over the comparable prior year periods. The increases were attributable to higher data processing fees associated with increased transaction volumes from loans and deposits, and ongoing costs associated with the Company's planned conversion to a new third-party core processing system in the first quarter of 2009. Non-interest expense also increased due to higher professional fees associated with being a public company, and higher occupancy costs associated with the Company's operations center occupied in June 2008, as well as increased depreciation and amortization expense associated with capital improvements to certain branches.
The increase in net interest income of $3.1 million, or 33.2%, for the quarter ended September 30, 2008, as compared to the quarter ended September 30, 2007, was primarily the result of an increase in average interest-earning assets of $231.3 million, or 18.1%, coupled with an increase in the net interest margin of 38 basis points, or 13.4%, from 2.84% to 3.22%. The increase in net interest income of $8.7 million, or 34.0%, for the nine months ended September 30, 2008, was primarily the result of an increase in average interest-earning assets of $201.1 million, or 16.1%, coupled with an increase in the net interest margin of 42 basis points, or 15.3%, from 2.75% to 3.17%. The increase in average interest-earning assets and the net interest margin, for both current-year periods was due partially to the Company's completion of its stock issuance in November 2007, resulting in gross proceeds of $192.7 million, which included $82.4 million in transfers from deposit accounts. The Company deployed the net proceeds into loans, short-term investments, and securities. Net interest margin also benefited from decreases in the cost of interest-bearing liabilities for the quarter and nine months ended September 30, 2008, of 39 basis points and 32 basis points, as compared to the comparable prior year periods.
The Company recorded income tax expense of $1.8 million and $5.6 million for the quarter and nine months ended September 30, 2008, respectively, as compared to $1.9 million and $5.8 million, respectively, in the corresponding prior year periods. The effective tax rate was 35.6% and 31.1% for the quarter and nine months ended September 30, 2008, respectively, compared to 37.7% and 36.7%, in the corresponding prior periods. The decline in the effective tax rate for the nine-months ended September 30, 2008, is due primarily to the $2.5 million, nontaxable, death benefit realized on bank owned life insurance.
Forward-Looking Statements: This release may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and may be identified by the use of such words as "may," "believe," "expect," "anticipate," "should," "plan," "estimate," "predict," "continue," and "potential" or the negative of these terms or other comparable terminology. Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of Northfield Bancorp, Inc. Any or all of the forward-looking statements in this release and in any other public statements made by Northfield Bancorp, Inc. may turn out to be wrong. They can be affected by inaccurate assumptions Northfield Bancorp, Inc. might make or by known or unknown risks and uncertainties. Consequently, no forward-looking statement can be guaranteed. Northfield Bancorp, Inc. does not intend to update any of the forward-looking statements after the date of this release, or conform these statements to actual events.
NORTHFIELD BANCORP, INC.
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
(Dollars in thousands, except per share amounts)
(unaudited)
At At
Sept 30, Dec 31,
2008 2007
---------- ----------
Selected Financial Condition Data:
Total assets $1,647,520 $1,386,918
Cash and cash equivalents 49,819 25,088
Certificates of deposit (fully insured
by the FDIC) 59,590 24,500
Securities available for sale,
at estimated fair value 867,546 802,417
Securities held to maturity 15,816 19,686
Trading securities 3,301 3,605
Loans held for sale -- 270
Loans held for investment, net 556,734 424,329
Allowance for loan losses (7,736) (5,636)
Net loans held for investment 548,998 418,693
Bank owned life insurance 41,560 41,560
Non-performing loans(1) 12,123 9,834
Other real estate owned 1,071 --
Federal Home Loan Bank of
New York stock, at cost 11,480 6,702
Securities sold under
agreements to repurchase 254,500 102,000
Other borrowings 53,619 22,420
Deposits 934,636 877,225
Total liabilities 1,269,017 1,019,578
Total stockholders' equity 378,503 367,340
Three Months Ended Nine Months Ended
September 30, September 30,
---------------- ----------------
2008 2007 2008 2007
------- ------- ------- -------
Selected Operating Data:
Interest income $19,034 $16,651 $54,446 $47,797
Interest expense 6,792 7,478 20,066 22,119
------- ------- ------- -------
Net interest income before
provision for loan losses 12,242 9,173 34,380 25,678
Provision for loan losses 1,276 200 3,114 737
------- ------- ------- -------
Net interest income after
provision for loan losses 10,966 8,973 31,266 24,941
Non-interest income 820 1,274 5,426 8,246
Non-interest expense 6,703 5,327 18,628 17,350
------- ------- ------- -------
Income before income tax expense 5,083 4,920 18,064 15,837
Income tax expense 1,808 1,855 5,619 5,812
------- ------- ------- -------
Net income $ 3,275 $ 3,065 $12,445 $10,025
======= ======= ======= =======
Net income per common share (2) $ 0.08 $ N/A $ 0.29 $ N/A
================ ================
At or For the At or For the
Three Months Ended Nine Months Ended
September 30, September 30,
(annualized) (annualized)
---------------- ----------------
2008 2007 2008 2007
------- ------- ------- -------
Selected Financial Ratios:
Performance Ratios(3):
Return on assets (ratio of net
income to average total assets) 0.82% 0.91% 1.09% 1.03%
Return on equity (ratio of net
income to average equity) 3.48% 7.04% 4.44% 7.91%
Interest rate spread 2.59% 2.35% 2.46% 2.25%
Net interest margin 3.22% 2.84% 3.17% 2.75%
Efficiency ratio(4) 51.32% 50.99% 46.80% 51.14%
Non-interest expense
to average total assets 1.68% 1.58% 1.63% 1.78%
Average interest-earning assets
to average interest-bearing
liabilities 135.46% 121.15% 138.47% 121.33%
Average equity to
average total assets 23.54% 12.89% 24.48% 12.99%
Asset Quality Ratios:
Non-performing assets
to total assets 0.80% 0.66% 0.80% 0.66%
Non-performing loans to total
loans held for investment, net 2.18% 2.43% 2.18% 2.43%
Allowance for loan losses
to non-performing loans 63.81% 47.56% 63.81% 47.56%
Allowance for loan losses
to total loans 1.39% 1.16% 1.39% 1.16%
(1) Non-performing loans consist of non-accruing loans and loans 90
or more past due and still accruing, and are included in loans
held-for-investment, net.
(2) Net income per common share (calculated based on 43,140,090
average shares outstanding for the three months ended
September 30, 2008, and 43,116,500 average shares outstanding
for the nine months ended September 30, 2008) is not applicable
prior to the Company's completion of its stock offering on
November 7, 2007.
(3) Annualized when appropriate.
(4) The efficiency ratio represents non-interest expense divided by
the sum of net interest income and non-interest income.
NORTHFIELD BANCORP, INC.
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands)
For the Three Months Ended
September 30,
---------------------------------------------------------------------
2008
------------------------------------
Average Average
Outstanding Yield/ Rate
Balance Interest (1)
---------------------------------------------------------------------
Interest-earning assets:
Loans $ 534,587 $ 8,337 6.20%
Mortgage-backed securities 838,985 9,426 4.47
Other securities 32,543 246 3.01
Federal Home Loan Bank of
New York stock 12,930 203 6.25
Interest-earning deposits
in financial institutions 93,222 822 3.51
---------- ----------
Total interest-earning assets 1,512,267 19,034 5.01
Non-interest-earning assets 79,473
----------
Total assets $1,591,740
==========
Interest-bearing liabilities:
Savings, NOW, and money
market accounts $ 461,396 1,503 1.30
Certificates of deposit 355,627 2,774 3.10
---------- ----------
Total interest-bearing deposits 817,023 4,277 2.08
Repurchase agreements 230,859 2,024 3.49
Other borrowings 68,499 491 2.85
---------- ----------
Total interest-bearing
liabilities 1,116,381 6,792 2.42
Non-interest bearing
deposit accounts 88,749
Accrued expenses and
other liabilities 11,914
----------
Total liabilities 1,217,044
Stockholders' equity 374,696
----------
Total liabilities
and stockholders' equity $1,591,740
==========
----------
Net interest income $ 12,242
==========
Net interest rate spread (2) 2.59%
Net interest-earning assets (3) $ 395,886
==========
Net interest margin (4) 3.22%
Average interest-earning
assets to interest-bearing
liabilities 135.46%
For the Three Months Ended
September 30,
---------------------------------------------------------------------
2007
------------------------------------
Average Average
Outstanding Yield/ Rate
Balance Interest (1)
---------------------------------------------------------------------
Interest-earning assets:
Loans $ 425,755 $ 7,297 6.80%
Mortgage-backed securities 729,221 7,915 4.31
Other securities 33,670 389 4.58
Federal Home Loan Bank
of New York stock 6,511 119 7.25
Interest-earning deposits
in financial institutions 85,776 931 4.31
---------- ----------
Total interest-earning assets 1,280,933 16,651 5.16
Non-interest-earning assets 58,244
----------
Total assets $1,339,177
==========
Interest-bearing liabilities:
Savings, NOW, and
money market accounts $ 433,203 932 0.85
Certificates of deposit 486,290 5,140 4.19
---------- ----------
Total interest-bearing deposits 919,493 6,072 2.62
Repurchase agreements 115,033 1,187 4.09
Other borrowings 22,771 219 3.82
---------- ----------
Total interest-bearing
liabilities 1,057,297 7,478 2.81
Non-interest bearing
deposit accounts 94,685
Accrued expenses
and other liabilities 14,522
----------
Total liabilities 1,166,504
Stockholders' equity 172,673
----------
Total liabilities
and stockholders' equity $1,339,177
==========
----------
Net interest income $ 9,173
==========
Net interest rate spread (2) 2.35%
Net interest-earning assets (3) $ 223,636
==========
Net interest margin (4) 2.84%
Average interest-earning assets
to interest-bearing liabilities 121.15%
(1) Average yields and rates for the three months ended
September 30, 2008, and 2007 are annualized.
(2) Net interest rate spread represents the difference between the
weighted average yield on interest-earning assets and the
weighted average cost of interest-bearing liabilities.
(3) Net interest-earning assets represent total interest-earning
assets less total interest-bearing liabilities.
(4) Net interest margin represents net interest income divided by
average total interest-earning assets.
NORTHFIELD BANCORP, INC.
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands)
For the Nine Months Ended
September 30,
---------------------------------------------------------------------
2008
------------------------------------
Average Average
Outstanding Yield/ Rate
Balance Interest (1)
---------------------------------------------------------------------
Interest-earning assets:
Loans $ 478,966 $ 22,723 6.34%
Mortgage-backed securities 812,586 27,197 4.47
Other securities 39,752 1,182 3.97
Federal Home Loan Bank
of New York stock 12,021 538 5.98
Interest-earning deposits
in financial institutions 104,227 2,806 3.60
---------- ----------
Total interest-earning assets 1,447,552 54,446 5.02
Non-interest-earning assets 81,880
----------
Total assets $1,529,432
==========
Interest-bearing liabilities:
Savings, NOW, and
money market accounts $ 418,256 3,649 1.17
Certificates of deposit 373,149 9,844 3.52
---------- ----------
Total interest-bearing deposits 791,405 13,493 2.28
Repurchase agreements 206,431 5,414 3.50
Other borrowings 47,543 1,159 3.26
---------- ----------
Total interest-bearing
liabilities 1,045,379 20,066 2.56
Non-interest bearing
deposit accounts 95,855
Accrued expenses
and other liabilities 13,779
----------
Total liabilities 1,155,013
Stockholders' equity 374,419
----------
Total liabilities
and stockholders' equity $1,529,432
==========
----------
Net interest income $ 34,380
==========
Net interest rate spread (2) 2.46%
Net interest-earning assets (3) $ 402,173
==========
Net interest margin (4) 3.17%
Average interest-earning assets
to interest-bearing liabilities 138.47%
For the Nine Months Ended
September 30,
---------------------------------------------------------------------
2007
------------------------------------
Average Average
Outstanding Yield/ Rate
Balance Interest (1)
---------------------------------------------------------------------
Interest-earning assets:
Loans $ 422,905 $ 21,343 6.75%
Mortgage-backed securities 709,302 22,348 4.21
Other securities 40,798 1,452 4.76
Federal Home Loan Bank
of New York stock 6,594 387 7.85
Interest-earning deposits
in financial institutions 66,902 2,267 4.53
---------- ----------
Total interest-earning assets 1,246,501 47,797 5.13
Non-interest-earning assets 57,739
----------
Total assets $1,304,240
==========
Interest-bearing liabilities:
Savings, NOW, and
money market accounts $ 404,794 2,461 0.81
Certificates of deposit 489,425 15,719 4.29
---------- ----------
Total interest-bearing deposits 894,219 18,180 2.72
Repurchase agreements 110,542 3,293 3.98
Other borrowings 22,581 646 3.82
---------- ----------
Total interest-bearing
liabilities 1,027,342 22,119 2.88
Non-interest bearing
deposit accounts 93,629
Accrued expenses
and other liabilities 13,911
----------
Total liabilities 1,134,882
Stockholders' equity 169,358
----------
Total liabilities
and stockholders' equity $1,304,240
==========
----------
Net interest income $ 25,678
==========
Net interest rate spread (2) 2.25%
Net interest-earning assets (3) $ 219,159
==========
Net interest margin (4) 2.75%
Average interest-earning assets
to interest-bearing liabilities 121.33%
(1) Average yields and rates for the nine months ended
September 30, 2008, and 2007 are annualized.
(2) Net interest rate spread represents the difference between the
weighted average yield on interest-earning assets and the
weighted average cost of interest-bearing liabilities.
(3) Net interest-earning assets represent total interest-earning
assets less total interest-bearing liabilities.
(4) Net interest margin represents net interest income divided by
average total interest-earning assets.