0001493225-18-000075.txt : 20180809 0001493225-18-000075.hdr.sgml : 20180809 20180809134908 ACCESSION NUMBER: 0001493225-18-000075 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 74 CONFORMED PERIOD OF REPORT: 20180630 FILED AS OF DATE: 20180809 DATE AS OF CHANGE: 20180809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Northfield Bancorp, Inc. CENTRAL INDEX KEY: 0001493225 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-35791 FILM NUMBER: 181004390 BUSINESS ADDRESS: STREET 1: 581 MAIN STREET STREET 2: SUITE 810 CITY: WOODBRIDGE STATE: NJ ZIP: 07095 BUSINESS PHONE: (732) 499-7200 MAIL ADDRESS: STREET 1: 581 MAIN STREET STREET 2: SUITE 810 CITY: WOODBRIDGE STATE: NJ ZIP: 07095 10-Q 1 nfbk2018-6x3010xq.htm 10-Q Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 
 
FORM 10-Q
 
 
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2018
or
[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For transition period from               to 
Commission File Number
 
001-35791
 
NORTHFIELD BANCORP, INC.
(Exact name of registrant as specified in its charter) 
 
Delaware
 
80-0882592
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
581 Main Street, 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, former address, and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ý    No o.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for shorter period that the registrant was required and post such files).  Yes ý    No o.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
 
 
Large accelerated filer  ý
Accelerated filer  o
Non-accelerated filer  o  (Do not check if smaller reporting company)
Smaller reporting company  o
 
Emerging growth company  o
 
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No ý.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.
49,492,931 shares of Common Stock, par value $0.01 per share, were issued and outstanding as of July 31, 2018.


NORTHFIELD BANCORP, INC.
Form 10-Q Quarterly Report
Table of Contents

2

PART I
ITEM 1.        FINANCIAL STATEMENTS

NORTHFIELD BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands, except share amounts)
 
June 30, 2018
 
December 31, 2017
ASSETS:
 
 
 
Cash and due from banks
$
13,538

 
$
17,446

Interest-bearing deposits in other financial institutions
45,195

 
40,393

Total cash and cash equivalents
58,733

 
57,839

Trading securities
10,167

 
9,597

Debt securities available-for-sale, at estimated fair value
625,279

 
513,782

Debt securities held-to-maturity, at amortized cost
9,819

 
9,931

(estimated fair value of $9,529 at June 30, 2018, and $9,892 at December 31, 2017)
 
 
 
Equity securities
1,301

 
1,339

Originated loans held-for-investment, net
2,547,920

 
2,425,275

Loans acquired
650,875

 
692,803

Purchased credit-impaired (“PCI”) loans held-for-investment
21,331

 
22,741

Loans held-for-investment, net
3,220,126

 
3,140,819

Allowance for loan losses
(26,882
)
 
(26,160
)
Net loans held-for-investment
3,193,244

 
3,114,659

Accrued interest receivable
11,413

 
10,713

Bank owned life insurance
152,298

 
150,604

Federal Home Loan Bank of New York stock, at cost
27,718

 
25,046

Premises and equipment, net
25,058

 
25,746

Goodwill
38,411

 
38,411

Other real estate owned
850

 
850

Other assets
33,867

 
32,900

Total assets
$
4,188,158

 
$
3,991,417

 

 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY:
 
 
 
LIABILITIES:
 

 
 

Deposits
$
2,967,281

 
$
2,836,979

Borrowed funds
524,335

 
471,549

Advance payments by borrowers for taxes and insurance
18,009

 
14,798

Accrued expenses and other liabilities
28,878

 
29,214

Total liabilities
3,538,503

 
3,352,540

STOCKHOLDERS’ EQUITY:
 

 
 

Preferred stock, $0.01 par value; 25,000,000 shares authorized, none issued or outstanding
—

 
—

Common stock, $0.01 par value: 150,000,000 shares authorized, 60,933,707 shares issued at
 

 
 

June 30, 2018 and December 31, 2017, 49,481,589 and 48,803,885 outstanding at June 30, 2018, and December 31, 2017, respectively
609

 
609

Additional paid-in-capital
544,404

 
548,864

Unallocated common stock held by employee stock ownership plan
(21,737
)
 
(22,244
)
Retained earnings
292,900

 
281,138

Accumulated other comprehensive loss
(11,648
)
 
(5,451
)
Treasury stock at cost; 11,452,118 and 12,129,822 shares at June 30, 2018, and December 31, 2017, respectively
(154,873
)
 
(164,039
)
Total stockholders’ equity
649,655

 
638,877

Total liabilities and stockholders’ equity
$
4,188,158

 
$
3,991,417


See accompanying notes to unaudited consolidated financial statements.

3

NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 
(Unaudited) (In thousands, except per share data) 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
Interest income:
 
 
 
 
 
 
 
Loans
$
31,456

 
$
29,653

 
$
62,243

 
$
58,661

Mortgage-backed securities
3,068

 
2,260

 
5,794

 
4,616

Other securities
821

 
283

 
1,323

 
535

Federal Home Loan Bank of New York dividends
398

 
325

 
812

 
696

Deposits in other financial institutions
192

 
139

 
445

 
221

Total interest income
35,935

 
32,660

 
70,617

 
64,729

Interest expense:
 
 
 
 
 

 
 

Deposits
6,050

 
3,899

 
11,261

 
7,519

Borrowings
2,115

 
1,852

 
4,042

 
3,624

Total interest expense
8,165

 
5,751

 
15,303

 
11,143

Net interest income
27,770

 
26,909

 
55,314

 
53,586

Provision for loan losses
670

 
511

 
704

 
883

Net interest income after provision for loan losses
27,100

 
26,398

 
54,610

 
52,703

Non-interest income:
 
 
 
 
 

 
 

Fees and service charges for customer services
1,147

 
1,107

 
2,361

 
2,325

Income on bank owned life insurance
914

 
1,010

 
1,868

 
3,468

Gains on securities transactions, net
313

 
256

 
473

 
664

Other
71

 
64

 
147

 
127

Total non-interest income
2,445

 
2,437

 
4,849

 
6,584

Non-interest expense:
 
 
 
 
 

 
 

Compensation and employee benefits
9,121

 
9,774

 
18,238

 
19,746

Occupancy
2,950

 
2,696

 
6,046

 
5,653

Furniture and equipment
252

 
287

 
508

 
592

Data processing
1,150

 
1,120

 
2,374

 
2,281

Professional fees
909

 
595

 
1,672

 
1,465

FDIC insurance
274

 
258

 
571

 
516

Other
2,384

 
1,888

 
4,757

 
3,909

Total non-interest expense
17,040

 
16,618

 
34,166

 
34,162

Income before income tax expense
12,505

 
12,217

 
25,293

 
25,125

Income tax expense
1,893

 
3,807

 
4,237

 
6,767

Net income
$
10,612

 
$
8,410

 
$
21,056

 
$
18,358

Net income per common share:
 
 
 
 
 
 
 
Basic
$
0.23

 
$
0.19

 
$
0.46

 
$
0.41

Diluted
$
0.23

 
$
0.18

 
$
0.45

 
$
0.39

 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to unaudited consolidated financial statements.
 

4

NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - (Continued)
(Unaudited) (In thousands) 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
Net Income
$
10,612

 
$
8,410

 
$
21,056

 
$
18,358

Other comprehensive (loss) income:
 
 
 
 
 
 
 
Unrealized (losses) gains on securities:
 
 
 
 
 
 
 
Net unrealized holding (losses) gains on securities
(2,290
)
 
2,107

 
(8,443
)
 
3,086

Less: reclassification adjustment for net (gains) losses included in net income (included in gains on securities transactions, net)
(116
)
 
4

 
(171
)
 
4

Net unrealized (losses) gains
(2,406
)
 
2,111

 
(8,614
)
 
3,090

Amortization related to post retirement benefit obligation
—

 
27

 
—

 
54

Other comprehensive (loss) income, before tax
(2,406
)
 
2,138

 
(8,614
)
 
3,144

Income tax benefit (expense) related to net unrealized holding (losses) gains on securities
640

 
(844
)
 
2,369

 
(1,235
)
Income tax benefit (expense) related to reclassification adjustment for (losses) gains included in net income
33

 
(2
)
 
48

 
(2
)
Income tax expense related to post retirement benefit adjustment
—

 
(11
)
 
—

 
(22
)
Other comprehensive (loss) income, net of tax
(1,733
)
 
1,281

 
(6,197
)
 
1,885

Comprehensive income
$
8,879

 
$
9,691

 
$
14,859

 
$
20,243



































See accompanying notes to unaudited consolidated financial statements.

5

NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Six Months Ended June 30, 2018 and 2017
(Unaudited) (In thousands, except share data) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares Outstanding
 
 Par Value
 
Additional Paid-in Capital
 
Unallocated Common Stock Held by the Employee Stock Ownership Plan
 
Retained Earnings
 
Accumulated Other Comprehensive Income (loss) Net of tax
 
Treasury Stock
 
Total Stockholders' Equity
Balance at December 31, 2016
48,526,658

 
$
609

 
$
547,910

 
$
(23,466
)
 
$
268,226

 
$
(4,332
)
 
$
(167,751
)
 
$
621,196

Net income
 

 
 

 
 

 
 

 
18,358

 
 

 
 

 
18,358

Other comprehensive income, net of tax
 

 
 

 
 

 
 

 
 

 
1,885

 
 

 
1,885

Cumulative effect of change in accounting principle - adoption of ASU No. 2016-09
 
 
 
 
(2,898
)
 
 
 
2,898

 
 
 
 
 
—

ESOP shares allocated or committed to be released
 

 
 

 
608

 
511

 
 

 
 

 
 

 
1,119

Stock compensation expense
 

 
 

 
3,217

 
 

 
 

 
 

 
 

 
3,217

Forfeitures of restricted stock
(3,600
)
 
 
 
47

 
 
 
 
 
 
 
(47
)
 
—

Exercise of stock options, net
333,738

 
 

 
(4,422
)
 
 

 
 
 
 

 
4,514

 
92

Cash dividends declared and paid ($0.16 per common share)
 

 
 

 
 

 
 

 
(7,348
)
 
 

 
 

 
(7,348
)
Balance at June 30, 2017
48,856,796

 
$
609

 
$
544,462

 
$
(22,955
)
 
$
282,134

 
$
(2,447
)
 
$
(163,284
)
 
$
638,519

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2017
48,803,885

 
$
609

 
$
548,864

 
$
(22,244
)
 
$
281,138

 
$
(5,451
)
 
$
(164,039
)
 
$
638,877

Net income
 

 
 

 
 

 
 

 
21,056

 
 

 
 

 
21,056

Other comprehensive loss, net of tax
 

 
 

 
 

 
 

 
 

 
(6,197
)
 
 

 
(6,197
)
ESOP shares allocated or committed to be released
 

 
 

 
498

 
507

 
 

 
 

 
 

 
1,005

Stock compensation expense
 

 
 

 
2,717

 
 

 
 

 
 

 
 
 
2,717

Forfeitures of restricted stock
(1,760
)
 
 

 
23

 
 

 
 

 
 

 
(23
)
 
—

Exercise of stock options, net
679,464

 
 

 
(7,698
)
 
 

 
 
 
 

 
9,189

 
1,491

Cash dividends declared and paid ($0.20 per common share)
 

 
 

 
 

 
 

 
(9,294
)
 
 

 
 

 
(9,294
)
Balance at June 30, 2018
49,481,589

 
$
609

 
$
544,404

 
$
(21,737
)
 
$
292,900

 
$
(11,648
)
 
$
(154,873
)
 
$
649,655





See accompanying notes to unaudited consolidated financial statements.

6

NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In thousands)

 
Six Months Ended June 30,
 
2018
 
2017
Cash flows from operating activities:
 
 
 
Net income
$
21,056

 
$
18,358

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Provision for loan losses
704

 
883

ESOP and stock compensation expense
3,722

 
4,336

Depreciation
1,529

 
1,661

Amortization of premiums, and deferred loan costs, net of (accretion) of discounts, and deferred loan fees
1,223

 
994

Amortization of intangible assets
166

 
196

Income on bank owned life insurance
(1,868
)
 
(3,468
)
Gains on securities transactions, net
(473
)
 
(664
)
Net purchases of trading securities
(268
)
 
(283
)
Increase in accrued interest receivable
(700
)
 
(52
)
Decrease in other assets
1,283

 
1,247

Decrease in accrued expenses and other liabilities
(336
)
 
(3,113
)
Net cash provided by operating activities
26,038

 
20,095

Cash flows from investing activities:
 
 
 
Net increase in loans receivable
(42,409
)
 
(82,339
)
Purchase of loans
(37,593
)
 
—

Purchases of Federal Home Loan Bank of New York stock
(14,045
)
 
(10,170
)
Redemptions of Federal Home Loan Bank of New York stock
11,373

 
8,438

Purchases of debt securities available-for-sale
(206,709
)
 
(17,746
)
Principal payments and maturities on debt securities available-for-sale
56,699

 
45,390

Principal payments and maturities on debt securities held-to-maturity
103

 
101

Proceeds from sale of debt securities available-for-sale
29,608

 
967

Proceeds from bank owned life insurance
174

 
2,043

Purchases and improvements of premises and equipment
(841
)
 
(641
)
Net cash used in investing activities
(203,640
)
 
(53,957
)
Cash flows from financing activities:
 
 
 
Net increase in deposits
130,302

 
(35,114
)
Dividends paid
(9,294
)
 
(7,348
)
Exercise of stock options
1,491

 
92

Increase in advance payments by borrowers for taxes and insurance
3,211

 
2,962

Repayments under capital lease obligations
(124
)
 
(109
)
Proceeds from securities sold under agreements to repurchase and other borrowings
415,545

 
179,725

Repayments related to securities sold under agreements to repurchase and other borrowings
(362,635
)
 
(152,132
)
Net cash provided by (used in) financing activities
178,496

 
(11,924
)
Net increase (decrease) in cash and cash equivalents
894

 
(45,786
)
Cash and cash equivalents at beginning of period
57,839

 
96,085

Cash and cash equivalents at end of period
$
58,733

 
$
50,299

 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to unaudited consolidated financial statements.

7


See accompanying notes to unaudited consolidated financial statements.

NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
(Unaudited) (In thousands)
 
Six Months Ended June 30,
 
2018
 
2017
Supplemental cash flow information:
 
 
 
Cash paid during the period for:
 
 
 
Interest
$
15,222

 
$
10,927

Income taxes
4,747

 
4,500

Non-cash transactions:
 
 
 
Loans recoveries, net
(18
)
 
(127
)
Transfer of originated loans held-for-investment to loans held-for-sale at fair value
—

 
2,009







































See accompanying notes to unaudited consolidated financial statements.

8

NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements
Note 1 – Basis of Presentation
The consolidated financial statements are comprised of the accounts of Northfield Bancorp, Inc. (the “Company”) and its wholly owned subsidiaries, Northfield Investments, Inc. and Northfield Bank (the “Bank”), and the Bank’s wholly-owned significant subsidiaries, NSB Services Corp. and NSB Realty Trust. All significant intercompany accounts and transactions have been eliminated in consolidation.
 
In the opinion of management, all adjustments (consisting solely of normal and recurring adjustments) necessary for the fair presentation of the consolidated financial condition and the consolidated results of operations for the unaudited periods presented have been included. The results of operations and other data presented for the three and six months ended June 30, 2018, are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2018 or for any other period. Whenever necessary, certain prior year amounts are reclassified to conform to the current year presentation.
In preparing the unaudited consolidated financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP), management has made estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated statements of financial condition and results of operations for the periods indicated. Material estimates that are particularly susceptible to change are: the allowance for loan losses, the evaluation of goodwill and other intangible assets, impairment on investment securities, fair value measurements of assets and liabilities, and income taxes. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the consolidated financial statements in the period they are deemed necessary. While management uses its best judgment, actual amounts or results could differ significantly from those estimates.
 
Certain information and note disclosures usually included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for the preparation of interim financial statements. The consolidated financial statements presented should be read in conjunction with the audited consolidated financial statements and notes to consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2017, of the Company as filed with the SEC. 

Note 2 – Debt Securities Available-for-Sale
The following is a comparative summary of mortgage-backed and other debt securities available-for-sale at June 30, 2018, and December 31, 2017 (in thousands):
 
June 30, 2018
 
 
 
Gross
 
Gross
 
Estimated
 
Amortized
 
unrealized
 
unrealized
 
fair
 
cost
 
gains
 
losses
 
value
Mortgage-backed securities:
 
 
 
 
 
 
 
Pass-through certificates:
 

 
 

 
 

 
 

Government sponsored enterprises (GSE)
$
247,743

 
$
581

 
$
5,238

 
$
243,086

Real estate mortgage investment conduits (REMICs):
 

 
 

 
 

 
 

GSE
283,386

 
95

 
10,760

 
272,721

Non-GSE
76

 
—

 
1

 
75

 
531,205

 
676

 
15,999

 
515,882

Other debt securities:
 
 
 
 
 
 
 
Municipal bonds
276

 
3

 
—

 
279

Corporate bonds
109,801

 
215

 
898

 
109,118

 
110,077

 
218

 
898

 
109,397

Total debt securities available-for-sale
$
641,282

 
$
894

 
$
16,897

 
$
625,279



9
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)

 
December 31, 2017
 
 
 
Gross
 
Gross
 
Estimated
 
Amortized
 
unrealized
 
unrealized
 
fair
 
cost
 
gains
 
losses
 
value
Mortgage-backed securities:
 

 
 

 
 

 
 

Pass-through certificates:
 

 
 

 
 

 
 

GSE
$
179,320

 
$
1,429

 
$
2,454

 
$
178,295

REMICs:
 

 
 

 
 

 
 

GSE
273,501

 
287

 
6,859

 
266,929

Non-GSE
80

 
—

 
1

 
79

 
452,901

 
1,716

 
9,314

 
445,303

Other debt securities:
 
 
 
 
 
 
 
Municipal bonds
343

 
6

 
—

 
349

Corporate bonds
67,927

 
401

 
198

 
68,130

 
68,270

 
407

 
198

 
68,479

Total debt securities available-for-sale
$
521,171

 
$
2,123

 
$
9,512

 
$
513,782


The following is a summary of the expected maturity distribution of debt securities available-for-sale, other than mortgage-backed securities, at June 30, 2018 (in thousands):
Available-for-sale
Amortized cost
 
Estimated fair value
Due after one year through five years
$
100,189

 
$
99,505

Due after five years through ten years
9,888

 
9,892

 
$
110,077

 
$
109,397

 Contractual maturities for mortgage-backed securities are not included above, as expected maturities on mortgage-backed securities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties.

Certain securities available-for-sale are pledged or encumbered to secure borrowings under Pledge Agreements and Repurchase Agreements and for other purposes required by law.  At June 30, 2018, the fair value of securities available-for-sale that were pledged to secure borrowings and deposits was $441.2 million.

For the three and six months ended June 30, 2018, the Company had gross proceeds of $10.1 million and $29.6 million, respectively, on sales of debt securities available-for-sale, with gross realized gains of $116,000 and $176,000 and gross realized losses of $0 and $5,000. For the three and six months ended June 30, 2017, the Company had gross proceeds of $967,000 on sales of debt securities available-for-sale, with no gross realized gains and gross realized losses of $4,000. The Company recognized net gains of $197,000 and $302,000 on its trading securities portfolio during the three and six months ended June 30, 2018, respectively. The Company recognized net gains of $260,000 and $668,000, on its trading securities portfolio during the three and six months ended June 30, 2017, respectively.

10
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)

Gross unrealized losses on mortgage-backed and other debt securities available-for-sale, and the estimated fair value of the related securities, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2018, and December 31, 2017, were as follows (in thousands):
 
June 30, 2018
 
Less than 12 months
 
12 months or more
 
Total
 
Unrealized
 
Estimated
 
Unrealized
 
Estimated
 
Unrealized
 
Estimated
 
losses
 
fair value
 
losses
 
fair value
 
losses
 
fair value
Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
Pass-through certificates:
 
 
 
 
 
 
 
 
 
 
 
GSE
$
1,538

 
$
104,219

 
$
3,700

 
$
74,599

 
$
5,238

 
$
178,818

REMICs:
 
 
 
 
 
 
 
 
 
 
 
GSE
2,720

 
120,720

 
8,040

 
120,653

 
10,760

 
241,373

Non-GSE
—

 
—

 
1

 
75

 
1

 
75

Other debt securities:
 
 
 
 
 
 
 
 
 
 
 
Corporate bonds
514

 
75,010

 
384

 
14,798

 
898

 
89,808

Total
$
4,772

 
$
299,949

 
$
12,125

 
$
210,125

 
$
16,897

 
$
510,074

 
December 31, 2017
 
Less than 12 months
 
12 months or more
 
Total
 
Unrealized
 
Estimated
 
Unrealized
 
Estimated
 
Unrealized
 
Estimated
 
losses
 
fair value
 
losses
 
fair value
 
losses
 
fair value
Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
Pass-through certificates:
 
 
 
 
 
 
 
 
 
 
 
GSE
$
439

 
$
48,931

 
$
2,015

 
$
76,113

 
$
2,454

 
$
125,044

REMICs:
 
 
 
 
 
 
 
 
 
 
 
GSE
933

 
103,644

 
5,926

 
139,830

 
6,859

 
243,474

Non-GSE
—

 
—

 
1

 
79

 
1

 
79

Other debt securities:
 
 
 
 
 
 
 
 
 
 
 
Corporate bonds
61

 
11,006

 
137

 
15,084

 
198

 
26,090

Total
$
1,433

 
$
163,581

 
$
8,079

 
$
231,106

 
$
9,512

 
$
394,687

 
The Company held 33 pass-through mortgage-backed securities issued or guaranteed by GSEs, 19 REMIC mortgage-backed securities issued or guaranteed by GSEs, one REMIC mortgage-backed security not issued or guaranteed by a GSE, and three corporate bonds that were in a continuous unrealized loss position of twelve months or greater at June 30, 2018. There were 40 pass-through mortgage-backed securities issued or guaranteed by GSEs, 37 REMIC mortgage-backed securities issued or guaranteed by a GSE, and 13 corporate bonds that were in an unrealized loss position of less than twelve months at June 30, 2018. All securities referred to above were rated investment grade at June 30, 2018.  The declines in value relate to the general interest rate environment and are considered temporary. The securities cannot be prepaid in a manner that would result in the Company not receiving substantially all of its amortized cost. The Company neither has an intent to sell, nor is it more likely than not that the Company will be required to sell, the securities before the recovery of their amortized cost basis or, if necessary, maturity.
 
The fair values of our investment securities could decline in the future if the underlying performance of the collateral for the collateralized mortgage obligations or other securities deteriorates and our credit enhancement levels do not provide sufficient protections to our contractual principal and interest, which may result in other-than-temporary impairment in the future. The Company did not recognize any other-than-temporary impairment charges during the three and six months ended June 30, 2018, or June 30, 2017. 
    
    

11
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)

Note 3 – Debt Securities Held-to-Maturity
The following is a summary of debt securities held-to-maturity at June 30, 2018, and December 31, 2017 (in thousands): 
 
June 30, 2018
 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Estimated Fair Value
Mortgage-backed securities:
 

 
 

 
 

 
 

Pass-through certificates:
 

 
 

 
 

 
 

GSEs
$
9,819

 
$
—

 
$
290

 
$
9,529

Total securities held-to-maturity
$
9,819

 
$
—

 
$
290

 
$
9,529

 
December 31, 2017
 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Estimated Fair Value
Mortgage-backed securities:
 

 
 

 
 

 
 

Pass-through certificates:
 

 
 

 
 

 
 

GSEs
$
9,931

 
$
17

 
$
56

 
$
9,892

Total securities held-to-maturity
$
9,931

 
$
17

 
$
56

 
$
9,892

    
Contractual maturities for mortgage-backed securities are not presented, as expected maturities on mortgage‑backed securities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties. There were no sales of held-to-maturity securities for the three and six months ended June 30, 2018, or June 30, 2017.

At June 30, 2018, debt securities held-to-maturity with a carrying value of $7.1 million were pledged to secure borrowings and deposits.

Gross unrealized losses on mortgage-backed securities held-to-maturity, and the estimated fair value of the related securities, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2018 and December 31, 2017, were as follows (in thousands):
 
June 30, 2018
 
Less than 12 months
 
12 months or more
 
Total
 
Unrealized losses
 
Estimated fair value
 
Unrealized losses
 
Estimated fair value
 
Unrealized losses
 
Estimated fair value
Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
Pass-through certificates:
 
 
 
 
 
 
 
 
 
 
 
GSEs
$
145

 
$
5,930

 
$
145

 
$
3,599

 
$
290

 
$
9,529

Total securities held-to-maturity
$
145

 
$
5,930

 
$
145

 
$
3,599

 
$
290

 
$
9,529

 
December 31, 2017
 
Less than 12 months
 
12 months or more
 
Total
 
Unrealized losses
 
Estimated fair value
 
Unrealized losses
 
Estimated fair value
 
Unrealized losses
 
Estimated fair value
Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
Pass-through certificates:
 
 
 
 
 
 
 
 
 
 
 
GSEs
$
7

 
$
3,922

 
$
49

 
$
3,735

 
$
56

 
$
7,657

Total securities held-to-maturity
$
7

 
$
3,922

 
$
49

 
$
3,735

 
$
56

 
$
7,657





12
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)

The Company held two pass-through mortgage-backed securities held-to-maturity, issued or guaranteed by GSEs that were in a continuous unrealized loss position of greater than twelve months at June 30, 2018, and four pass-through mortgage-backed securities held-to-maturity, issued or guaranteed by GSEs that were in a continuous unrealized loss position of less than twelve months at June 30, 2018. Management evaluated these securities and concluded that the declines in value relate to the general interest rate environment and are considered temporary. The securities cannot be prepaid in a manner that would result in the Company not receiving substantially all of its amortized cost. The Company neither has an intent to sell, nor is it more likely than not that the Company will be required to sell, the securities before the recovery of their amortized cost basis or, if necessary, maturity.

The fair values of our investment securities could decline in the future if the underlying performance of the collateral for the collateralized mortgage obligations or other securities deteriorates and our credit enhancement levels do not provide sufficient protections to our contractual principal and interest.  As a result, there is a risk that significant other-than-temporary impairments may occur in the future given the current economic environment. The Company did not recognize any other-than-temporary impairment charges in earnings on securities held-to-maturity during the three and six months ended June 30, 2018, or June 30, 2017.
Note 4 – Equity Securities
At both June 30, 2018, and December 31, 2017, equity securities totaled $1.3 million. Equity securities consist of money market mutual funds, recorded at fair value of $272,000 and $323,000, at June 30, 2018, and December 31, 2017, respectively, and an investment in a private Small Business Administration (“SBA”) Loan Fund recorded at net asset value of $1.0 million at both June 30, 2018, and December 31, 2017. As the SBA Loan Fund operates as a private fund, its shares are not publicly traded and therefore have no readily determinable market value. The investment in the fund is recorded at net asset value as a practical expedient for reporting fair market value. Upon adoption of Accounting Standards Update (“ASU”) No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities as of January 1, 2018, the Company reclassified its equity securities out of available-for-sale securities to equity securities on the consolidated balance sheets for all periods presented. For further details on ASU No. 2016-01 see Note 12 - “Recently Issued and Adopted Accounting Pronouncements.”


13
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)

Note 5 – Loans
 
Net loans held-for-investment are as follows (in thousands):
 
June 30,
 
December 31,
 
2018
 
2017
Real estate loans:
 
 
 
Multifamily
$
1,800,421

 
$
1,735,712

Commercial mortgage
499,518

 
445,225

One-to-four family residential mortgage
100,257

 
100,942

Home equity and lines of credit
72,728

 
66,254

Construction and land
26,983

 
34,545

Total real estate loans
2,499,907

 
2,382,678

Commercial and industrial loans
39,682

 
34,828

Other loans
1,532

 
1,430

Total commercial and industrial and other loans
41,214

 
36,258

Deferred loan cost, net
6,799

 
6,339

Originated loans held-for-investment, net
2,547,920

 
2,425,275

PCI Loans
21,331

 
22,741

Loans acquired:
 
 
 
One-to-four family residential mortgage
265,709

 
275,053

Multifamily
180,951

 
199,149

Commercial mortgage
155,250

 
163,962

Home equity and lines of credit
19,009

 
20,455

Construction and land
14,999

 
17,201

Total acquired real estate loans
635,918

 
675,820

Commercial and industrial loans
14,939

 
16,946

Other loans
18

 
37

Total loans acquired, net
650,875

 
692,803

Loans held-for-investment, net
3,220,126

 
3,140,819

Allowance for loan losses
(26,882
)
 
(26,160
)
Net loans held-for-investment
$
3,193,244

 
$
3,114,659

    
There were no loans held-for-sale at June 30, 2018, or December 31, 2017.

PCI loans totaled $21.3 million at June 30, 2018, as compared to $22.7 million at December 31, 2017. The majority of the PCI loan balance is attributable to those loans acquired as part of a Federal Deposit Insurance Corporation-assisted transaction. The Company accounts for PCI loans utilizing U.S. GAAP applicable to loans acquired with deteriorated credit quality. At June 30, 2018, PCI loans consist of approximately 27% commercial real estate loans and 50% commercial and industrial loans, with the remaining balance in residential and home equity loans. At December 31, 2017, PCI loans consist of approximately 27% commercial real estate loans and 50% commercial and industrial loans, with the remaining balance in residential and home equity loans.

The following table details the accretion of interest income for PCI loans for the three and six months ended June 30, 2018 and June 30, 2017 (in thousands): 
 
At or for the three months ended June 30,
 
At or for the six months ended June 30,
 
2018
 
2017
 
2018
 
2017
Balance at the beginning of period
$
23,412

 
$
22,763

 
$
24,502

 
$
24,215

Accretion into interest income
(1,026
)
 
(1,321
)
 
(2,116
)
 
(2,773
)
Balance at end of period
$
22,386

 
$
21,442

 
$
22,386

 
$
21,442


14
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)

The following tables set forth activity in our allowance for loan losses, by loan type, as of and for the three and six months ended June 30, 2018, and June 30, 2017 (in thousands):  
 
Three Months Ended June 30, 2018
 
Real Estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
One-to-Four Family
 
Construction and Land
 
Multifamily
 
Home Equity and Lines of Credit
 
Commercial and Industrial
 
Other
 
Unallocated
 
Originated Loans Total
 
Purchased Credit-Impaired
 
Acquired Loans
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
5,213

 
$
455

 
$
463

 
$
17,412

 
$
225

 
$
1,337

 
$
113

 
$
—

 
$
25,218

 
$
951

 
$
3

 
$
26,172

Charge-offs
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Recoveries
12

 
—

 
—

 
26

 
—

 
—

 
—

 
—

 
38

 
—

 
2

 
40

Provisions (credit)
493

 
(71
)
 
(25
)
 
165

 
54

 
65

 
(6
)
 
—

 
675

 
—

 
(5
)
 
670

Ending balance
$
5,718

 
$
384

 
$
438

 
$
17,603

 
$
279

 
$
1,402

 
$
107

 
$
—

 
$
25,931

 
$
951

 
$
—

 
$
26,882


 
Three Months Ended June 30, 2017
 
Real Estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
One-to-Four Family
 
Construction and Land
 
Multifamily
 
Home Equity and Lines of Credit
 
Commercial and Industrial
 
Other
 
Unallocated
 
Originated Loans Total
 
Purchased Credit-Impaired
 
Acquired Loans
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
5,231

 
$
649

 
$
165

 
$
16,184

 
$
492

 
$
1,561

 
$
72

 
$
—

 
$
24,354

 
$
896

 
$
34

 
$
25,284

Charge-offs
—

 
—

 
—

 
(178
)
 
(104
)
 
—

 
—

 
—

 
(282
)
 
—

 
(8
)
 
(290
)
Recoveries
17

 
—

 
—

 
—

 
64

 
17

 
—

 
—

 
98

 
—

 
2

 
100

Provisions (credit)
(12
)
 
(99
)
 
64

 
630

 
(89
)
 
(46
)
 
25

 
—

 
473

 
—

 
38

 
511

Ending balance
$
5,236

 
$
550

 
$
229

 
$
16,636

 
$
363

 
$
1,532

 
$
97

 
$
—

 
$
24,643

 
$
896

 
$
66

 
$
25,605



15
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)

 
Six Months Ended June 30, 2018
 
Real Estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
One-to-Four Family
 
Construction and Land
 
Multifamily
 
Home Equity and Lines of Credit
 
Commercial and Industrial
 
Other
 
Unallocated
 
Originated Loans Total
 
Purchased Credit-Impaired
 
Acquired Loans
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
5,196

 
$
503

 
$
610

 
$
17,374

 
$
122

 
$
1,273

 
$
94

 
$
—

 
$
25,172

 
$
951

 
$
37

 
$
26,160

Charge-offs
(3
)
 
—

 
—

 
—

 
(60
)
 
—

 
—

 
—

 
(63
)
 
—

 
(1
)
 
(64
)
Recoveries
28

 
—

 
—

 
26

 
—

 
20

 
—

 
—

 
74

 
—

 
8

 
82

Provisions/(credit)
497

 
(119
)
 
(172
)
 
203

 
217

 
109

 
13

 
—

 
748

 
—

 
(44
)
 
704

Ending balance
$
5,718

 
$
384

 
$
438

 
$
17,603

 
$
279

 
$
1,402

 
$
107

 
$
—

 
$
25,931

 
$
951

 
$
—

 
$
26,882

 
Six Months Ended June 30, 2017
 
Real Estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
One-to-Four Family
 
Construction and Land
 
Multifamily
 
Home Equity and Lines of Credit
 
Commercial and Industrial
 
Other
 
Unallocated
 
Originated Loans Total
 
Purchased Credit-Impaired
 
Acquired Loans
 
Total
Allowance for loan losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
5,432

 
$
664

 
$
172

 
$
14,952

 
$
588

 
$
1,720

 
$
96

 
$
—

 
$
23,624

 
$
896

 
$
75

 
$
24,595

Charge-offs
(4
)
 
—

 
—

 
(178
)
 
(104
)
 
—

 
—

 
—

 
(286
)
 
—

 
(31
)
 
(317
)
Recoveries
34

 
—

 
—

 
278

 
64

 
64

 
—

 
—

 
440

 
—

 
4

 
444

Provisions/(credit)
(226
)
 
(114
)
 
57

 
1,584

 
(185
)
 
(252
)
 
1

 
—

 
865

 
—

 
18

 
883

Ending balance
$
5,236

 
$
550

 
$
229

 
$
16,636

 
$
363

 
$
1,532

 
$
97

 
$
—