Regulatory Requirements

12 Months Ended

Dec. 31, 2019

Regulatory Requirements [Abstract]

Regulatory Requirements

Regulatory Requirements

Federal regulations require federally insured depository institutions to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets of 8.0%, and a 4.0% Tier 1 capital to total assets leverage ratio.

Under prompt corrective action regulations, the OCC is required to take certain supervisory actions (and may take additional discretionary actions) with respect to an undercapitalized institution.  Such actions could have a direct material effect on the institution’s financial statements.  The regulations establish a framework for the classification of savings institutions into five categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized.  Generally, an institution is considered well capitalized if it has a leverage (Tier 1) ratio of 5.0% or greater, a common equity Tier 1 ratio of 6.5% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, and a total risk-based capital ratio of 10.0% or greater.

The foregoing capital ratios are based in part on specific quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. Capital amounts and classifications also are subject to qualitative judgments by the regulators about capital components, risk weighting, and other factors.

Under the U.S. Basel III capital framework, both Northfield Bank and the Company must maintain minimum capital requirements which include: (i) a common equity Tier 1 capital to risk-based assets ratio of 4.5%; (ii) a Tier 1 capital to risk-based assets ratio of 6%; (iii) a total capital to risk-based assets of 8%; and (iv) a Tier 1 capital to total assets leverage ratio of 4%. In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements. The capital conservation buffer requirement was phased in beginning January 1, 2016, at 0.625% of risk-weighted assets and increased each year until it was fully implemented at 2.5% on January 1, 2019.

Management believes that as of December 31, 2019 and December 31, 2018, the Bank exceeded all capital adequacy requirements to which it was subject at these dates. Further, the most recent OCC notification categorized the Bank as a well-capitalized institution under the prompt corrective action regulations. There have been no conditions or events since that notification that management believes have changed the Bank's classification.

The following is a summary of Northfield Bank’s regulatory capital amounts and ratios compared to the regulatory requirements as of December 31, 2019 and 2018, for classification as a well-capitalized institution and minimum capital (dollars in thousands):

									For Well
					For Capital				Capitalized
					Adequacy				Under Prompt Corrective
	Actual				Purposes				Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 31, 2019:
Common Equity Tier 1 Capital (to risk-weighted assets)	$	598,462	14.99	%	$	179,626	4.50	%	$	259,459	6.50	%
Tier 1 Leverage	598,462		12.28		194,954		4.00		243,692		5.00
Tier I capital (to risk-weighted assets)	598,462		14.99		239,501		6.00		319,334		8.00
Total capital (to risk-weighted assets)	627,955		15.73		319,334		8.00		399,168		10.00
As of December 31, 2018:
Common Equity Tier 1 Capital (to risk-weighted assets)	$	592,815	16.00	%	$	166,742	4.50	%	$	240,850	6.50	%
Tier 1 Leverage	592,815		13.81		171,663		4.00		214,579		5.00
Tier I capital (to risk-weighted assets)	592,815		16.00		222,323		6.00		296,430		8.00
Total capital (to risk-weighted assets)	620,863		16.76		296,430		8.00		370,538		10.00

The following is a summary of the Company's regulatory capital amounts and ratios compared to the regulatory requirements as of December 31, 2019 and 2018, for classification as well-capitalized and minimum capital (dollars in thousands).

									For Well
					For Capital				Capitalized
					Adequacy				Under Prompt Corrective
	Actual				Purposes				Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 31, 2019:
Common Equity Tier 1 Capital (to risk-weighted assets)	$	651,974	16.35	%	$	179,439	4.50	%	$	259,189	6.50	%
Tier 1 Leverage	651,974		13.37		195,018		4.00		243,772		5.00
Tier I capital (to risk-weighted assets)	651,974		16.35		239,251		6.00		319,002		8.00
Total capital (to risk-weighted assets)	681,467		17.09		319,002		8.00		398,752		10.00
As of December 31, 2018:
Common Equity Tier 1 Capital (to risk-weighted assets)	$	636,141	17.17	%	$	166,717	4.50	%	$	240,814	6.50	%
Tier 1 Leverage	636,141		14.82		171,724		4.00		214,656		5.00
Tier I capital (to risk-weighted assets)	636,141		17.17		222,290		6.00		296,386		8.00
Total capital (to risk-weighted assets)	664,190		17.93		296,386		8.00		370,483		10.00