Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995
This presentation, like many written and oral communications presented by Northfield Bancorp, Inc. and our authorized officers, may contain certain forward-looking statements regarding our prospective performance and strategies within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of said safe harbor provisions.
Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by use of the words
“anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “seek,” “strive,” “try,” or future or conditional verbs such as “will,” “would,” “should,” “could,” “may,” or similar expressions. Our ability to predict results or the actual effects of our plans or strategies is inherently uncertain. Accordingly, actual results may differ materially from anticipated results.
There are a number of factors, many of which are beyond our control, that could cause actual conditions, events, or results to differ significantly from those described in our forward- looking statements. These factors include, but are not limited to: general economic conditions and trends, either nationally or in some or all of the areas in which we and our customers conduct our respective businesses; conditions in the securities and real estate markets or the banking industry; changes in interest rates, which may affect our net income, prepayment penalty income, and other future cash flows, or the market value of our assets, including our investment securities; changes in real estate values, which could impact the quality of the assets securing the loans in our portfolio; changes in the quality or composition of our loan or securities portfolios; changes in competitive pressures among financial institutions or from non-financial institutions; changes in our customer base or in the financial or operating performances of our customers’ businesses; changes in the demand for our deposit, loan, and investment products and other financial services in the markets we serve; changes in deposit flows and wholesale borrowing facilities; changes in our credit ratings or in our ability to access the capital markets; changes in our estimates of future reserves based upon the periodic review thereof under relevant regulatory and accounting requirements; changes in our capital management policies, including those regarding business combinations, dividends, and share repurchases, among others; our ability to retain key members of management;
changes in legislation, regulation, policies, or administrative practices, whether by judicial, governmental, or legislative action, including, but not limited to, those pertaining to banking, securities, taxation, rent regulation and housing, environmental protection, and insurance, and the ability to comply with such changes in a timely manner; changes in accounting principles, policies, practices, or guidelines; changes in the monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board of Governors; our timely development of new lines of business and competitive products or services in a changing environment, and the acceptance of such products or services by our customers; operational issues stemming from, and/or capital spending necessitated by, the potential need to adapt to industry changes in information technology systems, on which we are highly dependent; any interruption or breach of security, including cyber attacks, computer viruses and other technological risks, that may result in failures or disruptions in customer account management, general ledger, deposit, loan, or other systems; any interruption in customer service due to circumstances beyond our control; potential exposure to unknown or contingent liabilities of companies we have acquired or target for acquisition; the outcome of pending or threatened litigation, or of other matters before regulatory agencies, or of matters resulting from regulatory exams, whether currently existing or commencing in the future; environmental conditions that exist or may exist on properties owned by, leased by, or
mortgaged to the Company; war or terrorist activities; and other economic, competitive, governmental, regulatory, and geopolitical factors affecting our operations, pricing, and services.
For a discussion of these and other risks that may cause actual results to differ from expectations, please refer to our Form 10-K dated December 31, 2017, on file with the U.S.
Securities and Exchange Commission (the "SEC"), including the section entitled "Risk Factors, as well as other documents we file with the SEC.
In addition, it should be noted that we routinely evaluate opportunities to expand through mergers and acquisitions and frequently conduct due diligence activities in connection with such opportunities. As a result, merger and acquisition discussions and, in some cases, negotiations, may take place at any time, and acquisitions involving cash, debt, or equity securities may occur.
Furthermore, the timing and occurrence or non-occurrence of events may be subject to circumstances beyond our control.
Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date of this presentation. Except as required by applicable law or regulation, we undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.
Corporate Profile
● One future Brooklyn, NY branch estimated to open in fourth quarter 2018 (1) As of June 30, 2018
(2) Source: SNL, July 26, 2018
●
●
Established 1887
NASDAQ ticker symbol NFBK Years publicly traded 10
Headquarters Woodbridge, New Jersey 39 total Branches 21
●in NY | 18 in NJ
Employees (FTE)
(1)346
Share Price
(2)$16.79
Shares Outstanding
(1)49,481,589 Tangible Book Value per Share
(1)$12.33 Market Capitalization
(2)$824.80 Total Loans
(1)$3.2 billion Total Assets
(1)$4.2 billion
●
●
Markets
●
●
2018 2018 2018
County Total Population
(actual)
Total Households (actual)
Median HH Income ($) Number of Branches
Total Deposits In Market ($000)
Total Market Share (%)
Hunterdon, NJ 123,886 46,503 111,743 3 107,018 2.26
Kings, NY 2,647,777 981,388 57,227 9 338,230 0.63
Mercer, NJ 371,183 134,412 77,984 6 313,734 2.10
Middlesex, NJ 841,338 289,862 82,945 5 372,019 1.05
Richmond, NY 478,009 169,038 77,303 12 1,337,471 10.52
Union, NJ 559,707 194,554 76,739 4 236,325 0.83
NFBK June 30, 2017
History
●
Strategy
Mergers and Acquisitions
Enhancing Risk Management Increasing Dividends
Return Capital to Investors Sustainable Payout Ratios Manage Concentration Risk
Strategic Rational Pricing Rational
Acceptable TBV Dilutions and Earn‐back
Liquidity & Interest Rate Credit
Concentration
Operational & Technology Regulatory
Best in Class Products and Delivery Channels
C&I Lending
Automated Scoring for Small Business loans Additional C&I lending personnel
Treasury Management Services State of the Art Payment Services Reimagined Website
Mobile Banking for Retail and Business
Building Franchise Value
Disciplined Branch Strategy
Garnering Deposit Market Share
Expanding Commercial Loan Portfolio
Experienced Executive Management Team
Steven M. Klein President &
Chief Executive Officer
Over 30 years experience in banking and public accounting Licensed Certified Public Accountant in the State of New Jersey Tenure 13 years
Kenneth J. Doherty Executive Vice President,
Chief Lending Officer
Michael J. Widmer Executive Vice President,
Operations William R. Jacobs Executive Vice President,
Chief Financial Officer
Over 15 years experience in banking and public accounting Licensed Certified Public Accountant in the State of New Jersey Tenure 11 years
Over 35 years experience in banking Tenure 30 years
Over 35 years experience in banking Tenure 20 years
(1)(1)Includes service with Liberty Bank
Robin Lefkowitz Executive Vice President, Director of Business Developme nt
Over 30 years experience in banking Tenure 12 years
Tara L. French
Executive Vice President, Chief Administration Officer
Over 30 years experience in bank regulation and banking
Tenure < 1 year
Commercial
Multifamily Lending CRE Lending
C & I Lending
Business Checking
Business Money Market Non-Profit Checking Escrow Accounts Merchant Services
Online Cash Management Remote Deposit Capture Municipal Services
Retail
MyChecking Money Market
Certificates of Deposit Home Equity Loans E-Statements
EMV Visa Debit Cards Online & Mobile Banking Northfield Investment Services
(1)(1) Provided through an independent third party services agreement
Products and Services
Multiple Delivery Channels
Mobile App for phone and tablet Mobile Check Deposit
Mobile Bill Pay Apple Pay TM
Bank to Bank transfers
P2P Transfers with Popmoney ® and coming soon Zelle ®
Online deposit account opening CardValet ® for debit card
Inviting and modern branches
United with the Community
Northfield Bank Foundation Employee volunteerism
Leadership roles with community organizations
Community events Financial literacy
Fraud awareness & prevention
Corporate philanthropy
Second Quarter Highlights
Earnings per share increase 27.8% to $0.23 for the second quarter of 2018, compared to $0.18 for the second quarter of 2017, and 4.5%
compared to $0.22 for the first quarter of 2018.
Total assets increased to $4.19 billion, or 4.9%, from year end 2017.
Originated loans, increased to $2.55 billion, or 5.1%, from year end 2017.
Deposits, excluding brokered, increased 4.1% from year end 2017.
Net Interest Margin decreased to 2.85%, or 12 basis points, for the second quarter of 2018, as compared to 2.97% for the second quarter of 2017, and eight basis points compared to 2.93% for the first quarter of 2018.
Efficiency ratio improved to 56.4% from 56.6% for the second quarter of 2017.
Asset quality continues to remain strong with non-performing assets at
0.17% of total assets and non-performing loans at 0.20% of total loans.
Cash &
Equivalents 1.4%
Securities 15.4%
Net Loans 76.9%
BOLI 3.6%
Other Cash & 2.7%
Equivalents 1.4%
Securities 13.6%
Net Loans 78.7%
BOLI 3.8%
Other
Cash &2.5%
Equivalents 2.5%
Securities 13.6%
Net Loans 77.1%
BOLI 3.8%
Other 3.0%
Asset Composition
$4.19 billion
$3.85 billion
December 31, 2016 December 31, 2017 June 30, 2018
$3.99 billion
CAGR
(1)5.8%
(1)
CAGR calculated beginning December 31, 2016
Multifamily 61.7%
CRE 20.4%
Residential 11.4%
Home Equity 2.9%
PCI 0.7%
Construction
& Land 1.3%
C & I
1.6% Other
0.0%
Multifamily 61.7%
CRE 19.4%
Residential 12.0%
Home Equity 2.8%
PCI 0.7%
Construction &
Land
1.7% C & I
1.7% Other
0.0%
Multifamily 58.1%
CRE 20.3%
Residential 14.3%
Home Equity
3.1%
PCI Constructio 1.0%
n & Land 2.0%
C & I
1.9% Other
0.1%
Disciplined Loan Growth
$3.14 billion
$
2.97 billion
December 31, 2016 December 31, 2017 June 30, 2018
$3.21 billion
CAGR
(1)5.6%
(1)
CAGR calculated beginning December 31, 2016
4.26%
3.51% 3.83% 3.77% 3.68% 3.87%
3.66% 3.69%
4.09%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
2018 2019 2020 2021 2022 2023 2024 2025 2026 and
beyond
$0
$100
$200
$300
$400
$500
$600
Loan Balance Weighted Average Rate
Loan Repricing At June 30, 2018
($Millions)
Note: Excludes fixed rate loans and purchased credit impaired loans; based on current principal balances.
$- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000
2012 2013 2014 2015 2016 2017 YTD 2018
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
Originations Average Loan Size
Multifamily Originations
($Thousands)
* LTV (Loan-to-Value ratio), DSCR (Debt Service Coverage Ratio), and appraisal capitalization rates under the income valuation approach (Cap Rates) are presented as weighted averages
Avg. Loan Size Originations
($Thousands)
LTV*:
63.08%
DSCR*:
1.69 Cap Rate*:
6.4%
LTV*:
63.15%
DSCR*:
1.73 Cap Rate*:
6.4%
LTV*:
59.03%
DSCR*:
1.62 Cap Rate*:
6.0%
LTV*:
64.90%
DSCR*:
1.70 Cap Rate*:
6.1%
LTV*:
61.65%
DSCR*:
1.64 Cap Rate*:
5.9%
LTV*:
67.80%
DSCR*:
1.56 Cap Rate*:
5.9%
LTV*:
59.79%
DSCR*:
1.52 Cap Rate*:
5.7%
New Jersey
46%
New York 37%
Other 17%
New Jersey 47%
New York 39%
Other 14%
Real Estate Loan Portfolio Geographic Distribution by State (1)
(1)
By dollars
June 30, 2018 December 31, 2017
December 31, 2016
New Jersey
44%
New York 38%
Other
18%
CRE Concentrations
CRE Risk Management Trend Analytics on Leading and Trailing Risk Indicators Stress Testing under Various Economic Scenarios and Growth Strategies
410%
444% 442%
379%
412% 411%
340%
360%
380%
400%
420%
440%
460%
Dec'16 Dec'17 Jun'18
Including Owner Occupied Excluding Owner Occupied
0.00%
0.50%
1.00%
1.50%
2013 2014 2015 2016 2017 1Q18
0.76%
0.53%
0.46% 0.47% 0.48% 0.47%
0.17%
0.02%
0.09%
0.04% 0% 0%
SNL U.S. Bank and Thrift NFBK
Asset Quality
Non-Performing Assets* / Total Assets Net Charge Offs / Average Loans
* Excludes performing troubled debt restructured loans (1) SNL Data as of July 26, 2018 – 2Q18 data unavailable (2) Net Recoveries
(1) (1)
0.00%
(2)0.50%
1.00%
1.50%
2013 2014 2015 2016 2017 1Q18
0.72%
0.54%
0.46% 0.44%
0.35%
0.27%
0.68%
0.51%
0.28%
0.21%
0.16% 0.16%
SNL U.S. Bank and Thrift NFBK
Borrowings
• Borrowings* represent 11.5% of funding
• Current rate indicators**
• 1 Year at 2.76%
• 3 Year at 3.15%
• 5 Year at 3.25%
($Thousands)
* Excludes capitalized leases and overnight borrowings
** FHLBNY rate indicators as of July 26, 2018
1.88%
June 30, 2018
1.75%
1.48%
1.65%
1.80%
2.66%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
2018 2019 2020 2021 2022+
$0
$50,000
$100,000
$150,000
$200,000
Borrowing Maturities Average Rate
Non- Interest Bearing Demand
14%
NOW 14%
Money Market
25%
Savings 14%
Certificates of Deposit*
33%
Emphasis on Core Deposits
December 31, 2016 June 30, 2018
Average cost of deposits QTD: 54 bps
*Certificates of Deposit include brokered deposits of $99 million, $151 million, $171 million, at December 31, 2016, December 31, 2017 and June 30, 2018, respectively.
Non-Int.
Bearing Demand 14%
NOW 17%
Money Market 30%
Savings 19%
Certificates of Deposit*
20%
Non-Int.
Bearing Demand
14%
NOW 17%
Money Market
28%
Savings 15%
Certificates of Deposit*
26%
December 31, 2017
$2.84 billion $2.97 billion
Average cost of deposits QTD: 66 bps Average cost of deposits QTD: 82 bps
CAGR
(1)6.1%
(1) CAGR calculated beginning December 31, 2016
$2.71 billion
CD Maturities by Year
($Thousands)
June 30, 2018
1.39%
1.89% 1.88% 1.89%
2.17%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
2018 2019 2020 2021 2022+
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
CD Maturities Average Rate
2.97% 2.97%
2.83%
2.98% 2.96%
2.89%
1.08%
1.52%
1.29%
0.79%
1.30%
0.83%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
2013 2014 2015 2016 2017 YTD 2Q18
NFBK Net Interest Margin Avg. Spread 5yr Treasury to Effective Fed Funds
Managing Net Interest Margin
(1)
(1) Source: Federal Reserve Board
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
2013 2014 2015 2016 2017 2018
26.50%
19.66%
17.48%
16.13% 16.01% 15.80%
10.77% 10.99% 11.49% 11.38% 11.19% 11.05%
NFBK SNL U.S. Bank and Thrift
Capital Management
Total Equity/Total Assets
(1) Source: SNL, as of July 26, 2018 – 2Q18 data unavailable
(2) Completed second-step conversion
(1)
(2)
Capital exceeds all regulatory
“well-capitalized” standards
Focused on utilizing capital to
improve shareholder returns
Focused on Shareholder Returns
Diluted Earnings/Dividends Per Share
Continuing to evaluate dividend payout ratio and return excess capital to shareholders while managing concentrations.
$0.00
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
$0.45
$0.50
$0.55
$0.60
2016 2017 YTD 2018
$0.57
(1)$0.53
(2)$0.45
(3)$0.31 $0.34
$0.20 Diluted EPS Dividends Per Share
(1) Earnings for the year ended 12/31/2016, included merger related expenses of $2.4 million, net of tax, or $0.05 per diluted share related, to the acquisition of HVCB.
(2) Earnings for the year ended 12/31/2017, included an estimated tax charge of $10.5 million, or $0.23 per diluted share, related to the enactment of federal tax reform, a $2.3 million reduction in tax expense, or $0.05 per diluted share, as a result of the adoption of Accounting Standards Update No. 2016‐09, Compensation ‐ Stock Compensation (Topic 718), and a $1.5 million, or $0.03 per diluted share, benefit of tax‐exempt income from bank owned life insurance proceeds in excess of the cash surrender value of the policies.
(3) Earnings for the six months ended 6/30/2018 included a $2.1 million, or $0.05 per diluted share, reduction in income tax expense related to the exercise or vesting of
equity awards.
Focused on Shareholder Returns
Total Return NFBK: +184.8%
SNL US Bank Index: +55.5%
Outperformance - Since Initial Public Offering
Source: SNL for the period November 7, 2007 to July 26, 2018.