Northfield Bancorp, Inc. (NASDAQ:NFBK), the holding company for Northfield Bank, reported its second quarter 2024 financial results, showcasing resilience in the face of a dynamic economic landscape. The company delivered solid earnings and revenue performance, underscoring its ability to navigate the current market conditions effectively.

For the second quarter of 2024, Northfield Bancorp reported net income of $9.4 million, or $0.17 per diluted share, compared to $11.7 million, or $0.22 per diluted share, in the same period of the prior year. The company's annual net income for the fiscal year 2023 was $37.7 million. Total revenue for the quarter came in at $31.6 million, surpassing the Zacks Consensus Estimate of $31.0 million, but declining from $34.0 million in the year-ago quarter. For the full year 2023, the company reported annual revenue of $220.7 million.

The decrease in net income and revenue was primarily attributable to the rising interest rate environment, which put pressure on the company's net interest margin. However, Northfield Bancorp's management team demonstrated its ability to adapt and optimize its operations to mitigate the impact of these market challenges.

"The company is pleased to report solid financial results for the second quarter of 2024, despite the ongoing macroeconomic headwinds," said Steven M. Klein, Chairman, President, and Chief Executive Officer of Northfield Bancorp. "The team's disciplined approach to managing the balance sheet and maintaining strong credit quality has enabled the company to navigate this environment effectively."

Business Overview

Northfield Bancorp, Inc. is a bank holding company that provides a range of banking services through its wholly-owned subsidiary, Northfield Bank. The company operates a network of 38 full-service banking offices located in Staten Island and Brooklyn, New York, as well as Hunterdon, Middlesex, Mercer, and Union counties in New Jersey.

The company's core business activities include accepting deposits from the general public and investing those deposits, together with funds generated from operations and borrowings, in commercial real estate loans, multi-family loans, one-to-four family residential mortgage loans, construction and land loans, commercial and industrial loans, and other loans, as well as mortgage-backed securities, U.S. Government and agency securities, and other investment securities.

Northfield Bancorp's loan portfolio is primarily concentrated in commercial real estate and multi-family loans, which accounted for 65% of the total loan portfolio as of June 30, 2024. The company's geographic footprint is centered in the New York metropolitan area, with a significant presence in Staten Island and Brooklyn, New York, as well as several counties in New Jersey.

Financials

For the second quarter of 2024, Northfield Bancorp reported net interest income of $27.9 million, down from $34.9 million in the same period of the prior year. The decrease in net interest income was primarily driven by a 60 basis point decline in the company's net interest margin to 2.03%, as the cost of interest-bearing liabilities increased at a faster pace than the yield on interest-earning assets.

The provision for credit losses on loans decreased to $415,000 in the second quarter of 2024, compared to $864,000 in the same period of the prior year. This reduction was primarily due to a decline in loan balances, lower net charge-offs, and an improvement in the economic forecast within the company's Current Expected Credit Loss (CECL) model.

Non-interest income remained relatively stable at $3.4 million in the second quarter of 2024, compared to $3.3 million in the same period of the prior year. The company's non-interest expense increased by $1.2 million, or 5.7%, to $22.3 million, primarily due to higher employee compensation and benefits.

For the full year 2023, Northfield Bancorp reported annual operating cash flow of $46.9 million and annual free cash flow of $43.3 million.

Asset Quality and Liquidity

Northfield Bancorp's asset quality remained strong, with non-performing loans to total loans at 0.41% as of June 30, 2024, compared to 0.27% as of December 31, 2023. The company's allowance for credit losses on loans was $37.0 million, or 0.89% of total loans, as of June 30, 2024.

The company's liquidity position remained robust, with cash and cash equivalents of $238.8 million as of June 30, 2024, up from $229.5 million as of December 31, 2023. Northfield Bancorp's deposit base grew by 1.1% to $3.92 billion as of June 30, 2024, from $3.88 billion as of December 31, 2023.

Regulatory Capital and Dividends

Northfield Bancorp maintained strong regulatory capital ratios, with a Community Bank Leverage Ratio (CBLR) of 12.35% as of June 30, 2024, well above the regulatory minimum of 9%. The company's capital position provides a solid foundation for growth and the ability to withstand potential economic challenges.

The company's Board of Directors declared a quarterly cash dividend of $0.13 per share, payable on July 31, 2024, to stockholders of record as of July 15, 2024. This dividend is consistent with the company's previous quarterly dividend payments.

Outlook

Northfield Bancorp's management team remains cautiously optimistic about the company's future performance, despite the ongoing macroeconomic uncertainties. The company is focused on maintaining its disciplined approach to balance sheet management, credit quality, and operational efficiency to navigate the current environment effectively.

For the third quarter of 2024, the company expects net interest income to be in the range of $27.0 million to $28.0 million, with a net interest margin in the range of 1.95% to 2.05%. The provision for credit losses is anticipated to be between $400,000 and $600,000, reflecting the company's continued vigilance in managing credit risk.

"While the interest rate environment presents challenges, the company remains confident in its ability to adapt and deliver solid financial results for its shareholders," said Klein. "The company will continue to leverage its strong market position, diversified business model, and experienced management team to capitalize on opportunities and drive long-term value creation."

Conclusion

Northfield Bancorp's second quarter 2024 financial results demonstrate the company's resilience and ability to navigate the current economic landscape. Despite the headwinds faced, the company maintained its focus on asset quality, liquidity, and operational efficiency, positioning it well to weather the ongoing market volatility. With a solid capital base, disciplined approach to risk management, and a commitment to serving its communities, Northfield Bancorp remains well-equipped to navigate the challenges ahead and deliver value for its shareholders.