NFBK 10-Q Quarterly Report Sept. 30, 2017 | Alphaminr
Northfield Bancorp, Inc.
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NFBK 10-Q Quarter ended Sept. 30, 2017

Balance Sheet
Cash Flow
Income Statement
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10-Q 1 nfbk20179-3010xq.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 September 30, 2017
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)
(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 (Check one):
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.
48,879,812 shares of Common Stock, par value $0.01 per share, were issued and outstanding as of October 31, 2017 .


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


PART I
ITEM 1.        FINANCIAL STATEMENTS

NORTHFIELD BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands, except share amounts)
September 30, 2017
December 31, 2016
ASSETS:
Cash and due from banks
$
15,007

$
18,412

Interest-bearing deposits in other financial institutions
88,234

77,673

Total cash and cash equivalents
103,241

96,085

Trading securities
9,225

7,857

Securities available-for-sale, at estimated fair value
(encumbered $6,990 at September 30, 2017, and $11,786 at December 31, 2016)
482,626

498,897

Securities held-to-maturity, at amortized cost
9,983

10,148

(estimated fair value of $9,997 at September 30, 2017, and $10,118 at December 31, 2016) (encumbered $0 at September 30, 2017, and $2,108 at December 31, 2016)
Loans held-for-sale
1,506

—

Originated loans held-for-investment, net
2,360,864

2,144,346

Loans acquired
745,063

793,240

Purchased credit-impaired (PCI) loans held-for-investment
25,960

30,498

Loans held-for-investment, net
3,131,887

2,968,084

Allowance for loan losses
(26,099
)
(24,595
)
Net loans held-for-investment
3,105,788

2,943,489

Accrued interest receivable
10,249

9,714

Bank owned life insurance
149,657

148,047

Federal Home Loan Bank of New York stock, at cost
29,771

25,123

Premises and equipment, net
25,504

26,910

Goodwill
38,411

38,411

Other real estate owned
850

850

Other assets
40,017

44,563

Total assets
$
4,006,828

$
3,850,094


LIABILITIES AND STOCKHOLDERS’ EQUITY:
LIABILITIES:


Deposits
$
2,735,402

$
2,713,587

Borrowed funds
583,690

473,206

Advance payments by borrowers for taxes and insurance
14,265

12,331

Accrued expenses and other liabilities
28,422

29,774

Total liabilities
3,361,779

3,228,898

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


September 30, 2017 and December 31, 2016, 48,880,772 and 48,526,658 outstanding at September 30, 2017, and December 31, 2016, respectively
609

609

Additional paid-in-capital
545,955

547,910

Unallocated common stock held by employee stock ownership plan
(22,695
)
(23,466
)
Retained earnings
286,574

268,226

Accumulated other comprehensive loss
(2,434
)
(4,332
)
Treasury stock at cost; 12,052,935 and 12,407,049 shares at September 30, 2017, and December 31, 2016, respectively
(162,960
)
(167,751
)
Total stockholders’ equity
645,049

621,196

Total liabilities and stockholders’ equity
$
4,006,828

$
3,850,094


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 September 30,
Nine Months Ended September 30,
2017
2016
2017
2016
Interest income:
Loans
$
30,424

$
28,222

$
89,085

$
82,792

Mortgage-backed securities
2,175

2,665

6,791

8,322

Other securities
370

252

905

662

Federal Home Loan Bank of New York dividends
365

302

1,061

861

Deposits in other financial institutions
191

84

412

225

Total interest income
33,525

31,525

98,254

92,862

Interest expense:


Deposits
4,168

3,545

11,687

10,672

Borrowings
2,005

1,729

5,629

5,570

Total interest expense
6,173

5,274

17,316

16,242

Net interest income
27,352

26,251

80,938

76,620

Provision for loan losses
488

472

1,371

355

Net interest income after provision for loan losses
26,864

25,779

79,567

76,265

Non-interest income:


Fees and service charges for customer services
1,238

1,255

3,563

3,627

Income on bank owned life insurance
970

1,008

4,438

3,001

Gains on securities transactions, net
337

362

1,001

612

Other
70

42

197

189

Total non-interest income
2,615

2,667

9,199

7,429

Non-interest expense:


Compensation and employee benefits
9,593

9,565

29,339

30,891

Occupancy
2,807

2,828

8,460

8,597

Furniture and equipment
279

349

871

1,074

Data processing
1,155

1,674

3,436

4,919

Professional fees
569

684

2,034

2,621

FDIC insurance
279

256

795

1,218

Other
2,146

2,021

6,055

7,050

Total non-interest expense
16,828

17,377

50,990

56,370

Income before income tax expense
12,651

11,069

37,776

27,324

Income tax expense
4,525

3,782

11,292

9,392

Net income
$
8,126

$
7,287

$
26,484

$
17,932

Net income per common share:
Basic
$
0.18

$
0.16

$
0.59

$
0.40

Diluted
$
0.17

$
0.16

$
0.57

$
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 September 30,
Nine Months Ended September 30,
2017
2016
2017
2016
Net Income
$
8,126

$
7,287

$
26,484

$
17,932

Other comprehensive income:
Unrealized gains (losses) on securities:
Net unrealized holding (losses) gains on securities
(4
)
(850
)
3,082

9,405

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

(17
)
4

(223
)
Net unrealized (losses) gains
(4
)
(867
)
3,086

9,182

Amortization related to post retirement benefit obligation
27

—

81

—

Other comprehensive income (loss), before tax
23

(867
)
3,167

9,182

Income tax benefit (expense) related to net unrealized holding (losses) gains on securities
1

340

(1,234
)
(3,771
)
Income tax benefit (expense) related to reclassification adjustment for (losses) gains included in net income
—

7

(2
)
89

Income tax expense related to post retirement benefit adjustment
(11
)
—

(33
)
—

Other comprehensive income (loss), net of tax
13

(520
)
1,898

5,500

Comprehensive income
$
8,139

$
6,767

$
28,382

$
23,432


See accompanying notes to unaudited consolidated financial statements.

5

NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Nine Months Ended September 30, 2017 and 2016
(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, 2015
45,565,540

$
582

$
501,540

$
(24,664
)
$
256,170

$
(2,986
)
$
(170,863
)
$
559,779

Net income




17,932



17,932

Other comprehensive income, net of tax





5,500


5,500

Acquisition of Hopewell Valley Community Bank
2,707,381

27

41,694

41,721

ESOP shares allocated or committed to be released


698

777




1,475

Stock compensation expense


5,658





5,658

Additional tax benefit on equity awards


895





895

Net issuance of restricted stock
—





—

Forfeitures of restricted stock
(7,640
)
106

(106
)
—

Exercise of stock options, net
205,560


(2,592
)




2,712

120

Cash dividends declared ($0.23 per common share)




(10,443
)


(10,443
)
Treasury stock (average cost of $15.98 per share)
(133,694
)





(2,137
)
(2,137
)
Balance at September 30, 2016
48,337,147

$
609

$
547,999

$
(23,887
)
$
263,659

$
2,514

$
(170,394
)
$
620,500

Balance at December 31, 2016
48,526,658

$
609

$
547,910

$
(23,466
)
$
268,226

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

Net income




26,484



26,484

Other comprehensive income, net of tax





1,898


1,898

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


869

771




1,640

Stock compensation expense


4,765




4,765

Net issuance of restricted stock
19,180


(261
)



261

—

Exercise of stock options, net
334,934


(4,430
)


4,530

100

Cash dividends declared ($0.24 per common share)




(11,034
)


(11,034
)
Balance at September 30, 2017
48,880,772

$
609

$
545,955

$
(22,695
)
$
286,574

$
(2,434
)
$
(162,960
)
$
645,049



See accompanying notes to unaudited consolidated financial statements.

6

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

Nine Months Ended September 30,
2017
2016
Cash flows from operating activities:
Net income
$
26,484

$
17,932

Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses
1,371

355

ESOP and stock compensation expense
6,405

7,133

Depreciation
2,449

2,717

Amortization of premiums, and deferred loan costs, net of (accretion) of discounts, and deferred loan fees
1,551

1,580

Amortization intangible assets
292

337

Income on bank owned life insurance
(4,438
)
(3,001
)
Proceeds from sale of loans held-for-sale
494

—

Gains on securities transactions, net
(1,001
)
(612
)
Net purchases of trading securities
(363
)
(445
)
(Increase) decrease in accrued interest receivable
(535
)
531

Decrease (increase) in other assets
3,069

(2,446
)
Decrease in accrued expenses and other liabilities
(1,352
)
(443
)
Net cash provided by operating activities
34,426

23,638

Cash flows from investing activities:
Net increase in loans receivable
(107,567
)
(42,182
)
Purchase of loans
(59,087
)
(159,531
)
Purchases of Federal Home Loan Bank of New York stock
(16,640
)
(7,210
)
Redemptions of Federal Home Loan Bank of New York stock
11,992

7,515

Purchases of securities available-for-sale
(67,053
)
(105,558
)
Principal payments and maturities on securities available-for-sale
84,882

126,348

Principal payments and maturities on securities held-to-maturity
152

136

Proceeds from sale of securities available-for-sale
967

42,842

Proceeds from bank owned life insurance
2,828

—

Proceeds from sale of other real estate owned
—

45

Purchases and improvements of premises and equipment
(1,043
)
(706
)
Net cash acquired in business combination
—

55,479

Net cash used in investing activities
(150,569
)
(82,822
)
Cash flows from financing activities:
Net increase in deposits
21,815

119,869

Dividends paid
(11,034
)
(10,443
)
Exercise of stock options
100

120

Purchase of employee restricted shares to fund statutory tax withholding
—

(2,137
)
Additional tax benefit on equity awards
—

895

Increase in advance payments by borrowers for taxes and insurance
1,934

1,075

Repayments under capital lease obligations
(166
)
(153
)
Proceeds from securities sold under agreements to repurchase and other borrowings
331,653

177,241

Repayments related to securities sold under agreements to repurchase and other borrowings
(221,003
)
(243,000
)
Net cash provided by financing activities
123,299

43,467

Net increase (decrease) in cash and cash equivalents
7,156

(15,717
)
Cash and cash equivalents at beginning of period
96,085

51,853

Cash and cash equivalents at end of period
$
103,241

$
36,136


7


NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
(Unaudited) (In thousands)
Nine Months Ended September 30,
2017
2016
Supplemental cash flow information:
Cash paid during the period for:
Interest
$
17,052

$
16,729

Income taxes
5,500

9,336

Non-cash transactions:
Loans (recoveries)/charged-off, net
(133
)
785

Transfer of originated loans held-for-investment to loans held-for-sale at fair value
2,009

—

Acquisition:
Non-cash assets acquired, at fair value:
Securities available for sale
—

61,633

Loans
—

342,566

Accrued interest receivable
—

1,452

Bank-owned life insurance
—

11,269

Premises and equipment
—

5,926

Federal Home Loan Bank of New York stock, at cost
—

476

Goodwill and other intangible assets
—

24,265

Other assets
—

5,389

Total non-cash assets acquired
—

452,976

Non-cash liabilities assumed at fair value:
Deposits
—

456,203

Borrowings
—

2,213

Other liabilities
—

8,318

Total non-cash liabilities assumed
—

466,734

Net non-cash liabilities assumed
—

(13,758
)
Net cash and cash equivalents acquired
—

55,479

Common stock issued in acquisition
$
—

$
41,721


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 nine months ended September 30, 2017 , are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2017 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, 2016 , of the Company as filed with the SEC.

Note 2 – Business Combinations
On January 8, 2016, the Company completed its acquisition of Hopewell Valley Community Bank (“Hopewell Valley”), which after purchase accounting adjustments added $508.5 million to total assets, $342.6 million to loans, and $456.2 million to deposits, and nine branch offices in the Hunterdon and Mercer counties of New Jersey. Total consideration paid for Hopewell Valley was $55.4 million , consisting of $13.7 million in cash and 2,707,381 shares of common stock valued at $41.7 million based upon the $15.41 per share closing price of Northfield Bancorp, Inc.'s common stock on January 8, 2016.

The transaction was accounted for under the acquisition method of accounting. Under this method of accounting, the purchase price has been allocated to the respective assets acquired and liabilities assumed based upon their estimated fair values, net of tax. The excess of consideration paid over the fair value of the net assets acquired has been recorded as goodwill.

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


The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition for Hopewell Valley (in thousands):
ASSETS ACQUIRED:
January 8, 2016
Cash and cash equivalents, net
$
55,479

Securities available for sale
61,633

Loans
342,566

Accrued interest receivable
1,452

Bank-owned life insurance
11,269

Premises and equipment
5,926

Federal Home Loan Bank of New York stock, at cost
476

Goodwill
22,252

Other intangible assets
2,013

Other assets
5,389

Total assets acquired
$
508,455

LIABILITIES ASSUMED:
Deposits
$
456,203

Other borrowings
2,213

Other liabilities
8,318

Total liabilities assumed
466,734

Net assets acquired
$
41,721


The purchase accounting for the Hopewell Valley transaction is complete, and is reflected in both the table above and the Company's Consolidated Financial Statements.
Fair Value Measurement of Assets Assumed and Liabilities Assumed

The methods used to determine the fair value of the assets acquired and liabilities assumed in the Hopewell Valley acquisition were as follows:

Cash and cash equivalents

The estimated fair values of cash and cash equivalents approximate their stated face amounts, as these financial instruments are either due on demand or have short-term maturities.

Securities Available-for-Sale

The estimated fair values of the investment securities classified as available-for-sale were calculated utilizing Level 1 and Level 2 inputs. Management reviewed the data and assumptions used by its third party provider in pricing the securities to ensure the highest level of significant inputs is derived from observable market data. These prices were validated against other pricing sources and broker-dealer indications.

Loans
The acquired loan portfolio was valued based on current guidance which defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. Level 3 inputs were utilized to value the portfolio and included the use of present value techniques employing cash flow estimates and the incorporated assumptions that marketplace participants would use in estimating fair values. In instances where reliable market information was not available, the Company used its own assumptions in an effort to determine reasonable fair value. Specifically, management utilized three separate fair value analyses which a market participant would employ in estimating the total fair value adjustment. The three separate fair valuation methodologies used were: 1) interest rate loan fair value analysis; 2) general credit fair value adjustment; and 3) specific credit fair value adjustment.

To prepare the interest rate fair value analysis, loans were grouped by characteristics such as loan type, term, collateral and rate. Market rates for similar loans were obtained from various external data sources and reviewed by Company

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


management for reasonableness. The average of these rates was used as the fair value interest rate a market participant would utilize. A present value approach was utilized to calculate the interest rate fair value adjustment.

The general credit fair value adjustment was calculated using a two part general credit fair value analysis: 1) expected lifetime losses; and 2) estimated fair value adjustment for qualitative factors. The expected lifetime losses were calculated using an average of historical losses of the Company, the acquired bank and peer banks. The adjustment related to qualitative factors was impacted by general economic conditions and the risk related to lack of familiarity with the originator's underwriting process.

To calculate the specific credit fair value adjustment, management reviewed the acquired loan portfolio for loans meeting the definition of an impaired loan with deteriorated credit quality. Loans meeting this definition were reviewed by comparing the contractual cash flows to expected collectible cash flows. The aggregate expected cash flows less the acquisition date fair value resulted in an accretable yield amount. The accretable yield amount will be recognized over the life of the loans on a level yield basis as an adjustment to yield.

Other intangible assets

Other intangible assets consisting of core deposit premium represents the value assigned to demand, interest checking, money market and savings accounts acquired as part of an acquisition. The core deposit premium value represents the future economic benefit, including the present value of future tax benefits, of the potential cost savings from acquiring core deposits as part of an acquisition compared to the cost of alternative funding sources. The core deposit premium is being amortized over an estimated useful life of 10 years to approximate the existing deposit relationships acquired.

Deposits

The fair values of deposit liabilities with no stated maturity (i.e., non-interest bearing demand accounts, interest-bearing negotiable orders of withdrawal (NOW), savings and money market accounts) are equal to the carrying amounts payable on demand. The fair values of certificates of deposit represent contractual cash flows, discounted to present value using interest rates currently offered on deposits with similar characteristics and remaining maturities.

Other borrowings

Other borrowings consist of securities sold under agreements to repurchase. The carrying amounts approximate their fair values because they frequently re-price to a market rate.

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


Note 3 – Securities Available-for-Sale
The following is a comparative summary of mortgage-backed securities, other debt securities, and other securities available-for-sale at September 30, 2017 , and December 31, 2016 (in thousands):
September 30, 2017
Gross
Gross
Estimated
Amortized
unrealized
unrealized
fair
cost
gains
losses
value
Mortgage-backed securities:
Pass-through certificates:




Government sponsored enterprises (GSE)
$
187,572

$
2,261

$
1,756

$
188,077

Real estate mortgage investment conduits (REMICs):




GSE
224,265

211

4,956

219,520

Non-GSE
82

—

1

81

411,919

2,472

6,713

407,678

Other debt securities:
Municipal bonds
699

9

—

708

Corporate bonds
72,765

443

66

73,142

73,464

452

66

73,850

Other securities
Equity investments-mutual funds
93

—

—

93

Other
1,005

—

—

1,005

Total securities available-for-sale
$
486,481

$
2,924

$
6,779

$
482,626


December 31, 2016
Gross
Gross
Estimated
Amortized
unrealized
unrealized
fair
cost
gains
losses
value
Mortgage-backed securities:




Pass-through certificates:




GSE
$
225,047

$
2,800

$
3,298

$
224,549

REMICs:




GSE
230,500

259

6,466

224,293

Non-GSE
280

—

10

270

455,827

3,059

9,774

449,112

Other debt securities:
Municipal bonds
2,151

13

6

2,158

Corporate bonds
45,373

150

364

45,159

47,524

163

370

47,317

Other securities:
Equity investments - mutual funds
1,233

—

15

1,218

Other
1,250

—

—

1,250

2,483

—

15

2,468

Total securities available-for-sale
$
505,834

$
3,222

$
10,159

$
498,897


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


The following is a summary of the expected maturity distribution of debt securities available-for-sale, other than mortgage-backed securities, at September 30, 2017 (in thousands):
Available-for-sale
Amortized cost
Estimated fair value
Due in one year or less
$
350

$
350

Due after one year through five years
58,181

58,473

Due after five years through ten years
14,933

15,027

$
73,464

$
73,850

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.

There were no sales of securities available-for-sale for the three months ended September 30, 2017. For the nine months ended September 30, 2017 , the Company had gross proceeds of $967,000 on sales of securities available-for-sale, with no gross realized gains and gross realized losses of $4,000 . For the three and nine months ended September 30, 2016 , the Company had gross proceeds of $525,000 and $42.8 million , respectively, on sales of securities available-for-sale, with gross realized gains of $18,000 and $352,000 , respectively, and gross realized losses of $1,000 and $129,000 , respectively. The Company recognized net gains of $337,000 and $1.0 million , on its trading securities portfolio during the three and nine months ended September 30, 2017 , respectively. The Company recognized net gains of $345,000 and $389,000 , on its trading securities portfolio during the three and nine months ended September 30, 2016 , respectively. The Company did no t recognize any other-than-temporary impairment charges during the three and nine months ended September 30, 2017 or September 30, 2016 .

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 September 30, 2017 , and December 31, 2016 , were as follows (in thousands):
September 30, 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
$
1,567

$
84,923

$
189

$
11,234

$
1,756

$
96,157

REMICs:
GSE
1,124

104,018

3,832

89,828

4,956

193,846

Non-GSE
—

—

1

81

1

81

Other debt securities:
Corporate bonds
66

37,653

—

—

66

37,653

Total
$
2,757

$
226,594

$
4,022

$
101,143

$
6,779

$
327,737


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


December 31, 2016
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
$
2,703

$
121,878

$
595

$
8,402

$
3,298

$
130,280

REMICs:
GSE
1,622

75,586

4,844

97,726

6,466

173,312

Non-GSE
—

—

10

270

10

270

Other debt securities:
Municipal bonds
6

1,679

—

—

6

1,679

Corporate bonds
364

26,022

—

—

364

26,022

Equity investments - mutual funds
15

947

—

—

15

947

Total
$
4,710

$
226,112

$
5,449

$
106,398

$
10,159

$
332,510

The Company held 21 pass-through mortgage-backed securities issued or guaranteed by GSEs, nine REMIC mortgage-backed securities issued or guaranteed by GSEs, and one REMIC mortgage-backed security not issued or guaranteed by a GSE that were in a continuous unrealized loss position of twelve months or greater at September 30, 2017 . There were 17 pass-through mortgage-backed securities issued or guaranteed by GSEs, 25 REMIC mortgage-backed securities issued or guaranteed by a GSE, and eight corporate bonds that were in an unrealized loss position of less than twelve months at September 30, 2017 . All securities referred to above were rated investment grade at September 30, 2017 .  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.

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


Note 4 – Securities Held-to-Maturity
The following is a summary of mortgage-backed securities held-to-maturity at September 30, 2017 , and December 31, 2016 (in thousands):
September 30, 2017
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Estimated Fair Value
Mortgage-backed securities:




Pass-through certificates:




GSEs
$
9,983

$
43

$
29

$
9,997

Total securities held-to-maturity
$
9,983

$
43

$
29

$
9,997

December 31, 2016
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Estimated Fair Value
Mortgage-backed securities:




Pass-through certificates:




GSEs
$
10,148

$
29

$
59

$
10,118

Total securities held-to-maturity
$
10,148

$
29

$
59

$
10,118

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 nine months ended September 30, 2017 , or September 30, 2016 . The Company did no t recognize any other-than-temporary impairment charges in earnings on securities held-to-maturity during the three and nine months ended September 30, 2017 , or September 30, 2016 .

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 September 30, 2017 and December 31, 2016 , were as follows (in thousands):
September 30, 2017
December 31, 2016
Less than 12 months
Less than 12 months
Unrealized Losses
Estimated Fair Value
Unrealized Losses
Estimated Fair Value
Mortgage-backed securities:
Pass-through certificates:
GSEs
$
29

$
3,772

$
59

$
7,466

Total securities held-to-maturity
$
29

$
3,772

$
59

$
7,466


The Company held two pass-through mortgage-backed securities held-to-maturity, issued or guaranteed by GSE's that were in a continuous unrealized loss position of less than twelve months at September 30, 2017 . 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.

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


Note 5 – Loans
Net loans held-for-investment are as follows (in thousands):
September 30,
December 31,
2017
2016
Real estate loans:
Multifamily
$
1,690,026

$
1,506,335

Commercial mortgage
422,716

412,667

One-to-four family residential mortgage
102,373

105,968

Home equity and lines of credit
66,845

65,437

Construction and land
36,945

14,065

Total real estate loans
2,318,905

2,104,472

Commercial and industrial loans
34,295

31,906

Other loans
1,199

1,497

Total commercial and industrial and other loans
35,494

33,403

Deferred loan cost, net
6,465

6,471

Originated loans held-for-investment, net
2,360,864

2,144,346

PCI Loans
25,960

30,498

Loans acquired:
One-to-four family residential mortgage
289,514

317,639

Multifamily
228,303

215,389

Commercial mortgage
169,012

188,001

Home equity and lines of credit
21,636

25,522

Construction and land
17,179

20,887

Total acquired real estate loans
725,644

767,438

Commercial and industrial loans
19,119

25,443

Other loans
300

359

Total loans acquired, net
745,063

793,240

Loans held-for-investment, net
3,131,887

2,968,084

Allowance for loan losses
(26,099
)
(24,595
)
Net loans held-for-investment
$
3,105,788

$
2,943,489

Loans held-for-sale amounted to $1.5 million at September 30, 2017 . There were no loans held-for-sale at December 31, 2016 .
PCI loans totaled $26.0 million at September 30, 2017 , as compared to $30.5 million at December 31, 2016 . 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 September 30, 2017 , PCI loans consist of approximately 30% commercial real estate loans and 48% commercial and industrial loans, with the remaining balance in residential and home equity loans. At December 31, 2016 , PCI loans consist of approximately 30% commercial real estate loans and 48% commercial and industrial loans, with the remaining balance in residential and home equity loans.


16
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


The following table sets forth information regarding the estimates of the contractually required payments, the cash flows expected to be collected, and the estimated fair value of the PCI loans acquired from Hopewell Valley at January 8, 2016 (in thousands):
January 8, 2016
Contractually required principal and interest
$
16,580

Contractual cash flows not expected to be collected (non-accretable discount)
(9,929
)
Expected cash flows to be collected at acquisition
6,651

Interest component of expected cash flows (accretable yield)
(845
)
Fair value of acquired loans
$
5,806



The following table details the accretion of interest income for PCI loans for the three and nine months ended September 30, 2017 and September 30, 2016 (in thousands):
At or for the three months ended September 30,
At or for the nine months ended September 30,
2017
2016
2017
2016
Balance at the beginning of period
$
21,442

$
20,979

$
24,215

$
22,853

Acquisition
—

—

—

845

Accretion into interest income
(1,361
)
(1,294
)
(4,134
)
(4,013
)
Balance at end of period
$
20,081

$
19,685

$
20,081

$
19,685


17
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 nine months ended September 30, 2017 , and September 30, 2016 (in thousands):
Three Months Ended September 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
$
5,236

$
550

$
229

$
16,636

$
363

$
1,532

$
97

$
—

$
24,643

$
896

$
66

$
25,605

Charge-offs
—

—

—

(6
)
—

(73
)
—

—

(79
)
—

—

(79
)
Recoveries
18

—

—

—

34

10

—

—

62

—

23

85

Provisions (credit)
(109
)
(85
)
475

507

(292
)
69

(22
)
—

543

—

(55
)
488

Ending balance
$
5,145

$
465

$
704

$
17,137

$
105

$
1,538

$
75

$
—

$
25,169

$
896

$
34

$
26,099


Three Months Ended September 30, 2016
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
$
6,621

$
762

$
193

$
13,552

$
510

$
1,266

$
77

$
441

$
23,422

$
783

$
112

$
24,317

Charge-offs
(405
)
—

—

—

—

(65
)
—

—

(470
)
—

—

(470
)
Recoveries
17

1

—

—

1

1

1

—

21

—

—

21

Provisions (credit)
(38
)
(3
)
(26
)
43

70

326

32

70

474

—

(2
)
472

Ending balance
$
6,195

$
760

$
167

$
13,595

$
581

$
1,528

$
110

$
511

$
23,447

$
783

$
110

$
24,340


18
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


Nine Months Ended September 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
)
—

—

(184
)
(104
)
(73
)
—

—

(365
)
—

(30
)
(395
)
Recoveries
52

—

—

278

97

74

—

—

501

—

27

528

Provisions/(credit)
(335
)
(199
)
532

2,091

(476
)
(183
)
(21
)
—

1,409

—

(38
)
1,371

Ending balance
$
5,145

$
465

$
704

$
17,137

$
105

$
1,538

$
75

$
—

$
25,169

$
896

$
34

$
26,099

Nine Months Ended September 30, 2016
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
$
7,106

$
787

$
261

$
12,387

$
795

$
1,288

$
155

$
1,093

$
23,872

$
783

$
115

$
24,770

Charge-offs
(596
)
(20
)
—

(277
)
—

(66
)
—

—

(959
)
—

—

(959
)
Recoveries
163

2

1

—

1

3

4

—

174

—

—

174

Provisions/(credit)
(478
)
(9
)
(95
)
1,485

(215
)
303

(49
)
(582
)
360

—

(5
)
355

Ending balance
$
6,195

$
760

$
167

$
13,595

$
581

$
1,528

$
110

$
511

$
23,447

$
783

$
110

$
24,340



19
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


The following tables detail the amount of loans receivable held-for-investment, net of deferred loan fees and costs, that are evaluated individually, and collectively, for impairment, and the related portion of the allowance for loan losses that is allocated to each loan portfolio segment, at September 30, 2017 , and December 31, 2016 (in thousands):
September 30, 2017
Real Estate
Commercial
One-to-Four Family
Construction and Land
Multifamily
Home Equity and Lines of Credit
Commercial and Industrial
Other
Originated Loans Total
Purchased Credit-Impaired
Acquired Loans
Total
Allowance for loan losses:
Ending balance: individually evaluated for impairment
$
—

$
39

$
—

$
—

$
4

$
6

$
—

$
49

$
—

$
34

$
83

Ending balance: collectively evaluated for impairment
$
5,145

$
426

$
704

$
17,137

$
101

$
1,532

$
75

$
25,120

$
896

$
—

$
26,016

Loans, net:
Ending balance
$
423,311

$
103,092

$
37,040

$
1,693,590

$
68,243

$
34,387

$
1,201

$
2,360,864

$
25,960

$
745,063

$
3,131,887

Ending balance: individually evaluated for impairment
$
18,107

$
2,017

$
—

$
1,328

$
71

$
163

$
—

$
21,686

$
—

$
1,555

$
23,241

Ending balance: collectively evaluated for impairment
$
405,204

$
101,075

$
37,040

$
1,692,262

$
68,172

$
34,224

$
1,201

$
2,339,178

$
25,960

$
743,508

$
3,108,646


December 31, 2016
Real Estate
Commercial
One-to-Four Family
Construction and Land
Multifamily
Home Equity and Lines of Credit
Commercial and Industrial
Other
Originated Loans Total
Purchased Credit-Impaired
Acquired Loans
Total
Allowance for loan losses:
Ending balance: individually evaluated for impairment
$
64

$
66

$
—

$
95

$
23

$
5

$
—

$
253

$
—

$
75

$
328

Ending balance: collectively evaluated for impairment
$
5,368

$
598

$
172

$
14,857

$
565

$
1,715

$
96

$
23,371

$
896

$
—

$
24,267

Loans, net:
Ending balance
$
413,352

$
106,524

$
14,092

$
1,510,100

$
66,767

$
32,013

$
1,498

$
2,144,346

$
30,498

$
793,240

$
2,968,084

Ending balance: individually evaluated for impairment
$
20,710

$
2,180

$
—

$
1,372

$
336

$
101

$
—

$
24,699

$
—

$
1,591

$
26,290

Ending balance: collectively evaluated for impairment
$
392,642

$
104,344

$
14,092

$
1,508,728

$
66,431

$
31,912

$
1,498

$
2,119,647

$
30,498

$
791,649

$
2,941,794


20
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


The Company monitors the credit quality of its loan portfolio on a regular basis. Credit quality is monitored by reviewing certain credit quality indicators. Management has determined that loan-to-value ratios (at period end) and internally assigned credit risk ratings by loan type are the key credit quality indicators that best measure the credit quality of the Company’s loan receivables. Loan-to-value (LTV) ratios used by management in monitoring credit quality are based on current period loan balances and original appraised values at time of origination (unless a current appraisal has been obtained as a result of the loan being deemed impaired). In calculating the provision for loan losses, based on past loan loss experience, management has determined that commercial real estate loans and multifamily loans having loan-to-value ratios, as described above, of less than 35% , and one-to-four family loans having loan-to-value ratios, as described above, of less than 60% , require less of a loss factor than those with higher loan to value ratios.
The Company maintains a credit risk rating system as part of the risk assessment of its loan portfolio. The Company’s lending officers are required to assign a credit risk rating to each loan in their portfolio at origination. This risk rating is reviewed periodically and adjusted if necessary. Monthly, management presents monitored assets to the loan committee. In addition, the Company engages a third-party independent loan reviewer that performs semi-annual reviews of a sample of loans, validating the credit risk ratings assigned to such loans. The credit risk ratings play an important role in the establishment of the loan loss provision and the allowance for loan losses for originated loans held-for-investment. After determining the general reserve loss factor for each originated portfolio segment held-for-investment, the originated portfolio segment held-for-investment balance collectively evaluated for impairment is multiplied by the general reserve loss factor for the respective portfolio segment in order to determine the general reserve.

When assigning a risk rating to a loan, management utilizes the Bank’s internal nine-point credit risk rating system.

1.
Strong
2.
Good
3.
Acceptable
4.
Adequate
5.
Watch
6.
Special Mention
7.
Substandard
8.
Doubtful
9.
Loss
Loans rated 1 to 5 are considered pass ratings. An asset is classified substandard if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Substandard assets have well defined weaknesses based on objective evidence, and are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all of the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable based on current circumstances. Assets classified as loss are those considered uncollectible and of such little value that their continuance as assets is not warranted. Assets which do not currently expose the Company to sufficient risk to warrant classification in one of the aforementioned categories, but possess weaknesses, are required to be designated special mention.

21
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


The following tables detail the recorded investment of originated loans held-for-investment, net of deferred fees and costs, by loan type and credit quality indicator at September 30, 2017 , and December 31, 2016 (in thousands):
September 30, 2017
Real Estate
Multifamily
Commercial
One-to-Four Family
Construction and Land
Home Equity and Lines of Credit
Commercial and Industrial
Other
Total
< 35% LTV
=> 35% LTV
< 35% LTV
=> 35% LTV
< 60% LTV
=> 60% LTV
Internal Risk Rating
Pass
$
137,410

$
1,554,538

$
71,332

$
335,771

$
59,438

$
40,879

$
37,040

$
67,983

$
33,595

$
1,201

$
2,339,187

Special Mention
5

1,553

—

1,835

687

—

—

28

607

—

4,715

Substandard
—

84

—

14,373

1,489

599

—

232

185

—

16,962

Originated loans held-for-investment, net
$
137,415

$
1,556,175

$
71,332

$
351,979

$
61,614

$
41,478

$
37,040

$
68,243

$
34,387

$
1,201

$
2,360,864


December 31, 2016
Real Estate
Multifamily
Commercial
One-to-Four Family
Construction and Land
Home Equity and Lines of Credit
Commercial and Industrial
Other
Total
< 35% LTV
=> 35% LTV
< 35% LTV
=> 35% LTV
< 60% LTV
=> 60% LTV
Internal Risk Rating
Pass
$
122,525

$
1,381,231

$
65,612

$
323,842

$
59,214

$
43,316

$
14,092

$
66,489

$
31,173

$
1,498

$
2,108,992

Special Mention
25

4,636

—

3,852

705

—

—

29

696

—

9,943

Substandard
40

1,643

1,179

18,867

1,807

1,482

—

249

144

—

25,411

Originated loans held-for-investment, net
$
122,590

$
1,387,510

$
66,791

$
346,561

$
61,726

$
44,798

$
14,092

$
66,767

$
32,013

$
1,498

$
2,144,346


22
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


Included in loans receivable (including loans held-for-sale) are loans for which the accrual of interest income has been discontinued due to deterioration in the financial condition of the borrowers. The recorded investment of these non-accrual loans was $5.5 million and $7.3 million at September 30, 2017 , and December 31, 2016 , respectively. Generally, loans are placed on non-accrual status when they become 90 days or more delinquent, or sooner if considered appropriate by management, and remain on non-accrual status until they are brought current, have six consecutive months of performance under the loan terms, and factors indicating reasonable doubt about the timely collection of payments no longer exist. Therefore, loans may be current in accordance with their loan terms, or may be less than 90 days delinquent and still be on a non-accruing status.

These non-accrual amounts included loans deemed to be impaired of $3.1 million and $5.7 million at September 30, 2017 , and December 31, 2016 , respectively. Loans on non-accrual status with principal balances less than $500,000 , and therefore not meeting the Company’s definition of an impaired loan, amounted to $2.4 million and $1.7 million at September 30, 2017 , and December 31, 2016 , respectively. There were no non-accrual loans held-for-sale at September 30, 2017 and December 31, 2016 . Loans past due 90 days or more and still accruing interest were $173,000 and $60,000 at September 30, 2017 , and December 31, 2016 , respectively, and consisted of loans that are considered well secured and in the process of collection.

23
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


The following tables set forth the detail, and delinquency status, of non-performing loans (non-accrual loans and loans past due 90 days or more and still accruing), net of deferred fees and costs, at September 30, 2017 , and December 31, 2016 , excluding loans held-for-sale and PCI loans which have been segregated into pools. For PCI loans, each loan pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows (in thousands):

24
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


September 30, 2017
Total Non-Performing Loans
Non-Accruing Loans
0-29 Days Past Due
30-89 Days Past Due
90 Days or More Past Due
Total
90 Days or More Past Due and Accruing
Total Non-Performing Loans
Loans held-for-investment:
Real estate loans:
Commercial






LTV => 35%






Substandard
$
767

$
—

$
2,304

$
3,071

$
—

$
3,071

Total commercial
767

—

2,304

3,071

—

3,071

One-to-four family residential






LTV < 60%






Substandard
206

—

330

536

7

543

Total
206


—


330

536

7

543

LTV => 60%






Substandard
—

—

—

—

40

40

Total one-to-four family residential
206

—

330

536

47

583

Home equity and lines of credit






Substandard
84

—

—

84

—

84

Total home equity and lines of credit
84

—

—

84

—

84

Commercial and industrial loans






Substandard
—

—

72

72

—

72

Total commercial and industrial loans
—

—

72

72

—

72

Other loans
Pass
—

—

—

—

47

47

Total other
—

—

—

—

47

47

Total non-performing loans held-for-investment, originated
1,057

—

2,706

3,763

94

3,857

Loans acquired:






Real estate loans:
Commercial






LTV < 35%






Substandard
—

—

212

212

—

212

LTV => 35%
Substandard
37

738

58

833

—

833

Total commercial
37

738

270

1,045

—

1,045

One-to-four family residential






LTV < 60%






Substandard
—

202

—

202

27

229

Total one-to-four family residential
—

202

—

202

27

229

Multifamily
LTV => 35%
Substandard
—

418

—

418

—

418

Total multifamily
—

418

—

418

—

418

Home equity and lines of credit






Substandard
28

—

—

28

52

80

Total home equity and lines of credit
28

—

—

28

52

80

Commercial and industrial loans






Substandard
—

—

3

3

—

3

Total commercial and industrial loans
—

—

3

3

—

3

Total non-performing loans acquired
65

1,358

273

1,696

79

1,775

Total non-performing loans
$
1,122


$
1,358

$
2,979

$
5,459

$
173

$
5,632


25
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


December 31, 2016
Total Non-Performing Loans
Non-Accruing Loans
0-29 Days Past Due
30-89 Days Past Due
90 Days or More Past Due
Total
90 Days or More Past Due and Accruing
Total Non-Performing Loans
Loans held-for-investment:
Real estate loans:
Commercial






Substandard
$
341

$
—

$
4,882

$
5,223

$
—

$
5,223

Total commercial
341

—

4,882

5,223

—

5,223

One-to-four family residential






LTV < 60%






Substandard
384

383

442

1,209

9

1,218

Total
384

383

442

1,209

9

1,218

LTV => 60%






Substandard
—

—

—

—

43

43

Total
—

—

—

—

43

43

Total one-to-four family residential
384

383

442

1,209

52

1,261

Multifamily






LTV < 35%
Substandard
40

—

—

40

—

40

LTV => 35%






Substandard
—

—

3

3

—

3

Total multifamily
40

—

3

43

—

43

Home equity and lines of credit
Substandard
—

96

—

96

—

96

Total home equity and lines of credit
—

96

—

96

—

96

Other loans
Pass
—

—

—

—

—

—

Total other loans
—

—

—

—

—

—

Total non-performing loans held-for-investment, originated
765

479

5,327

6,571

52

6,623

Loans acquired:






Real estate loans:
Commercial
LTV < 35%
Substandard
—

—

231

231

—

231

LTV => 35%
Substandard
—

—

59

59

—

59

Total commercial
—

—

290

290

—

290

One-to-four family residential
LTV < 60%






Substandard
420

—

—

420

—

420

Total one-to-four family residential
420

—


—


420


—


420

Home equity and lines of credit
—

—

31

31

8

39

Commercial and industrial
—

—

9

9

—

9

Total non-performing loans acquired:
420

—

330

750

8

758

Total non-performing loans
$
1,185

$
479

$
5,657

$
7,321

$
60

$
7,381



26
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


The following tables set forth the detail and delinquency status of originated and acquired loans held-for-investment, net of deferred fees and costs, by performing and non-performing loans at September 30, 2017 , and December 31, 2016 (in thousands):
September 30, 2017
Performing (Accruing) Loans
0-29 Days Past Due
30-89 Days Past Due
Total
Non-Performing Loans
Total Loans Receivable, net
Loans held-for-investment:
Real estate loans:
Commercial



LTV < 35%



Pass
$
70,919

$
413

$
71,332

$
—

$
71,332

Substandard
—

—

—

—

—

Total
70,919

413

71,332

—

71,332

LTV => 35%





Pass
334,194

1,577

335,771

—

335,771

Special Mention
839

996

1,835

—

1,835

Substandard
10,289

1,013

11,302

3,071

14,373

Total
345,322

3,586

348,908

3,071

351,979

Total commercial
416,241

3,999

420,240

3,071

423,311

One-to-four family residential





LTV < 60%





Pass
56,960

2,478

59,438

—

59,438

Special Mention
126

561

687

—

687

Substandard
694

252

946

543

1,489

Total
57,780

3,291

61,071

543

61,614

LTV => 60%





Pass
40,637

242

40,879

—

40,879

Substandard
559

—

559

40

599

Total
41,196

242

41,438

40

41,478

Total one-to-four family residential
98,976

3,533

102,509

583

103,092

Construction and land





Pass
37,040

—

37,040

—

37,040

Total construction and land
37,040

—

37,040

—

37,040

Multifamily





LTV < 35%





Pass
137,067

343

137,410

—

137,410

Special Mention
5

—

5

—

5

Substandard
—

—

—

—

—

Total
137,072

343

137,415

—

137,415

LTV => 35%





Pass
1,553,264

1,274

1,554,538

—

1,554,538

Special Mention
1,553

—

1,553

—

1,553

Substandard
84

—

84

—

84

Total
1,554,901

1,274

1,556,175

—

1,556,175

Total multifamily
1,691,973

1,617

1,693,590

—

1,693,590

Home equity and lines of credit





Pass
67,783

200

67,983

—

67,983

Special Mention
28

—

28

—

28

Substandard
148

—

148

84

232

Total home equity and lines of credit
67,959

200

68,159

84

68,243

Commercial and industrial





Pass
33,510

85

33,595

—

33,595

Special Mention
486

121

607

—

607

Substandard
113

—

113

72

185

Total commercial and industrial
34,109

206

34,315

72

34,387


27
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


September 30, 2017
Performing (Accruing) Loans (Continued)
0-29 Days Past Due
30-89 Days Past Due
Total
Non-Performing Loans
Total Loans Receivable, net
Other loans - Pass
1,149

5

1,154

47

1,201

Total originated loans held-for-investment
2,347,447

9,560

2,357,007

3,857

2,360,864

Acquired loans:
One-to-four family residential
LTV < 60%
Pass
263,204

461

263,665

—

263,665

Special Mention
449

21

470

—

470

Substandard
575

—

575

229

804

Total
264,228

482

264,710

229

264,939

LTV => 60%





Pass
24,439

—

24,439

—

24,439

Substandard
136

—

136

—

136

Total
24,575

—

24,575

—

24,575

Total one-to-four family residential
288,803

482

289,285

229

289,514

Commercial



LTV < 35%



Pass
49,065

71

49,136

—

49,136

Special Mention
92

96

188

—

188

Substandard
—

87

87

212

299

Total
49,157

254

49,411

212

49,623

LTV => 35%
Pass
113,966

288

114,254

—

114,254

Special Mention
—

135

135

—

135

Substandard
3,731

436

4,167

833

5,000

Total
117,697

859

118,556

833

119,389

Total commercial
166,854

1,113

167,967

1,045

169,012

Construction and land





Pass
17,179

—

17,179

—

17,179

Total construction and land
17,179

—

17,179

—

17,179

Multifamily





LTV < 35%



Pass
218,631

—

218,631

—

218,631

Special Mention
—

89

89

—

89

Substandard
153

—

153

—

153

Total
218,784

89

218,873

—

218,873

LTV => 35%





Pass
9,012

—

9,012

—

9,012

Substandard
—

—

—

418

418

Total
9,012

—

9,012

418

9,430

Total multifamily
227,796

89

227,885

418

228,303

Home equity and lines of credit
Pass
21,425

42

21,467

—

21,467

Substandard
—

89

89

80

169

Total home equity and lines of credit
21,425

131

21,556

80

21,636

Commercial and industrial
Pass
19,116

—

19,116

—

19,116

Substandard
—

—

—

3

3

Total commercial and industrial
19,116

—

19,116

3

19,119

Other - Pass
295

5

300

—

300

Total loans acquired
741,468

1,820

743,288

1,775

745,063

$
3,088,915

$
11,380

$
3,100,295

$
5,632

$
3,105,927


28
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


December 31, 2016
Performing (Accruing) Loans
0-29 Days Past Due
30-89 Days Past Due
Total
Non-Performing Loans
Total Loans Receivable, net
Loans held-for-investment:
Real estate loans:
Commercial



LTV < 35%



Pass
$
65,189

$
423

$
65,612

—

$
65,612

Substandard
1,179

—

1,179

—

1,179

Total
66,368

423

66,791

—

66,791

LTV => 35%





Pass
322,307

1,535

323,842

—

323,842

Special Mention
3,852

—

3,852

—

3,852

Substandard
12,600

1,044

13,644

5,223

18,867

Total
338,759

2,579

341,338

5,223

346,561

Total commercial
405,127

3,002

408,129

5,223

413,352

One-to-four family residential





LTV < 60%





Pass
56,787

2,427

59,214

—

59,214

Special Mention
—

705

705

—

705

Substandard
589

—

589

1,218

1,807

Total
57,376

3,132

60,508

1,218

61,726

LTV => 60%





Pass
43,316

—

43,316

—

43,316

Substandard
1,439

—

1,439

43

1,482

Total
44,755

—

44,755

43

44,798

Total one-to-four family residential
102,131

3,132

105,263

1,261

106,524

Construction and land





Pass
14,092

—

14,092

—

14,092

Total construction and land
14,092

—

14,092

—

14,092

Multifamily





LTV < 35%





Pass
122,525

—

122,525

—

122,525

Special Mention
25

—

25

—

25

Substandard
—

—

—

40

40

Total
122,550

—

122,550

40

122,590

LTV => 35%





Pass
1,380,331

900

1,381,231

—

1,381,231

Special Mention
4,636

—

4,636

—

4,636

Substandard
1,640

—

1,640

3

1,643

Total
1,386,607

900

1,387,507

3

1,387,510

Total multifamily
1,509,157

900

1,510,057

43

1,510,100

Home equity and lines of credit





Pass
66,369

120

66,489

—

66,489

Special Mention
29

—

29

—

29

Substandard
153

—

153

96

249

Total home equity and lines of credit
66,551

120

66,671

96

66,767

Commercial and industrial loans





Pass
31,040

133

31,173

—

31,173

Special Mention
696

—

696

—

696

Substandard
144

—

144

—

144

Total commercial and industrial loans
31,880

133

32,013

—

32,013

Other loans - Pass
1,452

46

1,498

—

1,498

Total originated loans held-for-investment
$
2,130,390

$
7,333

$
2,137,723

$
6,623

$
2,144,346


29
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


December 31, 2016
Performing (Accruing) Loans
0-29 Days Past Due
30-89 Days Past Due
Total
Non-Performing Loans
Total Loans Receivable, net
Loans Acquired
Real estate loans:
One-to-four family residential
LTV < 60%
Pass
285,116

21

285,137

—

285,137

Special Mention
502

—

502

—

502

Substandard
654

261

915

420

1,335

Total
286,272

282

286,554

420

286,974

LTV => 60%
Pass
30,199

—

30,199

—

30,199

Substandard
259

207

466

—

466

Total
30,458

207

30,665

—

30,665

Total one-to-four family residential
316,730

489

317,219

420

317,639

Commercial
LTV < 35%
Pass
61,646

7

61,653

—

61,653

Special Mention
286

—

286

—

286

Substandard
406

1,040

1,446

231

1,677

Total
62,338

1,047

63,385

231

63,616

LTV => 35%
Pass
119,932

132

120,064

—

120,064

Special Mention
446

138

584

—

584

Substandard
3,419

259

3,678

59

3,737

Total
123,797

529

124,326

59

124,385

Total commercial
186,135

1,576

187,711

290

188,001

Construction and land
Pass
20,887

—

20,887

—

20,887

Total construction and land
20,887

—

20,887

—

20,887

Multifamily
LTV < 35%
Pass
205,025

—

205,025

—

205,025

Special Mention
99

111

210

—

210

Substandard
156

—

156

—

156

Total
205,280

111

205,391

—

205,391

LTV => 35%
Pass
9,569

—

9,569

—

9,569

Substandard
—

429

429

—

429

Total
9,569

429

9,998

—

9,998

Total multifamily
214,849

540

215,389

—

215,389

Home equity and lines of credit
Pass
25,340

45

25,385

—

25,385

Substandard
—

98

98

39

137

Total home equity and lines of credit
25,340

143

25,483

39

25,522

Commercial and industrial loans
Pass
25,419

—

25,419

—

25,419

Substandard
—

15

15

9

24

Total commercial and industrial loans
25,419

15

25,434

9

25,443

Other
355

4

359

—

359

Total loans acquired
789,715

2,767

792,482

758

793,240

$
2,920,105

$
10,100

$
2,930,205

$
7,381

$
2,937,586


30
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


The following table summarizes originated and acquired impaired loans as of September 30, 2017 , and December 31, 2016 (in thousands):
September 30, 2017
December 31, 2016
Recorded Investment
Unpaid Principal Balance
Related Allowance
Recorded Investment
Unpaid Principal Balance
Related Allowance
With No Allowance Recorded:
Real estate loans:



Commercial



LTV < 35%



Substandard
$
—

$
139

$
—

$
—

$
139

$
—

LTV => 35%



Pass
5,737

5,874

—

3,911

4,047

—

Substandard
12,370

13,935

—

14,780

16,868

—

One-to-four family residential



LTV < 60%



Pass
1,203

1,265

—

633

633

—

Substandard
253

253

—

184

184

—

LTV => 60%
Pass
138

161

—

Substandard
136

288

—

620

848

—

Multifamily



LTV < 35%
Substandard
153

153

—

156

156

—

LTV => 35%



Pass
1,328

1,799

—

63

534

Home equity and lines of credit
Pass
35

35

39

39

—

Commercial and industrial loans



Substandard
138

138

—

75

75

—

With a Related Allowance Recorded:



Real estate loans:



Commercial



LTV => 35%



Substandard
—

—

—

2,019

2,019

(64
)
One-to-four family residential



LTV < 60%
Pass
413

413

(13
)
—

—

—

Substandard
1,006

1,007

(53
)
1,522

1,522

(97
)
LTV => 60%
Pass
270

270

(6
)
275

275

(3
)
Substandard
—

—

—

381

381

(41
)
Multifamily



LTV => 35%
Pass
—

—

—

1,309

1,309

(95
)
Home equity and lines of credit



Pass
—

—

—

258

258

(5
)
Substandard
36

36

(4
)
39

39

(18
)
Commercial and industrial loans



Special Mention
25

25

(6
)
26

26

(5
)
Total:



Real estate loans



Commercial
18,107

19,948

—

20,710

23,073

(64
)
One-to-four family residential
3,419

3,657

(72
)
3,615

3,843

(141
)
Multifamily
1,481

1,952

—

1,528

1,999

(95
)
Home equity and lines of credit
71

71

(4
)
336

336

(23
)
Commercial and industrial loans
163

163

(6
)
101

101

(5
)
$
23,241

$
25,791

$
(82
)
$
26,290

$
29,352

$
(328
)

31
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


Included in the above table at September 30, 2017 , are impaired loans with carrying balances of $16.6 million that were not written down by charge-offs or for which there are no specific reserves in our allowance for loan losses. Included in impaired loans at December 31, 2016 , are loans with carrying balances of $11.5 million that were not written down by charge-offs or for which there are no specific reserves in our allowance for loan losses.  Loans not written down by charge-offs or specific reserves at September 30, 2017 , and December 31, 2016 , are considered to have sufficient collateral values, less costs to sell, to support the carrying balances of the loans.


32
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


The following table summarizes the average recorded investment in originated and acquired impaired loans (excluding PCI loans) and interest recognized on impaired loans as of, and for, the three and nine months ended September 30, 2017 and September 30, 2016 (in thousands):
Three Months Ended
Nine Months Ended
September 30, 2017
September 30, 2016
September 30, 2017
September 30, 2016
Average Recorded Investment
Interest Income
Average Recorded Investment
Interest Income
Average Recorded Investment
Interest Income
Average Recorded Investment
Interest Income
With No Allowance Recorded:
Real estate loans:


Commercial


LTV < 35%


Substandard
$
—

$
18

$
—

$
—

$
—

$
39

$
—

$
—

LTV => 35%


Pass
5,770

67

3,962

44

5,330

199

3,997

144

Substandard
12,434

151

13,908

130

13,066

406

13,621

369

One-to-four family residential
LTV < 60%
Pass
911

14

645

4

770

3

541

13

Substandard
418

4

208

—

402

10

220

1

LTV => 60%
Pass
69

1

—

—

34

42

—

—

Special Mention
—

1

2

Substandard
206

3

387

7

328

10

268

19

Multifamily
LTV < 35%
Substandard
154

2

78

2

154

5

39

5

LTV => 35%
Pass
692

12

68

4

377

40

70

12

Substandard
—

—

583

—

—

—

728

8

Home equity and lines of credit
Pass
36

1

—

—

37

2

—

—

Commercial and industrial loans
Substandard
140

—

80

—

125

—

83

—

With a Related Allowance Recorded:
Real estate loans:
Commercial
LTV => 35%
Substandard
—

—

6,972

16

505

—

6,745

54

One-to-four family residential
LTV < 60%
Pass
207

2

61

4

103

5

171

12

Special Mention
—

—

—

—

—

—

Substandard
1,353

5

1,577

7

1,332

13

1,588

18

LTV => 60%
Pass
271

4

139

1

272

15

69

4

Substandard
—

—

772

1

190

—

900

3

Multifamily
LTV => 35%
Pass
642

—

1,332

12

972

—

666

38

Substandard
—

—

—

—

225

—

682

—

Home equity and lines of credit
Pass
126

—

263

2

191

4

265

6

Special Mention
—

—

42

1

—

—

43

2

Substandard
37

—

39

—

38

1

40

1

Commercial and industrial loans
Special Mention
25

—

27

—

25

1

28

1

Total:
Real estate loans
Commercial
18,204

236

24,842

190

18,901

644

24,363

567

One-to-four family residential
3,435

34

3,789

24

3,431

100

3,757

70

Multifamily
1,488

14

2,061

18

1,728

45

2,185

63

Home equity and lines of credit
199

1

344

3

266

7

348

9

Commercial and industrial loans
165

—

107

—

150

1

111

1

$
23,491

$
285

$
31,143

$
235

$
24,476

$
797

$
30,764

$
710



33
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


There were no loans modified as troubled debt restructurings (TDRs) during the three months ended September 30, 2017. There was one one-to-four family residential loan modified as a TDR during the nine months ended September 30, 2017. This loan had a pre- and post-modification balance of $256,000 as of the date of modification, and was restructured to receive a reduced interest rate. There were no loans modified as TDRs during the three or nine months ended September 30, 2016.

At September 30, 2017 , and December 31, 2016 , we had TDRs of $21.7 million and $22.4 million , respectively.

Management classifies all TDRs as impaired loans. Impaired loans are individually assessed to determine that the loan’s carrying value is not in excess of the estimated fair value of the collateral less cost to sell, if the loan is collateral dependent, or the present value of the expected future cash flows, if the loan is not collateral dependent. Management performs an evaluation of each impaired loan and generally obtains updated appraisals as part of the evaluation. In addition, management adjusts estimated fair values down to appropriately consider recent market conditions, our willingness to accept a lower sales price to effect a quick sale, and costs to dispose of any supporting collateral. Determining the estimated fair value of underlying collateral (and related costs to sell) can be difficult in illiquid real estate markets and is subject to significant assumptions and estimates. Management employs an independent third-party management firm that specializes in appraisal preparation and review to ascertain the reasonableness of updated appraisals. Projecting the expected cash flows under troubled debt restructurings which are not collateral dependent is inherently subjective and requires, among other things, an evaluation of the borrower’s current and projected financial condition. Actual results may be significantly different than our projections and our established allowance for loan losses on these loans, which could have a material effect on our financial results.

At September 30, 2017 , there was one TDR loan that was restructured during the preceding twelve months ended September 30, 2017, that subsequently defaulted. The loan was a one-to-four family residential loan, with a recorded investment of $254,000 , which was 90 days or more past due and on non-accrual status at September 30, 2017 . At September 30, 2016, there were three TDR loans that were restructured during the twelve months ended September 30, 2016, that subsequently defaulted. The loans consisted of one commercial real estate loan with a recorded investment of $1.8 million , which was less than 90 days delinquent and on accrual status, and two one-to-four family residential loans with a recorded investment of $361,000 , which were 90 days or more past due and on non-accrual status.

Note 6 – Deposits

Deposits account balances are summarized as follows (in thousands):
September 30,
December 31,
2017
2016
Non-interest-bearing demand
$
378,756

$
390,484

Interest-bearing negotiable orders of withdrawal (NOW)
411,316

467,440

Savings and money market
1,257,757

1,319,586

Certificates of deposit
687,573

536,077

Total deposits
$
2,735,402

$
2,713,587

Interest expense on deposit accounts is summarized for the periods indicated (in thousands):
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017
2016
2017
2016
Negotiable orders of withdrawal, savings, and money market
$
2,033

$
1,877

$
6,142

$
5,773

Certificates of deposit
2,135

1,668

5,545

4,899

Total interest expense on deposit accounts
$
4,168

$
3,545

$
11,687

$
10,672


Note 7 – Equity Incentive Plan
On August 1, 2017, the Company granted to a director 19,500 restricted shares, and 45,744 stock options to purchase Company stock. These shares and options were issued out of the 2008 and 2014 Equity Incentive Plans, which allow the Company to grant common stock or options to purchase common stock at specific prices to directors and employees of the Company. The stock options and restricted stock granted vest in varying installments over a period ranging from 10 to 34 months, the first vesting beginning on May 27, 2018. The vesting of options and restricted stock awards may accelerate in

34
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


accordance with terms of the Plan. Stock options were granted at an exercise price equal to the fair value of the Company’s common stock on the grant date based on quoted market prices and all have an expiration period of ten years. The fair value of stock options granted on August 1, 2017, was estimated utilizing the Black-Scholes option pricing model using the following assumptions: an expected life of 5.75 years, risk-free rate of return of 1.86% , volatility of 29.46% and a dividend yield of 1.91% .
On September 19, 2017, the Company granted to an employee a total of 5,000 restricted shares, and 12,500 stock options to purchase Company stock. These shares and options were issued out of the 2008 Equity Incentive Plan as noted above. The stock options and restricted stock granted vest in equal installments over a two -year period beginning one year from the date of grant. The vesting of options and restricted stock awards may accelerate in accordance with terms of the Plan. Stock options were granted at an exercise price equal to the fair value of the Company’s common stock on the grant date based on quoted market prices and all have an expiration period of ten years. The fair value of stock options granted on September 19, 2017, was estimated utilizing the Black-Scholes option pricing model using the following assumptions: an expected life of 5.75 years, risk-free rate of return of 1.89% , volatility of 30.06% and a dividend yield of 1.98% .

The following table is a summary of the Company’s stock options outstanding as of September 30, 2017 , and changes therein during the nine months then ended.
Number of Stock Options
Weighted Average Grant Date Fair Value
Weighted Average Exercise Price
Weighted Average Contractual Life (years)
Outstanding - December 31, 2016
5,328,670

$
3.41

$
11.36

5.78

Granted
58,244

4.11

16.62

9.87

Forfeited
(19,540
)
3.97

13.76

—

Exercised
(555,723
)
2.40

7.48

—

Outstanding - September 30, 2017
4,811,651

3.52

11.87

5.45

Exercisable - September 30, 2017
3,128,650

3.25

10.73

4.50

Expected future stock option expense related to the non-vested options outstanding as of September 30, 2017 , is $5.2 million over a weighted average period of 2.13 years.
The following is a summary of the status of the Company’s restricted stock awards as of September 30, 2017 , and changes therein during the nine months then ended.
Number of Shares Awarded
Weighted Average Grant Date Fair Value
Non-vested at December 31, 2016
924,002

$
13.82

Granted
24,500

16.62

Vested
(275,660
)
13.61

Forfeited
(5,320
)
13.13

Non-vested at September 30, 2017
667,522

$
14.02

Expected future stock award expense related to the non-vested restricted share awards as of September 30, 2017 , is $7.4 million over a weighted average period of 2.17 years.

During the three months ended September 30, 2017 and 2016 , the Company recorded $1.6 million and $1.5 million , respectively, of stock-based compensation related to the above plans. During the nine months ended September 30, 2017 and 2016 , the Company recorded $4.8 million and $5.7 million , respectively, of stock-based compensation related to the above plans.

35
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


Note 8 – Fair Value Measurements
The following tables present the assets reported on the consolidated balance sheet at their estimated fair value as of September 30, 2017 , and December 31, 2016 , by level within the fair value hierarchy as required by the Fair Value Measurements and Disclosures Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC).  Financial assets and liabilities are classified in their entirety based on the level of input that is significant to the fair value measurement.  The fair value hierarchy is as follows:

•
Level 1 Inputs – Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

•
Level 2 Inputs – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlations or other means.

•
Level 3 Inputs – Significant unobservable inputs that reflect the Company’s own assumptions that market participants would use in pricing the assets or liabilities.

36
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


Fair Value Measurements at September 30, 2017 Using:
Carrying Value
Quoted Prices in Active Markets for Identical Assets (Level 1)
Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs (Level 3)
(in thousands)
Measured on a recurring basis:
Assets:
Investment securities:
Available-for-sale:
Mortgage-backed securities
GSE
$
407,597

$
—

$
407,597

$
—

Non-GSE
81

—

81

—

Other debt securities
Municipal bonds
708

—

708

—

Corporate bonds
73,142

—

73,142

—

Other securities
Equity investments - mutual funds
93

93

—

—

Other
1,005

—

1,005

—

Total available-for-sale
482,626

93

482,533

—

Trading securities
9,225

9,225

—

—

Total
$
491,851

$
9,318

$
482,533

$
—

Measured on a non-recurring basis:
Assets:
Impaired loans:
Real estate loans:
Commercial real estate
$
4,730

$
—

$
—

$
4,730

One-to-four family residential mortgage
1,753

—

—

1,753

Multifamily
54

—

—

54

Home equity and lines of credit
33

—

—

33

Total impaired real estate loans
6,570

—

—

6,570

Commercial and industrial loans
19

—

—

19

Other real estate owned
850

—

—

850

Total
$
7,439

$
—

$
—

$
7,439


37
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


Fair Value Measurements at December 31, 2016 Using:
Carrying Value
Quoted Prices in Active Markets for Identical Assets (Level 1)
Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs (Level 3)
(in thousands)
Measured on a recurring basis:
Assets:
Investment securities:
Available-for-sale:
Mortgage-backed securities
GSE
$
448,842

$
—

$
448,842

$
—

Non-GSE
270

—

270

—

Other debt securities
Municipal bonds
2,158

—

2,158

—

Corporate bonds
45,159

—

45,159

—

Other securities
Equity investments - mutual funds
1,218

271

947

—

Other
1,250

—

1,250

—

Total available-for-sale
498,897

271

498,626

—

Trading securities
7,857

7,857

—

—

Total
$
506,754

$
8,128

$
498,626

$
—

Measured on a non-recurring basis:
Assets:
Impaired loans:
Real estate loans:
Commercial real estate
$
10,730

$
—

$
—

$
10,730

One-to-four family residential mortgage
2,177

—

—

2,177

Multifamily
1,276

—

—

1,276

Home equity and lines of credit
274

—

—

274

Total impaired real estate loans
14,457

—

—

14,457

Commercial and industrial loans
21

—

—

21

Other real estate owned
850

—

—

850

Total
$
15,328

$
—

$
—

$
15,328


The following table presents qualitative information for Level 3 assets measured at fair value on a non-recurring basis at September 30, 2017 , and December 31, 2016 (dollars in thousands):
Fair Value
Valuation Methodology
Unobservable Inputs
Range of Inputs
September 30, 2017
December 31, 2016
September 30, 2017
December 31, 2016
Impaired loans
$
6,589

$
14,478

Appraisals
Discount for costs to sell
7.0%
7.0%
Discount for quick sale
10.0%
10.0%
Discounted cash flows
Interest rates
3.125% to 6.75%
4.75% to 7.5%
Other real estate owned
$
850

$
850

Appraisals
Discount for costs to sell
7.0%
7.0%

38
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


The valuation techniques described below were used to measure fair value of financial instruments in the tables below on a recurring basis and a non-recurring basis as of September 30, 2017 and December 31, 2016.
Available for Sale Securities: The estimated fair values for mortgage-backed securities, corporate and other debt securities, and certain less liquid equity securities are obtained from an independent nationally recognized third-party pricing service. The estimated fair values are derived primarily from cash flow models, which include assumptions for interest rates, credit losses, and prepayment speeds. Broker/dealer quotes are utilized as well, when such quotes are available and deemed representative of the market. The significant inputs utilized in the cash flow models are based on market data obtained from sources independent of the Company (Observable Inputs), and are therefore classified as Level 2 within the fair value hierarchy. The estimated fair values of equity securities consisting of publicly traded mutual funds are classified as Level 1 and are derived from quoted market prices in active markets. There were no transfers of securities between Level 1 and Level 2 during the nine months ended September 30, 2017 .
Trading Securities: Fair values are derived from quoted market prices in active markets.  The assets consist of publicly traded mutual funds.
Impaired Loans: At September 30, 2017 , and December 31, 2016 , the Company had impaired loans held-for-investment (excluding PCI loans) with outstanding principal balances of $9.0 million and $17.7 million , respectively, which were recorded at their estimated fair value of $6.6 million and $14.5 million , respectively. The Company recorded a net decrease in the specific reserve for impaired loans of $246,000 and $24,000 for the nine months ended September 30, 2017 , and September 30, 2016 , respectively, utilizing level 3 inputs. For purposes of estimating fair value of impaired loans, management utilizes independent appraisals, if the loan is collateral dependent, adjusted downward by management, as necessary, for changes in relevant valuation factors subsequent to the appraisal date, or the present value of expected future cash flows for non-collateral dependent loans and troubled debt restructurings.
Other Real Estate Owned (OREO): At both September 30, 2017 and December 31, 2016, the Company had assets acquired through foreclosure, or deed in lieu of foreclosure, of $850,000 . These assets are recorded at estimated fair value, less estimated selling costs when acquired, establishing a new cost basis. Estimated fair value is generally based on independent appraisals. These appraisals include adjustments to comparable assets based on the appraisers’ market knowledge and experience, and are considered Level 3 inputs. When an asset is acquired, the excess of the loan balance over fair value, less estimated selling costs, is charged to the allowance for loan losses. If the estimated fair value of the asset declines, a write-down is recorded through non-interest expense. The valuation of foreclosed assets is subjective in nature and may be adjusted in the future because of changes in economic conditions.

In addition, the Company may be required, from time to time, to measure the fair value of certain other financial assets on a nonrecurring basis in accordance with U.S. GAAP. The adjustments to fair value usually result from the application of lower-of-cost-or-market accounting or write downs of individual assets.
Fair Value of Financial Instruments
The FASB ASC Topic for Financial Instruments requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above. The following methods and assumptions were used to estimate the fair value of other financial assets and financial liabilities not already discussed above:
(a)
Cash, Cash Equivalents, and Certificates of Deposit
Cash and cash equivalents are short-term in nature with original maturities of three months or less; the carrying amount approximates fair value. Certificates of deposit having original terms of six-months or less; the carrying value generally approximates fair value. Certificates of deposit with an original maturity of six months or greater; the fair value is derived from discounted cash flows.

39
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


(b)
Securities (Held to Maturity)
The estimated fair values for substantially all of our securities are obtained from an independent nationally recognized pricing service. The independent pricing service utilizes market prices of same or similar securities whenever such prices are available. Prices involving distressed sellers are not utilized in determining fair value. Where necessary, the independent third-party pricing service estimates fair value using models employing techniques such as discounted cash flow analyses. The assumptions used in these models typically include assumptions for interest rates, credit losses, and prepayments, utilizing market observable data where available.
(c)
Federal Home Loan Bank of New York Stock
The fair value for Federal Home Loan Bank of New York (FHLB) stock is its carrying value, since this is the amount for which it could be redeemed and there is no active market for this stock.
(d)
Loans (Held-for-Investment)
Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as originated and purchased, and further segregated by residential mortgage, construction, land, multifamily, commercial and consumer. Each loan category is further segmented into amortizing and non-amortizing and fixed and adjustable rate interest terms and by performing and nonperforming categories. The fair value of loans is estimated by discounting the future cash flows using current prepayment assumptions and current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. This method of estimating fair value does not incorporate the exit price concept of fair value prescribed by the FASB ASC Topic for Fair Value Measurements and Disclosures.
(e)
Loans (Held-for-Sale)
Held-for-sale loans are carried at the lower of aggregate cost or estimated fair value, less costs to sell, and therefore fair value is equal to carrying value.
(f)
Deposits
The fair value of deposits with no stated maturity, such as non-interest bearing demand deposits, savings, NOW and money market accounts, is equal to the amount payable on demand. The fair value of certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities.
(g)
Commitments to Extend Credit and Standby Letters of Credit
The fair value of commitments to extend credit and standby letters of credit is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of off‑balance sheet commitments is insignificant and therefore not included in the following table.
(h)
Borrowed Funds
The fair value of borrowed funds is estimated by discounting future cash flows based on rates currently available for debt with similar terms and remaining maturity.
(i)
Advance Payments by Borrowers for Taxes and Insurance
Advance payments by borrowers for taxes and insurance have no stated maturity; the fair value is equal to the amount currently payable.

40
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


The estimated fair value of the Company’s significant financial instruments at September 30, 2017 , and December 31, 2016 , is presented in the following tables (in thousands):
September 30, 2017
Estimated Fair Value
Carrying Value
Level 1
Level 2
Level 3
Total
Financial assets:
Cash and cash equivalents
$
103,241

$
103,241

$
—

$
—

$
103,241

Trading securities
9,225

9,225

—

—

9,225

Securities available-for-sale
482,626

93

482,533

—

482,626

Securities held-to-maturity
9,983

—

9,997

—

9,997

Federal Home Loan Bank of New York stock, at cost
29,771

—

29,771

—

29,771

Loans held-for-sale
1,506

—

—

1,506

1,506

Net loans held-for-investment
3,105,788

—

—

3,104,390

3,104,390

Financial liabilities:
Deposits
$
2,735,402

$
—

$
2,738,542

$
—

$
2,738,542

Borrowed funds
583,690

—

581,525

—

581,525

Advance payments by borrowers for taxes and insurance
14,265

—

14,265

—

14,265


December 31, 2016
Estimated Fair Value
Carrying Value
Level 1
Level 2
Level 3
Total
Financial assets:
Cash and cash equivalents
$
96,085

$
96,085

$
—

$
—

$
96,085

Trading securities
7,857

7,857

—

—

7,857

Securities available-for-sale
498,897

271

498,626

—

498,897

Securities held-to-maturity
10,148

—

10,118

—

10,118

Federal Home Loan Bank of New York stock, at cost
25,123

—

25,123

—

25,123

Net loans held-for-investment
2,943,489

—

—

2,970,438

2,970,438

Financial liabilities:
Deposits
$
2,713,587

$
—

$
2,720,176

$
—

$
2,720,176

Borrowed funds
473,206

—

472,387

—

472,387

Advance payments by borrowers for taxes and insurance
12,331

—

12,331

—

12,331

Limitations
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected losses, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on-and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

41
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


Note 9 – Earnings Per Share
Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of shares outstanding during the period. For purposes of calculating basic earnings per share, weighted average common shares outstanding excludes unallocated employee stock ownership plan (“ESOP”) shares that have not been committed for release and unvested restricted stock.

Diluted earnings per share is computed using the same method as basic earnings per share, but reflects the potential dilution that could occur if stock options and unvested shares of restricted stock were exercised and converted into common stock. These potentially dilutive shares would then be included in the weighted average number of shares outstanding for the period using the treasury stock method. In March 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, a new standard that simplifies certain aspects of accounting for share-based payments. The Company adopted ASU No. 2016-09 effective for the first quarter of 2017. The update amended the diluted earnings per share calculation in that excess tax benefits are no longer included in assumed proceeds when determining average diluted shares outstanding under the treasury stock method. This guidance is required to be applied prospectively upon adoption. For further discussion, see Note 10 - “Recently Issued and Adopted Accounting Pronouncements”.

When applying the treasury stock method for the three and nine months ended September 30, 2017, we added (1) the assumed proceeds from option exercises and (2) the average unamortized compensation costs related to unvested shares of restricted stock and stock options. We then divided this sum by our average stock price for the period to calculate assumed shares repurchased. The excess of the number of shares issuable over the number of shares assumed to be repurchased is added to basic weighted average common shares to calculate diluted earnings per share. For the three and nine months ended September 30, 2016, we added (1) the assumed proceeds from option exercises; (2) the tax benefit, that would have been credited to additional paid-in capital assuming exercise of non-qualified stock options and vesting of shares of restricted stock; and (3) the average unamortized compensation costs related to unvested shares of restricted stock and stock options. We then divided this sum by our average stock price for the period to calculate assumed shares repurchased. The excess of the number of shares issuable over the number of shares assumed to be repurchased is added to basic weighted average common shares to calculate diluted earnings per share.
The following is a summary of the Company’s earnings per share calculations and reconciliation of basic to diluted earnings per share for the periods indicated (dollars in thousands, except per share data):
Three Months Ended September 30,
Nine Months Ended September 30,
2017
2016
2017
2016
Net income available to common stockholders
$
8,126

$
7,287

$
26,484

$
17,932

Weighted average shares outstanding-basic
45,492,713

44,556,682

45,257,199

44,282,476

Effect of non-vested restricted stock and stock options outstanding
1,248,510

1,164,070

1,577,148

1,272,785

Weighted average shares outstanding-diluted
46,741,223

45,720,752

46,834,347

45,555,261

Earnings per share-basic
$
0.18

$
0.16

$
0.59

$
0.40

Earnings per share-diluted
$
0.17

$
0.16

$
0.57

$
0.39

Anti-dilutive shares
1,091,464

1,020,340

393,821

1,021,273

Note 10 – Recently Issued and Adopted Accounting Pronouncements

Accounting Pronouncements Adopted

In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , a new standard that simplifies certain aspects of accounting for share-based payments. The amendments include the following:

•
Excess tax benefits and deficiencies resulting from exercise or vesting of stock awards are recorded as income tax expense or benefit on the income statement. Previously, excess tax benefits and certain tax deficiencies were recorded as equity in additional paid-in capital. This update is required to be applied prospectively upon adoption.

42
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


•
For diluted earnings per share calculations, excess tax benefits are no longer included in assumed proceeds when determining average diluted shares outstanding under the treasury stock method, resulting in changes to average diluted shares outstanding. This update is required to be applied prospectively upon adoption.
•
Excess tax benefits or deficiencies are included as income tax expense as discrete items in the period in which they occur, which impact the effective tax rate in each reporting period; however, these discrete items are not included in the projected annual effective tax rate calculation. This update is required to be applied prospectively upon adoption.
•
Excess tax benefits are presented as cash flows from operating activities. Previously, excess tax benefits were included as a cash inflow from financing activities. This update may be applied either prospectively or retrospectively upon adoption. The Company applied this update prospectively upon adoption and prior periods have not been adjusted.
•
Cash paid by an employer to taxing authorities when withholding shares for tax withholding purposes is presented as cash outflows from financing activities, which is consistent with the manner in which we have presented such employee withholding taxes in the past. Accordingly, no reclassification for prior periods is required. Beginning in 2017, the Company no longer withholds shares for tax withholding purposes and employees pay their own taxes.
•
An accounting policy election, using a modified retrospective transition method, to account for forfeitures as they occur or estimate the number of awards expected to be forfeited. The Company elected to account for forfeitures as they occur.
The Company adopted ASU No. 2016-09 effective for the first quarter of 2017 and upon adoption recorded a cumulative effect adjustment of $2.9 million to the opening balances of retained earnings and additional paid-in-capital. Adoption of ASU No. 2016-09 also resulted in the recognition of a $2.3 million benefit within income tax expense for the nine months ended September 30, 2017, which resulted in a corresponding increase to net income and earnings per share. In addition, the guidance increases average diluted shares, since the Company no longer includes such excess tax benefits in the calculation of diluted shares. Adoption of this update does not affect the Company's or the Bank's total equity, book value per share, or regulatory capital ratios.
Accounting Pronouncements Not Yet Adopted

In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying
the Test for Goodwill Impairment. The ASU simplifies the subsequent measurement of goodwill impairment by eliminating the requirement to calculate the implied fair value of goodwill (i.e., the current Step 2 of the goodwill impairment test) to measure a goodwill impairment charge. As amended, the goodwill impairment test will consist of one step comparing the fair value of a reporting unit with its carrying amount. A goodwill impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The ASU is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim and annual goodwill impairment testing dates after January 1, 2017. The adoption of this pronouncement is not expected to have a material effect on the Company's consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash , which requires that entities include restricted cash and restricted cash equivalents with cash and cash equivalents in the beginning-of-period and end-of-period total amounts shown on the Statement of Cash Flows. Prior to this pronouncement there was no guidance on how to present restricted cash and cash equivalents in the Statement of Cash Flows. ASU No. 2016-18 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and is required to be applied retrospectively to all periods presented beginning in the year of adoption. The adoption of this pronouncement is not expected to have a material effect on the Company's consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , which provides guidance on the classification of certain cash receipts and payments within the statement of cash flows. ASU No. 2016-15 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and is required to be applied retrospectively to all periods presented beginning in the year of adoption. Since the ASU only impacts classification on the statements of cash flows, adoption will not affect the Company's consolidated financial position, results of operations or its cash and cash equivalents.

In June 2016, the FASB issued No. ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires credit losses on most financial assets measured at amortized cost and certain other instruments to be measured using an expected credit loss model (referred to as the current expected credit loss (CECL) model). Under this model, entities will estimate credit losses over the entire contractual term of the instrument from the date of initial recognition of that instrument. Current US GAAP is based on an incurred loss model that

43
NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements - (Continued)


delays recognition of credit losses until it is probable the loss has been incurred. Accordingly, it is anticipated that credit losses will be recognized earlier under the CECL model than under the incurred loss model. ASU No. 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently evaluating the potential effect of adoption of this pronouncement on its consolidated financial statements, but the extent of the effect is indeterminable at this time as it will depend upon the nature and characteristics of the Company's loan portfolio at the adoption date, as well as economic conditions and forecasts at that date.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) , which is intended to increase transparency and comparability of accounting for lease transactions. The ASU will require all leases to be recognized on the balance sheet as lease assets and lease liabilities and will require both quantitative and qualitative disclosures regarding key information about leasing arrangements. Lessor accounting is largely unchanged. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within that reporting period. The Company is currently evaluating the potential effect of adoption of this pronouncement on its consolidated financial statements by reviewing its existing lease contracts and service contracts that may include embedded leases. The Company expects a gross-up of its consolidated balance sheet as a result of recognizing lease liabilities and right of use assets; the extent of such gross-up is under evaluation. The Company does not expect adoption of this pronouncement to have a material impact on its results of operations.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities , which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The guidance primarily affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The accounting for other financial instruments, such as loans, investments in debt securities, and financial liabilities is largely unchanged. ASU No. 2016-01 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The adoption of this pronouncement is not expected to have a material effect on the Company's consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers using a five-step model that requires entities to exercise judgment when considering the terms of the contracts. ASU No. 2014-09 and subsequent related updates, also require new qualitative and quantitative disclosures, including disaggregation of revenues and descriptions of performance obligations. The Company will adopt the guidance in the first quarter of 2018 using the modified retrospective method with a cumulative-effect adjustment to opening retained earnings. Because the guidance does not apply to revenue associated with financial instruments, including loans and securities that are accounted for under other U.S. GAAP, the new revenue recognition standard will not have a material impact on the company's consolidated financial statements. The Company's implementation efforts include the identification of revenue streams within the scope of the guidance, as well as the evaluation of revenue contracts. Although the impact of adoption is not expected to be significant to the financial statements, the guidance includes expanded disclosures to revenue which we are currently in the process of drafting.

Note 11 – Commitments

The Company has obligations related to non-cancelable operating leases and capitalized leases on property used for banking purposes, that were disclosed in its Annual Report on Form 10-K for the year ended December 31, 2016. During the quarter ended September 30, 2017, the Company amended the terms of one contract, and entered into a new contract which resulted in additional aggregate minimum rent obligations totaling approximately $12.4 million as follows: (1) In July 2017, the Company entered into an amendment to the operating lease for its main office premises in Woodbridge, New Jersey, to lease an additional 6,919 square feet of office space in the same building and extend the lease term by 10 years and eight months from July 1, 2018 through February 28, 2029. Pursuant to the lease amendment, we estimate our total additional future minimum rent payments to be approximately $9.9 million and (2) In September 2017, the Company entered into a new lease agreement for 3,600 square feet of office space at a branch facility in Staten Island, New York, for a term of 15 years through September 2032. Pursuant to the terms of this lease we estimate our total additional future minimum rent payments to be approximately $2.5 million .



44

ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-Looking Statements
This Quarterly Report contains certain “forward-looking statements,” which can be identified by the use of such words as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect,” and words of similar meaning.  These forward looking statements include, but are not limited to:
•
statements of our goals, intentions, and expectations;
•
statements regarding our business plans, prospects, growth and operating strategies;
•
statements regarding the quality of our loan and investment portfolios; and
•
estimates of our risks and future costs and benefits.
These forward-looking statements are based on the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control.  In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.
The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:
•
adverse changes in general economic conditions, either nationally or in our market areas;
•
competition among depository and other financial institutions;
•
inflation and changes in the interest rate environment that reduce our margins and yields or reduce the fair value of financial instruments;
•
adverse changes in the securities or credit markets;
•
changes in laws, tax policies, or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;
•
our ability to manage operations in the current or future economic conditions;
•
our ability to enter new markets successfully and capitalize on growth opportunities;
•
our ability to successfully integrate acquired entities;
•
changes in consumer spending, borrowing and savings habits;
•
changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission, or the Public Company Accounting Oversight Board;
•
cyber attacks, computer viruses and other technological risks that may breach the security of our websites or other systems to obtain unauthorized access to confidential information and destroy data or disable our systems;
•
changes in our organization, compensation, and benefit plans;
•
changes in the level of government support for housing finance;
•
significant increases in our loan losses; and
•
changes in the financial condition, results of operations, or future prospects of issuers of securities that we own.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.  Except as required by law, we disclaim any intention or obligation to update or revise any forward-looking statements after the date of this Quarterly Report on Form 10-Q, whether as a result of new information, future events or otherwise.

45

Critical Accounting Policies
Note 1 to the Company’s Audited Consolidated Financial Statements for the year ended December 31, 2016 included in the Company’s Annual Report on Form 10-K, as supplemented by this report, contains a summary of significant accounting policies.  Various elements of these accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments.  Certain assets are carried in the Consolidated Balance Sheets at estimated fair value or the lower of cost or estimated fair value.  Policies with respect to the methodologies used to determine the allowance for loan losses, estimated cash flows of our purchased credit-impaired (“PCI”) loans, and judgments regarding the valuation of intangible assets and securities as well as the valuation allowance against deferred tax assets are the most critical accounting policies because they are important to the presentation of the Company’s financial condition and results of operations, involve a higher degree of complexity, and require management to make difficult and subjective judgments which often require assumptions or estimates about highly uncertain matters. The use of different judgments, assumptions, and estimates could result in material differences in the results of operations or financial condition.  These critical accounting policies and their application are reviewed periodically and, at least annually, with the Audit Committee of the Board of Directors.  For a further discussion of the critical accounting policies of the Company, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 .
Overview
This overview highlights selected information and may not contain all the information that is important to you in understanding our performance during the period. For a more complete understanding of trends, events, commitments, uncertainties, liquidity, capital resources, and critical accounting estimates, you should read this entire document carefully, as well as our Annual Report on Form 10-K for the year ended December 31, 2016 .
Net income was $26.5 million for the nine months ended September 30, 2017 , as compared to $17.9 million for the nine months ended September 30, 2016 . Basic and diluted earnings per common share were $0.59 and $0.57 for the nine months ended September 30, 2017 , respectively, compared to basic and diluted earnings per common share of $0.40 and $0.39 for the nine months ended September 30, 2016 , respectively. Earnings for the nine months ended September 30, 2017 reflect the adoption of Accounting Standards Update (“ASU”) No. 2016-09, Compensation - Stock Compensation (Topic 718) (“ASU 2016-09”) which resulted in a $2.3 million, or $0.05 per diluted share, reduction in income tax expense, as well as $1.5 million, or $0.03 per diluted share, of tax-exempt income from bank owned life insurance proceeds in excess of the cash surrender value of the policies. Both of these items were recorded in the first quarter of 2017. Earnings for the nine months ended September 30, 2016, included merger-related expenses associated with the acquisition of Hopewell Valley Community Bank (“Hopewell Valley”) of approximately $2.4 million, net of tax, or $0.05 per diluted share. For the nine months ended September 30, 2017 , our return on average assets was 0.91% , as compared to 0.65% for the nine months ended September 30, 2016 . For the nine months ended September 30, 2017 , our return on average stockholders’ equity was 5.57% as compared to 3.92% for the nine months ended September 30, 2016 .

Comparison of Financial Condition at September 30, 2017 , and December 31, 2016
Total assets increase d $156.7 million , or 4.1% , to $4.01 billion at September 30, 2017 , from $3.85 billion at December 31, 2016 . The increase was primarily due to an increase in loans held-for-investment, net, of $163.8 million , and an increase in cash and cash equivalents of $7.2 million , partially offset by a decrease in securities available-for-sale of $16.3 million .
Cash and cash equivalents increase d $7.2 million , or 7.4% , to $103.2 million at September 30, 2017 , from $96.1 million at December 31, 2016 . Balances fluctuate based on the timing of receipt of security and loan repayments and the redeployment of cash into other asset classes, or the funding of deposit or borrowing obligations.
The available-for-sale securities portfolio totaled $482.6 million at September 30, 2017 , compared to $498.9 million at December 31, 2016 , a decrease of $16.3 million , or 3.3% , primarily attributable to paydowns, partially offset by purchases, primarily of corporate bonds. At September 30, 2017 , $407.6 million of the portfolio consisted of residential mortgage-backed securities issued or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. In addition, the Company held $73.1 million in corporate bonds, all of which were considered investment grade at September 30, 2017 , and other securities of $1.9 million (including $93,000 of equity investments in mutual funds).

As of September 30, 2017 , our non-owner occupied commercial real estate concentration (as defined by regulatory guidance issued in 2006) to total risk-based capital was 409%. Management believes that Northfield Bank (the "Bank") has

46

implemented appropriate risk management practices including risk assessments, board approved underwriting policies and related procedures, which include monitoring bank portfolio performance, performing market analysis (economic and real estate), and stressing of the Bank’s commercial real estate portfolio under severe adverse economic conditions. Although management believes the Bank has implemented appropriate policies and procedures to manage our commercial real estate concentration risk, the Bank’s regulators could require us to implement additional policies and procedures or could require us to maintain higher levels of regulatory capital, which might adversely affect our loan originations, ability to pay dividends, and profitability.

Loans held-for-investment, net, increase d $163.8 million , or 5.5% , to $3.13 billion at September 30, 2017 , from $2.97 billion at December 31, 2016 . The increase was primarily due to originated loan growth. Originated loans held-for-investment, net, totaled $2.36 billion at September 30, 2017 , as compared to $2.14 billion at December 31, 2016 .  The increase was primarily due to an increase in multifamily real estate loans of $183.7 million , or 12.2% , to $1.69 billion at September 30, 2017 , from $1.51 billion at December 31, 2016 . The following table details our multifamily real estate originations for the nine months ended September 30, 2017 and 2016 (dollars in thousands):
For the Nine Months Ended September 30, 2017
Multifamily Originations
Weighted Average Interest Rate
Weighted Average Loan-to-Value Ratio
Weighted Average Months to Next Rate Change or Maturity for Fixed Rate Loans
(F)ixed or (V)ariable
Amortization Term
$
247,421

3.61%
60%
80
V
15 to 30 Years
750

5.07%
48%
1
V
25 Years
16,640

3.95%
44%
180
F
15 Years
$
264,811

3.63%
59%
For the Nine Months Ended September 30, 2016
Multifamily Originations
Weighted Average Interest Rate
Weighted Average Loan-to-Value Ratio
Weighted Average Months to Next Rate Change or Maturity for Fixed Rate Loans
(F)ixed or (V)ariable
Amortization Term
$
219,975

3.42%
63%
81
V
30 Years
7,075

3.66%
41%
131
F
7-15 Years
$
227,050

3.43%
62%
Originated loans held-for-investment, net, include funded participations of $39.2 million for the nine months ended September 30, 2017, including $22.5 million in commercial real estate loans, and $16.7 million in construction loans. For the three months ended September 30, 2017, funded participations totaled $27.2 million.
Acquired loans decrease d by $48.2 million to $745.1 million at September 30, 2017 , from $793.2 million at December 31, 2016 , primarily due to paydowns, partially offset by purchases of one-to-four family residential mortgage and multifamily real estate loan pools totaling $58.7 million in the nine months ended September 30, 2017. The geographic locations of the properties collateralizing the loans are as follows: 63.9% in New York, 10.0% in California, and 26.1% in other states. The following table provides the details of the loans pools purchased during the nine months ended September 30, 2017 (dollars in thousands):
Purchase Amount
Loan Type
Weighted Average Interest Rate(1)
Weighted Average Loan-to-Value Ratio
Weighted Average Months to Next Rate Change or Maturity for Fixed Rate Loans
(F)ixed or (V)ariable
Original Amortization Term
$
29,286

Residential
2.89%
57%
1
V
30 Years
18,774

Multifamily
3.35%
55%
53
V
30 Years
3,399

Multifamily
3.40%
58%
46
F
30 Years
7,280

Multifamily
3.35%
51%
58
V
30 Years
$
58,739

3.12%
56%



47

PCI loans totaled $26.0 million at September 30, 2017 , as compared to $30.5 million at December 31, 2016 . The majority of the PCI loan balance consists of loans acquired as part of a Federal Deposit Insurance Corporation-assisted transaction. The Company accreted interest income of $1.4 million and $4.1 million attributable to PCI loans for the three and nine months ended September 30, 2017 , respectively, as compared to $1.3 million and $4.0 million for the three and nine months ended September 30, 2016 , respectively.
Total liabilities increase d $132.9 million , or 4.1% , to $3.36 billion at September 30, 2017 , from $3.23 billion at December 31, 2016 . The increase was primarily attributable to increase s in deposits of $21.8 million , and other borrowings of $114.5 million , partially offset by a decrease in securities sold under agreements to repurchase of $4.0 million .
Deposits increase d $21.8 million , or 0.8% , to $2.74 billion at September 30, 2017 , as compared to $2.71 billion at December 31, 2016 . The increase was attributable to increase s of $151.5 million in certificates of deposit accounts and $3.7 million in money market accounts, partially offset by decreases of $67.9 million in transaction accounts and $65.5 million in savings accounts.
Borrowings and securities sold under agreements to repurchase increase d by $110.5 million , or 23.3% , to $583.7 million at September 30, 2017 , from $473.2 million at December 31, 2016 .  Management utilizes borrowings to mitigate interest rate risk, for short-term liquidity, and to a lesser extent as part of leverage strategies.  The following is a table of term borrowing maturities (excluding capitalized leases and floating rate advances) and the weighted average rate by year at September 30, 2017 (dollars in thousands):
Year
Amount
Weighted Average Rate
2017
$127,000
1.30%
2018
142,715
1.66%
2019
123,502
1.48%
2020
90,000
1.65%
2021
70,000
1.80%
Thereafter
20,000
1.97%
$573,217
1.57%

Total stockholders’ equity increase d by $23.9 million to $645.0 million at September 30, 2017 , from $621.2 million at December 31, 2016 . The increase was primarily attributable to net income of $26.5 million for the nine months ended September 30, 2017 , and to a lesser extent a $6.5 million increase related to equity award activity, and a $1.9 million reduction in unrealized losses on our securities available-for-sale portfolio. These increases were partially offset by dividend payments of $11.0 million.
Comparison of Operating Results for the Nine Months Ended September 30, 2017 and 2016
Net Income. Net income was $26.5 million and $17.9 million for the nine months ended September 30, 2017 , and September 30, 2016 , respectively. Significant variances from the comparable prior year period are as follows: a $4.3 million increase in net interest income, a $1.0 million increase in the provision for loan losses, a $1.8 million increase in non-interest income, a $5.4 million decrease in non-interest expense, and a $ 1.9 million increase in income tax expense.

Interest Income . Interest income increased $5.4 million , or 5.8% , to $98.3 million for the nine months ended September 30, 2017 , from $92.9 million for the nine months ended September 30, 2016 , due to an increase in the average balance of interest-earning assets of $187.1 million , or 5.5% , and a one basis point increase in the yields earned on interest-earning assets. Interest income on loans increased by $6.3 million , primarily attributable to an increase in the average loan balances of $297.5 million , which was partially offset by a 12 basis point decrease in the yield. The Company accreted interest income related to its PCI loans of $4.1 million for the nine months ended September 30, 2017 , as compared to $4.0 million for the nine months ended September 30, 2016 . Interest income on loans for the nine months ended September 30, 2017 , reflected loan prepayment income of $886,000 compared to $1.4 million for the nine months ended September 30, 2016 .

Interest Expense . Interest expense increased $1.1 million , or 6.61% , to $17.3 million for the nine months ended September 30, 2017 , as compared to $16.2 million for nine months ended September 30, 2016, primarily due to a $1.0 million increase in interest expense on deposits. The increase in interest expense on deposits was attributed to an increase in the cost of interest-bearing deposits of two basis points to 0.68% for the nine months ended September 30, 2017 as compared to 0.66% for

48

the comparable prior year period and an increase in the average balance of interest bearing deposit accounts of $138.7 million , or 6.4% , to $2.31 billion for the nine months ended September 30, 2017 , from $2.17 billion for the nine months ended September 30, 2016.
Net Interest Income . Net interest income for the nine months ended September 30, 2017 , increase d $4.3 million , or 5.6% , to $80.9 million , from $76.6 million for the nine months ended September 30, 2016 , primarily due to a $187.1 million , or 5.5% , increase in our average interest-earning assets while net interest margin remained level at 2.99% . The increase in average interest-earning assets was due primarily to an increase in average loans outstanding of $297.5 million , partially offset by decreases in average mortgage-backed securities of $107.4 million and interest-earning deposits in financial institutions of $12.9 million . The increase in average loans was primarily due to originated loan growth. Yields earned on interest-earning assets increased one basis point to 3.63% for the nine months ended September 30, 2017 , from 3.62% for the nine months ended September 30, 2016 , primarily driven by higher yields on securities, Federal Home Loan Bank of New York stock and interest-earning deposits in financial institutions, partially offset by lower yields on loans. The cost of interest-bearing liabilities increased one basis point to 0.82% for the nine months ended September 30, 2017 , from 0.81% for the nine months ended September 30, 2016 , primarily due to higher rates on certificates of deposits.
Provision for Loan Losses . The provision for loan losses increase d by $1.0 million to $ 1.4 million for the nine months ended September 30, 2017 , from $355,000 for the nine months ended September 30, 2016 , primarily due to growth in the loan portfolio, partially offset by declines in non-performing loans and net recoveries during the nine months ended September 30, 2017 . Net recoveries for the nine months ended September 30, 2017 , were $133,000, primarily relating to insurance proceeds received from a previously charged-off loan, as compared to net charge-offs of $785,000 for the comparative prior year period.

Non-interest Income . Non-interest income increase d $1.8 million , or 23.8% , to $9.2 million for the nine months ended September 30, 2017 , from $7.4 million for the nine months ended September 30, 2016 , primarily due to an increase of $1.4 million in income on bank owned life insurance, attributable to insurance proceeds in excess of the related cash surrender value of the policies, and an increase of $389,000 in gains on securities transactions, net. Securities gains, net, during the nine months ended September 30, 2017 , included gains of $1.0 million related to the Company’s trading portfolio, compared to gains of $389,000 in the comparative prior year period. The trading portfolio is utilized to fund the Company’s deferred compensation obligation to certain employees and directors of the Company's deferred compensation plan (the "Plan"). The participants of this Plan, at their election, defer a portion of their compensation. Gains and losses on trading securities have no effect on net income since participants benefit from, and bear the full risk of, changes in the trading securities market values. Therefore, the Company records an equal and offsetting amount in compensation expense, reflecting the change in the Company’s obligations under the Plan.
Non-interest Expense . Non-interest expense decrease d $5.4 million , or 9.5% , to $51.0 million for the nine months ended September 30, 2017 , from $56.4 million for the nine months ended September 30, 2016 . The decrease was primarily due to a $3.9 million reduction in merger-related expenses associated with the Hopewell Valley acquisition reflected in the first nine months of 2016. Compensation and employee benefits expense decreased $1.6 million , due primarily to a reduction in severance, retention, and change-in-control compensation associated with the Hopewell Valley acquisition in the prior year period, partially offset by annual merit-related salary increases and an increase in expenses related to the Company’s deferred compensation plan, which is described above, and which has no effect on net income. Data processing fees decreased $1.5 million , primarily due to non-recurring conversion costs and contract termination costs associated with the Hopewell Valley acquisition incurred in the prior year period. Professional fees decreased $587,000 due to non-recurring merger-related professional fees associated with the Hopewell Valley acquisition. FDIC insurance expense decreased by $423,000 due to a reduction in the FDIC's assessment rates for depository institutions with less than $10.0 billion in assets, which became effective in the quarter ended September 30, 2016. Other expense decreased by $1.0 million , primarily due to lower directors' equity award expense, related to the retirement of three directors.
Income Tax Expense . The Company recorded income tax expense of $11.3 million for the nine months ended September 30, 2017 , compared to $9.4 million for the nine months ended September 30, 2016 . The effective tax rate for the nine months ended September 30, 2017 , was 29.9% compared to 34.4% for the nine months ended September 30, 2016 . As previously disclosed, the Company adopted ASU 2016-09 in the first quarter of 2017, which resulted in a $2.3 million reduction in income tax expense related to the exercise or vesting of equity awards during the nine months ended September 30, 2017. Previously, these tax benefits were recorded through equity as an adjustment to additional paid in capital. The effective tax rate for the nine months ended September 30, 2017, also was affected by $1.5 million of tax-exempt income from bank owned life insurance proceeds in excess of the cash surrender value of the policies. In accordance with applicable accounting standards, the tax effect will be recognized evenly throughout the year.

49

The following table sets forth average balances, average yields and costs, and certain other information for the periods indicated.
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands)

For the Nine Months Ended
September 30, 2017
September 30, 2016
Average Outstanding Balance
Interest
Average Yield/ Rate (1)
Average Outstanding Balance
Interest
Average Yield/ Rate (1)
Interest-earning assets:
Loans (2)
$
3,027,517

$
89,085

3.93
%
$
2,730,006

$
82,792

4.05
%
Mortgage-backed securities (3)
431,186

6,791

2.11

538,568

8,322

2.06

Other securities (3)
65,603

905

1.84

57,030

662

1.55

Federal Home Loan Bank of New York stock
26,458

1,061

5.36

25,159

861

4.57

Interest-earning deposits in financial institutions
64,164

412

0.86

77,035

225

0.39

Total interest-earning assets
3,614,928

98,254

3.63

3,427,798

92,862

3.62

Non-interest-earning assets
277,263

262,748

Total assets
$
3,892,191

$
3,690,546

Interest-bearing liabilities:
Savings, NOW, and money market accounts
$
1,717,916

$
6,142

0.48
%
$
1,594,088

$
5,773

0.48
%
Certificates of deposit
594,100

5,545

1.25

579,227

4,899

1.13

Total interest-bearing deposits
2,312,016

11,687

0.68

2,173,315

10,672

0.66

Borrowed funds
498,640

5,629

1.51

489,300

5,570

1.52

Total interest-bearing liabilities
2,810,656

17,316

0.82

2,662,615

16,242

0.81

Non-interest bearing deposits
381,173

367,454

Accrued expenses and other liabilities
64,859

49,825

Total liabilities
3,256,688

3,079,894

Stockholders' equity
635,503

610,652

Total liabilities and stockholders' equity
$
3,892,191

$
3,690,546

Net interest income
$
80,938

$
76,620

Net interest rate spread (4)
2.81
%
2.81
%
Net interest-earning assets (5)
$
804,272

$
765,183

Net interest margin (6)
2.99
%
2.99
%
Average interest-earning assets to interest-bearing liabilities
128.62
%
128.74
%
(1)
Average yields and rates are annualized.
(2)
Includes non-accruing loans.
(3)
Securities available-for-sale are reported at amortized cost.
(4)
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.
(5)
Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6)
Net interest margin represents net interest income divided by average total interest-earning assets.

50

Comparison of Operating Results for the Three Months Ended September 30, 2017 and 2016
Net Income. Net income was $8.1 million and $7.3 million for the quarters ended September 30, 2017 , and September 30, 2016 , respectively. Significant variances from the comparable prior year quarter are as follows: a $ 1.1 million increase in net interest income, a $16,000 increase in the provision for loan losses, a $52,000 decrease in non-interest income, a $549,000 decrease in non-interest expense, and a $743,000 increase in income tax expense.

Interest Income . Interest income increased $2.0 million , or 6.3% , to $33.5 million for the quarter ended September 30, 2017 , from $31.5 million for the quarter September 30, 2016 , due to an increase in the average balance of interest-earning assets of $151.1 million , or 4.3% , and a six basis point increase in the yields earned on interest-earning assets. Interest income on loans increased by $2.2 million , primarily attributable to an increase in the average loan balances of $254.8 million , partially offset by a five basis point decrease in the yield. The increase in average loans was primarily due to originated loan growth. The Company accreted interest income related to its PCI loans of $1.4 million for the quarter ended September 30, 2017 , as compared to $1.3 million for the quarter ended September 30, 2016 . Interest income on loans for the quarter ended September 30, 2017 , reflected loan prepayment income of $366,000 compared to $459,000 for the quarter ended September 30, 2016 .

Interest Expense . Interest expense increased $899,000 , or 17.0% , to $6.2 million for the quarter ended September 30, 2017 , from $5.3 million for the quarter ended September 30, 2016 . The increase was due to an increase of $623,000 in interest expense on deposits and a $276,000 increase in interest expense on borrowings. The increase in interest expense on deposits was attributed to an increase in the average balance of interest-bearing deposits of $101.9 million , or 4.6% , to $2.34 billion for the quarter ended September 30, 2017 , from $2.24 billion for the quarter ended September 30, 2016 , and an eight basis point increase in the cost of interest-bearing deposits. Interest expense on borrowings increased by $276,000 due to a $36.8 million , or 7.9% , increase in the average balances of borrowings to $503.2 million for the quarter ended September 30, 2017 , from $466.5 million for the quarter ended September 30, 2016 and an 11 basis point increase in the cost of borrowings.
Net Interest Income . Net interest income for the quarter ended September 30, 2017 , increase d $1.1 million , or 4.2% , primarily due to a $151.1 million , or 4.3% , increase in our average interest-earning assets, partially offset by a one basis point decrease in our net interest margin to 2.97% . The increase in average interest-earning assets was primarily attributable to an increase in average loans outstanding of $254.8 million , partially offset by decreases in average mortgage-backed securities of $111.9 million . Yields earned on interest-earning assets increased six basis points to 3.64% for the quarter ended September 30, 2017 , from 3.58% for the quarter ended September 30, 2016 , primarily driven by higher yields on securities, Federal Home Loan Bank of New York stock, and interest-earning deposits in financial institutions, partially offset by lower yields on loans. The cost of interest-bearing liabilities increased eight basis points to 0.86% for the current quarter as compared to 0.78% for the comparable prior year quarter due to higher rates across all interest-bearing deposits and borrowed funds.
Provision for Loan Losses . The provision for loan losses increase d by $16,000 to $ 488,000 for the quarter ended September 30, 2017 , from $472,000 for the quarter ended September 30, 2016 , primarily due to growth in the loan portfolio, partially offset by declines in non-performing loans and net recoveries during the current quarter. Net recoveries were $6,000 for the quarter ended September 30, 2017 , compared to net charge-offs of $449,000 for the quarter ended September 30, 2016 .

Non-interest Income . Non-interest income remained relatively stable at $2.6 million for the quarter ended September 30, 2017, as compared to $2.7 million for the quarter ended September 30, 2016.
Non-interest Expense . Non-interest expense decrease d $549,000 , or 3.2% , to $16.8 million for the quarter ended September 30, 2017 , from $17.4 million for the quarter ended September 30, 2016 . The decrease was due primarily to a decrease of $519,000 in data processing fees, related to a contract termination fee associated with the Hopewell Valley acquisition, incurred in the comparable prior year quarter.
Income Tax Expense . The Company recorded income tax expense of $4.5 million for the quarter ended September 30, 2017 , compared to $3.8 million for the quarter ended September 30, 2016 . The effective tax rate for the quarter ended September 30, 2017 , was 35.8% compared to 34.2% for the quarter ended September 30, 2016 .


51

The following table sets forth average balances, average yields and costs, and certain other information for the periods indicated.
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands)

For the Three Months Ended
September 30, 2017
September 30, 2016
Average Outstanding Balance
Interest
Average Yield/ Rate (1)
Average Outstanding Balance
Interest
Average Yield/ Rate (1)
Interest-earning assets:
Loans (2)
$
3,065,206

$
30,424

3.94
%
$
2,810,377

$
28,222

3.99
%
Mortgage-backed securities (3)
413,627

2,175

2.09

525,487

2,665

2.02

Other securities (3)
77,170

370

1.90

60,373

252

1.66

Federal Home Loan Bank of New York stock
26,422

365

5.48

24,667

302

4.87

Interest-earning deposits in financial institutions
71,606

191

1.06

82,016

84

0.41

Total interest-earning assets
3,654,031

33,525

3.64

3,502,920

31,525

3.58

Non-interest-earning assets
265,652

283,900

Total assets
$
3,919,683

$
3,786,820

Interest-bearing liabilities:
Savings, NOW, and money market accounts
$
1,686,677

$
2,033

0.48
%
$
1,654,778

$
1,877

0.45
%
Certificates of deposit
653,512

2,135

1.30

583,488

1,668

1.14

Total interest-bearing deposits
2,340,189

4,168

0.71

2,238,266

3,545

0.63

Borrowed funds
503,240

2,005

1.58

466,476

1,729

1.47

Total interest-bearing liabilities
2,843,429

6,173

0.86

2,704,742

5,274

0.78

Non-interest bearing deposits
378,191

400,856

Accrued expenses and other liabilities
54,278

62,104

Total liabilities
3,275,898

3,167,702

Stockholders' equity
643,785

619,118

Total liabilities and stockholders' equity
$
3,919,683

$
3,786,820

Net interest income
$
27,352

$
26,251

Net interest rate spread (4)
2.78
%
2.80
%
Net interest-earning assets (5)
$
810,602

$
798,178

Net interest margin (6)
2.97
%
2.98
%
Average interest-earning assets to interest-bearing liabilities
128.51
%
129.51
%
(1)
Average yields and rates are annualized.
(2)
Includes non-accruing loans.
(3)
Securities available-for-sale are reported at amortized cost.
(4)
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.
(5)
Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
(6)
Net interest margin represents net interest income divided by average total interest-earning assets.


52

Asset Quality
Purchased Credit Impaired Loans
PCI loans are recorded at estimated fair value using discounted expected future cash flows deemed to be collectible on the date acquired. Based on its detailed review of PCI loans and experience in loan workouts, management believes it has a reasonable expectation about the amount and timing of future cash flows and accordingly has classified PCI loans ( $26.0 million at September 30, 2017 and $30.5 million at December 31, 2016 ) as accruing, even though they may be contractually past due. At September 30, 2017 , 8.6% of PCI loans were past due 30 to 89 days, and 18.2% were past due 90 days or more, as compared to 6.6% and 19.3%, respectively, at December 31, 2016 .
Originated and Acquired loans
The following table details total originated and acquired (including held-for-sale, but excluding PCI) non-accruing loans, non-performing loans, non-performing assets, troubled debt restructurings (TDRs) on which interest is accruing, and accruing loans 30 to 89 days delinquent at September 30, 2017 , and December 31, 2016 (dollars in thousands):

September 30, 2017
December 31, 2016
Non-accrual loans:
Held-for-investment
Real estate loans:
Commercial
$
4,116

$
5,513

One-to-four family residential
738

1,629

Multifamily
418

43

Home equity and lines of credit
112

127

Commercial and industrial
75

9

Total non-accrual loans
5,459

7,321

Loans delinquent 90 days or more and still accruing:
Held-for-investment
Real estate loans:
One-to-four family residential
74

52

Home equity and lines of credit
52

8

Other
47

—

Total loans delinquent 90 days or more and still accruing
173

60

Total non-performing loans
5,632

7,381

Other real estate owned
850

850

Total non-performing assets
$
6,482

$
8,231

Non-performing loans to total loans
0.18
%
0.25
%
Non-performing assets to total assets
0.16
%
0.21
%
Loans subject to restructuring agreements and still accruing
$
20,164

$
20,628

Accruing loans 30 to 89 days delinquent
$
11,380

$
10,100



53

Accruing Loans 30 to 89 Days Delinquent
Loans 30 to 89 days delinquent and on accrual status totaled $11.4 million and $10.1 million at September 30, 2017 , and December 31, 2016 , respectively. The following table sets forth delinquencies for accruing loans by type and by amount at September 30, 2017 , and December 31, 2016 (dollars in thousands):
September 30, 2017
December 31, 2016
Held-for-investment
Real estate loans:
Commercial
$
5,112

$
4,578

One-to-four family residential
4,015

3,621

Multifamily
1,706

1,440

Home equity and lines of credit
331

263

Commercial and industrial loans
206

148

Other loans
10

50

Total delinquent accruing loans
$
11,380

$
10,100


Loans Subject to TDR Agreements
Included in non-accruing loans are loans subject to TDR agreements totaling $254,000 and $1.8 million at September 30, 2017 and December 31, 2016 , respectively. At September 30, 2017 , the $254,000 non-accruing TDR was not performing in accordance with its restructured terms and consisted of one one-to-four family residential loan which was over 90 days delinquent at September 30, 2017, and collateralized by real estate with a recent appraised value of $629,000. At December 31, 2016, $1.4 million, or 76.4%, of the $1.8 million TDRs were not performing in accordance with their restructured terms.

The Company also holds loans subject to restructuring agreements that are on accrual status totaling $20.2 million and $20.6 million at September 30, 2017 , and December 31, 2016 , respectively. At September 30, 2017 , $1.3 million, or 6.4%, of the $20.2 million accruing TDRs were not performing in accordance with their restructured terms. The $1.3 million is comprised of two loans, both of which were 30 - 89 days delinquent at September 30, 2017, and collateralized by real estate with an aggregate recent appraised value of $1.6 million.

The following table details the amounts and categories of the loans subject to restructuring agreements by loan type as of September 30, 2017 , and December 31, 2016 (in thousands):
September 30, 2017
December 31, 2016
Non-Accruing
Accruing
Non-Accruing
Accruing
TDRs:
Real estate loans:
Commercial
$
—

$
15,355

$
1,000

$
15,828

One-to-four family residential
254

3,166

783

2,835

Multifamily
—

1,481

—

1,527

Home equity and lines of credit
—

71

—

336

Commercial and industrial loans
—

91

—

102

$
254

$
20,164

$
1,783

$
20,628


54

Liquidity and Capital Resources
Liquidity . The overall objective of our liquidity management is to ensure the availability of sufficient funds to meet financial commitments and to take advantage of lending and investment opportunities. The Bank manages liquidity in order to meet deposit withdrawals on demand or at contractual maturity, to repay borrowings as they mature, and to fund new loans and investments as opportunities arise.
The Bank's primary sources of funds are deposits, principal and interest payments on loans and securities, borrowed funds, the proceeds from maturing securities and short-term investments, and to a lesser extent, the proceeds from the sales of loans and securities and wholesale borrowings. The scheduled amortization of loans and securities, as well as proceeds from borrowed funds, are predictable sources of funds. Other funding sources, however, such as deposit inflows and loan prepayments are greatly influenced by market interest rates, economic conditions, and competition. The Bank is a member of the Federal Home Loan Bank of New York (the “FHLB”), which provides an additional source of short-term and long-term funding. The Bank also has short-term borrowing capabilities with the Federal Reserve Bank of New York. The Bank’s borrowed funds, excluding capitalized lease obligations and floating rate advances, were $573.2 million at September 30, 2017 , and had a weighted average interest rate of 1.57% . A total of $237.6 million of these borrowings will mature in less than one year. Borrowed funds, excluding capitalized lease obligations and floating rate advances, were $462.0 million at December 31, 2016 . The Bank has the ability to obtain additional funding from the FHLB and Federal Reserve Bank of New York's discount window of approximately $861.1 million utilizing unencumbered securities of $64.3 million and loans of $883.0 million at September 30, 2017 . The Bank expects to have sufficient funds available to meet current commitments in the normal course of business.

Northfield Bancorp, Inc. (standalone) is a separate legal entity from the Bank and must provide for its own liquidity to pay dividends, repurchase its stock, and for other corporate purposes. Northfield Bancorp, Inc.'s primary source of liquidity is dividend payments from the Bank. At September 30, 2017 , Northfield Bancorp, Inc. (standalone) had liquid assets of $24.9 million.

During the first quarter of 2017, the Company enhanced its liquidity position by arranging for a municipal line of credit from the FHLB to be used, if needed, to collateralize our municipal deposits.
Capital Resources . 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. These capital requirements were effective January 1, 2015, and are the result of a final rule implementing recommendations of the Basel Committee on Banking Supervision and certain requirements of the Dodd-Frank Act. 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 capital to risk-weighted assets above 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 increases each year until fully implemented at 2.5% on January 1, 2019.

55

At September 30, 2017 , and December 31, 2016 , as set forth in the following table, both the Bank and Northfield Bancorp, Inc. exceeded all of the regulatory capital requirements to which they were subject at such dates.
Northfield Bank
Northfield Bancorp, Inc.
For Capital Adequacy Purposes (1)
For Well Capitalized Under Prompt Corrective Action Provisions
As of September 30, 2017:
Common equity Tier 1 capital (to risk-weighted assets)
16.60%
18.08%
5.75%
6.50%
Tier 1 leverage
14.39%
15.67%
4.00%
5.00%
Tier I capital (to risk-weighted assets)
16.60%
18.08%
7.25%
8.00%
Total capital (to risk-weighted assets)
17.39%
18.87%
9.25%
10.00%
As of December 31, 2016:
Common equity Tier 1 capital (to risk-weighted assets)
17.75%
18.79%
5.13%
6.50%
Tier 1 leverage
14.55%
15.40%
4.00%
5.00%
Tier I capital (to risk-weighted assets)
17.75%
18.79%
6.63%
8.00%
Total capital (to risk-weighted assets)
18.56%
19.60%
8.63%
10.00%
(1) Includes capital conservation buffer at September 30, 2017, and December 31, 2016.
Off-Balance Sheet Arrangements and Contractual Obligations
In the normal course of operations, the Company engages in a variety of financial transactions that, in accordance with U.S. GAAP, are not recorded in the financial statements.  These transactions primarily relate to lending commitments. These arrangements are not expected to have a material impact on the Company's results of operations or financial condition.
The following table shows the contractual obligations of the Company by expected payment period as of September 30, 2017 (in thousands):
Contractual Obligation
Total
Less than One Year
One to less than Three Years
Three to less than Five Years
More than Five Years
Debt obligations (excluding capitalized leases)
$
573,217

$
237,635

$
220,582

$
115,000

$
—

Commitments to originate loans
78,566

78,566

—

—

—

Commitments to fund unused lines of credit
94,035

94,035

—

—

—


Commitments to fund unused lines of credit are agreements to lend additional funds to customers as long as there have been no violations of any of the conditions established in the agreements (original or restructured).  Commitments to originate loans generally have a fixed expiration or other termination clauses, which may or may not require payment of a fee.  Since some of these loan commitments are expected to expire without being drawn upon, total commitments do not necessarily represent future cash requirements.
For further information regarding our off-balance sheet arrangements and contractual obligations, see "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 .

Recent Accounting Standards and Interpretations

See Note 10 of the Notes to the Unaudited Consolidated Financial Statements for information about recent accounting developments.

56

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Management of Market Risk
General .  A majority of our assets and liabilities are monetary in nature. Consequently, our most significant form of market risk is interest rate risk. Our assets, consisting primarily of mortgage-related assets and loans, generally have longer maturities than our liabilities, which consist primarily of deposits and wholesale borrowings. As a result, a principal part of our business strategy involves managing interest rate risk and limiting the exposure of our net interest income to changes in market interest rates. Accordingly, our board of directors has established a management risk committee, comprised of our Chief Investment Officer, who chairs this Committee, our President and Chief Executive Officer, our Chief Operating Officer, our Chief Financial Officer, our Chief Lending Officer, our Executive Vice President of Operations and our Executive Vice President of Branch Administration and Business Development. This committee is responsible for, among other things, evaluating the interest rate risk inherent in our assets and liabilities, for recommending to the risk management committee of our board of directors the level of risk that is appropriate given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors.
We seek to manage our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates.  As part of our ongoing asset-liability management, we currently use the following strategies to manage our interest rate risk:

•
originating multifamily loans and commercial real estate loans that generally tend to have shorter maturities than one-to-four family residential real estate loans and have higher interest rates that generally reset in five to ten years;
•
investing in shorter term (generally less than 10 years) investment grade corporate securities and mortgage-backed securities; and
•
obtaining general financing through lower-cost core deposits, longer-term FHLB advances and repurchase agreements, and brokered deposits.
Shortening the average term of our interest-earning assets by increasing our investments in shorter-term assets, as well as originating loans with variable interest rates, helps to match the maturities and interest rates of our assets and liabilities better, thereby reducing the exposure of our net interest income to changes in market interest rates.
Net Portfolio Value Analysis . We compute amounts by which the net present value of our assets and liabilities (net portfolio value or NPV) would change in the event market interest rates changed over an assumed range of rates.  Our simulation model uses a discounted cash flow analysis to measure the interest rate sensitivity of NPV.  Depending on current market interest rates, we estimate the economic value of these assets and liabilities under the assumption that interest rates experience an instantaneous and sustained increase of 100, 200, 300, or 400 basis points, or a decrease of 100 and 200 basis points, which is based on the current interest rate environment.  A basis point equals one-hundredth of one percent, and 100 basis points equals one percent.  An increase in interest rates from 3% to 4% would mean, for example, a 100 basis point increase in the “Change in Interest Rates” column below.
Net Interest Income Analysis. In addition to NPV calculations, we analyze our sensitivity to changes in interest rates through our net interest income model.  Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing liabilities, such as deposits and borrowings.  In our model, we estimate what our net interest income would be for a twelve-month period.  Depending on current market interest rates we then calculate what the net interest income would be for the same period under the assumption that interest rates experience an instantaneous and sustained increase or decrease of 100, 200, 300, or 400 basis points, or a decrease of 100 and 200 basis points, which is based on the current interest rate environment.

The following tables set forth, as of September 30, 2017 , and December 31, 2016 , our calculation of the estimated changes in our NPV, NPV ratio, and percent change in net interest income that would result from the designated instantaneous and sustained changes in interest rates (dollars in thousands).  Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, loan prepayments and deposit repricing characteristics including decay rates, and correlations to movements in interest rates, and should not be relied on as indicative of actual results.

57

NPV at September 30, 2017
Change in Interest Rates (basis points)
Estimated Present Value of Assets
Estimated Present Value of Liabilities
Estimated NPV
Estimated Change in NPV
Estimated Change in NPV %
Estimated NPV/Present Value of Assets Ratio
Net Interest Income Percent Change (Year 1)
+400
$
3,611,380

$
3,007,784

$
603,596

$
(168,366
)
(21.81
)%
16.71
%
(12.71
)%
+300
3,702,033

3,060,960

641,073

(130,889
)
(16.96
)
17.32

(9.35
)
+200
3,802,433

3,116,449

685,984

(85,978
)
(11.14
)
18.04

(5.92
)
+100
3,902,545

3,174,395

728,150

(43,812
)
(5.68
)
18.66

(2.85
)
—
4,006,910

3,234,948

771,962

—

—

19.27

—

(100)
4,113,683

3,304,390

809,293

37,331

4.84

19.67

1.84

(200)
4,227,938

3,372,839

855,099

83,137

10.77

20.22

0.98

NPV at December 31, 2016
Change in Interest Rates (basis points)
Estimated Present Value of Assets
Estimated Present Value of Liabilities
Estimated NPV
Estimated Change In NPV
Estimated Change in NPV %
Estimated NPV/Present Value of Assets Ratio
Net Interest Income Percent Change (Year 1)
+400
$
3,453,451

$
2,884,031

$
569,420

$
(200,567
)
(26.05
)%
16.49
%
(15.85
)%
+300
3,551,355

2,936,326

615,029

(154,958
)
(20.12
)
17.32

(11.67
)
+200
3,657,218

2,990,913

666,305

(103,682
)
(13.47
)
18.22

(7.53
)
+100
3,765,179

3,047,933

717,246

(52,741
)
(6.85
)
19.05

(3.68
)
—
3,877,525

3,107,538

769,987

—

—

19.86

—

(100)
4,011,261

3,171,899

839,362

69,375

9.01

20.93

1.10

(200)
4,179,973

3,227,571

952,402

182,415

23.69

22.78

(1.89
)

At September 30, 2017 , in the event of a 200 basis point decrease in interest rates, we would experience a 10.77% increase in estimated net portfolio value and a 0.98% increase in net interest income. In the event of a 400 basis point increase in interest rates, we would experience a 21.81% decrease in estimated net portfolio value and a 12.71% decrease in net interest income. Our policies provide that, in the event of a 200 basis point decrease or less in interest rates, our net present value ratio should decrease by no more than 300 basis points and 10%, and in the event of a 400 basis point increase or less, our net present value should decrease by no more than 475 basis points and 35%. In the event of a 200 basis point decrease or less, our projected net interest income should decrease by no more than 10% in year one, and in the event of a 400 basis point increase or less, our projected net interest income should decrease by no more than 30% in year one. However, when the federal funds rate is low and negative rate shocks do not produce meaningful results, management may temporarily suspend use of guidelines for negative interest rate shocks. At September 30, 2017 , we were in compliance with all board approved policies with respect to interest rate risk management.

Certain shortcomings are inherent in the methodologies used in determining interest rate risk through changes in net portfolio value and net interest income.  Our model requires us to make certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates.  However, we also apply consistent parallel yield curve shifts (in both directions) to determine possible changes in net interest income if the theoretical yield curve shifts occurred gradually.  Net interest income analysis also adjusts the asset and liability repricing analysis based on changes in prepayment rates resulting from the parallel yield curve shifts.  In addition, the net portfolio value and net interest income information presented assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assume that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities.  Accordingly, although interest rate risk calculations provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our net portfolio value or net interest income and will differ from actual results.


58

ITEM 4.    CONTROLS AND PROCEDURES
An evaluation was performed under the supervision and with the participation of the Company’s management, including the President and Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) as of September 30, 2017 .  Based on that evaluation, the Company’s management, including the President and Chief Executive Officer and the Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.
During the three months ended September 30, 2017 , there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

59

PART II

ITEM 1. LEGAL PROCEEDINGS
The Company and subsidiaries are subject to various legal actions arising in the normal course of business.  In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s consolidated financial condition or results of operations.

ITEM 1A.  RISK FACTORS
During the nine months ended September 30, 2017 , there have been no material changes to the risk factors as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 , as filed with the SEC.
ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a)
Unregistered Sale of Equity Securities .  There were no sales of unregistered securities during the period covered by this report.
(b)
Use of Proceeds .  Not applicable
(c)
Repurchases of Our Equity Securities .
The Company did not repurchase any of its common stock during the three months ended September 30, 2017 . The previously adopted repurchase program permitted $185.0 million shares to be repurchased in open market or private transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission. There were no shares remaining to be purchased at September 30, 2017 .

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None

ITEM 4.     MINE SAFETY DISCLOSURES
Not applicable

ITEM 5. OTHER INFORMATION
None

ITEM 6. EXHIBITS
The exhibits required by Item 601 of Regulation S-K are included with this Quarterly Report on Form 10-Q and are listed on the “Index to Exhibits” immediately following the Signatures.

60

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
NORTHFIELD BANCORP, INC.
(Registrant)
Date: November 9, 2017
/s/   Steven M. Klein
Steven M. Klein
President and Chief Executive Officer
/s/   William R. Jacobs
William R. Jacobs
Chief Financial Officer
(Principal Financial and Accounting Officer)

61

INDEX TO EXHIBITS
Exhibit
Number
Description



101

The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Statements of Changes in Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements

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