Safe and Sound

Northfield Bank

Staten Island, NY
5
Star Rating
Staten Island, NY-based Northfield Bank is an FDIC-insured bank started in 1887. As of June 30, 2017, the bank had equity of $603.3 million on assets of $3.86 billion.

With 344 full-time employees in 38 offices in multiple states, the bank currently holds loans and leases worth $3.02 billion, including real estate loans of $2.98 billion. U.S. bank customers currently have $2.70 billion in deposits with the bank.

Overall, Bankrate believes that, as of June 30, 2017, Northfield Bank exhibited a superior condition, earning a full 5 stars for safety and soundness. Keep reading for a breakdown of how the bank did on the three key criteria Bankrate used to evaluate American banks on safety and soundness.

WHAT IS
SAFE AND SOUND?

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THE INSTITUTION'S SCORE

Capital Score

Capital works as a buffer against losses and affords protection for depositors when a bank is experiencing financial trouble. It follows then that a bank's level of capital is an essential measurement of a bank's financial fortitude. When looking at safety and soundness, the higher the capital, the better.
On our test to measure the adequacy of a bank's capital, Northfield Bank racked up 20 out of a possible 30 points, above the national average of 13.38.

One important measure of this buffer is a bank's Tier 1 capital ratio. Northfield Bank's Tier 1 capital ratio was 17.46 percent, higher than the 6 percent level regulators consider adequate, but under the national average of 25.16 percent. A higher capital ratio suggests the bank will be better able to stand up to financial downturns.

Overall, Northfield Bank held equity amounting to 15.63 percent of its assets, which exceeded the national average of 12.10 percent.

Asset Quality Score

Bankrate uses this test to determine the effect of troubled assets, such as unpaid loans, on the bank's loan loss reserves and overall capitalization.

Having large numbers of these types of assets may eventually force a bank to use capital to cover losses, diminishing its equity cushion. It also means that there are likely to be many assets that are in non-accrual status and no longer earning interest for the bank, decreasing earnings and elevating the chances of a failure in the future.

Northfield Bank beat out the national average of 37.62 on Bankrate's test of asset quality, racking up 40 out of a possible 40 points .

The percentage of problem assets a bank holds compared to its total assets is a handy indicator of asset quality.As of June 30, 2017, 0.35 percent of Northfield Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.04 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with troubled assets . The size of that reserve can be a widely used indicator when evaluating a bank's ability to manage troubled assets, especially when compared to the total amount of problematic loans. Unfortunately, the FDIC did not provide information on Northfield Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings may be retained by the bank, expanding its capital cushion, or be used to deal with problematic loans, likely making the bank more resilient in times of trouble. Losses, on the other hand, diminish a bank's ability to do those things.

Northfield Bank received below-average marks on Bankrate's test of earnings, achieving a score of 14 out of a possible 30.

Return on equity, calculated by dividing net income (profit, essentially) by total equity, is one key measure of a bank's earnings. The most recent annualized quarterly return on equity for Northfield Bank was 6.17 percent, below the national average of 9.28 percent.

The bank earned net income of $18.5 million on total equity of $603.3 million for the twelve months ended June 30, 2017. The bank experienced an annualized return on average assets, or ROA, of 0.96 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.14 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.