6. Northfield Bancorp
Shares of Northfield Bancorp (NFBK) of Avenel, N.J., closed at $13.97 Monday, rising 7% year-to-date. The shares were 16% higher than the consensus price target of $12.00 at the end of 2010.
The company had $2.3 billion in total assets as of Sept. 30, with 24 branches in New Jersey and New York.Northfield Bancorp is a mutual holding company, with Northfield Bancorp MHC holding 57% of the company's common stock as of Dec. 31, 2010. The mutual holding company waives its dividend from North Field Bancorp, which in turn pays six cents per quarter to common shareholders, for a dividend yield of 1.72%. In June 2010, the mutual holding company and Northfield Bancorp adopted a plan for a second-step conversion to full stock ownership, however, the conversion and proposed common equity offering were put on hold in September 2010 because of market conditions. According to SNL Financial, there are three second-step conversions scheduled to close this month, including Wellesley Bancorp (WEBK) of Wellesley, Mass., on Dec. 12; West End Indiana Bancshares of Richmond, Ind., on Dec. 13; and Cheviot Financial (CHEV) of Cheviot, Ohio, on Dec. 20. Northfield Bancorp reported third-quarter net income of $3.7 million, or nine cents a share, increasing from $2.4 million, or six cents a share, in the third quarter of 2010. The provision for loan losses declined to $2 million in the third quarter, from $3.4 million a year earlier. Third-quarter net interest income increased 4% year-over-year, to $16.3 million, as "strong loan growth and improving loan quality [continued] to fuel solid earnings," according to CEO John Alexander. However, the net interest margin declined to 2.96% in the third quarter from 3.05% a year earlier, with Alexander adding that margin pressures were "likely to continue as banks compete for quality loans when demand is weak, and seek to invest excess liquidity when the supply of quality investments is limited. The third-quarter ROA was .64%, according to SNL. Loan quality improved, with nonperforming loans making up 5.5% of total loans as of Sept. 30, compared to 6.9% a year earlier. KBW analyst Matthew Clark on Nov. 10 initiated his firm's coverage of Northfield Bancorp with a "Market Perform" rating and $15 price target, saying he expected "valuation improvement as nonperforming assets (NPAs) decline to a more manageable level and Northfield revisits its second-step conversion." The shares trade for just under 29 times the consensus 2012 EPS estimate of 47 cents among analysts polled by FactSet, and for 1.5 times tangible book value, according to SNL. Both analysts covering Northfield Bancorp have neutral ratings on the shares.
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