Retirement Benefits

12 Months Ended

Dec. 31, 2019

The Company has a 401(k) plan for its employees, which grants eligible employees (those salaried employees with at least three months of service) the opportunity to invest from 2% to 15% of their base compensation in certain investment alternatives. The Company contributes an amount equal to 25% of employee contributions on the first 6% of base compensation contributed by eligible employees for the first three years of participation. Subsequent years of participation in excess of three years will increase the Company matching contribution from 25% to 50% of an employee’s contributions, on the first 6% of base compensation contributed by eligible employees. A member becomes fully vested in the Company’s contributions upon (a) completion of five years of service, or (b) normal retirement, early retirement, permanent disability, or death. The Company’s contribution to this plan amounted to approximately $426,000, $394,000, and $387,000 for the years ended December 31, 2019, 2018, and 2017, respectively.

The Company maintains the Northfield Bank ESOP. The ESOP is a tax-qualified plan designed to invest primarily in the Company’s common stock. The ESOP provides employees with the opportunity to receive a funded retirement benefit from the Bank, based primarily on the value of the Company’s common stock. The ESOP purchased 2,463,884 shares of the Company’s common stock in the Company’s initial public offering at a price of $7.13 per share, as adjusted. This purchase was funded with a loan from Northfield Bancorp, Inc. to the ESOP. The outstanding balance at December 31, 2019 and 2018 was $10.1 million and $10.8 million, respectively. The shares of the Company’s common stock purchased in the initial public offering are pledged as collateral for the loan. Shares are released for allocation to participants as loan payments are made. A total of 100,841 and 101,514 shares were released and allocated to participants of the ESOP for the years ended December 31, 2019 and 2018, respectively. Cash dividends on unallocated shares are utilized to satisfy required debt payments. Dividends on allocated shares are utilized to prepay debt which releases additional shares to participants.

Upon completion of the Company’s second-step conversion, a second ESOP was established for employees in 2013, which purchased 1,422,357 shares of the Company’s common stock at a price of $10.00 per share. The purchase was funded with a loan from Northfield Bancorp, Inc. to the second ESOP. The outstanding balance at December 31, 2019 and 2018 was $11.8 million and $12.2 million, respectively. The shares of the Company’s common stock purchased in the second-step conversion are pledged as collateral for the loan. Shares are released for allocation to participants as loan payments are made. A total of 53,320 and 52,523 shares were released and allocated to participants of the second ESOP for the years ended December 31, 2019 and 2018, respectively. Cash dividends on unallocated shares are utilized to satisfy required debt payments. Dividends on allocated shares are utilized to prepay debt which releases additional shares to participants.

ESOP compensation expense for both plans for the years ended December 31, 2019, 2018, and 2017 was $1.9 million, $2.0 million, and $2.2 million, respectively.

The Company maintains a Supplemental Employee Stock Ownership Plan (the "SESOP"), a non-qualified plan, that provides supplemental benefits to certain executives who are prevented from receiving the full benefits contemplated by the ESOP’s benefit formula due to tax law limits for tax-qualified plans. The supplemental payments for the SESOP consist of cash payments representing the value of Company shares that cannot be allocated to participants under the ESOP due to legal limitations imposed on tax-qualified plans. The Company's required contributions to the SESOP plan were $41,000, $76,000, and $84,000 for the years ended December 31, 2019, 2018, and 2017, respectively.

The Company provides post-retirement medical and life insurance to a limited number of retired individuals. The Company also provides retiree life insurance benefits to all qualified employees, up to certain limits. The following tables set forth the funded status and components of postretirement benefit costs at December 31 measurement dates (in thousands):



	2019			2018			2017
Accumulated postretirement benefit obligation beginning of year	$	1,359		$	1,645		$	1,697
Service cost	9			11			11
Interest cost	52			52			57
Actuarial (gain) loss	(76		)	(229		)	(8		)
Benefits paid	(103		)	(120		)	(112		)
Accumulated postretirement benefit obligation end of year	1,241			1,359			1,645
Accrued liability (included in accrued expenses and other liabilities)	$	1,241		$	1,359		$	1,645

The following table sets forth the amounts recognized in accumulated other comprehensive income (loss) (in thousands):



	December 31,
	2019			2018
Net loss	$	132		$	20
Prior service credit	(191		)	—
(Gain) loss recognized in accumulated other comprehensive income (loss)	$	(59	)	$	20

The estimated net loss, prior service credit, and transition obligation that will be amortized from accumulated other comprehensive income into net periodic cost in 2019, are $835, $19,000, and $0, respectively.

The following table sets forth the components of net periodic postretirement benefit costs for the years ended December 31, 2019, 2018, and 2017 (in thousands):



	December 31,
	2019		2018		2017
Service cost	$	9	$	11	$	11
Interest cost	52		52		57
Amortization of unrecognized loss	2		25		28
Net postretirement benefit cost included in compensation and employee benefits	$	63	$	88	$	96

The assumed discount rate related to plan obligations reflects the weighted average of published market rates for high-quality corporate bonds with terms similar to those of the plans expected benefit payments, rounded to the nearest quarter percentage point.

The Company’s discount rate and rate of compensation increase used in accounting for the plan are as follows:



	2019		2018		2017
Assumptions used to determine benefit obligation at period end:
Discount rate	2.75	%	4.00	%	3.25	%
Rate of increase in compensation	4.00	%	4.00	%	4.00	%
Assumptions used to determine net periodic benefit cost for the year:
Discount rate	4.00	%	3.25	%	3.50	%
Rate of increase in compensation	4.00	%	4.00	%	4.00	%

At December 31, 2019, a medical cost trend rate of 8.75% decreasing 0.50% per year thereafter until an ultimate rate of 4.75% is reached, was used in the plan’s valuation. The Company’s healthcare cost trend rates are based, among other things, on the Company’s own experience and third-party analysis of recent and projected healthcare cost trends.

A one percentage-point change in assumed heath care cost trends would have the following effects (in thousands):



	One Percentage Point Increase				One Percentage Point Decrease
	2019		2018		2019			2018
Effect on benefits earned and interest cost	$	4	$	4	$	(4	)	$	(3	)
Effect on accumulated postretirement benefit obligation	$	104	$	109	$	(90	)	$	(94	)

A one percentage-point change in assumed heath care cost trends would have the following effects (in thousands):



	One Percentage Point Increase						One Percentage Point Decrease
	2019		2018		2017		2019			2018			2017
Aggregate of service and interest components of net periodic cost (benefit)	$	4	$	4	$	4	$	(4	)	$	(3	)	$	(4	)

Benefit payments of approximately $103,000, $120,000, and $112,000 were made in 2019, 2018, and 2017, respectively. The benefits expected to be paid under the postretirement health benefits plan for the next five years are as follows: $108,000 in 2020; $108,000 in 2021; $107,000 in 2022; $88,000 in 2023; and $85,000 in 2024. The benefit payments expected to be paid in the aggregate for the years 2025 through 2029 are $359,000. The expected benefits are based on the same assumptions used to measure the Company’s benefit obligation at December 31, 2019, and include estimated future employee service.

The Company maintains a nonqualified plan to provide for the elective deferral of all or a portion of director fees by members of the Board of Directors, deferral of all or a portion of the compensation and/or annual incentive compensation payable to eligible employees of the Company, and to provide to certain officers of the Company benefits in excess of those permitted to be paid by the Company’s savings plan, ESOP, and profit-sharing plan under the applicable Internal Revenue Code. The plan obligation was approximately $14.7 million and $12.7 million at December 31, 2019 and 2018, respectively, and is included in accrued expenses and other liabilities on the consolidated balance sheets. (Loss) income under this plan was $2.0 million, $(879,000), and $1.1 million for the years ended December 31, 2019, 2018, and 2017, respectively. The Company invests to fund this future obligation, in various mutual funds designated as trading securities. The securities are marked-to-market through current period earnings as a component of non-interest income. Accrued obligations under this plan are credited or charged with the return on the trading securities portfolio as a component of compensation and benefits expense.