<PAGE>
<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1999
[ ] Transition Report under Section 13 or 15(d) of the
Exchange Act
For the transition period from ______ to ______
Commission File Number: 000-25057
NORTHFIELD BANCORP, INC.
- ---------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its
Charter)
Maryland 52-2098394
- ------------------------------- --------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
8005 Harford Road, Baltimore, Maryland 21234
- ---------------------------------------------------------
(Address of Principal Executive Offices)
(410) 665-7900
-----------------------------------------------
(Issuer's Telephone Number, Including Area Code)
N/A
- ---------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer: (1) filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act
during the past 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 X No
--- ---
As of August 9, 1999, the issuer had 475,442 shares of
Common Stock issued and outstanding.
<PAGE>
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CONTENTS
PAGE
----
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
Consolidated Statements of Financial Condition
as of June 30, 1999 (unaudited) and
December 31, 1998 . . . . . . . . . . . . . . . .2
Consolidated Statements of Operations for the
Six and Three Months Ended June 30, 1999
and 1998 (unaudited). . . . . . . . . . . . . . .3
Consolidated Statements of Comprehensive Income
for the Six Months Ended June 30, 1999
and 1998 (unaudited). . . . . . . . . . . . . . .4
Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1999 and 1998
(unaudited) . . . . . . . . . . . . . . . . . . .5
Notes to Consolidated Financial Statements. . . . . .7
Item 2. Management's Discussion and Analysis or Plan
of Operation . . . . . . . . . . . . . . . . . . .9
PART II. OTHER INFORMATION
-----------------
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . .13
Item 2. Changes in Securities and Use of Proceeds. . . . . .13
Item 3. Defaults Upon Senior Securities. . . . . . . . . . .13
Item 4. Submission of Matters to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . . .13
Item 5. Other Information. . . . . . . . . . . . . . . . . .13
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . .13
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . .14
1
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NORTHFIELD BANCORP, INC.
------------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
--------- -----------
(Unaudited)
<S> <C> <C>
Assets
------
Cash $ 209,920 $ 166,446
Interest bearing deposits in other banks 1,310,590 4,833,876
Investments available for sale 4,052,984 -
Investments held to maturity - 799,256
Mortgage backed securities available for sale 2,119,277 -
Mortgage backed securities held to maturity 536,246 2,122,590
Loans receivable, net 39,576,172 35,701,656
Accrued interest receivable - loans 183,411 163,989
- investments 58,626 19,016
- mortgage backed securities 13,589 13,569
Premises and equipment, at cost, less
accumulated depreciation 115,282 128,325
Federal Home Loan Bank of Atlanta stock at cost 331,500 272,900
Prepaid income taxes 6,996 -
Deferred income taxes 186,380 57,526
Prepaid expenses and other assets 47,138 30,963
----------- -----------
Total assets $48,748,111 $44,310,112
=========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Liabilities
- -----------
Deposit accounts $36,526,186 $36,434,786
Federal Home Loan Bank advances 4,000,000 -
Advance payments by borrowers for expenses 892,457 462,726
Income taxes payable - 18,449
Other liabilities 314,120 266,230
Total liabilities 41,732,763 37,182,191
Commitments and contingencies
Stockholders' Equity
- --------------------
Serial Preferred stock $.01 par value;
authorized 2,000,000 shares; none issued
or outstanding
Common stock $.01 par value;
authorized 8,000,000 shares; issued and
outstanding 475,442 shares at June 30, 1999
and 475,442 shares at December 31, 1998 4,754 4,754
Additional paid-in capital 4,350,174 4,415,682
Retained earnings (substantially restricted) 3,362,716 3,200,542
Accumulated other comprehensive income, net
of taxes (223,868) -
Stock held by Rabbi Trust (134,650) (134,650)
Employee Stock Ownership Plan (343,778) (358,407)
----------- -----------
Total stockholders' equity 7,015,348 7,127,921
----------- -----------
Total liabilities and stockholders' equity $48,748,111 $44,310,112
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
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NORTHFIELD BANCORP, INC.
-----------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
------------------ -------------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Income
- ------
Interest and fees on loans $1,451,926 $1,258,428 $726,417 $630,757
Interest on investments 139,607 115,658 78,420 60,805
Interest on mortgage backed
securities 65,094 76,946 32,896 40,529
---------- ---------- -------- --------
Total interest income 1,656,627 1,451,032 837,733 732,091
Interest Expense
- ----------------
Interest on deposits 838,275 846,730 418,972 433,965
Interest on borrowings 52,919 1,167 42,630 648
---------- ---------- -------- --------
Total interest expense 891,194 847,897 461,602 434,613
---------- ---------- -------- --------
Net interest income 765,433 603,135 376,131 297,478
Provision for losses on loans - - - -
---------- ---------- -------- --------
Net interest income after provision
for losses on loans 765,433 603,135 376,131 297,478
Non-Interest Income
- -------------------
Fees on loans 5,183 4,619 2,783 2,107
Fees on deposits 7,935 5,984 3,717 3,375
All other income 3,151 5,448 1,047 1,407
---------- ---------- -------- --------
Net non-interest income 16,269 16,051 7,547 6,889
Non-Interest Expenses
- ---------------------
Compensation and related
expenses 205,169 148,606 112,991 73,760
Occupancy 57,078 34,643 30,479 17,896
Deposit insurance 11,364 9,944 5,809 5,122
Service bureau expense 35,903 30,382 15,877 14,576
Furniture, fixtures and
equipment expense 11,769 10,172 5,626 5,337
Advertising 14,798 12,089 7,522 5,613
Professional fees 33,063 15,200 19,446 2,750
Other 78,218 53,542 41,055 17,804
---------- ---------- -------- --------
Total non-interest expenses 447,362 314,578 238,805 142,858
---------- ---------- -------- --------
Income before tax provision and
cumulative effect of accounting
change 334,340 304,608 144,873 161,509
Provision for income tax 133,602 111,859 61,146 53,280
Income before cumulative effect of
accounting change 200,738 192,749 83,727 108,229
Cumulative effect of accounting
change, net of tax 8,980 - - -
---------- ---------- -------- --------
Net income $ 209,718 $ 192,749 $ 83,727 $108,229
========== ========== ======== ========
Basic earnings per share $ .49 $ N/A $ .20 $ N/A
========== ========== ======== ========
Diluted earnings per share $ .48 $ N/A $ .19 $ N/A
========== ========== ======== ========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE>
NORTHFIELD BANCORP, INC.
-----------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
-----------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------
1999 1998
------ ------
(Unaudited)
<S> <C> <C>
Net income $ 209,718 $192,749
Unrealized losses on available for sale securities,
net of tax of $140,857 at June 30, 1999 (223,868) -
--------- --------
Comprehensive income $ (14,150) $192,749
========= ========
Three Months Ended
June 30,
-------------------
1999 1998
------ ------
Net income $ 83,727 $108,229
Unrealized losses on available for sale securities,
net of tax of $122,073 at June 30, 1999 (316,088) -
--------- ---------
Comprehensive income $(232,361) $108,229
========= =========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE>
<PAGE>
NORTHFIELD BANCORP, INC.
-----------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------
1999 1998
------ ------
(Unaudited)
<S> <C> <C>
Operating Activities
- --------------------
Net income $ 209,718 $ 192,749
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities
-----------------------------------------
Net amortization of premiums and
accretion of discounts on certificates
of deposit 42 1,837
Gain on sale of securities available for sale (14,936) -
Net amortization of premiums and accretion
of discounts on mortgage backed and
investment securities 10,395 (261)
Net amortization of premiums on mortgage
loans purchased 281 -
Loan fees deferred 28,348 31,287
Amortization of deferred loan fees (36,164) (19,193)
Non-cash compensation under stock-based
benefit plan 15,156 -
Increase in accrued interest (59,052) (7,963)
Provision for depreciation 22,096 6,980
Decrease in deferred income taxes 12,004 17,453
Increase in prepaid income taxes (6,996) (17,630)
Increase in prepaid expenses and other assets (16,175) (127,779)
Decrease in accrued interest payable (3,983) (2,682)
Decrease in income taxes payable (18,449) (62,964)
Increase in other liabilities 47,890 29,707
----------- -----------
Net cash provided by operating activities 190,175 41,541
Cash Flows from Investing Activities
- ------------------------------------
Proceeds from maturing certificates of deposit $ 547,000 $ 245,001
Purchases of certificates of deposit (95,000) (392,000)
Purchase of securities available for sale (3,592,031) -
Proceeds from sale of mortgage backed securities
available for sale 1,048,335 -
Purchases of mortgage backed securities
available for sale (1,615,153) -
Purchases of mortgage backed securities held
to maturity (539,642) (784,712)
Principal collected on mortgage backed securities 554,539 594,825
Purchase of loans (877,919) (60,682)
Longer term loans originated (7,372,915) (4,288,744)
Principal collected on longer term loans 4,401,096 3,172,572
Net decrease (increase) in short-term loans (17,241) 20,015
Purchases of premises and equipment (9,053) (102,040)
Purchase of Federal Home Loan Bank of
Atlanta stock (58,600) (46,500)
----------- -----------
Net cash used by investing activities (7,626,584) (1,642,265)
</TABLE>
<PAGE>
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NORTHFIELD BANCORP, INC.
-----------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------
1999 1998
------ ------
(Unaudited)
<S> <C> <C>
Cash Flows from Financing Activities
- ------------------------------------
Net increase (decrease) in demand deposits,
money market, passbook accounts and
advance payments by borrowers for
taxes and insurance $ (48,898) $ 1,821,534
Net increase in certificates of deposit 574,012 924,394
Net increase in Federal Home Loan Bank advances 4,000,000 -
Dividend payment (47,544) -
Conversion costs paid subsequent to stock issuance (66,035) -
----------- ------------
Net cash provided by financing activities 4,411,535 2,745,928
----------- ------------
Increase (decrease) in cash and cash equivalents (3,024,874) 1,145,204
Cash and cash equivalents at beginning of period 4,062,056 2,744,442
----------- ------------
Cash and cash equivalents at end of period $ 1,037,182 $ 3,889,646
=========== ============
Reconciliation of cash and cash equivalents:
Cash $ 209,920 $ 222,219
Interest bearing accounts in other banks 1,310,590 4,698,697
----------- ------------
1,520,510 4,920,916
Less - Certificates of deposit maturing in 90
days or more included in interest
bearing accounts in other banks (483,328) (1,031,270)
----------- ------------
Cash and cash equivalents $ 1,037,182 $ 3,889,646
=========== ============
Supplemental disclosures of cash flows information:
Cash paid during year for:
Interest $ 860,521 $ 850,579
Income taxes $ 153,000 $ 175,000
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
<PAGE>
<PAGE>
NORTHFIELD BANCORP, INC.
-----------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
------------------------------------------------------
Note 1 - Basis of Presentation
---------------------
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and in accordance
with the instructions to Form 10-QSB. Accordingly, they do not
include all of the disclosures required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments necessary for a fair
presentation of the results of operations for the interim
periods presented have been made. Such adjustments were of a
normal recurring nature. The results of operations for the six
months ended June 30, 1999 are not necessarily indicative of the
results that may be expected for the fiscal year December 31,
1999 or any other interim period. The consolidated financial
statements should be read in conjunction with the consolidated
financial statements and related notes which are incorporated by
reference in the Company's Annual Report on Form 10-KSB for the
year ended December 31,1998.
Note 2 - Cash Flow Presentation
----------------------
For purposes of the statements of cash flows, cash and
cash equivalents include cash and amounts due from depository
institutions and certificates of deposit with original
maturities of 90 days or less.
Note 3 - Earnings Per Share
------------------
Basic EPS is computed by dividing net income by the
weighted average number of common shares outstanding for the
appropriate period. Unearned ESOP shares are not included
in outstanding shares. Diluted EPS is computed by dividing
net income by the weighted average shares outstanding as
adjusted for the dilutive effect of unvested stock awards
based on the "treasury stock" method. Earnings per share
data is not presented for the three month and six month
periods ended June 30, 1998, since the Bank converted to
stock form in November 1998 and such information would not
be meaningful. Information relating to the calculations of
net income per share of common stock, summarized for the six
and three months ended June 30, 1999, is as follows:
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30 June 30
---------------- ------------------
<S> <C> <C>
Net income before other comprehensive income $209,718 $ 83,727
======== ========
Weighted Average Shares
Outstanding basic EPS 426,744 427,112
Dilutive Items
Rabbi Trust shares 13,465 13,465
Adjusted weighted average shares
used for dilutive EPS 440,209 440,577
======== ========
</TABLE>
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<PAGE>
NORTHFIELD BANCORP, INC.
-----------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
------------------------------------------------------
Note 4 - Recent Accounting Pronouncements
--------------------------------
SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" was issued in June, 1998. This Statement
standardizes the accounting for derivative instruments
including certain derivative instruments embedded in other
contracts, by requiring that an entity recognize these items as
assets or liabilities in the statement of financial position and
measure them at fair value. This Statement generally provides
for matching the timing of gain or loss recognition on the
hedging instrument with the recognition of the changes in the
fair value of the hedged asset or liability that
are attributable to the hedged risk or the earnings effect of
the hedged forecasted transaction. The Statement is effective
for all fiscal quarters of all fiscal years beginning after June
15, 1999.
Note 5 - Cumulative Effect of Accounting Change
--------------------------------------
The Company early implemented SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities"
on January 1, 1999. In accordance with the pronouncement's
provisions, the Company reclassified approximately $1,071,000 of
mortgage backed securities from held to maturity to trading. On
January 11, 1999, the Company sold the entire trading investment
for $1,048,335 and realized a gain of $8,980, net of tax in
the amount of $5,956. In addition, the Company reclassified
approximately $1,020,000 of mortgage backed securities and
$799,000 of investments from held to maturity to available for
sale.
<PAGE>
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
When used in this filing and in future filings by Northfield
Bancorp, Inc. (the "Company") with the Securities and Exchange
Commission, in the Company's press releases or other public or
shareholder communications, or in oral statements made with the
approval of an authorized executive officer, the words or
phrases "would be," "will allow," "intends to," "will likely
result," "are expected to," "will continue," "is anticipated,"
"estimate," "project" or similar expressions are intended to
identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such
statements are subject to risks and uncertainties, including but
not limited to changes in economic conditions in the Company's
market area, changes in policies by regulatory agencies,
fluctuations in interest rates, demand for loans in the
Company's market area and competition, all or some of
which could cause actual results to differ materially from
historical earnings and those presently anticipated or
projected.
The Company wishes to caution readers not to place undue
reliance on any such forward-looking statements, which speak
only as of the date made, and advises readers that various
factors, including regional and national economic conditions,
substantial changes in levels of market interest rates, credit
and other risks of lending and investment activities and
competitive and regulatory factors, could affect the Company's
financial performance and could cause the Company's actual
results for future periods to differ materially from those
anticipated or projected.
The Company does not undertake, and specifically disclaims
any obligations, to update any forward-looking statements to
reflect occurrences or unanticipated events or circumstances
after the date of such statements.
FINANCIAL CONDITION
Total assets of the Company were $48,748,000 as of June 30,
1999, compared to $44,310,000 as of December 31, 1998, an
increase of $4,438,000 or 10.02%. The increase was primarily
attributable to an increase in investment securities of
$3,254,000; an increase in mortgage backed securities of
$533,000 and an increase in loans receivable of $3,874,000.
These increases were partially offset by a decrease in
interest-bearing deposits in other banks of $3,523,000. The
purchase of investments and mortgage backed securities in the
current year is part of management's strategy to maximize the
high level of equity and to increase profitability. As
liquidity levels increased with the inflow of Federal Home Loan
Bank ("FHLB") advances, the funds were transferred from
interest-bearing deposits to higher yielding investments and
mortgage backed securities. Approximately ninety percent of the
investments are held as "available for sale".
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION - CONTINUED
Total liabilities of the Company were $41,733,000 as of
June 30, 1999, compared to $37,182,000 as of December 31, 1998,
an increase of $4,551,000 or 12.24%. The increase was due to
FHLB advances of $4,000,000 and an increase in advance payments
by borrowers for taxes and insurance of $430,000. In addition,
deposits increased $91,000. Management's plan is to take
advantage of low rate FHLB advances and invest the proceeds in
higher yielding investments and loan originations. The increase
in advance payments by borrowers was due to the cyclical nature
of this account as borrowers increased the accounts monthly and
disbursements are made primarily in July through September.
The increase in deposits is attributed to an aggregate $1.0
million 36 month jumbo certificate issued to several credit
unions, which was substantially offset by withdrawals in smaller
depositor accounts.
Stockholders' equity was $7,015,000 as of June 30, 1999,
compared to $7,128,000 as of December 31,1998, a decrease of
$113,000. The decrease was principally due to a net unrealized
loss on investments available for sale of $224,000, stock
conversion-related expenses of $66,000 and common stock
dividends of $48,000, which were partially offset by net income
for the period of $210,000.
RESULTS OF OPERATIONS
GENERAL
Net income for the quarter ended June 30, 1999 was $84,000
as compared to $108,000 for the corresponding quarter in 1998.
The decrease in net income of $24,000 was primarily the result
of increases in total non-interest expense and the provision for
income taxes, partially off-set by increases in net interest
income, predominantly interest and fees on loans.
Net income for the six months ended June 30, 1999 was
$210,000 as compared to $193,000 for the same period in 1998.
The increase in net income of $17,000 was the result of
increases in total interest income, predominantly interest and
fees on loans and a realized gain on the sale of available for
sale securities during the current year. The increases were
substantially offset by increases in interest expense on
borrowings, total non-interest expense and the provision for
income taxes.
INTEREST INCOME
Total interest income for the quarter ended June 30, 1999
was $838,000 compared to $732,000 for the same quarter in the
prior year, an increase of $106,000 or 14.48%. The increase was
primarily due to an increase of $8,082,000 in the average
balance of loans outstanding and an increase of $3,490,000 in
average investment balances for the quarter ended June 30, 1999
over the prior year's respective quarter. The increases were
partially offset by a decrease in both the weighted average
yield and the average dollar amount of interest-bearing deposits
and a decline in the weighted average yield on loans.
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
INTEREST INCOME - CONTINUED
Total interest income for the six months ended June 30,
1999 was $1,657,000 compared to $1,451,000 for the corresponding
period in the prior year, an increase of $206,000 or 14.20%. The
increase was primarily due to an increase of $7,512,000 in the
average dollar amount of loans outstanding and an increase of
$2,763,000 in average dollar amount of investments outstanding
for the six months ended June 30, 1999 over the prior year's
respective period. The increases were partially offset by
decreases in the weighted average yield and the average dollar
amount outstanding on interest-bearing deposits and a decline in
the weighted average yield on loan balances.
The weighted average yield on interest-earning assets was
7.07% and 7.74% for the quarters ended June 30, 1999 and 1998,
respectively. The weighted average yield on interest-earning
assets was 7.19% and 7.80% for the six month periods ended June
30, 1999 and 1998, respectively.
INTEREST EXPENSE
Total interest expense for the three months ended June 30,
1999 and 1998 was $462,000 and $435,000 respectively, an
increase of $27,000 or 6.21%. The increase resulted primarily
from increases in the average dollar amount of borrowings of
$3,500,000. The increase was partially offset by a decrease of
$1,070,000 in the average dollar amount of deposits compared to
the prior year's quarter.
Total interest expense for the six months ended June 30,
1999 and 1998 was $891,000 and $848,000 respectively, an
increase of $43,000 or 5.07%. The increase resulted primarily
from increases in the average dollar amount of borrowings of
$2,500,000. The increase was slightly offset by a decrease in
the weighted average yields paid to 2.42% in the current year's
period compared to 2.48% for the prior year's period.
PROVISION FOR LOAN LOSSES
There were no provisions for loan losses for the three and
six month periods ended June 30, 1999 and 1998. Management
monitors and adjusts its loan loss reserves based upon its
analysis of the loan portfolio. Reserves are increased by a
charge to income, the amount of which depends upon an analysis
of the changing risks inherent in the Company's loan portfolio
and the relative status of the real estate market and the
economy in general. The Company has historically experienced a
limited amount of loan charge-offs and delinquencies. At June
30, 1999, management believes the allowance for loan losses is
sufficient since the loans are adequately secured. The
assessment of the adequacy of the allowance for loan losses
involves subjective judgment regarding future events and there
can be no assurance that additional provisions for loan losses
will not be required in future periods.
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
NON-INTEREST EXPENSE
Total non-interest expense increased $96,000 to $239,000
for the quarter ended June 30, 1999 from $143,000 for June 30,
1998. The increase for the three month period was the result of
increases in compensation and related expenses, occupancy and
equipment expenses, professional expenses and other expenses.
The increase in compensation and related expenses of $39,000 or
52.70% was the result of an increase in personnel, increases in
insurance benefit expenses, employee stock ownership and
deferred compensation expenses, and a decrease in payroll
related deferred loan origination costs. Occupancy expense
increased $12,000 or 66.67% as a result of the opening of an
administrative office in 1998. Professional fees increased
$17,000 as a result of additional expenses incurred associated
with publicly held companies. Other expenses rose $23,000
primarily reflecting Year 2000 compliance-related expenses
incurred during the current quarter.
Total non-interest expense increased $132,000 to $447,000
for the six months ended June 30, 1999 from $315,000 for June
30, 1998. The increase for the period was the result of
increases in compensation and related expenses, occupancy and
equipment expenses, and professional expenses. The increase in
compensation and related expenses of $56,000 or 37.58% was the
result of an increase in personnel, increases in insurance
benefit expenses, employee stock ownership and deferred
compensation expenses, and a decrease in payroll related
deferred loan origination costs. Occupancy expense increased
$22,000 or 62.86% as a result of the opening of an
administrative office in 1998. Professional fees increased
$18,000 as a result of additional expenses incurred
associated with publicly held companies.
The Company expects the level of its non-interest expense
to increase in future periods as a result of expenses associated
with the employee stock ownership plan that the Company
implemented in connection with its stock conversion as well as
other stock benefit plans that the Company intends to implement
in the future.
INCOME TAXES
The Company's income tax expense for the quarters ended
June 30, 1999 and 1998 was $61,000 and $53,000, respectively,
representing an increase of $8,000 or 15.09%. The increase was
primarily the result of a net operating loss of the holding
company for which no income tax benefit has been recorded. The
effective tax rate for the quarter ended June 30, 1999 was
42.21% compared to 32.99% for the same period in 1998.
The Company's income tax expense for the six months ended
June 30, 1999 and 1998 was $134,000 and $112,000, respectively,
representing an increase of $22,000 or 19.64%. The increase was
primarily the result of the increase in pre-tax income and the
result of a net operating loss of the holding company for which
no income tax benefit has been recorded. The effective tax rate
for the six months ended June 30, 1999 was 39.96% compared to
36.72% for the same period in 1998.
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
CUMULATIVE EFFECT OF ACCOUNTING CHANGE
The Company early implemented SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" on January 1,
1999. In accordance with the pronouncement's provisions,
the Company reclassified approximately $1,071,000 of mortgage
backed securities from held to maturity to trading. On January
11, 1999 the Company sold the entire trading investment for
$1,048,335 and realized a gain of $8,980, net of tax in the
amount of $5,956.
YEAR 2000
A great deal of information has been disseminated about the
global computer problem that may occur in the year 2000 which
would affect the speed and accuracy of the data processing
service provider. During 1997, the Company adopted a Year 2000
Compliance Plan (the "Plan"). The objective of the Plan is to
prepare the Company for the Year 2000 date change technology.
The Company has now completed a thorough review of its internal
systems as well as the efforts of its outside data processing
service provider. The Company's Board of Directors monitors the
progress of the Plan. The Company began testing its internal PC
based applications beginning in February 1998. As of June 30,
1999, the Company has spent $20,000 on its Year 2000 project.
The Company has replaced several outdated teller terminal units.
The Company expects additional costs of $3,000, due to the
following items: the cost of a customer awareness effort; and
service bureau fees for the use of a Year 2000 disaster recovery
facility. The greatest potential for problems, however,
concerns the data processing provided by the Company's third
party service bureau. The service bureau is providing the
Company with quarterly updates of its compliance progress and
has advised the Company that it expects to resolve this problem
before the year 2000 and is well on its way to doing so. The
Company completed testing with its third party data processing
service bureau in August 1998. The Company developed a
contingency plan to deal with the potential that
if its service bureau is unable to bring its systems into
compliance or the Company has failures in any other areas
despite all of its preparations, the Company will be able to
continue operating. There can be no assurance in this regard.
It is possible that the Company could experience data
processing delays, errors or failures, all of which could have a
material adverse impact on the Company's financial condition and
results of operations. However, the Company also will
implement its contingency plan in the event of delays, errors or
failures and expects to be able to continue operating by other
means.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-
HOLDERS
(a) The registrant held its Annual Meeting of
Stockholders on May 12, 1999
(b) Not applicable
(c) The only matter to be voted upon at the
Annual Meeting was the election of two
individuals as directors.
<TABLE>
<CAPTION>
Nominee Votes For Votes Withheld
- ------- --------- --------------
<S> <C> <C>
E. Thomas Lawrence, Jr. 324,572 1,000
David G. Rittenhouse 325,522 50
</TABLE>
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibit is filed herewith:
Exhibit 27 Financial Data Schedule for the six
months ended June 30, 1999
(b) Reports on 8-K. None.
13
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NORTHFIELD BANCORP, INC.
Date: August 10, 1999 /s/ G. Ronald Jobson
---------------------------
G. Ronald Jobson
President and Chief Executive
Officer
(Principal Executive Officer)
Date: August 10, 1999 /s/ John P. Sabol, Jr.
---------------------------
John P. Sabol, Jr.
Vice President and Chief Financial
Officer
(Principal Accounting and Financial
Officer)
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