<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 September 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 November 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 September 30, 1999 (unaudited) and
December 31, 1998 . . . . . . . . . . . . . . . .2
Consolidated Statements of Operations for the
Nine and Three Months Ended September 30, 1999
and 1998 (unaudited). . . . . . . . . . . . . . .3
Consolidated Statements of Comprehensive Income
for the Nine Months Ended September 30, 1999
and 1998 (unaudited). . . . . . . . . . . . . . .4
Consolidated Statements of Cash Flows for the
Nine Months Ended September 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. . . . . . . . . . . . . . . . . .14
Item 2. Changes in Securities and Use of Proceeds. . . . . .14
Item 3. Defaults Upon Senior Securities. . . . . . . . . . .14
Item 4. Submission of Matters to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . . .14
Item 5. Other Information. . . . . . . . . . . . . . . . . .14
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . .14
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . .15
1
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NORTHFIELD BANCORP, INC.
------------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------ -----------
(Unaudited)
<S> <C> <C>
Assets
------
Cash $ 655,428 $ 166,446
Interest bearing deposits in other banks 986,453 4,833,876
Investments held to maturity -- 799,256
Investments available for sale 4,257,047 --
Mortgage backed securities available for sale 2,702,017 --
Mortgage backed securities held to maturity 531,531 2,122,590
Loans receivable, net 41,213,210 35,701,656
Accrued interest receivable - loans 178,148 163,989
- investments 91,002 19,016
- mortgage backed
securities 16,838 13,569
Premises and equipment, at cost, less
accumulated depreciation 103,941 128,325
Federal Home Loan Bank of Atlanta stock at cost 331,500 272,900
Prepaid income taxes 19,350 --
Deferred income taxes 190,986 57,526
Prepaid expenses and other assets 47,760 30,963
----------- -----------
Total assets $51,325,211 $44,310,112
=========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Liabilities
- -----------
Deposit accounts $37,183,057 $36,434,786
Federal Home Loan Bank advances 6,250,000 --
Advance payments by borrowers for expenses 471,622 462,726
Income taxes payable -- 18,449
Other liabilities 328,317 266,230
----------- -----------
Total liabilities 44,232,996 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 September 30, 1999 and December 31, 1998 4,754 4,754
Additional paid-in capital 4,350,538 4,415,682
Retained earnings (substantially restricted) 3,467,461 3,200,542
Accumulated other comprehensive income, net of
tax (259,635) --
Stock held by Rabbi Trust (134,650) (134,650)
Employee Stock Ownership Plan (336,253) (358,407)
----------- -----------
Total stockholders' equity 7,092,215 7,127,921
----------- -----------
Total liabilities and stockholders' equity $51,325,211 $44,310,112
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
-2-
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NORTHFIELD BANCORP, INC.
-----------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
For Nine Months Ended For Three Months Ended
September 30, September 30,
--------------------- ----------------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Income
Interest and fees on loans $2,203,592 $1,895,954 $751,666 $637,526
Interest on investments 231,923 184,863 92,316 69,205
Interest on mortgage backed
securities 107,520 115,057 42,426 38,111
---------- ---------- -------- --------
Total interest income 2,543,035 2,195,874 886,408 744,842
Interest Expense
Interest on deposits 1,267,921 1,293,013 429,646 446,283
Interest on borrowings 124,289 1,516 71,370 349
---------- ---------- -------- --------
Total interest expense 1,392,210 1,294,529 501,016 446,632
---------- ---------- -------- --------
Net interest income 1,150,825 901,345 385,392 298,210
Provision for losses on loans -- -- -- --
---------- ---------- -------- --------
Net interest income after
provision for losses on loans 1,150,825 901,345 385,392 298,210
Non-Interest Income
Fees on loans 7,530 7,493 2,347 2,874
Fees on deposits 11,520 8,944 3,585 2,960
All other income 4,206 5,676 1,055 228
---------- ---------- -------- --------
Net non-interest income 23,256 22,113 6,987 6,062
Non-Interest Expenses
Compensation and related
expenses 303,009 220,353 97,840 71,747
Occupancy 87,091 60,457 30,013 25,814
Deposit insurance 16,848 15,273 5,484 5,329
Service bureau expense 51,383 44,654 15,480 14,272
Furniture, fixtures and
equipment expense 18,584 16,457 6,815 6,285
Advertising 22,836 20,577 8,038 8,488
Professional fees 59,365 38,203 26,302 23,003
Other 111,420 98,918 33,204 45,376
---------- ---------- -------- --------
Total non-interest expenses 670,536 514,892 223,176 200,314
---------- ---------- -------- --------
Income before tax provision and
cumulative effect of accounting
change 503,545 408,566 169,203 103,958
Provision for income tax 201,646 151,076 68,044 39,217
---------- ---------- -------- --------
Income before cumulative effect
on accounting change 301,899 257,490 101,159 64,741
Cumulative effect of accounting
change, net of tax 8,980 -- -- --
---------- ---------- -------- --------
Net income $ 310,879 $ 257,490 $101,159 $ 64,741
========== ========== ======== ========
Basic earnings per share $ .73 $ N/A $ .24 $ N/A
========== ========== ======== ========
Diluted earnings per share $ .71 $ N/A $ .23 $ N/A
========== ========== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
-3-
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NORTHFIELD BANCORP, INC.
-----------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
-----------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------
1999 1998
---- ----
<S> <C> <C>
Net income $ 310,879 $257,490
Unrealized losses on available for sale securities,
net of tax of $163,361 (259,635) --
--------- --------
Comprehensive income $ 51,244 $257,490
========= ========
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
September 30,
---------------------
1999 1998
---- ----
<S> <C> <C>
Net income $101,159 $ 64,741
Unrealized losses on available for sale securities,
net of tax of $22,504 (35,767) --
-------- ---------
Comprehensive income $ 65,392 $ 64,741
======== =========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
-4-
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NORTHFIELD BANCORP, INC.
-----------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
--------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------
1999 1998
---- ----
<S> <C> <C>
Operating Activities
Net income $ 310,879 $ 257,490
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities
-----------------------------------------
Net amortization of premiums and accretion of
discounts on certificates of deposit 65 2,471
Gain on sale of securities available for sale (14,936) --
Net amortization of premiums and accretion of
discounts on mortgage backed securities and
investment securities 14,508 49
Amortization of premiums on mortgage loans
purchased 439 --
Loan fees deferred 41,091 77,083
Amortization of deferred loan fees (44,160) (36,002)
Non-cash compensation under stock-based
benefit plan 23,044 --
Increase in accrued interest on loans (14,159) (22,825)
(Increase) decrease in accrued interest on
investments (71,986) 8,915
(Increase) decrease in accrued interest on
mortgage backed securities (3,269) 261
Provision for depreciation 33,625 18,020
Change in deferred income taxes 29,901 (438)
Increase in prepaid income taxes (19,350) (9,022)
Increase in prepaid expenses and other assets (16,797) (193,862)
Decrease in accrued interest payable (6,151) (277)
Decrease in income taxes payable (18,449) (62,964)
Increase in other liabilities 62,087 70,417
---------- ---------
Net cash provided by operating activities 306,382 109,316
Cash Flows from Investing Activities
- ------------------------------------
Proceeds from maturing certificates of deposit 646,000 538,001
Purchases of certificates of deposit (190,000) (590,000)
Purchases of securities available for sale (3,842,031) --
Proceeds from sale of mortgage backed
securities available for sale 1,048,335 --
Purchases of mortgage backed securities held
to maturity (539,642) (784,712)
Purchases of mortgage backed securities
available for sale (2,371,480) --
Principal collected on mortgage backed
securities 719,272 858,394
Purchase of loans (877,919) (60,682)
Longer term loans originated (11,245,760) (8,005,768)
Principal collected on longer term loans 6,658,871 4,832,445
Net (increase) decrease in short-term loans (44,113) 59,009
Purchases of premises and equipment (9,241) (116,175)
Purchase of Federal Home Loan Bank of Atlanta
stock (58,600) (46,500)
------------ -----------
Net cash used by investing activities (10,106,308) (3,315,988)
</TABLE>
-5-
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NORTHFIELD BANCORP, INC.
-----------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------
1999 1998
---- ----
<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 $ (287,727) $1,504,965
Net increase in certificates of deposit 1,051,045 1,888,707
Net increase in Federal Home Loan Bank advances 6,250,000 --
Conversion costs paid subsequent to stock issuance (66,035) --
Dividend payment (43,960) --
----------- ----------
Net cash provided by financing activities 6,903,323 3,393,672
----------- ----------
Increase (decrease) in cash and cash equivalents (2,896,603) 187,000
Cash and cash equivalents at beginning of period 4,062,056 2,744,442
----------- ----------
Cash and cash equivalents at end of period $ 1,165,453 $2,931,442
=========== ==========
Reconciliation of cash and cash equivalents:
Cash $ 655,428 $ 249,433
Interest bearing accounts in other banks 986,453 3,617,645
----------- ----------
1,641,881 3,867,078
Less - Certificates of deposit maturing in
90 days or more included in interest
bearing accounts in other banks (476,428) (935,636)
----------- ----------
Cash and cash equivalents $ 1,165,453 $2,931,442
=========== ==========
Supplemental disclosures of cash flows information:
Cash paid during year for:
Interest $ 1,351,685 $1,294,806
Income taxes $ 215,500 $ 223,500
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
-6-
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NORTHFIELD BANCORP, INC.
-----------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- -----------------------------------------------------
Note 1 - Basis of Presentation
---------------------
The accompanying unaudited consolidated 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
nine months ended September 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 nine month and three month periods
ended September 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 nine and three months ended
September 30, 1999, is as follows:
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30 September 30
------------- -------------
<S> <C> <C>
Net income before other comprehensive income $310,879 $101,159
======== ========
Weighted Average Shares
Outstanding basic EPS 427,118 427,841
Dilutive Items
Rabbi Trust shares 13,465 13,465
------- -------
Adjusted weighted average shares
used for dilutive EPS 440,583 441,306
======= =======
</TABLE>
-7-
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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, 2000.
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.
-8-
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<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 $51,325,000 as of September
30, 1999, compared to $44,310,000 as of December 31, 1998, an
increase of $7,015,000 or 15.83%. The increase was primarily
attributable to an increase in investment securities of
$3,458,000; an increase in mortgage backed securities of
$1,111,000 and an increase in loans receivable of $5,511,000.
These increases were partially offset by a decrease in
interest-bearing deposits in other banks of $3,848,000. 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 three percent
of the investments are held as "available for sale".
-9-
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION - CONTINUED
Total liabilities of the Company were $44,233,000 as of
September 30, 1999, compared to $37,182,000 as of December 31,
1998, an increase of $7,051,000 or 18.96%. The increase was due
to FHLB advances of $6,250,000 and an increase in deposits of
$748,000. 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 deposits is
attributed to an aggregate $1.0 million 36 month jumbo
certificate issued to several credit unions, which was partially
offset by withdrawals in smaller depositor accounts.
Stockholders' equity was $7,092,000 as of September 30, 1999,
compared to $7,128,000 as of December 31,1998, a decrease of
$36,000. The decrease was principally due to a net unrealized
loss on investments available for sale of $260,000, which was
precipitated by an increase in interest rates that in turn,
negatively impacted the market value of the Company's
predominantly bond investment portfolio. The unrealized loss
was substantially offset by net income for the period of
$311,000.
RESULTS OF OPERATIONS
GENERAL
Net income for the quarter ended September 30, 1999 was
$101,000 as compared to $65,000 for the corresponding quarter in
1998. The increase in net income of $36,000 was primarily the
result of increases in net interest income and was substantially
off-set by increases in total non-interest expense and the
provision for income taxes.
Net income for the nine months ended September 30, 1999 was
$311,000 as compared to $257,000 for the same period in 1998.
The increase in net income of $54,000 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 September 30,
1999 was $886,000 compared to $744,000 for the same quarter in
the prior year, an increase of $142,000 or 19.09%. The increase
was primarily due to an increase of $8,038,000 in the average
balance of loans outstanding and an increase of $4,350,000 in
average investment balances for the quarter ended September 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.
-10-
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED
INTEREST INCOME - CONTINUED
Total interest income for the nine months ended September
30, 1999 was $2,543,000 compared to $2,196,000 for the
corresponding period in the prior year, an increase of $347,000
or 15.80%. The increase was primarily due to an increase of
$7,688,000 in the average dollar amount of loans outstanding and
an increase of $3,292,000 in average dollar amount of
investments outstanding for the nine months ended September 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, and mortgage backed security balances.
The weighted average yield on interest-earning assets was
7.20% and 7.68% for the quarters ended September 30, 1999 and
1998, respectively. The weighted average yield on interest-
earning assets was 7.19% and 7.77% for the nine month periods
ended September 30, 1999 and 1998, respectively.
INTEREST EXPENSE
Total interest expense for the three months ended
September 30, 1999 and 1998 was $501,000 and $447,000
respectively, an increase of $54,000 or 12.08%. The increase
resulted primarily from increases in the average dollar amount
of borrowings of $5,583,000. The increase was partially offset
by a decrease of $1,343,000 in the average dollar amount of
deposits compared to the prior year's quarter.
Total interest expense for the nine months ended September
30, 1999 and 1998 was $1,392,000 and $1,295,000 respectively, an
increase of $97,000 or 7.49%. The increase resulted primarily
from increases in the average dollar amount of borrowings of
$3,506,000. The increase was slightly offset by a decrease in
the weighted average yields paid to 4.92% in the current year's
period compared to 4.97% for the prior year's period.
PROVISION FOR LOAN LOSSES
There were no provisions for loan losses for the three and
nine month periods ended September 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 September 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.
-11-
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED
NON-INTEREST EXPENSE
Total non-interest expense increased $23,000 to $223,000
for the quarter ended September 30, 1999 from $200,000 for
September 30, 1998. The increase for the three month period
was the result of an increase in compensation and related
expenses of $26,000 or 36.11%. The increase 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.
Total non-interest expense increased $156,000 to $671,000
for the nine months ended September 30, 1999 from $515,000 for
September 30, 1998. The increase for the 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 $83,000 or
37.73% was the result of an increase in personnel, increases in
insurance benefit expenses, employee stock ownership expenses,
and a decrease in payroll related deferred loan origination
costs. Occupancy expense increased $27,000 or 45.00% as a
result of the opening of an administrative office in 1998.
Professional fees increased $21,000 as a result of additional
expenses incurred associated with publicly held companies.
The Company expects the level of its non-interest expense to
continue 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
September 30, 1999 and 1998 was $68,000 and $39,000,
respectively, representing an increase of $29,000 or 74.36%.
The increase was principally the result of an increase in
pre-tax earnings and an increase in the effective tax rate for
the quarter ended September 30, 1999 to 40.21% from 37.72% for
the same period in 1998. The higher tax rate was primarily the
result of a net operating loss of the holding company for which
no income tax benefit has been recorded.
The Company's income tax expense for the nine months ended
September 30, 1999 and 1998 was $202,000 and $151,000,
respectively, representing an increase of $51,000 or 33.77%. The
increase was primarily the result of the increase in pre-tax
income and an increase in the effective tax rate to 40.05% for
the nine months ended September 30, 1999 compared to 36.98% for
the same period in 1998. The higher tax rate was primarily the
result of a net operating loss of the holding company for which
no income tax benefit has been recorded.
-12-
<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 $5,956 tax.
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 September
30, 1999, the Company has spent $22,000 on its Year 2000
project. The Company has replaced several outdated teller
terminal units. The Company expects additional costs of $1,000,
primarily for communication of the Company's Y2K readiness to
customers. 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 July 1999. 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.
-13-
<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
None.
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 nine
months ended September 30, 1999
(b) Reports on 8-K. None.
-14-
<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: November 9, 1999 /s/ G. Ronald Jobson
---------------------------
G. Ronald Jobson
President and Chief Executive
Officer
(Principal Executive Officer)
Date: November 9, 1999 /s/ John P. Sabol, Jr.
---------------------------
John P. Sabol, Jr.
Vice President and Chief Financial
Officer
(Principal Accounting and Financial
Officer)
-15-
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