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, 2000
[ ] 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 June 30, 2000, the issuer had 475,422 shares of Common Stock issued
and outstanding.
<PAGE>
CONTENTS
PAGE
----
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of
June 30, 2000 (unaudited) and December 31, 1999....................2
Consolidated Statements of Operations for the
Six Months and Three Months Ended June 30, 2000
and 1999 (unaudited)...............................................3
Consolidated Statements of Comprehensive Income
for the Six Months Ended June 30, 2000
and 1999 (unaudited)...............................................4
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 2000 and 1999 (unaudited)...........................5
Notes to Consolidated Financial Statements (Unaudited).................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
1
<PAGE>
NORTHFIELD BANCORP, INC.
------------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
-------- -------------
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
Assets
------
Cash $ 182,131 $ 620,282
Interest bearing deposits in other banks 1,206,119 1,038,521
Investments available for sale 4,782,295 4,873,550
Mortgage backed securities available for sale 2,303,633 2,551,277
Mortgage backed securities held to maturity 505,124 524,188
Loans receivable, net 44,214,224 42,856,212
Accrued interest receivable - loans 196,298 171,294
- investments 72,538 65,508
- mortgage backed securities 15,579 16,086
Premises and equipment, at cost, less accumulated depreciation 78,765 97,153
Federal Home Loan Bank of Atlanta stock at cost 500,000 445,000
Deferred income taxes 332,875 286,708
Prepaid and refundable income taxes 55,828 410
Prepaid expenses and other assets 24,288 33,886
----------- -----------
Total assets $54,469,697 $53,580,075
=========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Liabilities
-----------
Deposit accounts $36,535,306 $36,602,858
Borrowings 9,400,000 8,900,000
Advance payments by borrowers for expenses 925,113 553,961
Income taxes payable -- 11,237
Other liabilities 567,564 439,377
----------- -----------
Total liabilities 47,427,983 46,507,433
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 475,422 shares at June 30, 2000
and at December 31 1999 4,754 4,754
Additional paid-in capital 4,354,980 4,351,177
Retained earnings (substantially restricted) 3,485,667 3,491,960
----------- -----------
7,845,401 7,847,891
Accumulated other comprehensive income (364,108) (318,280)
Stock held by Rabbi Trust (134,650) (134,650)
Employee Stock Ownership Plan (304,929) (322,319)
----------- -----------
Total stockholders' equity 7,041,714 7,072,642
----------- -----------
Total liabilities and stockholders' equity $54,469,697 $53,580,075
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
2
<PAGE>
NORTHFIELD BANCORP, INC.
------------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
------------------------- ------------------------
2000 1999 2000 1999
---------- ---------- -------- ---------
<S> <C> <C> <C> <C>
Income
------
Interest and fees on loans $1,624,917 $1,451,926 $823,648 $726,417
Interest on investments 222,760 139,607 113,500 78,420
Interest on mortgage backed securities 88,776 65,094 43,661 32,896
----------- ----------- --------- --------
Total interest income 1,936,453 1,656,627 980,809 837,733
Interest Expense
----------------
Interest on deposits 870,616 838,275 442,473 418,972
Interest on short-term borrowings 201,743 21,798 110,465 11,509
Interest on long-term borrowings 79,777 31,121 39,889 31,121
----------- ----------- -------- --------
Total interest expense 1,152,136 891,194 592,827 461,602
----------- ----------- --------- --------
Net interest income 784,317 765,433 387,982 376,131
Provision for losses on loans -- -- -- --
----------- ----------- --------- --------
Net interest income after provision
for losses on loans 784,317 765,433 387,982 376,131
Non-Interest Income
-------------------
Fees on loans 2,598 5,183 1,109 2,783
Fees on deposits 7,586 7,935 3,980 3,717
All other income 3,450 3,151 1,470 1,047
----------- ----------- -------- ---------
Net non-interest income 13,634 16,269 6,559 7,547
Non-Interest Expenses
---------------------
Compensation and related expenses 304,816 205,169 122,617 112,991
Occupancy 60,076 57,078 31,587 30,479
Deposit insurance 4,109 11,364 2,014 5,809
Service bureau expense 29,432 35,903 12,098 15,877
Furniture, fixtures and equipment expense 13,591 11,769 6,346 5,626
Advertising 16,136 14,798 6,992 7,522
Merger-related expenses 80,654 -- 70,654 --
Professional fees 80,099 33,063 40,451 19,446
Other 92,530 78,218 40,799 41,055
----------- ----------- --------- --------
Total non-interest expenses 681,443 447,362 333,558 238,805
----------- ----------- --------- --------
Income before tax provision and cumulative
effect of accounting change 116,508 334,340 60,983 144,873
Provision for income tax 78,480 133,602 54,153 61,146
----------- ----------- --------- --------
Income before cumulative effect of accounting change 38,028 200,738 6,830 83,727
Cumulative effect of accounting change, net of tax -- 8,980 -- --
----------- ----------- --------- --------
Net income $ 38,028 $ 209,718 $ 6,830 $ 83,727
=========== =========== ========= ========
Basic earnings per share $ .09 $ .49 $ .02 $ .20
=========== =========== ========= ========
Diluted earnings per share $ .09 $ .48 $ .02 $ .19
=========== =========== ========= ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
3
<PAGE>
NORTHFIELD BANCORP, INC.
------------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
-----------------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------
2000 1999
---- ----
<S> <C> <C>
Net income $ 38,028 $ 209,718
Cumulative effect of change in accounting principle,
net of taxes of $513 -- (815)
Unrealized losses on available for sale securities,
net of tax of $28,835 at June 30, 2000 and
$140,344 at June 30, 1999 (45,828) (223,053)
--------- ---------
Comprehensive loss $ (7,800) $ (14,150)
========= =========
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------
2000 1999
---- ----
<S> <C> <C>
Net income $ 6,830 $ 83,727
Unrealized losses on available for sale securities,
net of tax of $36,062 at June 30, 2000 and
$122,073 at June 30, 1999 (58,606) (316,088)
--------- ---------
Comprehensive loss $ (51,776) $(232,361)
========== =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
4
<PAGE>
NORTHFIELD BANCORP, INC.
------------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------
2000 1999
---- ----
<S> <C> <C>
Operating Activities
--------------------
Net income $ 38,028 $ 209,718
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities
------------------------------------------
Net amortization of premiums and accretion
accretion of discounts on certificates of deposit 47 42
Gain on sale of securities - trading -- (14,936)
Proceeds from sale of mortgage backed securities - trading -- 1,048,335
Net amortization of premiums and accretion of
discounts on mortgage backed and investment securities 4,384 10,395
Net amortization of premiums on mortgage loans purchased 315 281
Loan fees deferred 26,572 28,348
Amortization of deferred loan fees (17,242) (36,164)
Non-cash compensation under stock-based
benefit plan 21,193 15,156
Increase in accrued interest receivable (31,527) (59,052)
Provision for depreciation 22,535 22,096
(Increase) decrease in deferred income taxes (17,332) 12,004
Increase in prepaid income taxes (55,418) (6,996)
Decrease (increase) in prepaid expenses and other assets 9,598 (16,175)
Increase (decrease) in accrued interest payable 3,780 (3,983)
Decrease in income taxes payable (11,237) (18,449)
Increase in other liabilities 128,187 47,890
----------- -----------
Net cash provided by operating activities 121,883 1,238,510
Cash Flows from Investing Activities
------------------------------------
Proceeds from maturing certificates of deposit 99,000 547,000
Purchases of certificates of deposit (96,000) (95,000)
Purchase of securities available for sale -- (3,592,031)
Purchases of mortgage backed securities
available for sale -- (1,615,153)
Purchases of mortgage backed securities held
to maturity -- (539,642)
Principal collected on mortgage backed securities 270,586 554,539
Purchase of loans -- (877,919)
Longer term loans originated (3,616,257) (7,372,915)
Principal collected on longer term loans 2,259,827 4,401,096
Net increase in short-term loans (11,226) (17,241)
Purchases of premises and equipment (4,147) (9,053)
Purchase of Federal Home Loan Bank of Atlanta stock (55,000) (58,600)
----------- -----------
Net cash used by investing activities (1,153,217) (8,674,919)
</TABLE>
5
<PAGE>
NORTHFIELD BANCORP, INC.
------------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------
2000 1999
---- ----
<S> <C> <C>
Cash Flows from Financing Activities
------------------------------------
Net decrease in demand deposits, money market,
passbook accounts and advance payments by
borrowers for taxes and insurance $ (363,915) $ (48,898)
Net increase in certificates of deposit 663,735 574,012
Net increase in Federal Home Loan Bank advances 500,000 4,000,000
Dividend payment (44,321) (47,544)
Conversion costs paid subsequent to stock issuance -- (66,035)
----------- ------------
Net cash provided by financing activities 755,499 4,411,535
----------- ------------
Decrease in cash and cash equivalents (275,835) (3,024,874)
Cash and cash equivalents at beginning of period 1,279,953 4,062,056
----------- ------------
Cash and cash equivalents at end of period $ 1,004,118 $ 1,037,182
=========== ============
Reconciliation of cash and cash equivalents:
Cash $ 182,131 $ 209,920
Interest bearing accounts in other banks 1,206,119 1,310,590
----------- ------------
1,388,250 1,520,510
Less - Certificates of deposit with original
maturities of in 90 days or more included
in interest bearing accounts in other banks (384,132) (483,328)
----------- ------------
Cash and cash equivalents $ 1,004,118 $ 1,037,182
=========== ============
Supplemental disclosures of cash flows information: Cash paid during year for:
Interest $ 1,141,236 $ 850,579
Income taxes $ 165,110 $ 175,000
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
6
<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, 2000 are not necessarily
indicative of the results that may be expected for the fiscal year
December 31, 2000 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 31,1999.
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. Information
relating to the calculations of net income per share of common stock,
summarized for the six and three months ended June 30, 2000 and 1999,
is as follows:
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 2000 June 30, 1999
--------------------------- --------------------------
Basic Diluted Basic Diluted
----- ------- ----- -------
<S> <C> <C> <C> <C>
Net income $ 38,028 $ 38,028 $209,718 $209,718
Weighted Average Shares
Outstanding basic EPS 430,358 430,358 426,744 426,744
Dilutive Items
Rabbi Trust shares -- 13,465 -- 13,465
--------- --------- -------- --------
Adjusted weighted average
Shares for dilutive EPS 430,358 443,823 426,744 440,209
Per share amount $ 0.09 $ 0.09 $ 0.49 $ 0.48
</TABLE>
7
<PAGE>
NORTHFIELD BANCORP, INC.
------------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
------------------------------------------------------
Note 3 - Earnings Per Share - Continued
------------------------------
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 2000 June 30, 1999
--------------------------- --------------------------
Basic Diluted Basic Diluted
----- ------- ----- -------
<S> <C> <C> <C> <C>
Net income $ 6,830 $ 6,830 $ 83,727 $ 83,727
Weighted average shares
Outstanding basic EPS 430,724 430,724 427,112 427,112
Dilutive Items
Rabbi Trust shares -- 13,465 -- 13,465
--------- --------- -------- --------
Adjusted weighted average
shares used dilutive EPS 430,724 444,189 427,112 440,577
Per share amount $ 0.02 $ 0.02 $ 0.20 $ 0.19
</TABLE>
Note 4 - Cumulative Effect of Accounting Change
--------------------------------------
The Company implemented SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS No.133") 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 that had a carrying value
of $1,033,041 and realized a gain of $8,980, net of tax. Accordingly,
the net realized gain of $8,980 is reflected on the consolidated
statements of operations as the cumulative effect of an accounting
change, net of taxes.
In addition, the Company reclassified $1,053,760 of mortgage
backed securities and $799,526 of investments from held to maturity
to available for sale. Accordingly, the net unrealized loss of $1,328
at the date of transfer is reflected on the consolidated statements
of comprehensive income as the cumulative effect of a change in
accounting principle, net of taxes.
8
<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.
PENDING MERGER
On May 16, 2000, the Board of Directors of Northfield Bancorp, Inc.
approved an agreement whereby Patapsco Bancorp, Inc. will acquire Northfield
Bancorp, Inc. To accomplish the acquisition, the Company will be merged into a
subsidiary of Patapsco Bancorp. If the merger is completed, Company stockholders
will receive $12.50 in cash and 0.24 shares of Patapsco Bancorp's Series A
Noncumulative Convertible Perpetual Preferred Stock for each share of Northfield
Bancorp common stock, plus cash in lieu of any fractional share of preferred
stock. At any time after issuance, the preferred stock will be convertible at
the stockholder's election into shares of Patapsco Bancorp common stock, on a
one-for-one basis, subject to future adjustment in certain circumstances. Each
share of Patapsco Bancorp's outstanding preferred stock will earn dividends at
the annual rate of 7.5% of its liquidation preference of $25.00 per share,
payable when and if declared by Patapsco Bancorp's Board of Directors.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
PENDING MERGER - CONTINUED
Dividends are noncumulative, which means that if the Board of Directors of
Patapsco Bancorp, Inc. does not pay dividends for a quarterly period, it is not
obligated to pay a dividend for that period at a later date. After five years
from the date of issuance of the Patapsco Bancorp preferred stock, Patapsco
Bancorp may redeem some or all of the outstanding Patapsco Bancorp preferred
stock at $25.00 per share plus any declared but unpaid dividends for the
then-current quarter. Generally, the merger will be a taxable transaction for
Northfield Bancorp stockholders. The acquisition is expected to be completed in
the fourth quarter of 2000 and is subject to various conditions, including
regulatory approval and the approval of the stockholders of Northfield Bancorp,
Inc.
FINANCIAL CONDITION
Total assets of the Company were $54,470,000 as of June 30, 2000,
compared to $53,580,000 as of December 31, 1999, an increase of $890,000 or
1.66%. The increase was attributable to an increase in loans receivable of
$1,358,000, partially offset by a $438,000 decrease in cash.
Total liabilities of the Company were $47,428,000 as of June 30, 2000,
compared to $46,507,000 as of December 31, 1999, an increase of $921,000 or
1.98%. The increase was due to FHLB advances of $500,000 and an increase in
advance payments by borrowers for taxes and insurance of $371,000. Management's
plan is to take advantage of low rate FHLB advances and invest the proceeds in
higher yielding 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.
Stockholders' equity was $7,042,000 as of June 30, 2000, compared to
$7,073,000 as of December 31,1999, a decrease of $31,000. The decrease was
principally due to a net unrealized loss on investments available for sale of
$46,000 and common stock dividends of $44,000, which were partially offset by
net income for the period of $38,000.
RESULTS OF OPERATIONS
GENERAL
Net income for the six months ended June 30, 2000 was $38,000 as
compared to $210,000 for the corresponding period in 1999. Net income for the
quarter ended June 30, 2000 was $7,000 as compared to $84,000 for the
corresponding quarter in 1999. The decreases in net income in both the six and
three month periods of $172,000 and $77,000, respectively, were primarily the
result of increases in total non-interest expense, including merger-related
expenses. Adjusted for merger-related expenses, net income for the six and three
month periods ended June 30, 2000 would have been $119,000 and $77,000,
respectively. Net income for the six and three month periods would have
decreased $91,000 or 43.33% and $7,000 or 8.33%, respectively.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
INTEREST INCOME
Total interest income for the six months ended June 30, 2000 was
$1,936,000 compared to $1,657,000 for the corresponding period in the prior
year, an increase of $279,000 or 16.84%. The increase was primarily due to an
increase of $5,697,000 in the average dollar amount of loans outstanding and an
increase of $2,105,000 in average dollar amount of investments outstanding for
the six months ended June 30, 2000 over the prior year's respective period.
Total interest income for the quarter ended June 30, 2000 was $981,000
compared to $838,000 for the same quarter in the prior year, an increase of
$143,000 or 17.06%. The increase was primarily due to an increase of $5,271,000
in the average balance of loans outstanding and an increase of $1,355,000 in
average investment balances for the quarter ended June 30, 2000 over the prior
year's respective quarter.
The weighted average yield on interest-earning assets was 7.28% and
7.19% for the six month periods ended June 30, 2000 and 1999, respectively. The
weighted average yield on interest-earning assets was 7.32% and 7.07% for the
quarters ended June 30, 2000 and 1999, respectively.
INTEREST EXPENSE
Total interest expense for the six months ended June 30, 2000 and 1999
was $1,152,000 and $891,000 respectively, an increase of $261,000 or 29.29%. The
increase resulted primarily from an increase in the average dollar amount of
borrowings of $6,917,000 and a $909,000 increase in the average dollar amount of
certificates of deposit.
Total interest expense for the three months ended June 30, 2000 and
1999 was $593,000 and $462,000 respectively, an increase of $131,000 or 28.35%.
The increase resulted primarily from increases in the average dollar amount of
short-term borrowings of $6,133,000 and an increase of six basis points paid on
savings deposits.
PROVISION FOR LOAN LOSSES
There were no provisions for loan losses for the six and three month
periods ended June 30, 2000 and 1999. 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, 2000, 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>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Continued
NON-INTEREST EXPENSE
Total non-interest expense increased $234,000 to $681,000 for the six
months ended June 30, 2000 from $447,000 for June 30, 1999. The increase for the
period was the result of increases in compensation and related expenses, merger
expenses and professional expenses. The increase in compensation and related
expenses of $100,000 or 48.78% was the result of an increase in non-cash
deferred compensation expenses and annual merit employee salary increases.
Professional fees increased $47,000 as a result of increased legal and other
expenses.
Total non-interest expense increased $95,000 to $334,000 for the
quarter ended June 30, 2000 from $239,000 for June 30, 1999. The increase for
the three month period was the result of merger-related expenses and increased
professional fees incurred in fiscal 2000.
The Company expects the level of its non-interest expense to remain at
higher levels as a result of merger expenses and expenses associated with the
employee stock ownership plan that the Company implemented in connection with
its stock conversion.
INCOME TAXES
The Company's income tax expense for the six months ended June 30, 2000
and 1999 was $78,000 and $134,000, respectively, representing a decrease of
$56,000 or 41.79%. The decrease was primarily the result of the decrease in
pre-tax income, substantially offset by an increase in the effective tax rate.
The effective tax rate for the six months ended June 30, 2000 was 67.35%
compared to 39.96% for the same period in 1999. The increase in the effective
tax rate was predominantly the result of approximately $81,000 of non-deductible
merger-related expenses incurred to date in the current fiscal year.
The Company's income tax expense for the quarters ended June 30, 2000
and 1999 was $54,000 and $61,000, respectively, representing a decrease of
$7,000 or 11.48%. The decrease was primarily the result of the decrease in
pre-tax income, substantially offset by an increase in the effective tax rate.
The effective tax rate for the quarter ended June 30, 2000 was 88.80% compared
to 42.21% for the same period in 1999. The effective tax rate increase was
predominantly the result of non-deductible merger-related expenses incurred in
the quarter ended June 30, 2000.
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.
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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
On May 10, 2000, the Registrant held its Annual Meeting of
Stockholders. A total of 419,226 shares, or 88.0% of the
Company's shares outstanding, were represented at the Annual
Meeting either in person or by proxy.
Two directors were nominated by the Registrant's Board of
Directors to serve new three-year terms expiring in 2003. The
nominees and the voting results for each nominee are listed
below:
Nominee Vote For Vote Withheld
------- -------- -------------
G. Ronald Jobson 414,226 5,000
J. Thomas Hoffman 419,226 0
The following directors, whose three year terms of service have
not expired, continue as directors of the Registrant: Gary R.
Bozel, William R. Rush, E. Thomas Lawrence, Jr. and David G.
Rittenhouse.
There were no other matters voted on at the Annual Meeting.
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, 2000
(b) Reports on 8-K.
On May 19, 2000, the Registrant filed a Current Report on Form 8-K
under Item 5 to report that it had entered into an Agreement of
Merger with Patapsco Bancorp, Inc.
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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 14, 2000 /s/ G. Ronald Jobson
--------------------------------------
G. Ronald Jobson
President and Chief Executive Officer
(Principal Executive, Accounting and
Financial Officer)
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