UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2008

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from            to

NORTHFIELD BANCORP, INC.

United States of America		26-1384892
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)
1410 St. Georges Avenue , Avenel, New Jersey		07001
(Address of principal executive offices)		(Zip Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 þ No o.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date. 44,803,061 shares of Common Stock, par value $0.01 per share, were issued and outstanding as of August 12, 2008.

 

 

NORTHFIELD BANCORP, INC.

Form 10-Q Quarterly Report

Table of Contents

				Page
				Number
		PART I — FINANCIAL INFORMATION
Item 1.		Financial Statements			2
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			12
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			23
Item 4.		Controls and Procedures			25
Item 4T.		Controls and Procedures			25
		PART II — OTHER INFORMATION
Item 1.		Legal Proceedings			26
Item 1A.		Risk Factors			26
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			26
Item 3.		Defaults Upon Senior Securities			26
Item 4.		Submission of Matters to a Vote of Security Holders			26
Item 5.		Other Information			26
Item 6.		Exhibits			26
Signatures					27
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32: CERTIFICATION

PART I

ITEM 1. FINANCIAL STATEMENTS

NORTHFIELD BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 2008 and December 31, 2007
(In thousands, except share amounts)

		June 30,				December 31,
		2008				2007
		(Unaudited)
ASSETS:
Cash and due from banks		$	6,272				7,277
Interest-bearing deposits in other financial institutions			10,659				17,811
Total cash and cash equivalents			16,931				25,088
Certificates of deposit in other financial institutions			94,527				24,500
Trading securities			3,663				3,605
Securities available-for-sale, at estimated fair value (encumbered $393,186 in 2008 (unaudited) and $139,829 in 2007)			843,742				802,417
Securities held-to-maturity, at amortized cost (estimated fair value of $16,742 in 2008 (unaudited) and $19,440 in 2007 (encumbered $11,643 in 2008 (unaudited) and $6,338 in 2007)			16,967				19,686
Loans held-for-sale			—				270
Loans held-for-investment, net			517,683				424,329
Allowance for loan losses			(7,463	)			(5,636	)
Net loans held-for-investment			510,220				418,693
Accrued interest receivable			7,255				5,600
Bank owned life insurance			41,127				41,560
Federal Home Loan Bank of New York stock, at cost			14,630				6,702
Premises and equipment, net			8,296				7,727
Goodwill			16,159				16,159
Other assets			17,456				14,911
Total assets		$	1,590,973				1,386,918
LIABILITIES AND STOCKHOLDERS’ EQUITY:
LIABILITIES:
Deposits		$	909,032				877,225
Securities sold under agreements to repurchase			194,500				102,000
Other borrowings			103,654				22,420
Advance payments by borrowers for taxes and insurance			1,370				843
Accrued expenses and other liabilities			8,831				17,090
Total liabilities			1,217,387				1,019,578
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued or outstanding			—				—
Common stock, $0.01 par value: 90,000,000 shares authorized, 44,803,061 shares issued and outstanding at June 30, 2008 and December 31, 2007			448				448
Additional paid-in-capital			199,408				199,395
Unallocated common stock held by employee stock ownership plan			(16,685	)			(16,977	)
Retained earnings			197,162				187,992
Accumulated other comprehensive loss			(6,747	)			(3,518	)
Total stockholders’ equity			373,586				367,340
Total liabilities and stockholders’ equity		$	1,590,973				1,386,918

See accompanying notes to the unaudited consolidated financial statements.

NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three months and six months ended June 30, 2008 and 2007
(Unaudited)
(In thousands, except share data)

		Three months ended								Six months ended
		June 30,								June 30,
		2008				2007				2008				2007
Interest income:
Loans		$	7,397				7,133				14,386				14,046
Mortgage-backed securities			9,346				7,234				17,771				14,433
Other securities			226				388				936				1,063
Federal Home Loan Bank of New York dividends			204				128				335				268
Deposits in other financial institutions			924				761				1,984				1,336
Total interest income			18,097				15,644				35,412				31,146
Interest expense:
Deposits			4,431				6,043				9,216				12,108
Borrowings			2,119				1,354				4,058				2,533
Total interest expense			6,550				7,397				13,274				14,641
Net interest income			11,547				8,247				22,138				16,505
Provision for loan losses			1,240				97				1,838				537
Net interest income after provision for loan losses			10,307				8,150				20,300				15,968
Non-interest income:
Fees and service charges for customer services			756				751				1,521				1,553
Income on bank owned life insurance			424				432				3,357				821
(Loss) gain on securities transactions, net			(16	)			180				(343	)			244
Gain on sale of premises, equipment and deposit relationships			—				—				—				4,308
Other			43				7				71				46
Total non-interest income			1,207				1,370				4,606				6,972
Non-interest expense:
Compensation and employee benefits			3,066				3,227				6,067				6,524
Occupancy			831				818				1,659				1,705
Furniture and equipment			221				209				441				421
Data processing			635				521				1,271				1,155
Professional fees			304				268				669				450
Other			882				954				1,818				1,768
Total non-interest expense			5,939				5,997				11,925				12,023
Income before income tax expense			5,575				3,523				12,981				10,917
Income tax expense			2,010				1,256				3,811				3,957
Net income		$	3,565				2,267				9,170				6,960
Net income per common share		$	0.08				N/A				0.21				N/A

N/A- Net income per common share is not applicable for the three and six months ended June 30, 2007, due to the Company not becoming a public entity until November 7, 2007.

See accompanying notes to the unaudited consolidated financial statements.

NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Six months ended June 30, 2008 and 2007
(Unaudited)
(Dollars in thousands)

														Unallocated
														common stock held								Accumulated				Total
		Common Stock								Additional paid-in				by the employee					Retained			other				stockholders’
		Shares				Par value				capital				stock ownership plan				earnings				comprehensive loss				equity
Balance at December 31, 2006			100			$	—				510				—				177,731				(14,247	)			163,994
Comprehensive income:
Net income																			6,960								6,960
Change in other comprehensive income, net of tax of $910																							(1,366	)			(1,366	)
Total comprehensive income																											5,594
Captial contribution from Northfield Bancorp, MHC											500																500
Balance at June 30, 2007			100				—				1,010				—				184,691				(15,613	)			170,088
Balance at December 31, 2007			44,803,061				448				199,395				(16,977	)			187,992				(3,518	)			367,340
Comprehensive income:
Net income																			9,170								9,170
Change in other comprehensive income, net of tax of $2,347																							(3,229	)			(3,229	)
Total comprehensive income																											5,941
ESOP shares allocated or committed to be released											13				292												305
Balance at June 30, 2008			44,803,061			$	448				199,408				(16,685	)			197,162				(6,747	)			373,586

See accompanying notes to the unaudited consolidated financial statements.

NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 2008 and 2007
(Unaudited) (In thousands)

		Six months ended June 30,
		2008				2007
Cash flows from operating activities:
Net income		$	9,170				6,960
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Provision for loan losses			1,838				537
Depreciation			667				658
Accretion of discounts, and deferred loan fees, net of amortization of premiums			(682	)			175
Amortization of mortgage servicing rights			66				84
Income on bank owned life insurance			(847	)			(821	)
Gain on bank owned life insurance death benefit			(2,510	)			—
Net gain on sale of loans			(19	)			(27	)
Proceeds from sale of loans			3,012				2,925
Origination of loans held-for-sale			(2,723	)			(3,242	)
Loss (gain) on securities transactions, net			343				(244	)
Gain on sale of deposit relationships			—				(3,660	)
Gain on sale of premises and equipment, net			—				(648	)
Purchases of trading securities			(424	)			(557	)
(Increase) decrease in accrued interest receivable			(1,655	)			395
(Increase) decrease in other assets			(159	)			1,125
(Decrease) increase in accrued expenses and other liabilities			(8,259	)			1,094
Amortization of core deposit intangible			190				189
Net cash (used in) provided by operating activities			(1,992	)			4,943
Cash flows from investing activities:
Net increase in loans receivable		$	(93,307	)			(14,054	)
(Purchases) redemptions of Federal Home Loan Bank of New York stock, net			(7,928	)			1,069
Purchases of securities available-for-sale			(219,458	)			(95,733	)
Principal payments and maturities on securities available-for-sale			170,955				106,286
Principal payments and maturities on securities held-to-maturity			2,717				3,496
Proceeds from sale of securities available-for-sale			2,261				3,726
Purchases of certificates of deposit in other financial institutions			(118,527	)			(26,000	)
Proceeds from maturities of certificates of deposit in other financial institutions			48,500				27,000
Purchase of bank owned life insurance			—				(7,000	)
Cash received from bank owned life insurance settlement			3,790				—
Purchases of premises and equipment			(1,236	)			(280	)
Proceeds from sale of premises and equipment			—				1,473
Net cash used in investing activities			(212,233	)			(17	)
Cash flows from financing activities:
Net increase in deposits			31,807				4,809
Deposit relationships sold, net			—				(22,985	)
Increase in advance payments by borrowers for taxes and insurance			527				856
Repayments under capital lease obligations			(65	)			(55	)
Proceeds from securities sold under agreements to repurchase			239,500				20,000
Repayments related to securities sold under agreements to repurchase			(147,000	)			(17,000	)
Net increase in other borrowings			81,299				—
Capital contribution from Northfield Bancorp, MHC			—				500
Net cash provided by (used in) financing activities			206,068				(13,875	)
Net decrease in cash and cash equivalents			(8,157	)			(8,949	)
Cash and cash equivalents at beginning of period			25,088				60,624
Cash and cash equivalents at end of period		$	16,931				51,675
Supplemental cash flow information:
Cash paid during the period for:
Interest		$	12,807				14,703
Income taxes			16,255				2,891

See accompanying notes to the unaudited consolidated financial statements.

NORTHFIELD BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table dollar amounts in thousands)
(unaudited)

Note 1 — Basis of Presentation

          The consolidated financial statements are comprised of the accounts of Northfield Bancorp, Inc., and its wholly owned subsidiary, Northfield Bank (the “Bank”) and the Bank’s wholly-owned significant subsidiaries, NSB Services Corp. and NSB Realty Trust (collectively, the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation.

          In the opinion of management, all adjustments (consisting of normal and recurring adjustments) necessary for the fair presentation of the consolidated financial condition and the consolidated results of operations for the unaudited periods presented have been included. The results of operations and other data presented for the three and six-month periods ended June 30, 2008, are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2008. Certain prior year amounts have been reclassified to conform to the current year presentation.

          Certain information and note disclosures usually included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for the preparation of interim financial statements. The consolidated financial statements presented should be read in conjunction with the audited consolidated financial statements and notes to consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2007, of Northfield Bancorp, Inc. as filed with the SEC.

Note 2 —Net Income Per Common Share

          Net income per common share is computed by dividing net income available to common stockholders by the weighted average number of shares outstanding during the period. For purposes of calculating net income per common share, weighted average common shares outstanding excludes unallocated employee stock ownership (ESOP) shares that have not been committed for release. There were 43,126,414 and 43,119,145 average shares outstanding during the three and six months ended June 30, 2008, respectively, for purposes of calculating net income per common share. Net income per common share is not applicable for the three and six months ended June 30, 2007, due to the Company not becoming a public entity until November 7, 2007.

Note 3 — Net Loans Held-for-Investment

Net loans held-for-investment are as follows:

		June 30,				December 31,
		2008				2007
Real estate loans:
Commercial mortgage		$	272,224				243,902
One- to four-family residential mortgage			100,915				95,246
Home equity and lines of credit			18,875				12,797
Construction and land			50,748				44,850
Multifamily			62,483				14,164
Total real estate loans			505,245				410,959
Commercial and industrial loans			10,950				11,397
Other loans			1,388				1,842
Total commercial and industrial and other loans			12,338				13,239
Total loans held-for-investment			517,583				424,198
Deferred loan cost, net			100				131
Loans held-for-investment, net			517,683				424,329
Allowance for loan losses			(7,463	)			(5,636	)
Net loans held-for-investment		$	510,220				418,693

NORTHFIELD BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table dollar amounts in thousands)
(unaudited)

Activity in the allowance for loan losses is as follows:

		At or for the
		six months ended
		June 30,
		2008				2007
Beginning balance		$	5,636				5,030
Provision for loan losses			1,838				537
Recoveries			—				—
Charge-offs			(11	)			(836	)
Ending balance		$	7,463				4,731

          Included in loans held-for-investment, net are loans for which the accrual of interest income has been discontinued due to deterioration in the financial condition of the borrowers. The principal amount of these nonaccrual loans (including impaired loans) was $9.9 million and $8.6 million at June 30, 2008, and December 31, 2007, respectively. Loans past due 90 days or more and still accruing interest were $636,000 and $1.2 million at June 30, 2008, and December 31, 2007, respectively, and are considered well secured and in the process of collection. The Company is under no commitment to lend additional funds to borrowers whose loans are on nonaccrual status or who are past due 90 days or more and still accruing interest.

Note 4 — Deposits

Deposits are as follows:

		June 30,				December 31,
		2008				2007
Non-interest-bearing demand		$	97,954				99,208
Interest-bearing negotiable orders of withdrawal (NOW)			67,153				57,555
Savings-passbook, statement, tiered, and money market			381,186				317,875
Certificates of deposit			362,739				402,587
		$	909,032				877,225

Interest expense on deposit accounts is summarized as follows for the periods indicated:

		Three months ended								Six months ended
		June 30,								June 30,
		2008				2007				2008				2007
NOW		$	264				201				566				350
Savings-passbook, statement, tiered, and money market			978				582				1,580				1,179
Certificates of deposit			3,189				5,260				7,070				10,579
		$	4,431				6,043				9,216				12,108

NORTHFIELD BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table dollar amounts in thousands)
(unaudited)

Note 5 — Other Postretirement Benefits

The following table sets forth the components of net periodic postretirement benefit costs:

		Three months ended								Six months ended
		June 30,								June 30,
		2008				2007				2008				2007
Service cost		$	1				1				2				2
Interest cost			24				17				48				34
Amortization of transition obligation			4				4				8				9
Amortization of prior service costs			4				4				8				8
Amortization of unrecognized loss (gain)			5				(4	)			10				(8	)
		$	38				22				76				45

Note 6 — Fair Value Measurements

          The following table presents the assets reported on the consolidated balance sheet at their estimated fair value as of June 30, 2008, by level within the fair value hierarchy as required by Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements.” Financial assets and liabilities are classified in their entirety based on the level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

	•		Level 1 Inputs — Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
	•		Level 2 Inputs — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlations or other means.
	•		Level 3 Inputs — Significant unobservable inputs that reflect an entity’s own assumptions that market participants would use in pricing the assets or liabilities.

NORTHFIELD BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table dollar amounts in thousands)
(unaudited)

          The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of June 30, 2008, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

						Fair Value Measurements at Reporting Date Using:
						Quoted Prices in
						Active Markets for				Significant Other				Significant
						Identical Assets				Observable Inputs				Unobservable Inputs
		June 30, 2008				(Level 1)				(Level 2)				(Level 3)
Assets:
Investment securities:
Available-for-sale:
Mortgage-backed securities		$	824,410			$	—			$	824,410			$	—
Corporate bonds			13,460				—				13,460				—
Equities			5,872				5,872				—				—
Total available-for-sale			843,742				5,872				837,870				—
Trading securities			3,663				3,663				—				—
Total		$	847,405			$	9,535			$	837,870			$	—

          Available -for- Sale Securities: The estimated fair values for mortgage-backed and corporate securities are obtained from a nationally recognized third-party pricing service. The estimated fair values are derived primarily from cash flow models, which include assumptions for interest rates, credit losses, and prepayment speeds. Broker/dealer quotes are utilized as well when such quotes are available and deemed representative of the market. The significant inputs utilized in the cash flow models are based on market data obtained from sources independent of the Company (Observable Inputs,) and are therefore classified as Level 2 within the fair value hierarchy. The estimated fair value of equity securities classified as Level 1 are derived from quoted market prices in active markets, these assets consist of money market mutual funds.

          Trading Securities: Fair values are derived from quoted market prices in active markets. The assets consist of publicly traded mutual funds.

          Also, the Company may be required, from time to time, to measure the fair value of certain other financial assets on a nonrecurring basis in accordance with U.S. generally accepted accounting principles. The adjustments to fair value usually result from the application of lower-of-cost-or-market accounting or write downs of individual assets.

          At June 30, 2008, the Company had $5.9 million of impaired loans that were recorded at their estimated fair value, less cost to sell. Included in this amount were loans with principal balances of $5.5 million that had fair value impairment charges of $232,000 and $473,000 for the three months and six months ended June 30, 2008, utilizing Level 3 inputs. Impaired loans are valued utilizing current appraisals adjusted downward by management, as necessary, for changes in relevant valuation factors subsequent to the appraisal date.

          Certain non-financial assets and liabilities measured on a recurring and nonrecurring basis include goodwill and other intangible assets and other non-financial long-lived assets. The Financial Accounting Standards Board (“FASB”) has delayed provisions of SFAS No. 157 related to the fair value measurement of non-financial assets and liabilities until fiscal periods beginning after November 15, 2008; therefore, the Company will apply the applicable provisions of SFAS No. 157 for non-financial assets and liabilities beginning January 1, 2009.

NORTHFIELD BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table dollar amounts in thousands)
(unaudited)

Note 7 — Income Taxes

          The Company files income tax returns in the United States federal jurisdiction and in New York State and City jurisdictions. The Company and the Bank also file income tax returns in the State of New Jersey. With few exceptions, the Company is no longer subject to federal, state, and local income tax examinations by tax authorities for years prior to 2004. The following is a reconciliation of the beginning and ending gross unrecognized tax benefits for the six months ended June 30, 2008. The amounts have not been reduced by the federal deferred tax effects of unrecognized state benefits.

Unrecognized tax benefits at January 1, 2008		$	2,700
Payments for tax positions of prior years			(2,700	)
Unrecognized tax benefits at June 30, 2008		$	—

          The Company records interest accrued related to uncertain tax benefits as tax expense. During the three and six months ended June 30, 2008, the Company expensed $7,000 and $69,000, respectively, in interest on uncertain tax positions. The Company records penalties accrued as other expenses. The Company has not accrued for penalties.

Note 8 — Commitments and Contingencies

          During the second quarter of 2008, the Company’s back office facility located at 581 Main Street, Woodbridge, New Jersey was completed and the related operating lease commenced. The Company leased approximately 15,000 square feet of office space for 10 years with an average annual cost of $444,000.

Note 9 — Recent Accounting Pronouncements

          In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. In February 2008, the FASB issued FASB Staff Position 157-1, “Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13” (“FSP 157-1”) and FSP 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”). FSP 157-1 amends SFAS No. 157 to remove certain leasing transactions from its scope. FSP 157-2 delays the effective date of SFAS No. 157 for all non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. These nonfinancial items include assets and liabilities such as reporting units measured at fair value in a goodwill impairment test and nonfinancial assets acquired and liabilities assumed in a business combination. The provisions of Statement No. 157 were adopted by the Company, as it applies to its financial instruments, effective beginning January 1, 2008. The impact of adoption of SFAS No. 157 is discussed in Note 6, “Fair Value Measurement.”

          In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” The standard permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The Company adopted the statement effective January 1, 2008. The adoption of Statement No. 159 did not have a material impact on the Company’s financial statements as the Company did not choose to measure any additional financial instruments or certain other items at fair value.

          In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities.” This standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. This statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company is currently evaluating the effect, if any, this statement will have on its disclosures related to hedging activities.

NORTHFIELD BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table dollar amounts in thousands)
(unaudited)

          In June 2008, FASB ratified EITF Issue No. 08-3, “Accounting by Lessees for Nonrefundable Maintenance Deposits” (“EITF No. 08-3”). EITF No. 08-3 requires that all nonrefundable maintenance deposits be accounted for as a deposit with the deposit expensed or capitalized in accordance with the lessee’s maintenance accounting policy when the underlying maintenance is performed. Once it is determined that an amount on deposit is not probable of being used to fund future maintenance expense, it is to be recognized as additional expense at the time such determination is made. EITF No. 08-3 is effective for fiscal years beginning after December 15, 2008. The Company is currently evaluating the effect, if any, adopting EITF No. 08-3 will have on our financial statements.

ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking Information

Forward Looking Statements

          This Quarterly Report contains forward-looking statements, which can be identified by the use of such words as estimate, project, believe, intend, anticipate, plan, seek and similar expressions. These forward looking statements include:

	•		statements of our goals, intentions and expectations;
	•		statements regarding our business plans and prospects and growth and operating strategies;
	•		statements regarding the asset quality of our loan and investment portfolios; and
	•		estimates of our risks and future costs and benefits.

          These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the following important factors that could affect the actual outcome of future events:

	•		significantly increased competition among depository and other financial institutions;
	•		inflation and changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments;
	•		general economic conditions, either nationally or in our market areas, that are worse than expected;
	•		adverse changes in the securities markets;
	•		legislative or regulatory changes that adversely affect our business;
	•		our ability to enter new markets successfully and take advantage of growth opportunities, and the possible dilutive effect of potential acquisitions or de novo branches, if any;
	•		changes in consumer spending, borrowing and savings habits;
	•		changes in accounting policies and practices, as may be adopted by bank regulatory agencies and the Financial Accounting Standards Board and other promulgating authorities;
	•		inability of third-party providers to perform their obligations to us; and
	•		changes in our organization, compensation and benefit plans.

          Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

Critical Accounting Policies

     Note 1 to the Company’s Audited Consolidated Financial Statements for the year ended December 31, 2007 included in the Company’s Annual Report on Form 10-K, as supplemented by this report, contains a summary of significant accounting policies. Various elements of these accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. Certain assets are carried in the consolidated Balance Sheets at fair value or the lower of cost or fair value. Policies with respect to the methodologies used to determine the allowance for loan losses and judgments regarding the valuation of intangible assets and securities as well as the valuation allowance against deferred tax assets are the most critical accounting policies because they are important to the presentation of the Company’s financial condition and results of operations, involve a higher degree of complexity, and require management to make difficult and subjective judgments which often require assumptions or estimates about highly uncertain matters. The use of different judgments, assumptions, and estimates could result in material differences in the results of operations or financial condition. These critical accounting policies and their application are reviewed periodically and, at least annually, with the Audit Committee of the Board of Directors. For a further discussion of the critical accounting policies of the Company, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K, for the year ended December 31, 2007.

Overview

          This overview highlights selected information and may not contain all the information that is important to you in understanding our performance during the period. For a more complete understanding of trends, events, commitments, uncertainties, liquidity, capital resources, and critical accounting estimates, you should carefully read this entire document, as well as our Annual Report on Form 10-K for the year ended December 31, 2007.

          Net income for the three months ended June 30, 2008 was $3.6 million, an increase of $1.3 million, or 57.3%, as compared to net income of $2.3 million for the three months ended June 30, 2007. Net income per common share for the three months ended June 30, 2008 was $0.08. Net income per common share was not applicable for the second quarter of 2007 due to the Company not becoming a public company until November 7, 2007.

          Return on assets and return on equity were 0.93% and 3.83%, for the second quarter of 2008, as compared to 0.71% and 5.33% for the second quarter of 2007.

          The second quarter of 2008 was highlighted by the following items:

•

Total assets increased $204.1 million to $1.591 billion at June 30, 2008, from $1.387 billion at December 31, 2007.

	•		Certificates of deposits in other financial institutions increased $70.0 million.
	•		Securities available-for-sale increased $41.3 million.
	•		Net loans held-for-investment increased $91.5 million.
	•		Federal Home Loan Bank of New York stock increased $7.9 million.

•

Total liabilities increased $197.8 million to $1.217 billion at June 30, 2008 from $1.020 billion at December 31, 2007.

	•		Deposits increased $31.8 million.
	•		Securities sold under agreements to repurchase and other borrowings increased $173.7 million.

•

Net interest income increased $3.3 million to $11.5 million for the second quarter of 2008, as compared to $8.2 million for the second quarter of 2007.

•

The net interest margin increased 51 basis points to 3.19% for the second quarter of 2008, as compared to 2.68% for the second quarter of 2007.

•

The provision for loan losses was $1.2 million for the second quarter of 2008, compared to $97,000 for the second quarter of 2007. The increase in the provision was attributable to increased loan growth, increases in certain estimated loan loss factors for groups of similar loans, and increased provisions for certain impaired loans.

          We continue to focus on prudently originating high quality commercial real estate, mixed-use, and multifamily real estate-backed mortgage loans and developing business deposit relationships.

Comparison of Financial Condition at June 30, 2008 and December 31, 2007

          Cash and cash equivalents decreased $8.2 million, or 32.5%, to $16.9 million at June 30, 2008, from $25.1 million at December 31, 2007. Throughout 2008 the Company has focused on deploying excess cash into higher yielding assets.

          Certificates of deposit in other financial institutions increased $70.0 million, or 285.8%, to $94.5 million at June 30, 2008 from $24.5 million at December 31, 2007. The increase was attributable to the purchase of $118.5 million of certificates of deposit partially offset by maturities of $48.5 million. When opportunities exist, the Company has deployed a strategy to match fund investments in certificates of deposit in other financial institutions (fully insured by the FDIC) with similar term borrowings (securities sold under agreements to repurchase).

          Bank owned life insurance decreased $433,000, or 1.0%, to $41.1 million at June 30, 2008, from $41.6 million at December 31, 2007. The decrease in bank owned life insurance was attributable to death benefit proceeds on policies with a surrender value of $1.3 million, partially offset by an increase in the cash surrender value of existing polices of $847,000.

          Securities available-for-sale increased $41.3 million, or 5.2%, to $843.7 million at June 30, 2008, from $802.4 million at December 31, 2007. The increase was attributable to purchases of $219.5 million and net accretion of discounts of $648,000, partially offset by sales of $2.2 million, maturities and paydowns of $171.0 million, and a decrease of $5.6 million in the estimated fair value.

          Loans held-for-investment, net, increased $93.4 million, or 22.0%, to $517.7 million at June 30, 2008, from $424.3 million at December 31, 2007. The increase in loans was primarily attributable to an increase of $48.3 million, or 341.1%, in multifamily loans and an increase of $28.3 million, or 11.6%, in commercial real estate loans. We continue to focus on originating commercial real estate, mixed-use, and multifamily loans that meet our underwriting standards to the extent loan demand exists.

          Deposits increased $31.8 million, or 3.6%, to $909.0 million at June 30, 2008 from $877.2 million at December 31, 2007. The increase is primarily attributable to an increase of $63.3 million, or 19.9%, in savings-passbook, statement, tiered, and money market accounts (savings accounts), partially offset by a decrease in certificates of deposit of $39.8 million, or 9.9%. The increase in savings accounts was primarily due to the Company successfully introducing a new money market account during the later portion of the first quarter of 2008. The decrease in certificates of deposit was primarily attributable to the significant competition to attract deposits in our markets of Richmond and Kings Counties in New York and Union and Middlesex Counties in New Jersey. After considering competition pricing, our available opportunities to invest such deposits, and the overall customer relationship with Northfield Bank, we may choose not to compete for certain types of deposits, including certificates of deposit.

          Total borrowings increased $173.7 million, or 139.6%, to $298.2 million at June 30, 2008, from $124.4 million at December 31, 2007. The increase was attributable to proceeds of $239.5 million from securities sold under agreements to repurchase and an increase in other borrowings of $81.3 million. These increases were partially offset by repayments related to securities sold under agreements to repurchase of $147.0 million. The Company utilized the proceeds of borrowings primarily to fund investment securities leverage strategies.

          Total stockholders’ equity increased $6.2 million, or 1.7%, to $373.6 million at June 30, 2008, from $367.3 million at December 31, 2007. This increase was primarily attributable to net income of $9.2 million for the six months ended June 30, 2008, partially offset by other comprehensive loss of $3.2 million primarily attributable to the change in the estimated fair value of available -for- sale securities. Generally, as market interest rates have increased during the period, the resultant estimated fair values of fixed-rate securities have decreased.

Comparison of Operating Results for the Three Months Ended June 30, 2008 and 2007

          Interest income. Interest income increased $2.5 million, or 15.7%, to $18.1 million for the three months ended June 30, 2008, from $15.6 million for the three months ended June 30, 2007. The increase in interest income was primarily the result of an increase in average interest-earning assets of $221.8 million, or 18.0%. Average interest-earning assets increased for the three months ending June 30, 2008 as compared to the same prior year period, as average loans held-for-investment, net increased $42.5 million, or 10.0%. Average interest-earning assets were also positively affected by an increase of $177.6 million, or 23.2%, in mortgage-backed securities and deposits in other financial institutions from leveraging strategies executed in the latter part of 2007 and throughout 2008. The effect of the increase in average interest-earning assets was partially offset by a decrease in the yield earned from 5.09% for the three months ended June 30, 2007, to 5.01% for the three months ended June 30, 2008. The decrease in the yield earned on interest-earning assets was due to declines in market interest rates.

          Interest income on loans increased $264,000, or 3.7%, to $7.4 million for the three months ended June 30, 2008, from $7.1 million for the three months ended June 30, 2007. The average balance of loans increased $42.5 million, or 10.0%, to $468.5 million for the three months ended June 30, 2008, from $426.0 million for the three months ended June 30, 2007, reflecting our continued efforts to grow our loan portfolio, primarily commercial real estate and multifamily loans. The average yield earned on our loan portfolio decreased 37 basis points, or 5.5%, to 6.35% for the three months ended June 30, 2008, from 6.72% for the three months ended June 30, 2007. The decrease in the yield earned on loans was primarily attributable to decreases in market interest rates.

          Interest income on mortgage-backed securities increased $2.1 million, or 29.2%, to $9.3 million for the three months ended June 30, 2008, from $7.2 million for the three months ended June 30, 2007. The increase resulted from an increase of $140.7 million, or 20.2% in the average balance of mortgage-backed securities to $838.5 million for the three months ended June 30, 2008, from $697.8 million for the three months ended June 30, 2007. The average yield earned on mortgage-backed securities increased 32 basis points, or 7.7%, to 4.48% for the three months ended June 30, 2008, compared to 4.16% for the three months ended June 30, 2007.

          Interest income on other securities decreased $162,000, or 41.8%, to $226,000 for the three months ended June 30, 2008, from $388,000 for the three months ended June 30, 2007. The decrease resulted from the average balance of other securities decreasing $4.6 million, or 13.8%, to $28.8 million for the three months ended June 30, 2008, from $33.4 million for the three months ended June 30, 2007. The average yield earned on our other securities decreased 150 basis points, or 32.2%, to 3.16% for the three months ended June 30, 2008, from 4.66% for the three months ended June 30, 2007.

          Interest income on deposits in other financial institutions increased $163,000, or 21.4%, to $924,000 for the three months ended June 30, 2008, from $761,000 for the three months ended June 30, 2007. The increase resulted from an increase in the average balance of interest-earning deposits, which increased $36.9 million, or 53.8%, to $105.4 million for the three months ended June 30, 2008, from $68.5 million for the three months ended June 30, 2007. The increase in the average balance is primarily related to the deployment of a leverage strategy in the latter part of 2007 and the first quarter of 2008. The average yield earned on interest-earning deposits was 3.52% for the three months ended June 30, 2008, compared to 4.45% for the three months ended June 30, 2007.

          Interest Expense. Interest expense decreased $847,000 or 11.5%, to $6.6 million for the three months ended June 30, 2008, from $7.4 million for the three months ended June 30, 2007. The decrease was attributable to a decrease in interest expense on deposits of $1.6 million, or 26.7%, partially offset by an increase in interest expense on borrowings of $765,000, or 56.5%. The decrease in interest expense on deposits was attributable to average interest-bearing deposits decreasing $80.6 million, or 9.2%, to $791.1 million for the three months ended June 30, 2008, as compared to $871.7 million for the three months ended June 30, 2007, primarily as a result of customers using $82.4 million in deposits to purchase common stock in the Company’s initial public offering during the fourth quarter of 2007.

          Interest expense on savings, NOW, and money market accounts increased $457,000, or 58.2%, to $1.2 million for the three months ended June 30, 2008, from $785,000 for the three months ended June 30, 2007. The increase in interest expense on savings, NOW, and money market accounts was caused by an increase in the average rate we paid on these accounts of 37 basis points, or 45.1%, and an increase of $33.6 million, or 8.7%, in the average balances to $419.3 million for the three months ended June 30, 2008, from $385.7 million for the three months ended June 30, 2007. The average rate we paid on these accounts was 1.19% for the three months ended June 30, 2008, compared to 0.82% for the three months ended June 30, 2007.

          Interest expense on certificates of deposit decreased $2.1 million, or 39.3%, to $3.2 million for the three months ended June 30, 2008, from $5.3 million for the three months ended June 30, 2007. The decrease in interest expense on certificates of deposit was caused by a decrease in the average balance of $114.2 million, or 23.5%, to $371.8 million for the three months ended June 30, 2008, compared to $486.0 million for the three months ended June 30, 2007, and a decrease in the average rate we paid on certificates of deposit. The average rate we paid on certificates of deposit decreased 89 basis points, or 20.5%, to 3.45% for the three months ended June 30, 2008, from 4.34% for the three months ended June 30, 2007.

          Interest expense on borrowings (securities sold under agreements to repurchase and other borrowings) increased $765,000, or 56.5%, to $2.1 million for the three months ended June 30, 2008, from $1.4 million for the three months ended June 30, 2007. The average balance of borrowings increased $116.4 million, or 85.4%, to $252.7 million for the three months ended June 30, 2008, from $136.4 million for the three months ended June 30, 2007. The Company used the proceeds from borrowings to primarily purchase securities available-for-sale and certificates of deposit in other financial institutions, and to fund loan originations. The increase in the average balance was partially offset by a 61 basis point, or 15.3%, decrease in the average rate we paid on borrowings to 3.37% for the three months ended June 30, 2008, from 3.98% for the three months ended June 30, 2007, reflecting lower market interest rates.

          Net Interest Income. Net interest income increased $3.3 million, or 40.0%, to $11.5 million for the three months ended June 30, 2008, from $8.2 million for the three months ended June 30, 2007. Our net interest margin increased 51 basis points to 3.19% for the three months ended June 30, 2008, from 2.68% for the three months ended June 30, 2007.

          Provision for Loan Losses. We establish provisions for loan losses, which are charged to operations in order to maintain the allowance for loan losses at a level we consider necessary to absorb credit losses incurred in the loan portfolio that are both probable and reasonably estimable at the balance sheet date. In determining the level of the allowance for loan losses, we consider, among other things, past and current loss experience, evaluations of real estate collateral, current economic conditions, volume and type of lending, adverse situations that may affect a borrower’s ability to repay a loan and the levels of delinquent loans. The amount of the allowance is based on estimates and the ultimate losses may vary from such estimates as information becomes available or conditions change. We assess the allowance for loan losses and make provisions for loan losses on a quarterly basis.

          Based on our evaluation of the above factors, we recorded a provision for loan losses of $1.2 million for the three months ended June 30, 2008, and a provision for loan losses of $97,000 for the three months ended June 30, 2007. We recorded net charge-offs of $11,000 and $822,000 for the three months ended June 30, 2008 and 2007, respectively. The allowance for loan losses was $7.5 million, or 1.44% of total loans receivable at June 30, 2008, compared to $5.6 million, or 1.33% of total loans receivable at December 31, 2007. The provision for loan losses increased between the two periods primarily due to providing for impaired loans of $232,000 during the three months ended June 30, 2008 and loan balances increasing by $71.3 million for the three months ended June 30, 2008, as compared to a $3.1 million decrease for the three months ended June 30, 2007.

          Net change in total loans are as follows:

		Net Change for				Net Change for
		Three Months Ended				Three Months Ended
		June 30, 2008				June 30, 2007
Real estate loans:
Commercial mortgage		$	23,265				11,823
One- to four-family residential mortgage			3,740				(5,818	)
Home equity and lines of credit			5,493				(478	)
Construction and land			3,948				(7,055	)
Multifamily			36,310				(1,240	)
Total real estate loans			72,756				(2,768	)
Commercial and industrial loans			(1,135	)			299
Other loans			(327	)			(676	)
Total commercial and industrial and other loans			(1,462	)			(377	)
Total loans		$	71,294				(3,145	)

          The Company’s non-performing loans totaled $10.5 million at June 30, 2008, an increase from $9.8 million at December 31, 2007. The increase in non-performing loans from December 31, 2007, was primarily attributable to an increase in non-accruing one- to four-family residential mortgage loans of $622,000, an increase in non-accruing commercial real estate loans of $398,000, and an increase in non-accruing commercial and industrial loans of $232,000. These increases were partially offset by a decrease in loans 90 days or more past due and accruing of $592,000, which consisted primarily of commercial and industrial loans, land, and construction loans paying in accordance with their original contractual terms but past maturity.

          Non-interest Income. Non-interest income decreased $163,000, or 11.9%, to $1.2 million for the three months ended June 30, 2008, from $1.4 million for the three months ended June 30, 2007. The decrease in non-interest income was due primarily to declines in the fair value of trading securities.

          Non-interest Expense. Non-interest expense decreased modestly to $5.9 million for the three months ended June 30, 2008, compared to $6.0 million for the three months ended June 30, 2007. Compensation and benefits decreased $161,000 or 5.0%, to $3.1 million for the three months ended June 30, 2008, from $3.2 million for the three months ended June 30, 2007. The decrease was primarily attributable to the decreases in the estimated fair value of securities utilized to indirectly fund certain deferred compensation arrangements partially offset by increases in salaries as a result of annual merit increases. Occupancy expense increased $13,000, or 1.6%, to $831,000 for the three months ending June 30, 2008, from $818,000 for the three months ended June 30, 2007. These decreases were offset by increases in furniture and equipment, data processing, professional, and other non-interest expenses of $90,000.

          Income Tax Expense. The Company recorded income tax expense of $2.0 for the three ended June 30, 2008, as compared to $1.3 million in the corresponding prior year period. The effective tax rate was 36.1% for the three months ended June 30, 2008,

compared to 35.7% in the corresponding prior period. The increase in the effective tax rate for the quarter ended June 30, 2008, compared to the same prior year period was a result of increased taxable income as compared to total pre-tax income.

          Comparison of Operating Results for the Six Months Ended June 30, 2008 and 2007

          Interest income. Interest income increased $4.3 million, or 13.7%, to $35.4 million for the six months ended June 30, 2008, from $31.1 million for the six months ended June 30, 2007. The increase in interest income was primarily the result of an increase in average interest-earning assets of $184.1 million, or 15.0%. Average interest-earning assets increased in the first six months of 2008 as compared to the first six months of 2007, as average loans held-for-investment, net increased $29.4 million, or 7.0%. Average interest-earning assets were also positively affected by an increase of $150.8 million, or 19.9%, in mortgage-backed securities and deposits in other financial institutions from leveraging strategies executed in the latter part of 2007 and throughout 2008. The effect of the increase in average interest-earning assets was partially offset by a decrease in the yield earned from 5.10% for the six months ended June 30, 2007, to 5.03% for the six months ended June 30, 2008. The decrease in the yield earned on interest-earning assets was due to declines in market interest rates.

          Interest income on loans increased $340,000 or 2.4%, to $14.4 million for the six months ended June 30, 2008, from $14.0 million for the six months ended June 30, 2007. The average balance of loans increased $29.4 million, or 7.0%, to $450.9 million for the six months ended June 30, 2008, from $421.5 million for the six months ended June 30, 2007, reflecting our continued efforts to grow our loan portfolio, primarily commercial real estate and multifamily loans. The average yield earned on our loan portfolio decreased 30 basis points, or 4.5%, to 6.42% for the six months ended June 30, 2008, from 6.72% for the six months ended June 30, 2007. The decrease in the yield earned on loans was primarily attributable to decreases in market interest rates.

          Interest income on mortgage-backed securities increased $3.3 million, or 23.1%, to $17.8 million for the six months ended June 30, 2008, from $14.4 million for the six months ended June 30, 2007. The increase resulted from an increase of $100.1 million, or 14.3% in the average balance of mortgage-backed securities to $799.2 million for the six months ended June 30, 2008, from $699.2 million for the six months ended June 30, 2007. The average yield earned on mortgage-backed securities increased 31 basis points, or 7.5%, to 4.47% for the six months ended June 30, 2008, as compared to 4.16% for the six months ended June 30, 2007.

          Interest income on other securities decreased $127,000, or 11.9%, to $936,000 for the six months ended June 30, 2008, from $1.1 million for the six months ended June 30, 2007. The decrease resulted from the average balance of other securities decreasing $1.0 million, or 2.3%, to $43.4 million for the six months ended June 30, 2008, from $44.4 million for the six months ended June 30, 2007, and a decrease in the average yield earned on other securities of 49 basis points, or 10.1%, to 4.34% for the six months ended June 30, 2008, as compared to 4.83% for the six months ended June 30, 2007.

          Interest income on deposits in other financial institutions increased $648,000, or 48.5% to $2.0 million for the six months ended June 30, 2008, from $1.3 million for the six months ended June 30, 2007. The increase resulted from an increase in the average balance of interest-earning deposits, which increased $50.7 million, or 85.9%, to $109.8 million for the six months ended June 30, 2008, from $59.0 million for the six months ended June 30, 2007. The increase in the average balance is primarily related to the deployment of a leverage strategy in the latter part of 2007 and throughout 2008. The average yield earned on interest-earning deposits was 3.63% for the six months ended June 30, 2008, compared to 4.56% for the six months ended June 30, 2007.

          Interest Expense. Interest expense decreased $1.4 million or 9.3%, to $13.3 million for the six months ended June 30, 2008, from $14.6 million for the six months ended June 30, 2007. The decrease was attributable to a decrease in interest expense on deposits of $2.9 million, or 23.9%, partially offset by an increase in interest expense on borrowings of $1.5 million, or 60.2%. The decrease in interest expense on deposits was attributable to average interest-bearing deposits decreasing $102.9 million, or 11.7%, to $778.5 million for the six months ended June 30, 2008, as compared to $881.4 million for the six months ended June 30, 2007, primarily as a result of the sale of $26.6 million of deposits in two branches at the end of the first quarter of 2007, and customers using $82.4 million in deposits to purchase common stock in the Company’s initial public offering during the fourth quarter of 2007.

          Interest expense on certificates of deposit decreased $3.6 million, or 33.5%, to $7.1 million for the six months ended June 30, 2008, from $10.6 million for the six months ended June 30, 2007. The decrease in interest expense on certificates of deposit was caused by a decrease in the average balance of $109.0 million, or 22.2%, to $382.0 million for the six months ended June 30, 2008, compared to $491.0 million for the six months ended June 30, 2007 and a decrease in the average rate we paid on certificates of deposit. The average rate we paid on certificates of deposit decreased 65 basis points, or 14.9%, to 3.72% for the six months ended June 30, 2008, from 4.37% for the six months ended June 30, 2007.

          Interest expense on savings, NOW, and money market accounts increased $671,000, or 45.5%, to $2.1 million for the six months ended June 30, 2008, from $1.5 million for the six months ended June 30, 2007. The increase in interest expense on savings, NOW, and money market accounts was caused by an increase in the average rate we paid on these accounts of 33 basis points, or 43.4%, and an increase of $6.1 million, or 1.6%, in the average balances to $396.4 million for the six months ended June 30, 2008, from $390.4 million for the six months ended June 30, 2007. The average rate we paid on these accounts was 1.09% for the six months ended June 30, 2008, compared to 0.76% for the six months ended June 30, 2007.

          Interest expense on borrowings (securities sold under agreements to repurchase and other borrowings) increased $1.5 million, or 60.2%, to $4.1 million for the six months ended June 30, 2008, from $2.5 million for the six months ended June 30, 2007. The average balance of borrowings increased $100.3 million, or 76.7%, to $231.0 million for the six months ended June 30, 2008, from $130.7 million for the six months ended June 30, 2008. The Company used the proceeds from borrowings to purchase securities available-for-sale and certificates of deposit in other financial institutions, and to fund loan originations. The increase in the average balance was partially offset by a 38 basis point decrease in the average rate we paid on borrowings, or 9.7%, to 3.53% for the six months ended June 30, 2008, from 3.91% for the six months ended June 30, 2007, reflecting lower market interest rates.

          Net Interest Income. Net interest income increased $5.6 million, or 34.1%, to $22.1 million for the six months ended June 30, 2008, from $16.5 million for the six months ended June 30, 2007. Our net interest margin increased 45 basis points to 3.15% for the six months ended June 30, 2008, from 2.70% for the six months ended June 30, 2007.

          Provision for Loan Losses.

          We recorded a provision for loan losses of $1.8 million for the six months ended June 30, 2008, as compared to a provision for loan losses of $537,000 for the six months ended June 30, 2007. We recorded net charge-offs of $11,000 and $836,000 for the six months ended June 30, 2008 and 2007, respectively. The provision for loan losses increased between the two periods primarily due to loan balances increasing $93.4 million for the six months ended June 30, 2008, as compared to $15.0 million for the six months ended June 30, 2007 and additional reserves of $473,000 on impaired loans for the six months ended June 30, 2008.

     Net change in total loans are as follows:

		Net Change for				Net Change for
		Six Months Ended				Six Months Ended
		June 30, 2008				June 30, 2007
Real estate loans:
Commercial mortgage		$	28,322				33,378
One- to four-family residential mortgage			5,669				(8,769	)
Home equity and lines of credit			6,078				(1,649	)
Construction and land			5,898				(6,689	)
Multifamily			48,319				(188	)
Total real estate loans			94,286				16,083
Commercial and industrial loans			(447	)			87
Other loans			(454	)			(1,133	)
Total commercial and industrial and other loans			(901	)			(1,046	)
Total loans		$	93,385				15,037

          Non-interest Income. Non-interest income decreased $2.4 million to $4.6 million for the six months ended June 30, 2008, from $7.0 million for the six months ended June 30, 2007. The decrease in non-interest income was due primarily to a gain of $4.3 million on the sale of deposits in two underperforming branches in March 2007 being partially offset by a realized nontaxable death benefit of approximately $2.5 million in the first quarter of 2008. In addition, gain on securities transactions, net decreased $587,000 primarily as a result of declines in estimated fair values of trading securities.

          Non-interest Expense. Non-interest expense remained relatively unchanged at $11.9 million and $12.0 million for the six months ended June 30, 2008 and 2007, respectively. Compensation and benefits decreased $457,000, or 7.0%, to $6.1 million for the six months ended June 30, 2008, from $6.5 million for the six months ended June 30, 2007. The decrease was primarily attributable to a decrease in the estimated fair value of securities utilized to indirectly fund certain deferred compensation arrangements and the reduction of our work force as a result of the sale of the two underperforming branches in the first quarter of 2007, partially offset by annual merit increases in salary. These decreases were offset by increases in furniture and equipment, data processing, professional, and other non-interest expenses of $405,000.

          Income Tax Expense. The provision for income taxes was $3.8 million for the six months ended June 30, 2008, compared to $4.0 million for the six months ended June 30, 2007, reflecting a decrease in taxable income. Our effective tax rate was 29.4% for the six months ended June 30, 2008, compared to 36.2% for the six months ended June 30, 2007. The decrease in the effective tax rate

rate was primarily a result of an increase in non-taxable income of $2.5 million as a result of the gain from bank owned life insurance death benefits realized during the three months ended March 31, 2008.

NORTHFIELD BANCORP, INC.
ANALYSIS OF NET INTEREST INCOME

		For the Three Months Ended June, 30
		2008												2007
		Average								Average				Average								Average
		Outstanding								Yield/				Outstanding								Yield/
		Balance				Interest				Rate (1)				Balance				Interest				Rate (1)
		(Dollars in thousands)
Interest-earning assets:
Loans		$	468,535			$	7,397				6.35	%		$	425,993			$	7,133				6.72	%
Mortgage-backed securities			838,466				9,346				4.48				697,764				7,234				4.16
Other securities			28,751				226				3.16				33,363				388				4.66
Federal Home Loan Bank of New York stock			12,598				204				6.51				6,354				128				8.08
Deposits in other financial institutions			105,443				924				3.52				68,547				761				4.45
Total interest-earning assets			1,453,793				18,097				5.01				1,232,021				15,644				5.09
Non-interest-earning assets			82,224												54,396
Total assets		$	1,536,017											$	1,286,417
Interest-bearing liabilities:
Savings, NOW, and money market accounts		$	419,328				1,242				1.19			$	385,713				785				0.82
Certificates of deposit			371,753				3,189				3.45				485,970				5,258				4.34
Total interest-bearing deposits			791,081				4,431				2.25				871,683				6,043				2.78
Repurchase agreements			209,242				1,738				3.33				113,879				1,140				4.02
Other borrowings			43,502				381				3.51				22,475				214				3.82
Total interest-bearing liabilities			1,043,825				6,550				2.52				1,008,037				7,397				2.94
Non-interest bearing deposit accounts			104,531												92,942
Accrued expenses and other liabilities			12,879												14,880
Total liabilities			1,161,235												1,115,859
Stockholders’ equity			374,782												170,558
Total liabilities and stockholders’ equity		$	1,536,017											$	1,286,417
Net interest income						$	11,547											$	8,247
Net interest rate spread (2)											2.49	%											2.15	%
Net interest-earning assets (3)		$	409,968											$	223,984
Net interest margin (4)											3.19	%											2.68	%
Average interest-earning assets to interest-bearing liabilities											139.28	%											122.22	%

NORTHFIELD BANCORP, INC.
ANALYSIS OF NET INTEREST INCOME

		For the Six Months Ended June 30,
		2008												2007
		Average								Average				Average								Average
		Outstanding								Yield/				Outstanding								Yield/
		Balance				Interest				Rate (1)				Balance				Interest				Rate (1)
		(Dollars in thousands)
Interest-earning assets:
Loans		$	450,850			$	14,386				6.42	%		$	421,457			$	14,046				6.72	%
Mortgage-backed securities			799,242				17,771				4.47				699,178				14,433				4.16
Other securities			43,396				936				4.34				44,421				1,063				4.83
Federal Home Loan Bank of New York stock			11,561				335				5.83				6,636				268				8.14
Deposits in other financial institutions			109,790				1,984				3.63				59,049				1,336				4.56
Total interest-earning assets			1,414,839				35,412				5.03				1,230,741				31,146				5.10
Non-interest-earning assets			83,519												55,742
Total assets		$	1,498,358											$	1,286,483
Interest-bearing liabilities:
Savings, NOW, and money market accounts		$	396,449				2,145				1.09			$	390,354				1,474				0.76
Certificates of deposit			382,007				7,071				3.72				491,019				10,634				4.37
Total interest-bearing deposits			778,456				9,216				2.38				881,373				12,108				2.77
Repurchase agreements			194,082				3,389				3.51				108,260				2,106				3.92
Other borrowings			36,951				669				3.64				22,485				427				3.83
Total interest-bearing liabilities			1,009,489				13,274				2.64				1,012,118				14,641				2.92
Non-interest bearing deposit accounts			99,446												93,091
Accrued expenses and other liabilities			15,348												13,601
Total liabilities			1,124,283												1,118,810
Stockholders’ equity			374,075												167,673
Total liabilities and stockholders’ equity		$	1,498,358											$	1,286,483
Net interest income						$	22,138											$	16,505
Net interest rate spread (2)											2.39	%											2.18	%
Net interest-earning assets (3)		$	405,350											$	218,623
Net interest margin (4)											3.15	%											2.70	%
Average interest-earning assets to interest-bearing liabilities											140.15	%											121.60	%

Liquidity and Capital Resources

          Liquidity. The overall objective of our liquidity management is to ensure the availability of sufficient funds to meet financial commitments and to take advantage of lending and investment opportunities. We manage liquidity in order to meet deposit withdrawals on demand or at contractual maturity, to repay borrowings as they mature, and to fund new loans and investments as opportunities arise.

          Our primary sources of funds are deposits, principal and interest payments on loans and securities, the proceeds from maturing securities and short-term investments, and to a lesser extent the proceeds from the sales of loans and securities and wholesale borrowings. The scheduled amortizations of loans and securities, as well as proceeds from borrowings, are predictable sources of funds. Other funding sources, however, such as deposit inflows and loan prepayments are greatly influenced by market interest rates, economic conditions and competition. Northfield Bank is a member of the Federal Home Loan Bank of New York (FHLB), which provides an additional source of short-term and long-term funding. Securities sold under agreements to repurchase and other borrowings were $298.2 million at June 30, 2008, at a weighted average interest rate of 3.13%. A total of $204.5 million of these borrowings will mature in less than one year. Securities sold under agreements to repurchase and other borrowings were $124.4 million at December 31, 2007. The Company has two lines of credit with the FHLB, each line has a limit of $100.0 million. At June 30, 2008, the Company has $150.0 million available for use. The Company expects to have sufficient funds available to meet current commitments in the normal course of business.

          Capital Resources. At June 30, 2008 and December 31, 2007, Northfield Bank exceeded all regulatory capital requirements that it is subject to.

										Minimum
										Required to Be
						Minimum				Well Capitalized
						Required for				under Prompt
						Capital				Corrective
		Actual				Adequacy				Action
		Ratio				Purposes				Provisions
As of June 30, 2008:
Tangible capital to tangible assets			17.45	%			1.50	%		NA%
Tier 1 capital — leverage (to adjusted assets)			17.45				4.00				5.00
Total capital (to risk — weighted assets)			36.15				8.00				10.00
As of December 31, 2007:
Tangible capital to tangible assets			18.84	%			1.50	%		NA%
Tier 1 capital — leverage (to adjusted assets)			18.84				4.00				5.00
Total capital (to risk — weighted assets)			38.07				8.00				10.00

Off-Balance Sheet Arrangements and Contractual Obligations

          In the normal course of operations, the Company engages in a variety of financial transactions that, in accordance with U.S. generally accepted accounting principles, are not recorded in the financial statements. These transactions primarily relate to lending commitments.

          The following table shows the contractual obligations of the Company by expected payment period as of June 30, 2008:

						Less than				One-Three				Three-Five				More than
Contractual Obligation		Total				One Year				Years				Years				Five Years
		(in thousands)
Debt obligations (excluding capitalized leases)		$	295,800				204,500				70,000				21,300				—
Commitments to originate loans		$	30,505				30,505				—				—				—
Commitments to fund unused lines of credit		$	30,822				30,822				—				—				—