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Table of Contents

 
 
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 March 31, 2010
or
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For transition period from            to
Commission File Number 1-33732
 
NORTHFIELD BANCORP, INC.
(Exact name of registrant as specified in its charter)
 
     
United States of America
(State or other jurisdiction of incorporation)
  42-1572539
(I.R.S. Employer Identification No.)
     
1410 St. Georges Avenue, Avenel, New Jersey
(Address of principal executive offices)
  07001
(Zip Code)
Registrant’s telephone number, including area code: (732) 499-7200
Not Applicable
(Former name, former address, and former fiscal year, if changed since last report)
 
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 has submitted electronically and posted on it corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for shorter period that the registrant was required and post such files). Yes o Noo.
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 definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):
             
Large accelerated filer o   Accelerated filer þ   Non-accelerated filer o (Do not check if smaller reporting company)   Smaller reporting company o
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. 43,702,587 shares of Common Stock, par value $0.01 per share, were issued and outstanding as of May 6, 2010.
 
 

 


 

NORTHFIELD BANCORP, INC.
Form 10-Q Quarterly Report
Table of Contents

1


Table of Contents

PART I
ITEM 1. FINANCIAL STATEMENTS
NORTHFIELD BANCORP, INC.
CONSOLIDATED BALANCE SHEETS

March 31, 2010, and December 31, 2009
(In thousands, except share amounts)
                 
    March 31,     December 31,  
    2010     2009  
 
     (Unaudited)         
ASSETS:
               
 
               
Cash and due from banks
  $ 9,646       10,183  
Interest-bearing deposits in other financial institutions
    41,165       32,361  
 
Total cash and cash equivalents
    50,811       42,544  
 
 
               
Trading securities
    3,706       3,403  
Securities available-for-sale, at estimated fair value (encumbered $261,004 in 2010 and $219,446 in 2009)
    1,216,195       1,131,803  
Securities held-to-maturity, at amortized cost (estimated fair value of $6,432 in 2010 and $6,930 in 2009) (encumbered $0 in 2010 and 2009)
    6,220       6,740  
Loans held-for-investment, net
    737,225       729,269  
Allowance for loan losses
    (17,146 )     (15,414 )
 
Net loans held-for-investment
    720,079       713,855  
 
Accrued interest receivable
    8,042       8,054  
Bank owned life insurance
    44,174       43,751  
Federal Home Loan Bank of New York stock, at cost
    5,026       6,421  
Premises and equipment, net
    13,114       12,676  
Goodwill
    16,159       16,159  
Other real estate owned
    1,533       1,938  
Other assets
    12,744       14,930  
 
Total assets
  $ 2,097,803       2,002,274  
 
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY:
               
LIABILITIES:
               
Deposits
  $ 1,392,905       1,316,885  
Borrowings
    293,060       279,424  
Advance payments by borrowers for taxes and insurance
    2,038       757  
Accrued expenses and other liabilities
    13,514       13,668  
 
Total liabilities
    1,701,517       1,610,734  
 
 
               
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, 45,632,611 and 45,628,211 shares issued at March 31, 2010, and December 31, 2009, respectively, 43,722,522 and 43,912,148 outstanding at March 31, 2010, and December 31, 2009, respectively
    456       456  
Additional paid-in-capital
    203,541       202,479  
Unallocated common stock held by employee stock ownership plan
    (15,660 )     (15,807 )
Retained earnings
    214,779       212,196  
Accumulated other comprehensive income
    15,690       12,145  
Treasury stock at cost; 1,910,089 and 1,716,063 shares at March 31, 2010, and December 31, 2009, respectively
    (22,520 )     (19,929 )
 
Total stockholders’ equity
    396,286       391,540  
 
Total liabilities and stockholders’ equity
  $ 2,097,803       2,002,274  
 
See accompanying notes to the unaudited consolidated financial statements.

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Table of Contents

NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME

Three months ended March 31, 2010, and 2009
(Unaudited)
(In thousands, except share data)
                 
    Three months ended  
    March 31,  
 
    2010     2009  
 
Interest income:
               
Loans
  $ 10,293       8,571  
Mortgage-backed securities
    9,181       11,114  
Other securities
    1,384       282  
Federal Home Loan Bank of New York dividends
    95       80  
Deposits in other financial institutions
    54       435  
 
Total interest income
    21,007       20,482  
 
Interest expense:
               
Deposits
    3,952       4,957  
Borrowings
    2,506       2,764  
 
Total interest expense
    6,458       7,721  
 
Net interest income
    14,549       12,761  
Provision for loan losses
    1,930       1,644  
 
Net interest income after provision for loan losses
    12,619       11,117  
 
Non-interest income:
               
Fees and service charges for customer services
    660       659  
Income on bank owned life insurance
    423       433  
Gain (loss) on securities transactions, net
    615       (154 )
Other
    25       31  
 
Total non-interest income
    1,723       969  
 
Non-interest expense:
               
Compensation and employee benefits
    4,791       3,768  
Occupancy
    1,194       1,120  
Furniture and equipment
    272       288  
Data processing
    607       844  
FDIC insurance
    430       414  
Professional fees
    379       526  
Other
    1,448       822  
 
Total non-interest expense
    9,121       7,782  
 
Income before income tax expense
    5,221       4,304  
Income tax expense
    1,840       1,569  
 
Net income
  $ 3,381       2,735  
 
 
               
Basic and diluted earnings per share
  $ 0.08       0.06  
 
See accompanying notes to the unaudited consolidated financial statements.

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Table of Contents

NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Three months ended March 31, 2010, and 2009
(Unaudited)
(Dollars in thousands)
                                                                 
                            Unallocated                              
    Common Stock             common stock             Accumulated                
                    Additional     held by the             Other             Total  
            Par     paid-in     employee stock     Retained     comprehensive     Treasury     stockholders'  
    Shares     value     capital     ownership plan     earnings     income (loss)     Stock     equity  
 
Balance at December 31, 2008
    44,803,061     $ 448       199,453       (16,391 )     203,085       (17 )             386,578  
Comprehensive income:
                                                               
Net income
                                    2,735                       2,735  
Change in accumulated comprehensive income (loss), net of tax of $4,181
                                            5,621               5,621  
 
                                                             
Total comprehensive income
                                                            8,356  
 
                                                             
ESOP shares allocated or committed to be released
                    1       146                               147  
Stock compensation expense
                    559                                       559  
Dividends declared ($0.04 per share)
                                    (774 )                     (774 )
Issuance of restricted stock
    832,450       8       (8 )                                      
Treasury stock (average cost of $10.07 per share)
                                                    (3,801 )     (3,801 )
 
Balance at March 31, 2009
    45,635,511       456       200,005       (16,245 )     205,046       5,604       (3,801 )     391,065  
 
 
                                                               
Balance at December 31, 2009
    45,628,211       456       202,479       (15,807 )     212,196       12,145       (19,929 )     391,540  
Comprehensive income:
                                                               
Net income
                                    3,381                       3,381  
Change in accumulated comprehensive income, net of tax of $2,108
                                            3,545               3,545  
 
                                                             
Total comprehensive income
                                                            6,926  
 
                                                             
ESOP shares allocated or committed to be released
                    55       147                               202  
Stock compensation expense
                    776                                       776  
Additional tax benefit on stock awards
                    231                                       231  
Exercise of stock options
                                    (26 )             163       137  
Dividends declared ($0.04 per share)
                                    (772 )                     (772 )
Issuance of Restricted Stock
    4,400                                                    
Treasury stock (average cost of $13.25 per share)
                                                    (2,754 )     (2,754 )
 
 
                                                               
Balance at March 31, 2010
    45,632,611     $ 456       203,541       (15,660 )     214,779       15,690       (22,520 )     396,286  
 
See accompanying notes to the unaudited consolidated financial statements.

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Table of Contents

NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended March 31, 2010, and 2009
(Unaudited) (In thousands)
                 
    Three months ended  
    March 31,  
 
    2010     2009  
 
Cash flows from operating activities:
               
Net income
  $ 3,381       2,735  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Provision for loan losses
    1,930       1,644  
ESOP and stock compensation expense
    978       706  
Depreciation
    432       412  
(Accretion) of discounts, and deferred loan fees, net of amortization of premiums
    123       (419 )
Amortization of mortgage servicing rights
    25       27  
Income on bank owned life insurance
    (423 )     (433 )
Net gain on sale of loans held-for-sale
          (14 )
Proceeds from sale of loans held-for-sale
          1,222  
Origination of loans held-for-sale
          (2,267 )
(Gain) loss on securities transactions, net
    (615 )     154  
Net purchases of trading securities
    (42 )     185  
Decrease in accrued interest receivable
    12       1,768  
Decrease (increase) in other assets
    499       (2,666 )
Decrease in accrued expenses and other liabilities
    (154 )     (158 )
Amortization of core deposit intangible
    43       95  
 
Net cash provided by operating activities
    6,189       2,991  
 
Cash flows from investing activities:
               
Net increase in loans receivable
    (8,367 )     (34,927 )
Redemption of Federal Home Loan Bank of New York stock, net
    1,395       2,295  
Purchases of securities available-for-sale
    (217,161 )     (70,700 )
Principal payments and maturities on securities available-for-sale
    123,590       73,431  
Principal payments and maturities on securities held-to-maturity
    519       1,122  
Proceeds from sale of securities available-for-sale
    15,193       1,998  
Proceeds from maturities of certificates of deposit in other financial institutions
          46,000  
Purchases and improvements of premises and equipment
    (870 )     (901 )
 
Net cash (used in) provided by investing activities
    (85,701 )     18,318  
 
Cash flows from financing activities:
               
Net increase in deposits
    76,020       90,052  
Dividends paid
    (772 )     (774 )
Exercise of stock options
    137        
Purchase of treasury stock
    (2,754 )     (3,801 )
Additional tax benefit on stock awards
    231        
Increase (decrease) in advance payments by borrowers for taxes and insurance
    1,281       (1,455 )
Repayments under capital lease obligations
    (44 )     (67 )
Proceeds from borrowings
    69,680       20,000  
Repayments related to borrowings
    (56,000 )     (71,000 )
 
Net cash provided by financing activities
    87,779       32,955  
 
Net increase in cash and cash equivalents
    8,267       54,264  
Cash and cash equivalents at beginning of period
    42,544       50,128  
 
Cash and cash equivalents at end of period
  $ 50,811       104,392  
 
Supplemental cash flow information:
               
Cash paid during the period for:
               
Interest
  $ 6,645       8,251  
Income taxes
    1,565       183  
Non-cash transactions:
               
Loans charged-off, net
    198       595  
Other real estate owned charged-off
    146        
See accompanying notes to the unaudited consolidated financial statements.

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Table of Contents

NORTHFIELD BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements
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 solely 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 month period ended March 31, 2010, are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2010. 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, 2009, of Northfield Bancorp, Inc. as filed with the SEC.
Note 2 — Securities Available-for-Sale
     The following is a comparative summary of mortgage-backed securities and other securities available-for- sale at March 31, 2010, and December 31, 2009 (in thousands):
                                 
    March 31, 2010  
            Gross     Gross     Estimated  
    Amortized     unrealized     unrealized     fair  
    cost     gains     losses     value  
Mortgage-backed securities:
                               
Pass-through certificates:
                               
Government sponsored enterprises (GSE)
  $ 366,089       15,634             381,723  
Non-GSE
    56,696       1,410       2,137       55,969  
Real estate mortgage investment conduits (REMICs):
                               
GSE
    395,438       4,988       188       400,238  
Non-GSE
    101,799       4,048       220       105,627  
 
                       
 
    920,022       26,080       2,545       943,557  
 
                       
 
                               
Other securities:
                               
Equity investments-mutual funds
    5,560       63             5,623  
GSE bonds
    129,937       524       170       130,291  
Corporate bonds
    134,026       2,698             136,724  
 
                       
 
    269,523       3,285       170       272,638  
 
                       
 
                               
Total securities available-for-sale
  $ 1,189,545       29,365       2,715       1,216,195  
 
                       

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    December 31, 2009  
            Gross     Gross     Estimated  
    Amortized     unrealized     unrealized     fair  
    cost     gains     losses     value  
Mortgage-backed securities:
                               
Pass-through certificates:
                               
Government sponsored enterprises (GSE)
  $ 404,128       13,932             418,060  
Non-GSE
    65,363       799       3,696       62,466  
Real estate mortgage investment conduits (REMICs):
                               
GSE
    344,150       5,368       430       349,088  
Non-GSE
    111,756       2,627       189       114,194  
 
                       
 
    925,397       22,726       4,315       943,808  
 
                       
 
                               
Other securities:
                               
Equity investments-mutual funds
    21,820       52             21,872  
GSE bonds
    28,994             11       28,983  
Corporate bonds
    134,595       2,595       50       137,140  
 
                       
 
    185,409       2,647       61       187,995  
 
                       
 
                               
Total securities available-for-sale
  $ 1,110,806       25,373       4,376       1,131,803  
 
                       
     The following is a summary of the expected maturity distribution of debt securities available-for-sale, other than mortgage-backed securities, at March 31, 2010 (in thousands):
                 
            Estimated  
    Amortized     fair  
Available-for-sale   cost     value  
Due in one year or less
  $ 27,127       27,528  
Due after one year through five years
    236,836       239,487  
 
           
 
  $ 263,963       267,015  
 
           
     Expected maturities on mortgage-backed securities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties.
     For the three months ended March 31, 2010, the Company had gross proceeds of $15.2 million on sales of securities available-for-sale with gross realized gains and gross realized losses of approximately $270,000 and $0, respectively. For the three months ended March 31, 2009, the Company had gross proceeds of $2.0 million on sales of securities available-for-sale with gross realized gains and gross realized losses of approximately $7,000 and $0, respectively. All impairment losses at March 31, 2010 were considered temporary.
     Gross unrealized losses on mortgage-backed securities, GSE bonds, and corporate bonds available-for-sale, and the estimated fair value of the related securities, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2010, and December 31, 2009, were as follows (in thousands):

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    March 31, 2010  
    Less than 12 months     12 months or more     Total  
    Unrealized     Estimated     Unrealized     Estimated     Unrealized     Estimated  
    losses     fair value     losses     fair value     losses     fair value  
Mortgage-backed securities:
                                               
Pass-through certificates:
                                               
Non-GSE
  $             2,137       18,161       2,137       18,161  
REMICs
                                               
GSE
    124       108,847       64       9,148       188       117,995  
Non-GSE
    220       12,749                   220       12,749  
GSE bonds
    170       41,449                   170       41,449  
 
                                   
Total
  $ 514       163,045       2,201       27,309       2,715       190,354  
 
                                   
                                                 
    December 31, 2009  
    Less than 12 months     12 months or more     Total  
    Unrealized     Estimated     Unrealized     Estimated     Unrealized     Estimated  
    losses     fair value     losses     fair value     losses     fair value  
Mortgage-backed securities:
                                               
Pass-through certificates:
                                               
Non-GSE
  $ 1       1,462       3,695       27,832       3,696       29,294  
REMICs
                                               
GSE
    429       116,478       1       16,507       430       132,985  
Non-GSE
    189       6,970                   189       6,970  
GSE bonds
    11       4,019                   11       4,019  
Corporate bonds
    50       16,017                   50       16,017  
 
                                   
Total
  $ 680       144,946       3,696       44,339       4,376       189,285  
 
                                   
     Included in the above available-for-sale security amounts at March 31, 2010, were seven pass-through, non-GSE mortgage-backed securities, and two REMIC mortgage-backed securities, in an unrealized loss position. Only three of these securities, with an estimated fair value of $13.8 million (amortized cost of $15.8 million), are rated less than AAA at March 31, 2010. Of the three securities, one had an estimated fair value of $2.6 million (amortized cost of $2.7 million), was rated A+, and had the following underlying collateral characteristics: 84% originated in 2004, and 16% originated in 2005. The second security had an estimated fair value of $6.1 million (amortized cost of $7.4 million), was rated Baa2 (subsequently downgraded to Caa2), and had the following underlying collateral characteristics: 82% originated in 2004, and 18% originated in 2005. The remaining security had an estimated fair value of $5.1 million (amortized cost of $5.7 million), was rated CCC, and was supported by collateral entirely originated in 2006. The Company continues to receive principal and interest payments in accordance with the contractual terms of each of these securities. Management has evaluated, among other things, delinquency status, location of collateral, estimated prepayment speeds, and the estimated default rates and loss severity in liquidating the underlying collateral for each of these three securities. Since management does not have the intent to sell the securities, and it is more likely than not that the Company will be required to sell the securities, before their anticipated recovery (which may be at maturity), the Company believes that the unrealized losses of $2.0 million at March 31, 2010, are temporary, and as such, are recorded as a component of accumulated other comprehensive income, net of tax.
     REMIC mortgage-backed securities issued or guaranteed by GSEs (nine securities) and GSE bonds (three securities) are investment grade securities. The declines in value are deemed to relate to the general interest rate environment and are considered temporary. The securities cannot be prepaid in a manner that would result in the Company not receiving substantially all of its amortized cost. The Company neither has an intent to sell, nor is it more likely than not that the Company will be required to sell, the securities contained in the table above before the recovery of their amortized cost basis or, if necessary, maturity.
     The fair values of our securities could decline in the future if the underlying performance of the collateral for the mortgage-backed securities deteriorates and our credit enhancement levels do not provide sufficient protections to our contractual principal and interest. As a result, there is a risk that significant other-than-temporary impairments may occur in the future given the current economic environment.

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Note 3 — Net Loans Held-for-Investment
Net loans held-for-investment are as follows (in thousands):
                 
    March 31,     December 31,  
    2010     2009  
     
Real estate loans:
               
Commercial mortgage
  $ 332,427       327,802  
One to four family residential mortgage
    90,014       90,898  
Construction and land
    39,523       44,548  
Multifamily
    187,372       178,401  
Home equity and lines of credit
    28,143       26,118  
     
Total real estate loans
    677,479       667,767  
     
Commercial and industrial loans
    17,833       19,252  
Insurance premium loans
    39,977       40,382  
Other loans
    1,328       1,299  
     
Total commercial and industrial, insurance premium, and other loans
    59,138       60,933  
     
Total loans held-for-investment
    736,617       728,700  
Deferred loan cost, net
    608       569  
     
Loans held-for-investment, net
    737,225       729,269  
Allowance for loan losses
    (17,146 )     (15,414 )
     
Net loans held-for-investment
  $ 720,079       713,855  
     
     The Company did not have any loans-held-for-sale at March 31, 2010, or December 31, 2009.
     The Company does not have any lending programs commonly referred to as subprime lending. Subprime lending generally targets borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios.
     Activity in the allowance for loan losses is as follows (in thousands):
                 
    At or for the  
    three months ended  
    March 31,  
    2010     2009  
     
Beginning balance
  $ 15,414       8,778  
Provision for loan losses
    1,930       1,644  
Charge-offs, net
    (198 )     (595 )
     
Ending balance
  $ 17,146       9,827  
     
     Included in loans receivable 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 of $39.5 million at March 31, 2010, and $36.8 million at December 31, 2009) was $44.3 million and $41.6 million at March 31, 2010, and December 31, 2009, respectively. Loans on non-accrual status with principal balances less than $500,000, and therefore not meeting the definition of an impaired loan, amounted to $4.9 million and $4.8 million at March 31, 2010, and December 31, 2009, respectively. Loans past due 90 days or more and still accruing interest was $5.7 million and $191,000 at March 31, 2010, and December 31, 2009, respectively. The majority of the $5.7 million relates to one loan relationship for $3.7 million that was current on interest payments in accordance with the original contractual terms of the loans but past maturity. These loans are considered well secured and in the process of collection. The loans are being refinanced by the Company to permanent real estate mortgages in accordance with our current underwriting standards. At March 31, 2010, the Company is under commitment to lend additional funds totaling $360,000 to borrowers whose loans are on non-accrual status or who are past due 90 days or more and still accruing interest.

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     The following table summarizes non-performing loans (in thousands):
                 
    March 31,     December 31,  
    2010     2009  
     
Non-accruing loans
  $ 31,248       30,914  
Non-accruing loans subject to restructuring agreements
    13,090       10,717  
     
Total non-accruing loans
    44,338       41,631  
Loans 90 days or more past maturity and still accruing
    5,710       191  
     
Total non-performing loans
  $ 50,048       41,822  
     
 
               
Loans subject to restructuring agreements and still accruing
  $ 8,817       7,250  
     The following tables summarize impaired loans (in thousands):
                         
    March 31, 2010  
            Allowance        
    Recorded     for Loan     Net  
    Investment     Losses     Investment  
Non-accruing loans
  $ 26,390       (190 )     26,200  
Non-accruing loans subject to restructuring agreements
    13,090       (422 )     12,668  
Accruing loans subject to restructuring agreements
    8,817       (465 )     8,352  
 
                 
Total impaired loans
  $ 48,297       (1,077 )     47,220  
 
                 
                         
    December 31, 2009  
            Allowance        
    Recorded     for Loan     Net  
    Investment     Losses     Investment  
Non-accruing loans
  $ 26,113       (1,596 )     24,517  
Non-accruing loans subject to restructuring agreements
    10,717       (409 )     10,308  
Accruing loans subject to restructuring agreements
    7,250       (395 )     6,855  
 
                 
Total impaired loans
  $ 44,080       (2,400 )     41,680  
 
                 
     Included in the table above at March 31, 2010, are loans with carrying balances of $22.9 million that were not written down either by charge-offs or specific reserves in our allowance for loan losses. Included in the table above at December 31, 2009, are loans with carrying balances of $12.7 million that were not written down either by charge-offs or specific reserves in our allowance for loan losses.
     The average balance of impaired loans was $46.2 million and $14.1 million for the three months ended March 31, 2010, and 2009, respectively. The Company recorded $420,000 and $10,000 of interest income on impaired loans for the three months ended March 31, 2010 and 2009, respectively.

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Note 4 — Deposits
Deposits are as follows (in thousands):
                 
    March 31,     December 31,  
    2010     2009  
     
Non-interest-bearing demand
  $ 108,139       110,015  
Interest-bearing negotiable orders of withdrawal (NOW)
    66,719       62,904  
Savings-passbook, statement, tiered, and money market
    591,818       564,593  
Certificates of deposit
    626,229       579,373  
     
 
  $ 1,392,905       1,316,885  
     
     Interest expense on deposit accounts is summarized for the periods indicated (in thousands):
                 
    Three months ended  
    March 31,  
    2010     2009  
     
Negotiable order of withdrawal, savings-passbook, statement, tiered, and money market
  $ 1,420       1,636  
Certificates of deposit
    2,532       3,321  
     
 
  $ 3,952       4,957  
     
Note 5 —Equity Incentive Plan
     At the Special Meeting of the Stockholders of the Company (the “Meeting”) held on December 17, 2008, the stockholders of the Company approved the Northfield Bancorp, Inc. 2008 Equity Incentive Plan. On January 30, 2009, certain officers and employees of the Company were granted an aggregate of 1,478,900 stock options and 582,700 shares of restricted stock, and non-employee directors received an aggregate of 623,700 stock options and 249,750 shares of restricted stock. On May 29, 2009, an employee was granted 3,800 stock options and 4,200 restricted stock awards. On January 30, 2010, an employee was granted 3,000 stock options and 4,400 restricted stock awards. All stock options and restricted stock vest in equal installments over a five year period beginning one year from the date of grant. The vesting of options and restricted stock awards may accelerate in accordance with terms of the plan. Stock options were granted at an exercise price equal to the fair value of the Company’s common stock on the grant date based on quoted market prices and all have an expiration period of ten years. The fair value of stock options granted on January 30, 2009, was estimated utilizing the Black-Scholes option pricing model using the following assumptions: an expected life of 6.5 years utilizing the simplified method, risk-free rate of return of 2.17%, volatility of 35.33% and a dividend yield of 1.61%. The fair value of stock options granted on May 29, 2009, was estimated utilizing the Black-Scholes option pricing model using the following assumptions: an expected life of 6.5 years utilizing the simplified method, risk-free rate of return of 2.88%, volatility of 38.39% and a dividend yield of 1.50%. The fair value of stock options granted on January 30, 2010, was estimated utilizing the Black-Scholes option pricing model using the following assumptions: an expected life of 6.5 years utilizing the simplified method, risk-free rate of return of 2.90%, volatility of 38.29% and a dividend yield of 1.81%. The Company is expensing the grant date fair value of all employee and director share-based compensation over the requisite service periods on a straight-line basis.
     During the three months ended March 31, 2010 and 2009, the Company recorded $776,000 and $559,000 of stock-based compensation, respectively.
     The following table is a summary of the Company’s non-vested stock options as of March 31, 2010, and changes therein during the three months then ended:

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            Weighted Average             Weighted Average  
    Number of Stock     Grant Date Fair     Weighted Average     Contractual Life  
    Options     Value     Exercise Price     (years)  
Outstanding- December 31, 2009
    2,083,400     $ 3.22     $ 9.94       9.08  
Granted
    3,000       4.66       10.98       10.00  
Forfeited
                       
Exercised
    (13,860 )     3.22       9.94        
 
                       
Outstanding- March 31, 2010
    2,072,540     $ 3.22     $ 9.94       8.84  
 
                       
 
                               
Exercisable- March 31, 2010
    402,060     $ 3.22     $ 9.94       8.83  
 
                       
     Expected future stock option expense related to the non-vested options outstanding as of March 31, 2010, is $5.3 million over an average period of 3.8 years.
     Upon the exercise of stock options, management expects to utilize treasury stock as the source of issuance for these shares.
     The following is a summary of the status of the Company’s restricted share awards as of March 31, 2010, and changes therein during the three months then ended.
                 
            Weighted Average  
    Number of Shares     Grant Date Fair  
    Awarded     Value  
Non-vested at December 31, 2009
    825,150     $ 9.94  
Granted
    4,400       13.24  
Vested
    (174,830 )     9.94  
Forfeited
           
 
           
Non-vested at March 31, 2010
    654,720     $ 9.97  
 
           
     Expected future stock award expense related to the non-vested restricted share awards as of March 31, 2010, is $6.3 million over an average period of 3.8 years. On January 30, 2010, 174,830 of restricted shares vested. In connection with the vesting, the Company repurchased 21,605 shares of common stock from employees (at their request) in satisfaction of minimum payroll taxes.
Note 6- Fair Value Measurements
     The following table presents the assets reported on the consolidated balance sheet at their estimated fair value as of March 31, 2010, and December 31, 2009, by level within the fair value hierarchy as required by the Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification (ASC). 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 the Company’s own assumptions that market participants would use in pricing the assets or liabilities.

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            Fair Value Measurements at Reporting Date Using:  
            Quoted Prices in              
            Active Markets for     Significant Other     Significant  
            Identical Assets     Observable Inputs     Unobservable Inputs  
(in thousands)   March 31, 2010     (Level 1)     (Level 2)     (Level 3)  
Measured on a recurring basis:
                               
Assets:
                               
Investment securities:
                               
Available-for-sale:
                               
Mortgage-backed securities
                               
GSE
  $ 781,961             781,961        
Non-GSE
    161,596             161,596        
Corporate bonds
    136,724             136,724        
GSE bonds
    130,291             130,291        
Equities
    5,623       5,623              
 
                       
Total available-for-sale
    1,216,195       5,623       1,210,572        
 
                       
Trading securities
    3,706       3,706              
 
                       
Total
  $ 1,219,901       9,329       1,210,572        
 
                       
 
                               
Measured on a non-recurring basis:
                               
Assets:
                               
Impaired loans:
                               
Real estate loans:
                               
Commercial mortgage (CRE)
  $ 17,231                   17,231  
Construction and land
    6,219                   6,219  
Multifamily
    835                   835  
 
                       
Total impaired loans
    24,285                   24,285  
 
                       
Other real estate owned (CRE)
    1,533                   1,533  
 
                       
Total
  $ 25,818                   25,818  
 
                       
                                 
            Fair Value Measurements at Reporting Date Using:  
            Quoted Prices in              
            Active Markets for     Significant Other     Significant  
            Identical Assets     Observable Inputs     Unobservable Inputs  
    December 31, 2009     (Level 1)     (Level 2)     (Level 3)  
Measured on a recurring basis:
                               
Assets:
                               
Investment securities:
                               
Available-for-sale:
                               
Mortgage-backed securities
                               
GSE
  $ 767,148             767,148        
Non-GSE
    176,660             176,660        
Corporate bonds
    137,140             137,140        
GSE bonds
    28,983             28,983        
Equities
    21,872       21,872              
 
                       
Total available-for-sale
    1,131,803       21,872       1,109,931        
 
                       
Trading securities
    3,403       3,403              
 
                       
Total
  $ 1,135,206       25,275       1,109,931        
 
                       
 
                               
Measured on a non-recurring basis:
                               
Assets:
                               
Impaired loans:
                               
Real estate loans:
                               
Commercial mortgage
  $ 21,295                   21,295  
Construction and land
    6,910                   6,910  
Multifamily
    823                   823  
 
                       
Total impaired loans
    29,028                   29,028  
 
                       
Other real estate owned (CRE)
    1,938                   1,938  
 
                       
Total
  $ 30,966                   30,966  
 
                       

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     Available -for- Sale Securities: The estimated fair values for mortgage-backed, GSE and corporate securities are obtained from an independent 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 values of equity securities, classified as Level 1, are derived from quoted market prices in active markets. Equity securities consist primarily of money market mutual funds. There were no transfers of securities between Level 1 and Level 2 during the quarter ended March 31, 2010.
     Trading Securities: Fair values are derived from quoted market prices in active markets. The assets consist of publicly traded mutual funds.
     Impaired Loans: At March 31, 2010, and December 31, 2009, the Company had impaired loans with outstanding principal balances of $25.4 million and $31.4 million, that were recorded at their estimated fair value of $24.3 million and $29.0 million, respectively. The Company recorded impairment charges of $1.1 million and charge-offs of $198,000 for the three months ended March 31, 2010, compared to impairment charges of $594,000 and charge-offs of $595,000 for the same period of 2009, respectively, utilizing Level 3 inputs. Impaired assets are valued utilizing independent appraisals, if the loan is collateral dependent, adjusted downward by management, as necessary, for changes in relevant valuation factors subsequent to the appraisal date, or the present value of expected future cash flows for non-collateral dependent loans and troubled debt restructurings.
     Other Real Estate Owned: At March 31, 2010, and December 31, 2009 the Company had assets acquired through foreclosure of $1.5 million and $1.9 million, respectively, recorded at estimated fair value, less estimated selling costs when acquired, thus establishing a new cost basis. Fair value is generally based on independent appraisals. These appraisals include adjustments to comparable assets based on the appraisers’ market knowledge and experience, and are considered Level 3 inputs. When an asset is acquired, the excess of the loan balance over fair value, less estimated selling costs, is charged to the allowance for loan losses. If the estimated fair value of the asset declines, a write-down is recorded through expense. The valuation of foreclosed assets is subjective in nature and may be adjusted in the future because of changes in economic conditions. Subsequent valuation adjustments to other real estate owned totaled $146,000 for the three months ended March 31, 2010, reflective of continued deterioration in estimated fair values. The remaining reduction to REO was a result of sales. There were no subsequent valuation adjustments to other real estate owned for the three months ended March 31, 2009. Operating costs after acquisition are generally expensed.
Fair Value of Financial Instruments
     The FASB Accounting Standards Topic for Financial Instruments requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring or non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above. The following methods and assumptions were used to estimate the fair value of other financial assets and financial liabilities not already discussed above:
     Fair value estimates, methods, and assumptions are set forth below for the Company’s financial instruments.
(a) Cash, Cash Equivalents, and Certificates of Deposit
Cash and cash equivalents are short-term in nature with original maturities of three months or less; the carrying amount approximates fair value. Certificates of deposits having original terms of six-months or less; carrying value generally approximates fair value. Certificate of deposits with an original maturity of six months or greater the fair value is derived from discounted cash flows.
(b) Securities (Held to Maturity)
The fair values for substantially all of our securities are obtained from an independent nationally recognized pricing service. The independent pricing service utilizes market prices of same or similar securities whenever such prices are available. Prices involving distressed sellers are not utilized in determining fair value. Where necessary, the independent third-party pricing service estimates fair

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value using models employing techniques such as discounted cash flow analyses. The assumptions used in these models typically include assumptions for interest rates, credit losses, and prepayments, utilizing market observable data where available.
(c) Federal Home Loan Bank of New York Stock
The fair value for Federal Home Loan Bank of New York stock is its carrying value, since this is the amount for which it could be redeemed and there is no active market for this stock.
(d) Loans
Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as residential mortgage, construction, land, multifamily, commercial and consumer. Each loan category is further segmented into amortizing and non-amortizing and fixed and adjustable rate interest terms and by performing and nonperforming categories. The fair value of loans is estimated by discounting the future cash flows using current prepayment assumptions and current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. This method of estimating fair value does not incorporate the exit price concept of fair value prescribed by the FASB ASC Topic for Fair Value Measurements and Disclosures.
(e) Deposits
The fair value of deposits with no stated maturity, such as non-interest-bearing demand deposits, savings, NOW and money market accounts, is equal to the amount payable on demand. The fair value of certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities.
(f) Commitments to Extend Credit and Standby Letters of Credit
The fair value of commitments to extend credit and standby letters of credit is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of off-balance-sheet commitments is insignificant and therefore not included in the following table.
(g) Borrowings
The fair value of borrowings is estimated by discounting future cash flows based on rates currently available for debt with similar terms and remaining maturity.
(h) Advance Payments by Borrowers
Advance payments by borrowers for taxes and insurance have no stated maturity; the fair value is equal to the amount currently payable.

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The estimated fair values of the Company’s significant financial instruments at March 31, 2010, and December 31, 2009, are presented in the following table (in thousands):
                                 
    March 31,   December 31,
    2010   2009
            Estimated           Estimated
    Carrying   Fair   Carrying   Fair
    value   value   value   value
Financial assets:
                               
Cash and cash equivalents
  $ 50,811       50,811       42,544       42,544  
Trading securities
    3,706       3,706       3,403       3,403  
Securities available-for-sale
    1,216,195       1,216,195       1,131,803       1,131,803  
Securities held-to-maturity
    6,220       6,432       6,740       6,930  
Federal Home Loan Bank of New York stock, at cost
    5,026       5,026       6,421       6,421  
Net loans held-for-investment
    720,079       735,885       713,855       726,475  
Financial liabilities:
                               
Deposits
  $ 1,392,905       1,394,827       1,316,885       1,319,612  
Borrowings
    293,060       302,780       279,424       288,737  
Advance payments by borrowers
    2,038       2,038       757       757  
Limitations
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on- and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.
Note 7 —Earnings Per Share
     Basic earnings per 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 basic earnings per share, weighted average common shares outstanding excludes unallocated employee stock ownership plan (ESOP) shares that have not been committed for release and unvested restricted stock.
     Diluted earnings per share is computed using the same method as basic earnings per share, but reflects the potential dilution that could occur if stock options and unvested shares of restricted stock were exercised and converted into common stock. These potentially dilutive shares are included in the weighted average number of shares outstanding for the period using the treasury stock method. When applying the treasury stock method, we add: (1) the assumed proceeds from option exercises; (2) the tax benefit, if any, that would have been credited to

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additional paid-in capital assuming exercise of non-qualified stock options and vesting of shares of restricted stock; and (3) the average unamortized compensation costs related to unvested shares of restricted stock and stock options. We then divide this sum by our average stock price for the period to calculate assumed shares repurchased. The excess of the number of shares issuable over the number of shares assumed to be repurchased is added to basic weighted average common shares to calculate diluted earnings per share.
     The following is a summary of the Company’s earnings per share calculations and reconciliation of basic to diluted earnings per share for the periods indicated (dollars in thousands, except share data):
                 
    For the three months
    ended March 31,
    2010   2009
Net income available to common stockholders
  $ 3,381       2,735  
 
               
Weighted average shares outstanding-basic
    41,509,173       43,089,331  
Effect of non-vested restricted stock and stock options outstanding
    314,621       15,078  
Weighted average shares outstanding-diluted
    41,823,794       43,104,409  
 
               
Earnings per share-basic
  $ 0.08       0.06  
Earnings per share-diluted
  $ 0.08       0.06  
Note 8 — Recent Accounting Pronouncements
     ASC 810, Consolidation, replaces the quantitative-based risks and rewards calculation for determining which enterprise, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity that most significantly effect the entity’s economic performance and (i) the obligation to absorb losses of the entity or (ii) the right to receive benefits from the entity. The pronouncement was effective January 1, 2010, and did not have a significant effect on the Company’s consolidated financial statements.
     ASC 860, Transfers and Servicing, improves the information a reporting entity provides in its financial statements about a transfer of financial assets, including the effect of a transfer on an entity’s financial position, financial performance and cash flows and the transferor’s continuing involvement in the transferred assets. ASC 860 eliminates the concept of a qualifying special-purpose entity and changes the guidance for evaluation for consolidation. This pronouncement was effective January 1, 2010, and did not have a significant effect on the Company’s consolidated financial statements.
     Accounting Standards Update No. 2010-06 under ASC 820 requires new disclosures and clarifies certain existing disclosure requirements about fair value measurement. Specifically, the update requires an entity to disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for such transfers. A reporting entity is required to present separately information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements using Level 3 inputs. In addition, the update clarifies the following requirements of the existing disclosure: (i) for the purposes of reporting fair value measurement for each class of assets and liabilities, a reporting entity needs to use judgment in determining the appropriate classes of assets; and (ii) a reporting entity is required to include disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. The amendments were effective for interim and annual reporting periods beginning after December 15, 2009, except for the separate disclosures of purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. We adopted these requirements on January 1, 2010, and have provided the applicable disclosures.

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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 words such 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, prospects, 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 or other changes 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, the Financial Accounting Standards Board, the Public Company Accounting Oversight Board and other promulgating authorities;
 
    inability of borrowers and/or third-party providers to perform their obligations to us;
 
    the effect of current governmental effort to restructure the U.S. financial and regulatory system;
 
    the effect of developments in the secondary market affecting our loan pricing;
 
    the level of future deposit insurance premiums
 
    changes in our organization, compensation and benefit plans; and
 
    the effect of the current financial crisis on our loan portfolio, investment portfolio, and deposit and other customers.
     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, 2009, 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 estimated fair value or the lower of cost or estimated 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

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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, 2009.
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 read this entire document carefully, as well as our Annual Report on Form 10-K for the year ended December 31, 2009.
     Net income was $3.4 million for the quarter ended March 31, 2010, compared to $2.7 million for the quarter ended March 31, 2009. Basic and diluted earnings per share were $0.08 for the quarter ended March 31, 2010, compared to $0.06 per share for the quarter ended March 31, 2009.
     Return on average assets and return on average equity were 0.67% and 3.48%, respectively, for the quarter ended March 31, 2010, compared to 0.63% and 2.87% for the quarter ended March 31, 2009, respectively.
     The quarter ended March 31, 2010, was highlighted by the following items:
    Total assets increased $95.5 million to $2.1 billion at March 31, 2010, from $2.0 billion at December 31, 2009.
    Interest-bearing deposits in other financial institutions increased $8.8 million.
 
    Securities increased $84.2 million.
 
    Loans held-for-investment, net, increased $8.0 million.
    Allowance for loan losses increased to $17.1 million, or 2.33% of total loans at March 31, 2010, from $15.4 million, or 2.11% of total loans at December 31, 2009.
 
    Total liabilities increased $90.8 million to $1.7 billion at March 31, 2010, from $1.6 billion at December 31, 2009.
    Deposits increased $76.0 million.
 
    Borrowed funds increased $13.6 million.
    Stockholders’ equity increased to $396.3 million at March 31, 2010, from $391.5 million at December 31, 2009.
 
    Net interest income increased $1.8 million, or 14.0%, to $14.5 million for the quarter ended March 31, 2010, compared to $12.8 million for the quarter ended March 31, 2009.
    Average interest-earning assets increased $261.4 million, or 15.5%, to $1.9 billion for the quarter ended March 31, 2010, from $1.7 billion for the quarter ended March 31, 2009.
 
    The net interest margin decreased four basis points to 3.03% for the quarter ended March 31, 2010, from 3.07% for the quarter ended March 31, 2009.
    The provision for loan losses was $1.9 million for the quarter ended March 31, 2010, compared to $1.6 million for the quarter ended March 31, 2009. Net charge-offs were $198,000 and $595,000 for the quarter ended March 31, 2010 and 2009, respectively.
 
    Non-interest income increased $754,000, or 77.8%, to $1.7 million for the quarter ended March 31, 2010, compared to $969,000 for the quarter ended March 31, 2009.
 
    Non-interest expense increased to $9.1 million for the quarter ended March 31, 2010, compared to $7.8 million for the quarter ended March 31, 2009.

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Comparison of Financial Condition at March 31, 2010, and December 31, 2009
     Total assets increased $95.5 million, or 4.8%, to $2.1 billion at March 31, 2010, from $2.0 billion at December 31, 2009. The increase in total assets reflected increases in securities of $84.2 million, cash and cash equivalents of $8.3 million, and loans held for investment, net, of $8.0 million.
     Cash and cash equivalents increased $8.3 million, or 19.4%, to $50.8 million at March 31, 2010, from $42.5 million at December 31, 2009. The Company has been maintaining increased balances in other financial institutions while it evaluates opportunities to deploy funds into higher yielding investments such as loans and securities with acceptable risk and return characteristics.
     Securities available-for-sale increased $84.4 million, or 7.5%, to $1.2 billion at March 31, 2010, from $1.1 billion at December 31, 2009. The increase was primarily attributable to purchases of $217.2 million and an increase of $5.7 million in net unrealized gains, partially offset by maturities and paydowns of $123.6 million and sales of $15.2 million.
     Securities held-to-maturity decreased $520,000, or 7.7%, to $6.2 million at March 31, 2010, from $6.7 million at December 31, 2009. The decrease was attributable to maturities and paydowns during the quarter ended March 31, 2010.
     At March 31, 2010, $788.2 million of our securities were residential mortgage-backed securities issued or guaranteed by either Fannie Mae, Freddie Mac, or Ginnie Mae. The Company also held residential mortgage-backed securities not issued or guaranteed by either Fannie Mae, Freddie Mac, or Ginnie Mae, referred to as “private label securities.” These private label securities had an amortized cost of $158.5 million and an estimated fair value of $161.6 million at March 31, 2010. These private label securities portfolios were in a net unrealized gain position of $3.1 million, consisting of gross unrealized gains of $5.5 million and gross unrealized losses of $2.4 million.
     Of the $161.6 million in private label securities, three securities with an estimated fair value of $13.8 million (amortized cost of $15.8 million) are rated less than AAA at March 31, 2010. Of the three securities, one had an estimated fair value of $2.6 million (amortized cost of $2.7 million) and was rated A+, another had an estimated fair value of $6.1 million (amortized cost of $7.4 million) and was rated Baa2 (subsequently downgraded to Caa2), and the remaining security had an estimated fair value of $5.1 million (amortized cost of $5.7 million) and was rated CCC. The Company continues to receive principal and interest payments in accordance with the contractual terms of each of these securities. Management has evaluated, among other things, delinquency status, location of collateral, estimated prepayment speeds, and the estimated default rates and loss severity in liquidating the underlying collateral for each of these three securities. Since management does not have the intent to sell the securities, and it is more likely than not that the Company will not be required to sell the securities, before their anticipated recovery (which may be at maturity), the Company believes that the unrealized losses of $2.0 million at March 31, 2010, are temporary, and as such, are recorded as a component of accumulated other comprehensive income, net of tax.
     Loans held for investment, net totaled $737.2 million at March 31, 2010, as compared to $729.3 million at December 31, 2009. The increase was primarily in multi-family real estate loans, which increased $9.0 million, or 5.0%, to $187.4 million, from $178.4 million at December 31, 2009, reflecting our continued emphasis on this loan product. Commercial real estate loans increased $4.6 million, or 1.4%, to $332.4 million, and home equity loans increased $2.0 million, or 7.8%, from $26.1 million at December 31, 2009. These increases were partially offset by decreases in residential loans, land and construction loans, commercial and industrial loans, and insurance premium loans.
     Federal Home Loan Bank of New York stock, at cost, decreased $1.4 million, or 21.7%, from $6.4 million at December 31, 2009 to $5.0 million at March 31, 2010. This decrease was attributable to a decrease in borrowings outstanding with the FHLB over the same time period.
     Other real estate owned decreased $405,000, or 21.0%, from $1.9 million at December 31, 2009, to $1.5 million at March 31, 2010. This decrease was primarily attributable to downward valuation adjustments recorded against the carrying balances of the properties which resulted from the continued deterioration in estimated fair values, coupled with the sale of REO properties.

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     Other assets decreased $2.2 million, or 14.6%, to $12.7 million at March 31, 2010, from $14.9 million at December 31, 2009. The decrease in other assets was attributable to a decrease in deferred tax assets, which resulted primarily from an increase in net unrealized gains on the Company’s securities portfolio from December 31, 2009, to March 31, 2010.
     Deposits increased $76.0 million, or 5.8%, to $1.4 billion at March 31, 2010, from $1.3 billion at December 31, 2009. The increase in deposits during the first quarter of 2010 was primarily due to an increase of short-term certificates of deposit originated through the CDARS® Network in the amount of $82.0 million. The Company utilizes this funding source as a cost effective alternative to other short-term funding sources. In addition, savings and money market accounts, and transaction accounts increased $27.2 million and $1.9 million, respectively, from December 31, 2009 to March 31, 2010. These increases were partially offset by a decrease of $35.1 million in certificates of deposit (originated by the Bank) over the same time period.
     Borrowings increased $13.6 million, or 4.8%, to $293.1 million at March 31, 2010, from $279.4 million at December 31, 2009. The increase in borrowings was primarily the result of the Company increasing longer-term borrowings, locking in historically low interest rates, partially offset by maturities during the quarter.
     Total stockholders’ equity increased to $396.3 million at March 31, 2010, from $391.5 million at December 31, 2009. The increase was primarily attributable to net income of $3.4 million for the quarter ended March 31, 2010, and an increase in accumulated other comprehensive income of $3.5 million resulting primarily from a decrease in market interest rates that resulted in an increase in the estimated fair value of our securities available for sale. The increase in stockholders’ equity also was attributable to a $1.1 million increase in additional paid-in capital primarily related to the recognition of compensation expense associated with equity awards. These increases were partially offset by $2.8 million in stock repurchases, and the payment of approximately $772,000 in dividends for the quarter ended March 31, 2010. Through March 31, 2010, the Company had repurchased 1,910,089 shares of common stock at an average cost of $11.79 per share.
Comparison of Operating Results for the Three Months Ended March 31, 2010 and 2009
     Net income. Net income increased $646,000, or 23.6%, for the quarter ended March 31, 2010, compared to the quarter ended March 31, 2009. Net interest income increased $1.8 million, or 14.0%, and non-interest income increased $754,000, or 77.8%, which was partially offset by an increase of $286,000, or 17.4%, in provision for loan losses, an increase of non-interest expense of $1.3 million, or 17.2%, and an increase in income tax expense of $271,000, or 17.3%, over the same time periods.
     Interest income. Interest income increased $525,000, or 2.6%, to $21.0 million for the three months ended March 31, 2010, from $20.5 million for the three months ended March 31, 2009. The increase in interest income was primarily the result of an increase in average interest-earning assets of $261.4 million, or 15.5%. The increase in average interest-earning assets was primarily attributable to an increase in average loans of $133.2 million, or 22.1%, an increase in securities (other than mortgage-backed securities) of $197.4 million, partially offset by a decrease in average mortgage-backed securities of $34.6 million, or 3.7%. The effect of the increase in average interest-earning assets was partially offset by a decrease in the yield earned to 4.38% for the three months ended March 31, 2010, from 4.93% for the three months ended March 31, 2009. The rates earned on all asset categories, other than FHLB stock, decreased due to the general decline in market interest rates for these asset types. The rate earned on Federal Home Loan Bank of New York stock, increased from 4.10% for the quarter ended March 31, 2009, to 6.35% for the quarter ended March 31, 2010.
     Interest expense. Interest expense decreased $1.3 million, or 16.4%, to $6.5 million for the three months ended March 31, 2010, from $7.7 million for the three months ended March 31, 2009. The decrease was attributable to a decrease in interest expense on deposits of $1.0 million, or 20.3%, and a decrease in interest expense on borrowings of $258,000, or 9.3%. The decrease in interest expense on deposits was attributable to a decrease in the cost of deposits of 76 basis points, or 36.7%, to 1.31% for the quarter ended March 31, 2010, from 2.07% for the quarter ended March 31, 2009, reflecting lower market interest rates for short-term deposits. The decrease in the cost of deposits was partially offset by an increase of $253.5 million, or 26.1%, in average interest-bearing deposits outstanding between the two quarters. The decrease in interest expense on borrowings was primarily attributable to a decrease in the cost of borrowings of 42 basis points, to 3.26%, from 3.68% for the quarter ended March 31, 2009, reflecting lower market interest rates for borrowed funds.

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     Net Interest Income. Net interest income increased $1.8 million, or 14.0%, due primarily to interest earning assets increasing $261.4 million, or 15.5%, partially offset by a decrease in the net interest margin of four basis points, or 1.3%, over the prior year comparable quarter. The net interest margin decreased for the quarter as the average yield earned on interest earning assets decreased, which was partially offset by a decrease in the average rate paid on interest-bearing liabilities. The general decline in interest rates is due to the overall low interest rate environment. The increase in average interest earning assets was due primarily to an increase in average loans outstanding, of $133.2 million, and other securities of $197.4 million, being partially offset by decreases in mortgage-backed securities, and interest-earning assets in other financial institutions. Other securities consist primarily of investment-grade corporate bonds, and government-sponsored enterprise bonds.
     Provision for Loan Losses. The provision for loan losses was $1.9 million for the quarter ended March 31, 2010, an increase of $286,000, or 17.4%, from the $1.6 million provision recorded in the quarter ended March 31, 2009. The increase in the provision for loan losses in the current quarter was due primarily to an increase in general loss factors utilized in management’s estimate of credit losses inherent in the loan portfolio in recognition of our elevated level of delinquent loans, as well as the current weak economic environment and real estate market. Although loan growth in the first quarter of 2009 exceeded that of the current quarter, the Company has experienced greater growth in its loans past due and non-performing loans during the current quarter as compared to the first quarter of 2009, resulting in a larger increase in general loss factors. Net charge-offs for the quarter ended March 31, 2010, were $198,000, as compared to $595,000 for the quarter ended March 31, 2009. The allowance for loan losses was $17.1 million, or 2.33% of loans held for investment, net at March 31, 2010, compared to $15.4 million, or 2.11% of loans held for investment, net at December 31, 2009.
     Non-interest Income. Non-interest income increased $754,000, or 77.8%, to $1.7 million for the quarter ended March 31, 2010, compared to $969,000 the quarter ended March 31, 2009, primarily as a result of $615,000 in gains on securities transactions during the quarter ended March 31, 2010, as compared to $154,000 in losses on securities transactions during the quarter ended March 31, 2009. Securities gains in the first quarter of 2010 included gross realized gains of $270,000 on the sale of available-for-sale mortgage-backed securities. Securities gains in the first quarter of 2010 included $345,000 related to the Company’s trading portfolio, while the first quarter of 2009 included securities losses of $161,000 related to the Company’s trading portfolio. The trading portfolio is utilized to fund the Company’s deferred compensation obligation to certain employees and directors of the plan. The participants of this plan, at their election, defer a portion of their compensation. Gains and losses on trading securities have no effect on net income since participants benefit from, and bear the full risk of, changes in the trading securities market values. Therefore, the Company records an equal and offsetting amount in non-interest expense, reflecting the change in the Company’s obligations under the plan.
     Non-interest Expense. Total non-interest expense increased $1.3 million, or 17.2%, from $7.8 million for the quarter ended March 31, 2009, to $9.1 million for the quarter ended March 31, 2010. This increase was attributable, in part, to a $1.0 million increase in employee compensation and benefits expense, $506,000 of which related to the Company’s deferred compensation plan, which is described above, and had no effect on net income. The remaining increase in employee compensation and benefits expense related to additional costs associated with equity award grants which occurred on January 30, 2009, coupled with increases in full-time equivalent employees, primarily related to our insurance premium finance division formed in October 2009, higher health care costs, and to a lesser extent salary adjustments effective January 1, 2010.
     Income Tax Expense. The Company recorded income tax expense of $1.8 million and $1.6 million for the quarter ended March 31, 2010 and 2009, respectively. The effective tax rate for the quarter ended March 31, 2010, was 35.2%, as compared to 36.5% for the quarter ended March 31, 2009.

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NORTHFIELD BANCORP, INC.
ANALYSIS OF NET INTEREST INCOME
(Dollars in thousands)
                                                 
For the Quarter Ended March 31,  
    2010     2009  
    Average             Average     Average             Average  
    Outstanding             Yield/ Rate     Outstanding             Yield/ Rate  
    Balance     Interest     (1)     Balance     Interest     (1)  
 
Interest-earning assets:
                                               
Loans (5)
  $ 734,417     $ 10,293       5.68 %   $ 601,245     $ 8,571       5.78 %
Mortgage-backed securities
    909,351       9,181       4.09       943,951       11,114       4.77  
Other securities
    229,298       1,384       2.45       31,943       282       3.58  
Federal Home Loan Bank of New York stock
    6,068       95       6.35       7,917       80       4.10  
Interest-earning deposits in financial institutions
    65,561       54       0.33       98,229       435       1.80  
 
                                       
Total interest-earning assets
    1,944,695       21,007       4.38       1,683,285       20,482       4.93  
Non-interest-earning assets
    107,191                       86,820                  
 
                                       
Total assets
    2,051,886                       1,770,105                  
 
                                           
 
                                               
Interest-bearing liabilities:
                                               
Savings, NOW, and money market accounts
    637,500       1,420       0.90       523,886       1,636       1.27  
Certificates of deposit
    588,675       2,532       1.74       448,761       3,321       3.00  
 
                                       
Total interest-bearing deposits
    1,226,175       3,952       1.31       972,647       4,957       2.07  
Borrowed funds
    311,798       2,506       3.26       304,513       2,764       3.68  
 
                                       
Total interest-bearing liabilities
    1,537,973       6,458       1.70       1,277,160       7,721       2.45  
Non-interest bearing deposit accounts
    109,640                       94,185                  
Accrued expenses and other liabilities
    10,124                       11,816                  
 
                                           
Total liabilities
    1,657,737                       1,383,161                  
Stockholders’ equity
    394,149                       386,944                  
 
                                           
Total liabilities and stockholders’ equity
    2,051,886                       1,770,105                  
 
                                           
 
                                               
 
                                           
Net interest income
          $ 14,549                     $ 12,761          
 
                                           
Net interest rate spread (2)
                    2.68                       2.48  
Net interest-earning assets (3)
  $ 406,722                       406,125                  
 
                                           
Net interest margin (4)
                    3.03                       3.07  
Average interest-earning assets to interest-bearing liabilities
                    126.45                       131.80  
 
(1)   Average yields and rates for the three months ended March 31, 2010 and 2009, are annualized.
 
(2)   Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
 
(3)   Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
 
(4)   Net interest margin represents net interest income divided by average total interest-earning assets.
 
(5)   Loans include non-accrual loans.

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Loan Quality
     The following table details non-accrual loans, troubled debt restructurings (accruing and non-accruing), loans 90 days or more past due and still accruing, non-performing loans, non-performing assets, accruing loans delinquent 31 to 89 days, and the ratio of nonperforming loans as a percentage of total loans.
                                         
                               
    March 31,     December 31,     September 30,     June 30,     March 31,  
(in thousands)   2010     2009     2009     2009     2009  
Non-accruing loans
  $ 31,248       30,914       19,232       16,016       13,166  
Non-accruing loans subject to restructuring agreements
    13,090       10,717       11,003       11,494       9,650  
 
                             
Total non-accruing loans
    44,338       41,631       30,235       27,510       22,816  
Loans 90 days or more past due and still accruing
    5,710       191       5,487       3,483       1,281  
 
                             
Total non-performing loans
    50,048       41,822       35,722       30,993       24,097  
Other real estate owned
    1,533       1,938       933       993       1,071  
 
                             
Total non-performing assets
  $ 51,581       43,760       36,655       31,986       25,168  
 
                             
 
                                       
Loans subject to restructuring agreements and still accruing
  $ 8,817       7,250       7,258       6,838       2,414  
 
                                       
Accruing loans 31 to 89 days delinquent
  $ 38,371       28,283       35,466       33,290       32,550  
 
                                       
Non-performing loans to total loans held for investment, net
    6.79 %     5.73 %     5.36 %     4.71 %     3.86 %
     Total non-accruing loans increased $2.7 million, to $44.3 million at March 31, 2010, from $41.6 million at December 31, 2009. This increase was primarily attributable to $6.3 million of commercial real estate loans and $429,000 of multifamily real estate loans being placed on non-accrual status, and being designated as impaired, during the first quarter of 2010. These loans did not have a significant negative effect on our allowance for loan losses at March 31, 2010, as the estimated collateral values, including costs to sell, were considered adequate in relation to the outstanding loan balances. These increases were partially offset by a payoff of $504,000 on one commercial real estate loan and principal paydowns of approximately $757,000. In addition, a $2.8 million commercial real estate loan relationship was returned to accrual status. The loans under this relationship were current as to principal and interest at March 31, 2010, and factors indicating doubtful collection no longer existed, including the borrower’s performance under the original loan terms for greater than six months. At March 31, 2010, $16.2 million, or 74.1% of loans subject to restructuring agreements (accruing and non-accruing) were performing in accordance with their restructured terms.
     Loans 90 days or more past due and still accruing interest increased to $5.7 million from $191,000 at December 31, 2009. The majority of the increase was due to one loan relationship for $3.7 million that at March 31, 2010, was current on interest payments, in accordance with the original contractual terms of the loans, but was past maturity. These loans were considered well secured and in the process of collection. The loans are being refinanced by the Company to permanent real estate mortgages in accordance with our current underwriting standards.
     Generally, loans are placed on non-accrual status when they become 90 days or more delinquent, and remain on non-accrual status until they are brought current, have six months of performance under the loan terms, and factors indicating reasonable doubt about the timely collection of payments no longer exist. Therefore, loans may be current in accordance with their loan terms, or may be less than 90 days delinquent and still be on a non-accruing status.

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     The following tables detail the delinquency status of non-accruing loans at March 31, 2010 and December 31, 2009 (dollars in thousands).
                                 
    March 31, 2010  
    Days Past Due          
      0 to 30       31 to 89     90 or more   Total
 
                       
Real estate loans:
                               
Commercial
  $ 4,105       4,142       24,508       32,755  
One -to- four family residential
    137       546       1,512       2,195  
Construction and land
    3,382       1,637       988       6,007  
Multifamily
          523       1,984       2,507  
Home equity and lines of credit
    63                   63  
Commercial and industrial loans
          501       189       690  
Insurance premium loans
                121       121  
 
                       
Total non-accruing loans
  $ 7,687       7,349       29,302       44,338  
 
                       
                                 
    December 31, 2009  
    Days Past Due          
      0 to 30       31 to 89     90 or more   Total
 
                       
Real estate loans:
                               
Commercial
  $ 2,585       10,480       15,737       28,802  
One -to- four family residential
          392       1,674       2,066  
Construction and land
    5,864             979       6,843  
Multifamily
          530       1,589       2,119  
Home equity and lines of credit
    62                   62  
Commercial and industrial loans
    1,470             269       1,739  
 
                       
Total non-accruing loans
  $ 9,981       11,402       20,248       41,631  
 
                       
     Loans 31 to 89 days delinquent and on accrual status at March 31, 2010 totaled $38.4 million, an increase of $10.1 million, from the December 31, 2009 balance of $28.3 million. Included in this category at March 31, 2010, were $22.1 million of commercial real estate loans, $8.5 million of multifamily loans, and $5.3 million of one-to-four family residential loans.
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, borrowed funds, 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 borrowed funds, 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. Northfield Bank also has borrowing capabilities with the Federal Reserve on a short-term basis, The Bank’s borrowed funds, excluding capitalized lease obligations, were $291.0 million at March 31, 2010, at a weighted average interest rate of 3.42%. A total of $69.7 million of these borrowings will mature in less than one year. Borrowed funds, excluding capitalized lease obligations, were $277.3 million at December 31, 2009. The Company has two lines of credit with the FHLB. Each line has a limit of $100.0 million. At March 31, 2010, the Company has $200.0 million available for use. Additionally, the Company has the ability to obtain additional funding from the FHLB and Federal Reserve Bank discount window utilizing unencumbered securities of approximately $385.8 million at March 31, 2010. The Company expects to have sufficient funds available to meet current commitments in the normal course of business.

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     Capital Resources. At March 31, 2010, and December 31, 2009, Northfield Bank exceeded all regulatory capital requirements to which it is subject.
                         
                    Minimum  
                    Required to Be  
            Minimum     Well Capitalized  
            Required for     under Prompt  
            Capital     Corrective  
    Actual     Adequacy     Action  
    Ratio     Purposes     Provisions  
As of March 31, 2010:
                       
Tangible capital to tangible assets
    13.91 %     1.50 %   NA %
Tier 1 capital (core) — (to adjusted assets)
    13.91       4.00       5.00  
Total capital (to risk — weighted assets)
    28.59       8.00       10.00  
 
                       
As of December 31, 2009:
                       
Tangible capital to tangible assets
    14.35 %     1.50 %   NA %
Tier 1 capital (core) — (to adjusted assets)
    14.35       4.00       5.00  
Total capital (to risk — weighted assets)
    28.52       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 March 31, 2010:
                                         
                    One to less     Three to        
            Less than     than Three     less than     Five Years  
Contractual Obligation   Total     One Year     Years     Five Years     and greater  
 
                    (in thousands)                  
Debt obligations (excluding capitalized leases)
  $ 290,980       69,680       86,300       135,000        
Commitments to originate loans
  $ 61,835       61,835                    
Commitments to fund unused lines of credit
  $ 3,181       3,181                    
     Commitments to originate loans and commitments to fund unused lines of credit are agreements to lend additional funds to customers as long as there have been no violations of any of the conditions established in the agreements. Commitments generally have a fixed expiration or other termination clauses which may or may not require payment of a fee. Since some of these loan commitments are expected to expire without being drawn upon, total commitments do not necessarily represent future cash requirements.
     For further information regarding our off-balance sheet arrangements and contractual obligations, 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, 2009.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     A majority of our assets and liabilities are monetary in nature. Consequently, our most significant form of market risk is interest rate risk. Our assets, consisting primarily of mortgage-related assets and loans, generally have longer maturities than our liabilities, which consist primarily of deposits and wholesale funding. As a result, a principal part of our business strategy involves managing interest rate risk and limiting the exposure of our net interest income to changes in market interest rates. Accordingly, our board of directors has established a management asset liability committee, comprised of our Treasurer, who chairs this Committee, our Chief Executive Officer, our Chief Financial Officer, our Chief Lending Officer, and our Executive Vice President of Operations. This committee is responsible for, among other things, evaluating the interest rate risk inherent in our assets and liabilities, for recommending to the asset liability management committee of our board of director’s the level of risk that is appropriate given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this risk consistent with the guidelines approved by the board of directors.
     We seek to manage our interest rate risk in order to minimize the exposure of our earnings and capital to changes in interest rates. As part of our ongoing asset-liability management, we currently use the following strategies to manage our interest rate risk:
    originating commercial real estate loans and multifamily loans that generally tend to have shorter maturities and higher interest rates that generally reset at five years;
 
    investing in shorter term investment grade corporate securities and mortgage-backed securities; and
 
    obtaining general financing through lower-cost deposits and longer-term Federal Home Loan Bank advances and repurchase agreements.
     Shortening the average term of our interest-earning assets by increasing our investments in shorter-term assets, as well as loans with variable interest rates, helps to better match the maturities and interest rates of our assets and liabilities, thereby reducing the exposure of our net interest income to changes in market interest rates.
     Net Portfolio Value Analysis. We compute amounts by which the net present value of our assets and liabilities (net portfolio value or “NPV”) would change in the event market interest rates changed over an assumed range of rates. Our simulation model uses a discounted cash flow analysis to measure the interest rate sensitivity of NPV. Depending on current market interest rates we estimate the economic value of these assets and liabilities under the assumption that interest rates experience an instantaneous and sustained increase of 100, 200, or 300 basis points, or a decrease of 100 and 200 basis points, which is based on the current interest rate environment. A basis point equals one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100 basis point increase in the “Change in Interest Rates” column below.
     Net Interest Income Analysis. In addition to NPV calculations, we analyze our sensitivity to changes in interest rates through our net interest income model. Net interest income is the difference between the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing liabilities, such as deposits and borrowings. In our model, we estimate what our net interest income would be for a twelve-month period. Depending on current market interest rates we then calculate what the net interest income would be for the same period under the assumption that interest rates experience an instantaneous and sustained increase or decrease of 100, 200, or 300 basis points, or a decrease of 100 and 200 basis points, which is based on the current interest rate environment.

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     The table below sets forth, as of March 31, 2010, our calculation of the estimated changes in our NPV, NPV ratio, and percent change in net interest income that would result from the designated instantaneous and sustained changes in interest rates. Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions, including relative levels of market interest rates, loan prepayments and deposit decay, and should not be relied on as indicative of actual results (dollars in thousands).
                                                 
    NPV        
                                    Estimated        
Change in   Estimated     Estimated             Estimated     NPV/Present     Net Interest  
Interest Rates   Present Value     Present Value     Estimated     Change In     Value of     Income Percent  
(basis points)   of Assets     of Liabilities     NPV     NPV     Assets Ratio     Change  
+300
  $ 1,971,406     $ 1,587,388     $ 384,018     $ (66,863 )     19.48 %     (11.66 )%
+200
    2,018,509       1,611,132       407,377       (43,504 )     20.18       (7.26 )
+100
    2,065,712       1,635,684       430,028       (20,853 )     20.82       (3.01 )
0
    2,111,964       1,661,083       450,881             21.35        
-100
    2,148,563       1,687,185       461,378       10,497       21.47       0.25  
-200
    2,174,609       1,710,078       464,531       13,650       21.36       (3.13 )
     The table above indicates that at March 31, 2010, in the event of a 300 basis point increase in interest rates, we would experience a 187 basis point decrease in NPV ratio (19.48% less 21.35%), and a 11.66% decrease in net interest income. In the event of a 200 basis point decrease in interest rates, we would experience a 1 basis point increase in NPV ratio (21.36% less 21.35%) and a 3.13% decrease in net interest income. Our internal policies provide that, in the event of a 300 basis point increase in interest rates, our NPV as a percentage of total market assets should decrease by no more than 400 basis points and our projected net interest income should decrease by no more than 20%. Additionally, our internal policy states that our NPV is targeted to be at least 8.5% of estimated present value of assets. As of March 31, 2010, we were compliant with the Board approved policy limits.
     Certain shortcomings are inherent in the methodologies used in determining interest rate risk through changes in NPV and net interest income. Modeling requires making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the NPV and net interest income information presented assume that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assume that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although interest rate risk calculations provide an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our net interest income and will differ from actual results.

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ITEM 4. CONTROLS AND PROCEDURES
     An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of March 31, 2010. Based on that evaluation, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.
     During the quarter ended March 31, 2010, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
ITEM 4T. CONTROLS AND PROCEDURES

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PART II
ITEM 1. LEGAL PROCEEDINGS
     The Company and subsidiaries are subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s financial condition or results of operations.
ITEM 1A. RISK FACTORS
          There have been no material changes in the “Risk Factors” disclosed in the Company’s 2009 Annual Report on Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  (a)   Unregistered Sale of Equity Securities. There were no sales of unregistered securities during the period covered by this report.
 
  (b)   Use of Proceeds. Not applicable
 
  (c)   Repurchases of Our Equity Securities.
     The following table shows the Company’s repurchase of its common stock for each calendar month in the three months ended March 31, 2010.
                                 
                    (c) Total Number of        
                    Shares Purchased     (d) Maximum Number  
    (a) Total Number     (b) Average     as Part of Publicly     of Shares that May Yet  
    of Shares     Price Paid per     Announced Plans     Be Purchased Under  
Period   Purchased     Share     or Programs (1)     Plans or Programs (1)  
January 1, 2010, through January 31, 2010
    66,850     $ 13.46       66,850       457,240  
February 1, 2010, through February 28, 2010
    110,631       13.03       110,631       346,609  
March 1, 2010, through March 31, 2010
    8,800       14.36       8,800       337,809  
 
                           
Total
    186,281     $ 13.25       186,281          
 
                           
 
(1)   On February 13, 2009, the Board of Directors of the Company authorized a stock repurchase program pursuant to which the Company is authorized to repurchase up to 2,240,153 shares, representing approximately 5% of its outstanding shares. This program has no expiration date.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
     None
ITEM 4. REMOVED AND RESERVED
ITEM 5. OTHER INFORMATION
     None
ITEM 6. EXHIBITS
     The exhibits required by Item 601 of Regulation S-K are included with this Form 10-Q and are listed on the “Index to Exhibits” immediately following the Signatures.

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SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         
Date: May 10, 2010 NORTHFIELD BANCORP, INC.
(Registrant)


 
 
  /s/ John W. Alexander    
  John W. Alexander   
  Chairman, President and Chief Executive Officer   
 
     
  /s/ Steven M. Klein    
  Steven M. Klein   
  Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) 
 
 

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INDEX TO EXHIBITS
     
Exhibit    
Number   Description
31.1
  Certification of John W. Alexander, Chairman, President and Chief Executive Officer, Pursuant to Rule 13a-14(a) and Rule 15d-14(a).
 
   
31.2
  Certification of Steven M. Klein, Executive Vice President and Chief Financial Officer, Pursuant to Rule 13a-14(a) and Rule 15d-14(a).
 
   
32
  Certification of John W. Alexander, Chairman, President and Chief Executive Officer, and Steven M. Klein, Executive Vice President and Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32