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

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		42-1572539
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)
1410 St. Georges Avenue, Avenel, New Jersey		07001
(Address of principal executive offices)		(Zip Code)

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 þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See 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		Smaller reporting company o
				(Do not check if smaller reporting company)

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. 42,306,478 shares of Common Stock, par value $0.01 per share, were issued and outstanding as of July 29, 2011.

 

 

NORTHFIELD BANCORP, INC.

Form 10-Q Quarterly Report

Table of Contents

		Page
		Number
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements			2
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			34
Item 3. Quantitative and Qualitative Disclosures About Market Risk			49
Item 4. Controls and Procedures			51
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			52
Item 1A. Risk Factors			52
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			52
Item 3. Defaults Upon Senior Securities			53
Item 4. [Removed and Reserved]			53
Item 5. Other Information			53
Item 6. Exhibits			53
Signatures			54
EX-31.1
EX-31.2
EX-32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

ITEM 1.		FINANCIAL STATEMENTS

NORTHFIELD BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 2011, and December 31, 2010
(In thousands, except per share amounts)

		June 30,				December 31,
		2011				2010
		(Unaudited)
ASSETS:
Cash and due from banks		$	10,731				9,862
Interest-bearing deposits in other financial institutions			52,176				33,990
Total cash and cash equivalents			62,907				43,852
Trading securities			4,439				4,095
Securities available-for-sale, at estimated fair value (encumbered $370,796 in 2011 and $275,694 in 2010)			1,212,319				1,244,313
Securities held-to-maturity, at amortized cost (estimated fair value of $4,629 in 2011 and $5,273 in 2010) (encumbered $0 in 2011 and 2010)			4,421				5,060
Loans held-for-sale			125				1,170
Loans held-for-investment, net			902,564				827,591
Allowance for loan losses			(23,520	)			(21,819	)
Net loans held-for-investment			879,044				805,772
Accrued interest receivable			7,568				7,873
Bank owned life insurance			76,292				74,805
Federal Home Loan Bank of New York stock, at cost			8,631				9,784
Premises and equipment, net			17,509				16,057
Goodwill			16,159				16,159
Other real estate owned			118				171
Other assets			18,039				18,056
Total assets		$	2,307,571				2,247,167
LIABILITIES AND STOCKHOLDERS’ EQUITY:
LIABILITIES:
Deposits		$	1,448,569				1,372,842
Borrowings			444,522				391,237
Advance payments by borrowers for taxes and insurance			1,869				693
Accrued expenses and other liabilities			14,440				85,678
Total liabilities			1,909,400				1,850,450
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 shares issued at June 30, 2011, and December 31, 2010, respectively, 42,370,928 and 43,316,021 outstanding at June 30, 2011, and December 31, 2010, respectively			456				456
Additional paid-in-capital			207,686				205,863
Unallocated common stock held by employee stock ownership plan			(14,896	)			(15,188	)
Retained earnings			230,125				222,655
Accumulated other comprehensive income			15,611				10,910
Treasury stock at cost; 3,261,683 and 2,316,590 shares at June 30, 2011, and December 31, 2010, respectively			(40,811	)			(27,979	)
Total stockholders’ equity			398,171				396,717
Total liabilities and stockholders’ equity		$	2,307,571				2,247,167

See accompanying notes to the unaudited consolidated financial statements.

NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three and six months ended June 30, 2011, and 2010
(Unaudited)
(In thousands, except share data)

		Three months ended								Six months ended
		June 30,								June 30,
		2011				2010				2011				2010
Interest income:
Loans		$	12,778				12,098			$	25,252				22,391
Mortgage-backed securities			8,675				8,244				17,092				17,308
Other securities			787				1,567				1,757				3,068
Federal Home Loan Bank of New York dividends			121				63				230				158
Deposits in other financial institutions			77				60				105				114
Total interest income			22,438				22,032				44,436				43,039
Interest expense:
Deposits			3,270				3,382				6,287				7,334
Borrowings			3,339				2,733				6,549				5,239
Total interest expense			6,609				6,115				12,836				12,573
Net interest income			15,829				15,917				31,600				30,466
Provision for loan losses			1,750				2,798				3,117				4,728
Net interest income after provision for loan losses			14,079				13,119				28,483				25,738
Non-interest income:
Fees and service charges for customer services			743				630				1,437				1,289
Income on bank owned life insurance			746				514				1,487				937
Gain on securities transactions, net			839				529				2,644				1,145
Other-than-temporary impairment losses on securities			(991	)			—				(1,152	)			—
Portion recognized in other comprehensive income (before taxes)			743				—				743				—
Net impairment losses on securities recognized in earnings			(248	)			—				(409	)			—
Other			110				193				140				218
Total non-interest income			2,190				1,866				5,299				3,589
Non-interest expense:
Compensation and employee benefits			5,048				4,208				10,210				8,999
Director compensation			372				372				771				769
Occupancy			1,327				1,185				2,819				2,379
Furniture and equipment			292				259				579				531
Data processing			662				651				1,334				1,268
FDIC insurance			400				455				860				885
Professional fees			628				475				1,068				854
Other			855				852				1,896				1,893
Total non-interest expense			9,584				8,457				19,537				17,578
Income before income tax expense			6,685				6,528				14,245				11,749
Income tax expense			2,338				2,342				4,928				4,182
Net income		$	4,347				4,186			$	9,317				7,567
Basic and diluted earnings per share		$	0.11				0.10			$	0.23				0.18

See accompanying notes to the unaudited consolidated financial statements.

NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Six months ended June 30, 2011, and 2010
(Unaudited)
(Dollars in thousands)

														Unallocated
														common stock								Accumulated
		Common Stock								Additional				held by the								other								Total
						Par				paid-in				employee stock				Retained				comprehensive				Treasury				stockholders’
		Shares				value				capital				ownership plan				earnings				income				Stock				equity
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																			7,567												7,567
Change in accumulated comprehensive income, net of tax of $3,274																							5,283								5,283
Total comprehensive income																															12,850
ESOP shares allocated or committed to be released											117				293																410
Stock compensation expense											1,499																				1,499
Additional stock benefit on stock awards											231																				231
Exercise of stock options																			(26	)							163				137
Dividends declared ($0.09 per share)																			(1,581	)											(1,581	)
Issuance of restricted stock			4,400
Treasury stock (average cost of $12.00 per share)																											(5,347	)			(5,347	)
Balance at June 30, 2010			45,632,611				456				204,326				(15,514	)			218,156				17,428				(25,113	)			399,739
Balance at December 31, 2010			45,632,611				456				205,863				(15,188	)			222,655				10,910				(27,979	)			396,717
Comprehensive income:
Net income																			9,317												9,317
Change in accumulated comprehensive income, net of tax of $3,134																							4,701								4,701
Total comprehensive income																															14,018
ESOP shares allocated or committed to be released											102				292																394
Stock compensation expense											1,535																				1,535
Additional tax benefit on equity awards											186																				186
Exercise of stock options																			(1	)							6				5
Dividends declared ($0.11 per share)																			(1,846	)											(1,846	)
Treasury stock (average cost of $13.58 per share)																											(12,838	)			(12,838	)
Balance at June 30, 2011			45,632,611			$	456				207,686				(14,896	)			230,125				15,611				(40,811	)			398,171

See accompanying notes to the unaudited consolidated financial statements.

NORTHFIELD BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 2011, and 2010
(Unaudited) (In thousands)

		2011				2010
Cash flows from operating activities:
Net income		$	9,317				7,567
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses			3,117				4,728
ESOP and stock compensation expense			1,929				1,909
Depreciation			1,008				852
Amortization of premiums, and deferred loan costs, net of (accretion) of discounts, and deferred loan fees			295				267
Amortization of intangible assets			59				162
Income on bank owned life insurance			(1,487	)			(937	)
Gain on sale of premises and equipment and other real estate owned			(84	)			(197	)
Net gain on sale of loans held-for-sale			(15	)			(2	)
Proceeds from sale of loans held-for-sale			5,484				334
Origination of loans held-for-sale			(4,424	)			(580	)
Gain on securities transactions, net			(2,644	)			(1,145	)
Net impairment losses on securities recognized in earnings			409				—
Net purchases of trading securities			(205	)			(22	)
Decrease in accrued interest receivable			305				53
Increase in other assets			(2,084	)			(200	)
(Decrease) increase in accrued expenses and other liabilities			(491	)			296
Net cash provided by operating activities			10,489				13,085
Cash flows from investing activities:
Net increase in loans receivable			(76,940	)			(45,166	)
Redemptions (purchase) of Federal Home Loan Bank of New York stock, net			1,153				(1,698	)
Purchases of securities available-for-sale			(342,901	)			(435,937	)
Principal payments and maturities on securities available-for-sale			198,444				235,647
Principal payments and maturities on securities held-to-maturity			641				913
Proceeds from sale of securities available-for-sale			114,446				96,082
Purchase of bank owned life insurance			—				(10,000	)
Proceeds from sale of other real estate owned			487				—
Proceeds from the sale of premises and equipment			—				394
Purchases and improvements of premises and equipment			(2,460	)			(1,960	)
Net cash used in investing activities			(107,130	)			(161,725	)
Cash flows from financing activities:
Net increase in deposits			75,728				63,810
Dividends paid			(1,846	)			(1,581	)
Exercise of stock options			5				137
Purchase of treasury stock			(12,838	)			(5,347	)
Additional tax benefit on equity awards			186				231
Increase in advance payments by borrowers for taxes and insurance			1,176				799
Repayments under capital lease obligations			(102	)			(91	)
Proceeds from borrowings			412,981				176,680
Repayments related to borrowings			(359,594	)			(99,680	)
Net cash provided by financing activities			115,696				134,958
Net increase (decrease) in cash and cash equivalents			19,055				(13,682	)
Cash and cash equivalents at beginning of period			43,852				42,544
Cash and cash equivalents at end of period		$	62,907				28,862
Supplemental cash flow information:
Cash paid during the period for:
Interest		$	12,586				12,543
Income taxes			6,129				5,528
Other transactions:
Loans charged-off, net			1,416				1,020
Other real estate owned charged-off			26				146
Transfers to other real estate owned			376				—
Decrease in due to broker for purchases of securities available-for-sale			(70,747	)			—

See accompanying notes to the unaudited consolidated financial statements.

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 and six month period ended June 30, 2011, are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2011. 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, 2010, 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 June 30, 2011, and December 31, 2010 (in thousands):

		June 30, 2011
						Gross				Gross				Estimated
		Amortized				unrealized				unrealized				fair
		cost				gains				losses				value
Mortgage-backed securities:
Pass-through certificates:
Government sponsored enterprises (GSE)		$	549,817				19,543				1				569,359
Non-GSE			9,787				—				743				9,044
Real estate mortgage investment conduits (REMICs):
GSE			475,168				4,763				527				479,404
Non-GSE			38,491				2,311				16				40,786
			1,073,263				26,617				1,287				1,098,593
Other securities:
Equity investments-mutual funds			9,140				50				—				9,190
Corporate bonds			103,422				1,178				64				104,536
			112,562				1,228				64				113,726
Total securities available-for-sale		$	1,185,825				27,845				1,351				1,212,319

		December 31, 2010
						Gross				Gross				Estimated
		Amortized				unrealized				unrealized				fair
		cost				gains				losses				value
Mortgage-backed securities:
Pass-through certificates:
Government sponsored enterprises (GSE)		$	342,316				13,479				—				355,795
Non-GSE			27,801				814				737				27,878
Real estate mortgage investment conduits (REMICs):
GSE			622,582				3,020				3,525				622,077
Non-GSE			65,766				3,674				51				69,389
			1,058,465				20,987				4,313				1,075,139
Other securities:
Equity investments-mutual funds			12,437				31				115				12,353
GSE bonds			34,988				45				—				35,033
Corporate bonds			119,765				2,146				123				121,788
			167,190				2,222				238				169,174
Total securities available-for-sale		$	1,225,655				23,209				4,551				1,244,313

     The following is a summary of the expected maturity distribution of debt securities available-for-sale, other than mortgage-backed securities, at June 30, 2011 (in thousands):

						Estimated
		Amortized				fair
Available-for-sale		cost				value
Due in one year or less		$	63,716				64,357
Due after one year through five years			39,706				40,179
		$	103,422				104,536

     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 and six months ended June 30, 2011, the Company had gross proceeds of $25.9 million and $114.4 million on sales of securities available-for-sale with gross realized gains of approximately $886,000 and $2.5 million, and gross realized losses of $0 and $0, respectively. For the three and six months ended June 30, 2010, the Company had gross proceeds of $80.9 million and $96.1 million on sales of securities available-for-sale with gross realized gains of approximately $785,000 and $1.0 million, and gross realized losses of approximately $0 and $0, respectively. The Company recognized $(47,000) in losses and $139,000 in gains on its trading securities portfolio during the three and six months ended June 30, 2011, respectively. The Company recognized $(255,000) in losses and $90,000 in gains on its trading securities portfolio during the three and six months ended June 30, 2010, respectively. The Company recognized other-than-temporary impairment charges of $248,000 and $409,000 against earnings during the three and six months ended June 30, 2011, related to one equity investment in a mutual fund and two private label mortgage-backed securities. The Company recognized the credit component of $248,000 in earnings and the non-credit component of $743,000 as a component of accumulated other comprehensive income, net of tax for the three and six months ended June 30, 2011. The Company did not recognize any other-than-temporary impairment charges during the three and six months ended June 30, 2010.

     Activity related to the credit component recognized in earnings on debt securities for which a portion of other-than-temporary impairment was recognized in accumulated other comprehensive income for the three and six months ended June 30, 2011 and 2010, is as follows (in thousands):

		Three months ended								Six months ended
		June 30,								June 30,
		2011				2010				2011				2010
Balance, beginning of period		$	330				176				330				176
Additions to the credit component on debt securities in which other-than-temporary impairment was not previously recognized			248				—				248				—
Cumulative pre-tax credit losses, end of period		$	578				176				578				176

     Gross unrealized losses on mortgage-backed securities, equity investments, 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 June 30, 2011, and December 31, 2010, were as follows (in thousands):

		June 30, 2011
		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:
Government sponsored enterprises (GSE)		$	1				165				—				—				1				165
Non-GSE			289				3,354				454				5,689				743				9,043
Real estate mortgage investment conduits (REMICs)
GSE			527				53,176				—				—				527				53,176
Non-GSE			—				—				16				1,031				16				1,031
Corporate bonds			64				13,760				—				—				64				13,760
Total		$	881				70,455				470				6,720				1,351				77,175

		December 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		$	—				—				737				10,126				737				10,126
REMICs
GSE			3,525				344,971				—				—				3,525				344,971
Non-GSE			—				—				51				1,238				51				1,238
Corporate bonds			123				13,880				—				—				123				13,880
Equity Investments — mutual funds			115				4,884				—				—				115				4,884
Total		$	3,763				363,735				788				11,364				4,551				375,099

     Included in the above available-for-sale security amounts at June 30, 2011, was one pass-through non-GSE mortgage-backed security in a continuous unrealized loss position of greater than twelve months that was rated less than investment grade at June 30, 2011. The security had an estimated fair value of $5.7 million (amortized cost of $6.1 million), was rated Caa2, and had the following underlying collateral characteristics: 83% originated in 2004, and 17% originated in 2005. The rating of the security detailed above represents the lowest rating for the security received from the rating agencies of Moody’s, Standard & Poor’s, and Fitch. The Company continues to receive principal and interest payments in accordance with the contractual terms of this security. 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 this security. As a result of management’s evaluation of this security, the Company recognized during the quarter ended June 30, 2011, other than temporary impairment of $593,000. Since management does not have the intent to sell the security and it is more likely than not that the Company will not be required to sell the security, before its anticipated recovery (which may be maturity), the credit component of $139,000 was recognized in earnings, and the non credit component of $454,000 was recorded as a component of accumulated other comprehensive income, net of tax.

     In addition to the one pass-through non-GSE mortgage-backed security discussed above, the Company had one additional private label security that was rated less than investment grade at June 30, 2011. The security, had an estimated fair value of $3.4 million (amortized cost of $3.6 million), was rated CC, and was supported by collateral which was originated in 2006. The rating of the security detailed above represents the lowest rating for the security received from the rating agencies of Moody’s, Standard & Poor’s, and Fitch. The Company continues to receive principal and interest payments in accordance with the contractual terms of this security. 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 this security. As a result of management’s evaluation of this security, the Company recognized during the quarter ended June 30, 2011, other than temporary impairment of $398,000. Since management does not have the intent to sell the security and it is more likely than not that the Company will not be required to sell the security, before its anticipated recovery (which may be maturity), the credit component of $109,000 was recognized in earnings, and the non credit component of $289,000 was recorded as a component of accumulated other comprehensive income, net of tax.

     The Company held one REMIC non-GSE mortgage-backed security that was in a continuous unrealized loss position of greater than twelve months, and three corporate bonds, two pass-through GSE mortgage-backed securities, and five REMIC mortgage-backed securities issued or guaranteed by GSEs, that were in an unrealized loss position of less than twelve months, and rated investment grade at June 30, 2011. The declines in value 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 before the recovery of their amortized cost basis or, if necessary, maturity.

     The fair values of our investment securities could decline in the future if the underlying performance of the collateral for the collateralized mortgage obligations or other 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.

Note 3 — Net Loans Held-for-Investment

Net loans held-for-investment are as follows (in thousands):

		June 30,				December 31,
		2011				2010
Real estate loans:
Commercial mortgage		$	335,485				339,321
One- to- four family residential mortgage			74,825				78,032
Construction and land			28,078				35,054
Multifamily			358,130				283,588
Home equity and lines of credit			30,195				28,125
Total real estate loans			826,713				764,120
Commercial and industrial loans			13,974				17,020
Insurance premium loans			59,037				44,517
Other loans			1,700				1,062
Total commercial and industrial, insurance premium, and other loans			74,711				62,599
Total loans held-for-investment			901,424				826,719
Deferred loan cost, net			1,140				872
Loans held-for-investment, net			902,564				827,591
Allowance for loan losses			(23,520	)			(21,819	)
Net loans held-for-investment		$	879,044				805,772

     Loans held-for-sale amounted to $125,000 and $1.2 million at June 30, 2011, and December 31, 2010, respectively. All loans held for sale are one- to four-family residential mortgage loans.

     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.

     The Company, through its principal subsidiary, the Bank, serviced $46.9 million and $52.1 million of loans at June 30, 2011, and December 31, 2010, respectively, for Freddie Mac. These one- to four-family residential mortgage real estate loans were underwritten to Freddie Mac guidelines and to comply with applicable federal, state, and local laws. At the time of the closing of these loans the Company owned the loans and subsequently sold them to Freddie Mac providing normal and customary representations and warranties, including representations and warranties related to compliance with Freddie Mac underwriting standards. At the time of sale, the loans were free from encumbrances except for the mortgages filed for by the Company which, with other underwriting documents, were subsequently assigned and delivered to Freddie Mac. At June 30, 2011, substantially all of the loans serviced for Freddie Mac were performing in accordance with their contractual terms and management believes that it has no material repurchase obligations associated with these loans. Servicing of loans for others does not have a material effect on our financial position or results of operations.

     We provide for loan losses based on the consistent application of our documented allowance for loan loss methodology. Loan losses are charged to the allowance for loans losses and recoveries are credited to it. Additions to the allowance for loan losses are provided by charges against income based on various factors which, in our judgment, deserve current recognition in estimating probable losses. Loan losses are charged-off in the period the loans, or portion thereof, are deemed uncollectible. Generally, the Company will record a loan charge-off (including a partial charge-off) to reduce a loan to the estimated fair value of the underlying collateral, less cost to sell, for collateral dependent loans. We regularly review the loan portfolio and make adjustments for loan losses in order to maintain the allowance for loan losses in accordance with U.S. generally accepted accounting principles (“GAAP”). The allowance for loan losses consists primarily of the following two components:

(1)

Allowances are established for impaired loans (generally defined by the Company as non-accrual loans with an outstanding balance of $500,000 or greater). The amount of impairment provided for as an allowance is represented by the deficiency, if any, between the present value of expected future cash flows discounted at the original loan’s effective interest rate or the underlying collateral value (less estimated costs to sell,) if the loan is collateral dependent, and the carrying value of the loan. Impaired

			loans that have no impairment losses are not considered for general valuation allowances described below.
	(2)		General allowances are established for loan losses on a portfolio basis for loans that do not meet the definition of impaired. The portfolio is grouped into similar risk characteristics, primarily loan type, loan-to-value, if collateral dependent, and internal credit risk ratings. We apply an estimated loss rate to each loan group. The loss rates applied are based on our cumulative prior two year loss experience adjusted, as appropriate, for the environmental factors discussed below. This evaluation is inherently subjective, as it requires material estimates that may be susceptible to significant revisions based upon changes in economic and real estate market conditions. Actual loan losses may be significantly more than the allowance for loan losses we have established, which could have a material negative effect on our financial results. Within general allowances is an unallocated reserve established to recognize losses related to the inherent subjective nature of the appraisal process and the internal credit risk rating process.

     In underwriting a loan secured by real property, we require an appraisal of the property by an independent licensed appraiser approved by the Company’s board of directors or an automated valuation model. The appraisal is subject to review by an independent third party hired by the Company. We review and inspect properties before disbursement of funds during the term of a construction loan. Generally, management obtains updated appraisals when a loan is deemed impaired. These appraisals may be more limited than those prepared for the underwriting of a new loan. In addition, when the Company acquires other real estate owned, it generally obtains a current appraisal to substantiate the net carrying value of the asset.

     The adjustments to our loss experience are based on our evaluation of several environmental factors, including:

	•		changes in local, regional, national, and international economic and business conditions and developments that affect the collectibility of our portfolio, including the condition of various market segments;
	•		changes in the nature and volume of our portfolio and in the terms of our loans;
	•		changes in the experience, ability, and depth of lending management and other relevant staff;
	•		changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans;
	•		changes in the quality of our loan review system;
	•		changes in the value of underlying collateral for collateral-dependent loans;
	•		the existence and effect of any concentrations of credit, and changes in the level of such concentrations; and
	•		the effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in our existing portfolio.

     In evaluating the estimated loss factors to be utilized for each loan group, management also reviews actual loss history over an extended period of time as reported by the federal regulators for institutions both in our market area and nationally for periods that are believed to have experienced similar economic conditions.

     We evaluate the allowance for loan losses based on the combined total of the impaired and general components. Generally when the loan portfolio increases, absent other factors, our allowance for loan loss methodology results in a higher dollar amount of estimated probable losses. Conversely, when the loan portfolio decreases, absent other factors, our allowance for loan loss methodology results in a lower dollar amount of estimated probable losses.

     Each quarter we evaluate the allowance for loan losses and adjust the allowance as appropriate through a provision for loan losses. While we use the best information available to make evaluations, future adjustments to the allowance may be necessary if conditions differ substantially from the information used in making the evaluations. In addition, as an integral part of their examination process, the Office of the Comptroller of the Currency, as it relates to the Bank, and the Board of Governors of the Federal Reserve System, as it relates to Northfield Bancorp, Inc, are subject to periodic examination, including review of our allowance for loan losses. Our regulators may require us to adjust the allowance based on their analysis of information available to them at the time of their examination. Our last examination, as of September 30, 2010, of Northfield Bancorp, Inc. and the Bank, were conducted by the Office of Thrift Supervision, our predecessor regulator.

     Activity in the allowance for loan losses is as follows (in thousands):

		At or for the
		six months ended
		June 30,
		2011				2010
Beginning balance		$	21,819				15,414
Provision for loan losses			3,117				4,728
Charge-offs, net			(1,416	)			(1,020	)
Ending balance		$	23,520				19,122

     The following tables set forth activity in our allowance for loan losses, by loan type, for the six months ended June 30, 2011, and the year ended December 31, 2010, respectively. The following tables also detail the amount of loans held-for-investment, net of deferred loan fees and costs, that are evaluated individually, and collectively, for impairment, and the related portion of allowance for loan losses that is allocated to each loan portfolio segment, as of June 30, 2011 and December 31, 2010.

June 30, 2011
		Real Estate
																		Home Equity
						One -to- Four				Construction								and Lines of				Commercial				Insurance
		Commercial				Family				and Land				Multifamily				Credit				and Industrial				Premium				Other				Unallocated				Total
Allowance for loan losses:
Beginning Balance, December 31, 2010		$	12,654				570				1,855				5,137				242				719				111				28				503				21,819
Charge-offs			(1,198	)			—				—				(25	)			—				(196	)			(26	)			—				—				(1,445	)
Recoveries			6				—				—				—				—				23				—				—				—				29
Provisions			1,884				161				(734	)			702				110				169				63				16				746				3,117
Ending Balance, June 30, 2011			13,346				731				1,121				5,814				352				715				148				44				1,249				23,520
Ending balance, June 30, 2011: individually evaluated for impairment			2,325				369				128				122				—				—				—				—				—				2,944
Ending balance, June 30, 2011: collectively evaluated for impairment			11,021				362				993				5,692				352				715				148				44				1,249				20,576
Loans held-for-investment, net:
Ending Balance, June 30, 2011			335,520				74,915				28,097				358,887				30,431				13,977				59,037				1,700				—				902,564
Ending Balance, June 30, 2011 individually evaluated for impairment			52,097				3,618				3,079				3,214				—				1,455				—				—				—				63,463
Ending Balance, June 30, 2011 collectively evaluated for impairment		$	283,423				71,297				25,018				355,673				30,431				12,522				59,037				1,700				—				839,101

December 31, 2010
		Real Estate
																		Home Equity
						One -to- Four				Construction								and Lines of				Commercial				Insurance
		Commercial				Family				and Land				Multifamily				Credit				and Industrial				Premium				Other				Unallocated				Total
Allowance for loan losses:
Beginning Balance, December 31, 2009		$	8,403				163				2,409				1,866				210				1,877				101				34				351				15,414
Charge-offs			(987	)			—				(443	)			(2,132	)			—				(36	)			(101	)			—				—				(3,699	)
Recoveries			—				—				—				—				—				—				20				—				—				20
Provisions			5,238				407				(111	)			5,403				32				(1,122	)			91				(6	)			152				10,084
Ending Balance, December 31, 2010			12,654				570				1,855				5,137				242				719				111				28				503				21,819
Ending balance, December 31, 2010: individually evaluated for impairment			2,129				369				36				121				—				—				—				—				—				2,655
Ending balance, December 31, 2010: collectively evaluated for impairment			10,525				201				1,819				5,016				242				719				111				28				503				19,164
Loans held-for-investment, net:
Ending balance, December 31, 2010			339,259				78,109				35,077				284,199				28,337				17,032				44,517				1,061				—				827,591
Ending balance, December 31, 2010: individually evaluated for impairment			51,324				1,750				4,562				5,083				—				500				—				—				—				63,219
Ending balance, December 31, 2010: collectively evaluated for impairment		$	287,935				76,359				30,515				279,116				28,337				16,532				44,517				1,061				—				764,372