<PAGE>

                                                                      EXHIBIT 13

                               MARKET INFORMATION

         The Common Stock is listed in the over-the-counter through the OTC
"Electronic Bulletin Board" under the symbol "NFSB". There are currently 475,442
shares of the Common Stock outstanding. The number of registered holders of
Common Stock on March 14, 2000 was 221. The high and low bid prices for the
Common Stock for the quarter ended December 31, 1999 were $11.875 and $10.25,
respectively.

         The following table sets forth certain information as to the range of
the high and low bid prices for the Company's Common Stock for the calendar
quarters indicated from the commencement of trading on November 12, 1998 through
the Company's most recent fiscal year.

<TABLE>
<CAPTION>
                                    High Bid (1)     Low Bid (1)       Dividends Paid
                                    ------------     -----------       ---------------
         <S>                            <C>          <C>                     <C>
         1998:
           Fourth Quarter               $10.25       $10.00                   --

         1999:
           First Quarter                 10.75         9.625                  --
           Second Quarter                11.25        10.00                  $.10
           Third Quarter                 10.625       10.25                    --
           Fourth Quarter                11.875       10.25                  $.10
</TABLE>

---------------
(1)      Quotations reflect inter-dealer price, without retail mark-up,
         mark-down or commissions, and may not represent actual transactions.


         The income of the Company consists of interest from an ESOP loan to the
Bank and dividends which may periodically be declared and paid by the Board of
Directors of the Bank on the common shares of the Bank held by the Company.

         In addition to certain federal income tax considerations, OTS
regulations impose limitations on the payment of dividends and other capital
distributions by savings institutions. Under OTS regulations applicable to
converted savings institutions, we are not permitted to pay a cash dividend on
our common shares if our regulatory capital would, as a result of the payment of
such dividend, be reduced below the amount required for the liquidation account
established in connection with the Conversion or applicable regulatory capital
requirements prescribed by the OTS.

         Savings associations must submit notice to the OTS prior to making a
capital distribution (including cash dividends, stock repurchases and amounts
paid to stockholders of another institution in a cash merger) if (a) they would
not be well capitalized after the distribution, (b) the distribution would
result in the retirement of any of the association's common or preferred stock
or debt counted as its regulatory capital, or (c) the association is a
subsidiary of a holding company. A savings association must make application to
the OTS to pay a capital distribution if (x) the association would not be
adequately capitalized following the distribution, (y) the association's total
distributions for the calendar year exceeds the association's net income for the
calendar year to date plus its net income (less distributions) for the preceding
two years, or (z) the distribution would otherwise violate applicable law or
regulation or an agreement with or condition imposed by the OTS.

         We currently meet all of our regulatory requirements and, unless the
OTS determines that we are an institution requiring more than normal
supervision, we may pay dividends in accordance with the foregoing provisions of
the OTS regulations.
<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         The Company's principal business is that of the Bank. Therefore, this
discussion relates primarily to the Bank. Our profitability depends primarily on
our net interest income, which is the difference between interest and dividend
income on our interest-earning assets, principally loans, mortgage-backed
securities and investment securities, and interest expense on our
interest-bearing deposits and borrowings. Our net earnings also are dependent,
to a lesser extent, on the level of our noninterest income (including servicing
fees and other fees) and our noninterest expenses, such as compensation and
benefits, occupancy and equipment, insurance premiums, and miscellaneous other
expenses, as well as federal income tax expense.

Forward Looking Statements

         When used in this discussion and elsewhere in this Annual Report, the
words or phrases "will likely result," "are expected to," "will continue," "is
anticipated," "estimate," "project" or similar expressions are intended to
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. The Company cautions readers not to
place undue reliance on any such forward-looking statements, which speak only as
of the date made, and to advise readers that various factors, including regional
and national economic conditions, unfavorable judicial decisions, substantial
changes in levels of market interest rates, credit and other risks of lending
and investment activities and competitive and regulatory factors could affect
the Company's financial performance and could cause the Company's actual results
for future periods to differ materially from those anticipated or projected.

         The Company does not undertake and specifically disclaims any
obligation to update any forward-looking statements to reflect occurrence of
anticipated or unanticipated events or circumstances after the date of such
statements.

CRA Compliance

         We are periodically examined by the OTS for our record of meeting the
credit needs of our local communities pursuant to the Community Reinvestment Act
("CRA"). The OTS rates the performance of a savings institution under applicable
CRA performance standards and assigns one of the following ratings: Outstanding,
Satisfactory, Needs to Improve, or Substantial Non-Compliance. In our 1999 CRA
evaluation, we received a "Satisfactory" CRA rating. We had a "Needs to Improve"
CRA rating in 1998 and in response to this rating, we adopted a CRA action plan
in 1998.

         In implementing our CRA action plan, we purchased ten loans totaling
$864,000. The security property for all ten purchased loans is located in
moderate-income census tracts in the Bank's assessment area. Seven of the loans
totaling $641,000 are to low or moderate-income borrowers. For the reasons set
forth in purchasing these loans, the Bank was assigned a CRA rating of
"Satisfactory record of meeting community credit needs" in its 1999 CRA
evaluation.

Market Risk Disclosure

         Asset/Liability Management. Our assets and liabilities may be analyzed
by examining the extent to which our assets and liabilities are interest-rate
sensitive and by monitoring the expected effects of interest rate changes on our
net portfolio value.

         An asset or liability is interest rate sensitive within a specific time
period if it will mature or reprice within that time period. If our assets
mature or reprice more quickly or to a greater extent than our liabilities, our
net portfolio value and net interest income would tend to increase during
periods of rising interest rates but decrease during periods of falling interest
rates. Conversely, if our assets mature or reprice more slowly or to a lesser
extent than our liabilities, our net portfolio value and net interest income
would tend to decrease during periods of rising interest rates but increase
during periods of falling interest rates. Our policy has been to mitigate the
interest rate risk inherent in the historical savings institution business of
originating long-term loans funded by short-term deposits by pursuing certain
strategies designed to decrease the vulnerability of our earnings to material
and prolonged changes in interest rates.
<PAGE>

         To manage the interest rate risk of this type of loan portfolio, we are
attempting to emphasize loans with shorter terms and variable interest rates and
longer term deposits. Most of the loans in our portfolio, however, have fixed
rates. Unlike many other thrift institutions who offer both adjustable and fixed
rates on single family loans and tend to emphasize adjustable rate loans under
rising interest rate conditions, our policy is to originate all of our one- to
four-family residential loans, representing 88.20% of our total loans at
December 31, 1999, with fixed rates. While we plan to emphasize the origination
of home equity loans with shorter terms and variable rates, our primary loan
product will continue to be long-term, fixed-rate construction/permanent loans.
Our interest rate risk is, therefore, significant, and our earnings will
continue to be vulnerable to a rise in prevailing interest rates.

         At December 31, 1999, the average weighted term to maturity of our
mortgage loan portfolio was approximately 25 years and the average weighted term
of our fixed maturity deposits was slightly more than 16 months.

         Net Portfolio Value. In recent years, we have measured our interest
rate sensitivity by computing the "gap" between the assets and liabilities which
were expected to mature or reprice within certain time periods, based on
assumptions regarding loan prepayment and deposit decay rates formerly provided
by the OTS. However, the OTS now measures an institution's interest rate risk by
computing the amount by which the net present value of cash flow from assets,
liabilities and off balance sheet items (the institution's net portfolio value
or "NPV") would change in the event of a range of assumed changes in market
interest rates. These computations estimate the effect on an institution's NPV
from instantaneous and permanent 1% to 3% (100 to 300 basis points) increases
and decreases in market interest rates. The following table presents the
interest rate sensitivity of our NPV at December 31, 1999, as calculated by the
OTS, which is based upon quarterly information that we voluntarily provided to
the OTS.

<TABLE>
<CAPTION>

                                Net Portfolio Value                   NPV  as % of Portfolio Value of Assets
   Change            ---------------------------------------          --------------------------------------
  in Rates           $ Amount        $ Change       % Change             NPV Ratio       Basis  Point Change
  --------           --------        --------       --------             ---------       -----  ------------
                                                         (Dollars in thousands)
<S>                   <C>            <C>               <C>                 <C>               <C>
+ 300  bp             $(1,051)       $(5,639)          (123)%              (2.27)%           (1,095) bp
+ 200  bp                 736         (3,852)           (84)                1.52               (715) bp
+ 100  bp               2,645         (1,943)           (42)                5.23               (345) bp
    0  bp               4,588                                               8.68
- 100  bp               6,201          1,613             35                11.30                262  bp
- 200  bp               7,030          2,442             53                12.53                385  bp
- 300  bp               7,424          2,836             62                13.04                436  bp
</TABLE>

         While we cannot predict future interest rates or their effects on our
NPV or net interest income, we do not expect current interest rates to have a
material adverse effect on our NPV or net interest income in the near future.
Computations of prospective effects of hypothetical interest rate changes are
based on numerous assumptions, including relative levels of market interest
rates, prepayments and deposit runoff and should not be relied upon as
indicative of actual results. Certain shortcomings are inherent in such
computations. Although certain assets and liabilities may have similar maturity
or periods of repricing, they may react at different times and in different
degrees to changes in the market interest rates. The interest rates on certain
types of assets and liabilities may fluctuate in advance of changes in market
interest rates, while rates on other types of assets and liabilities may lag
behind changes in market interest rates. Certain assets, such as variable rate
loans, generally have features which restrict changes in interest rates on a
short-term basis and over the life of the loan. In the event of a change in
interest rates, prepayments and early withdrawal levels could deviate
significantly from those assumed in making calculations set forth above.
Additionally, an increased credit risk may result as the ability of many
borrowers to service their debt may decrease in the event of an interest rate
increase.

         Our Board of Directors reviews our asset and liability policies and
meets regularly to review interest rate risk and trends, as well as liquidity
and capital ratios and requirements. The estimated changes of our NPV set forth
above fell within the targets established by our Board of Directors. Management
administers the policies and determinations of our Board of Directors with
respect to our asset and
<PAGE>

liability goals and strategies. We expect that our asset and liability policies
and strategies will continue as described so long as competitive and regulatory
conditions in the financial institution industry and market interest rates
continue as they have in recent years.

Average Balances, Interest and Average Yields

         The following table sets forth certain information relating to our
average statement of financial condition and reflects the average yield on
assets and average cost of liabilities for the periods indicated and the average
yields earned and rates paid at the date and for the periods indicated. Such
yields and costs are derived by dividing income or expense by the average
monthly balance of assets or liabilities, respectively, for the periods
presented. Average balances are derived from month-end balances. We do not
believe that the use of month-end balances instead of daily balances has caused
any material difference in the information presented. For the purposes of
computing the average yield, nonaccruing loans have been included in the average
balances.

<TABLE>
<CAPTION>

                                                                      Year  Ended December 31,
                                               ------------------------------------------------------------------------------
                                                              1999                                      1998
                                               ---------------------------------       --------------------------------------
                                                                         Average                                     Average
                                               Average                   Yield/        Average                        Yield/
                                               Balance      Interest      Cost         Balance        Interest         Cost
                                               -------      --------      ----         -------        --------         ----
                                                                          (Dollars in thousands)
<S>                                           <C>           <C>          <C>            <C>            <C>           <C>
Interest-earning assets:
  Loans....................................  $   39,947     $ 2,979         7.46%      $   32,216     $ 2,566         7.97%
  Investment securities available for sale.       3,656         237         6.48               --          --            --
  Other investments held to maturity.......          --          --           --               66           2          3.03
  Mortgage-backed securities...............       2,882         154         5.34            1,984         150          7.56
  Other interest-earning assets (1)........       1,815         102         5.62            4,915         266          5.41
                                             ----------     -------                    ----------    --------
     Total interest-earning assets ........      48,300       3,472         7.19           39,181       2,984          7.62
Non-interest-earning assets................         980                                       636
                                             ----------                                ----------
     Total assets..........................  $   49,280                                $   39,817
                                             ==========                                ==========

Interest-bearing liabilities:
  Savings deposits.........................  $   34,323     $ 1,699         4.95       $   35,064     $ 1,748          4.99
  Short-term borrowings (2)................       2,471         124         5.02               53           2          3.77
  Long-term borrowings (3).................       2,250         112         4.98               --          --            --
                                             ----------     -------                    ----------    --------
     Total interest-bearing liabilities....      39,044       1,935         4.96           35,117       1,750          4.99
                                                            -------                                  --------
Non-interest-bearing liabilities...........       3,015                                       886
                                             ----------                                ----------
     Total liabilities.....................      42,059                                    36,003
Equity.....................................       7,221                                     3,814
                                             ----------                                ----------
     Total liabilities and equity..........  $   49,280                                $   39,817
                                             ==========                                ==========

Net interest income........................                 $ 1,537                                   $ 1,234
                                                            =======                                   =======

Net interest rate spread (4)...............                                 2.23%                                      2.63%
                                                                            ====                                     ======
Net interest-earning assets................  $    9,356                                $    4,064
                                             ==========                                ==========
Net interest margin (5)....................                                 3.18%                                      3.15%
                                                                            ====                                     ======
Ratio of average interest-earning assets
 to average interest-bearing liabilities...                 123.70%                                     111.57%
                                                            ======                                      ======
</TABLE>

--------------------

(1)       Other interest-earning assets includes interest-bearing deposits and
          FHLB of Atlanta stock.
(2)       Short-term borrowings includes FHLB advances and advance payments by
          borrowers for expenses.
(3)       Long-term borrowings include a FHLB advance.
(4)       Net interest rate spread represents the difference between the average
          yield on interest-earning assets and the average rate on
          interest-bearing liabilities.
(5)       Net interest margin represents net interest income divided by average
          interest-earning assets.




Rate/Volume Analysis

         The table shows certain information regarding changes in our interest
income and interest expense for the periods indicated. For each category of
interest-earning asset and interest-bearing liability, information is provided
on changes attributable to: (i) changes in volume (changes in volume multiplied
by old rate); and (ii) changes in rates
<PAGE>

(change in rate multiplied by old volume); and (iii) change in rate-volume
(changes in rate multiplied by the changes in volume).



<TABLE>
<CAPTION>

                                                                       Year Ended December 31,
                                    -----------------------------------------------------------------------------------------
                                          1999         vs.         1998                  1998      vs.        1997
                                    -------------------------------------------    ------------------------------------------
                                                Increase (Decrease)                           Increase (Decrease)
                                                    Due to                                          Due to
                                    -------------------------------------------    ------------------------------------------
                                                            Rate/                                            Rate/
                                    Volume     Rate        Volume      Total      Volume      Rate          Volume     Total
                                    ------     ----        ------      -----      ------      ----          ------     -----
                                                                          (In thousands)

<S>                                 <C>       <C>          <C>        <C>         <C>        <C>        <C>         <C>
Interest income:
  Loans...........................  $   616   $ (164)      $  (39)    $   413     $   399    $   (35)   $     (6)   $    358
  Investment securities available
     for sale.....................       86        3          149         237         (15)        --          --         (15)
  Investments held to maturity....       (2)      --           --          (2)          2         --          --           2
  Mortgage-backed securities......       68      (44)         (20)          4         (14)        (2)         --         (16)
  Other interest-earning assets...     (168)      10           (7)       (164)         53        (19)         (4)         30
                                    -------   ------       -------    -------     -------    -------      ------     -------
    Total interest-earning assets.      600     (195)           83        488         425        (56)        (10)        359
                                    -------   ------       -------    -------     -------    -------      ------     -------

Interest-bearing liabilities:
  Deposits........................      (36)     (13)          --         (49)        257         15           3         275
  Short-term borrowings (1).......       81        1            40       (122)        (17)        (5)          5         (17)
  Long-term borrowings (2)........      112       --           --         112          --         --          --         --
                                    -------   ------       -------    -------     -------    -------      ------     -------
     Total interest-bearing
         liabilities..............      157      (12)           40        185         240         10           8         258
                                    -------   ------       -------    -------     -------    -------      ------     -------

  Increase (decrease) in net interest
    income........................  $   443   $  (183)     $    43    $   303     $   185    $   (66)   $    (18)   $     101
                                    =======   ========     =======    =======     =======    =======    =========   =========
</TABLE>


---------------
(1)       Includes FHLB of Atlanta advances and advance payments by borrowers
          for expenses.
(2)       Includes a FHLB of Atlanta advance.

Comparison of Financial Condition at December 31, 1999 and December 31, 1998

         Total assets increased by $9.3 million, or 21%, from $44.3 million at
December 31, 1998 to $53.6 million at December 31, 1999. Total liabilities
increased by $9.3 million, or 25%, from $37.2 million at December 31, 1998 to
$46.5 million at December 31, 1999. The increase in assets was primarily due to
increases in investments of $4.1 million and loans of $7.2 million, partially
offset by a decrease in interest bearing deposits in other banks of $3.8
million. The asset and liability balance increases were the result of investing
the proceeds of FHLB advances of $8.9 million.

Comparison of Results of Operations for the Years Ended December 31, 1999 and
1998

         Net Income. Our net income increased $72,000 from $307,000 for the
fiscal year ended December 31, 1998 to $379,000 for the fiscal year ended
December 31, 1999. The primary reason for the increase was an increase in net
interest income of $303,000 and a cumulative effect of accounting change of
$9,000, offset by an increase in non-interest expense of $200,000 and in the
provision for income taxes of $38,000.

         Net Interest Income. Our net interest income increased from $1.23
million for fiscal 1998 to $1.54 million for fiscal year 1999. The $303,000
increase was primarily due to interest earned on a significantly larger, but a
slightly lower yielding average loan portfolio and a substantially larger and
higher yielding average investment portfolio in fiscal 1999 compared to fiscal
1998. The utilization of an average $4.7 million of FHLB advances in fiscal 1999
compared
<PAGE>

to none in fiscal 1998, slightly offset by a decline in average deposit
balances, resulted in an increase of $184,000 in interest expense.

         Provision for Loan Losses. There were no provisions for loan losses
during fiscal years 1999 and 1998. Future additions to the loan loss allowance
will be based on the analysis of the loan portfolio, and accordingly, are not
predictable.

         Non-Interest Income. Non-interest income decreased slightly from
$31,000 for fiscal year 1998 to $29,000 for fiscal year 1999 due to a drop in
all other income.

         Non-interest Expense. For fiscal year 1999, total non-interest expenses
were $961,000 as compared to $761,000 for fiscal 1998. Higher compensation
expenses following personnel additions, an increase in employee stock ownership
and deferred compensation expenses, and a decrease in payroll related deferred
loan origination costs contributed $129,000 to the total increase. In addition,
occupancy expense rose $28,000 in fiscal 1999 reflecting a full year's expenses
for the administrative office that opened mid-1998. The Company expects the
level of its non-interest expense to continue to increase in future periods as a
result of expenses associated with the employee stock ownership plan that the
Company implemented in connection with its stock conversion.

         Our deposit insurance premium expense increased slightly during 1999 as
the result of a slight increase in deposits.

         Income Tax Expense. Our income tax expense for fiscal 1999 was $234,000
compared to $196,000 for the prior year. The increase was principally the result
of an increase in pre-tax earnings. The effective tax rate fell slightly to
38.72% from 39.01%. The higher tax rate in fiscal 1998 was primarily the result
of a net operating loss of the holding company for which no income tax benefit
was recorded.

Cumulative Effect of Accounting Change

         The Company early implemented SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" on January 1, 1999. In accordance with the
pronouncement's provisions, the Company reclassified approximately $1,071,000 of
mortgage-backed securities from held to maturity to trading. On January 11,
1999, the Company sold the entire trading investment for $1,048,335 and realized
a gain of $8,980, net of $5,956 tax. In addition, the Company reclassified
approximately $1,054,000 of mortgage-backed securities and $800,000 of
investments from held to maturity to available for sale. Accordingly, the net
unrealized loss of $1,328 at the date of transfer is reflected on the
consolidated statements of stockholders' equity as the cumulative effect of a
change in accounting principle, net of taxes.

Liquidity and Capital Resources

         We are required to maintain minimum levels of liquid assets as defined
by OTS regulations. This requirement, which varies from time to time (currently
4%) depending upon economic conditions and deposit flows, is based upon a
percentage of our deposits and short-term borrowings. The required ratio at
December 31, 1999 was 4% and our liquidity ratio for the quarter ended December
31, 1999 was 17.58%.

         Our primary sources of funds are deposits, repayment of loans and
mortgage-backed securities, maturities of investments and interest-bearing
deposits, funds provided from operations and advances from the FHLB of Atlanta.
While scheduled repayments of loans and mortgage-backed securities and
maturities of investment securities are predictable sources of funds, deposit
flows and loan prepayments are greatly influenced by the general level of
interest rates, economic conditions and competition. We use our liquidity
resources principally to fund existing and future loan commitments, to fund
maturing certificates of deposit and demand deposit withdrawals, to invest in
other interest-earning assets, to maintain liquidity, and to meet operating
expenses.
<PAGE>

         Liquidity may be adversely affected by unexpected deposit outflows,
higher interest rates paid by competitors, adverse publicity relating to the
savings and loan industry, and similar matters. Management monitors projected
liquidity needs and determines the level desirable, based in part on our
commitments to make loans and management's assessment of our ability to generate
funds.

         A major portion of our liquidity consists of cash and cash equivalents,
which include cash and interest-bearing deposits in other banks with a maturity
date of less than ninety days. The level of these assets is dependent upon our
operating, investing, lending and financing activities during any given period.
At December 31, 1999, cash and cash equivalents totaled $1.3 million.

         Our primary investing activities include origination of loans and
purchase of investment securities and mortgage-backed securities. During the
years ended December 31, 1999 and 1998, purchases of investment securities
totaled $4.5 million and $800,000, respectively, while purchases of
mortgage-backed securities totaled $2.9 million and $1.3 million, respectively,
and loan originations and purchases totaled $13.9 million and $12.2 million,
respectively. These investments were funded in part by FHLB advances of $8.9
million, loan and mortgage-backed security repayments of $7.6 million and $7.5
million, respectively, proceeds from the sale of mortgage-backed securities
trading of $1.0 million, an increase in certificates of deposit received of
$500,000 and $2.3 million for the years ended December 31, 1999 and 1998,
respectively.

         At December 31, 1999, we had $1.2 million in outstanding commitments to
originate fixed-rate loans with rates that ranged from 7.25% to 8.5% and had no
non-recourse commercial finance lease commitments outstanding. We anticipate
that we will have sufficient funds available to meet our current loan
origination commitments. Certificates of deposit which are scheduled to mature
in one year or less totaled $12.9 million at December 31, 1999. Based on
historical experience management believes that a significant portion of such
deposits will remain with us.

         We are subject to federal regulations that impose certain minimum
capital requirements. At December 31, 1999 we were in compliance with all
applicable capital requirements.

Impact of Inflation and Changing Prices

         Our financial statements and the accompanying notes presented elsewhere
in this report, have been prepared in accordance with generally accepted
accounting principles, which require the measurement of financial position and
operating results in terms of historical dollars without considering the change
in the relative purchasing power of money over time and due to inflation. The
impact of inflation is reflected in the increased cost of our operations. As a
result, interest rates have a greater impact on our performance than do the
effects of general levels of inflation. Interest rates do not necessarily move
in the same direction or to the same extent as the prices of goods and services.

Impact of New Accounting Standards

         FASB Statement on Accounting for Derivative Instruments and Hedging
Activities. In June 1998, FASB issued SFAS No. 133. This Statement standardizes
the accounting for derivative instruments including certain derivative
instruments embedded in other contracts, by requiring that an entity recognize
these items as assets or liabilities in the statement of financial position and
measure them at fair value. This Statement generally provides for matching the
timing of gain or loss recognition on the hedging instrument with the
recognition of the changes in the fair value of the hedged asset or liability
that are attributable to the hedged risk or the earnings effect of the hedged
forecasted transaction. The Statement is effective for all fiscal quarters of
all fiscal years beginning after June 15, 1999.

         The Company implemented SFAS No. 133 on January 1, 1999. In accordance
with the pronouncement's provisions, the Company reclassified approximately
$1.07 million of mortgage-backed securities from held to maturity to trading. On
January 11, 1999, the Company sold mortgage-backed securities with an aggregate
net book value of $1,033,399 for $1,048,335 and realized a gain of $8,980, net
of taxes. In addition, the Company reclassified approximately $1.05 million of
mortgage-backed securities and $800,000 of investments from held to maturity to
available for sale. Accordingly, the net unrealized loss of $1,328 at the date
of transfer is reflected on the consolidated statements of stockholders' equity
as the cumulative effect of a change in accounting principle, net of taxes.
<PAGE>

                        INDEPENDENT AUDITOR'S REPORT
                        ----------------------------


To the Stockholders and Board of Directors
Northfield Bancorp, Inc.
Baltimore, Maryland

        We have audited the consolidated statements of financial condition of
Northfield Bancorp, Inc. and Subsidiary as of December 31, 1999 and 1998, and
the related consolidated statements of operations, stockholders' equity and cash
flows for each of the two years in the two year period ended December 31, 1999.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

        We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.


                                       F-1
<PAGE>

        In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Northfield Bancorp, Inc. and Subsidiary as of December 31, 1999 and 1998, and
the consolidated results of its operations and cash flows for each of the two
years in the two year period ended December 31, 1999 in conformity with
generally accepted accounting principles.

        As described in Note 1 to the consolidated financial statements, the
Company adopted the Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" as of January 1,
1999.




/s/ Anderson Associates, LLP

March 3, 2000
Baltimore, Maryland



                                       F-2
<PAGE>

                            NORTHFIELD BANCORP, INC.
                            ------------------------
                                 AND SUBSIDIARY
                                 --------------
                               Baltimore, Maryland
                               -------------------

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                 ----------------------------------------------
<TABLE>
<CAPTION>
                                                                                                December 31,
                                                                                                ------------
                                                                                         1999                1998
                                                                                         ----                ----
       Assets
       ------
<S>                                                                                   <C>                  <C>
Cash                                                                                  $   620,282          $   166,446
Interest bearing deposits in other banks                                                1,038,521            4,833,876
Investments available for sale (Note 2)                                                 4,873,550                 -
Investments held to maturity (Note 2)                                                        -                 799,256
Mortgage backed securities available for sale (Note 3)                                  2,551,277                 -
Mortgage backed securities held to maturity (Note 4)                                      524,188            2,122,590
Loans receivable, net (Note 5)                                                         42,856,212           35,701,656
Accrued interest receivable - loans                                                       171,294              163,989
                            - investments                                                  65,508               19,016
                            - mortgage backed securities                                   16,086               13,569
Premises and equipment, at cost, less accumulated
 depreciation (Note 6)                                                                     97,153              128,325
Federal Home Loan Bank of Atlanta stock at cost (Note 7)                                  445,000              272,900
Deferred income taxes (Note 13)                                                           286,708               57,526
Prepaid and refundable income taxes (Note 13)                                                 410                 -
Prepaid expenses and other assets                                                          33,886               30,963
                                                                                      -----------          -----------

Total assets                                                                          $53,580,075          $44,310,112
                                                                                      ===========          ===========
       Liabilities and Stockholders' Equity
       ------------------------------------
Liabilities
-----------
   Deposit accounts (Note 8)                                                          $36,602,858          $36,434,786
   Borrowings (Note 9)                                                                  8,900,000                 -
   Advance payments by borrowers for expenses                                             553,961              462,726
   Income taxes payable (Note 13)                                                          11,237               18,449
   Other liabilities                                                                      439,377              266,230
                                                                                      -----------          -----------
Total liabilities                                                                      46,507,433           37,182,191

Commitments and contingencies - Notes 5, 6, 9, 10, 11 and 12

Stockholders' Equity (Notes 11 and 12)
--------------------
   Serial Preferred stock $.01 par value; authorized 2,000,000
     shares; none issued or outstanding
   Common stock $.01 par value; authorized 8,000,000 shares;
     issued and outstanding 475,442 shares in 1999 and1998                                  4,754                4,754
   Additional paid-in capital                                                           4,351,177            4,415,682
   Retained earnings (substantially restricted)                                         3,491,960            3,200,542
                                                                                      -----------          -----------
                                                                                        7,847,891            7,620,978
   Accumulated other comprehensive income                                                (318,280)                -
   Stock held by Rabbi Trust                                                             (134,650)            (134,650)
   Employee Stock Ownership Plan                                                         (322,319)            (358,407)
                                                                                      -----------          -----------
Total stockholders' equity                                                              7,072,642            7,127,921
                                                                                      -----------          -----------

Total liabilities and stockholders' equity                                            $53,580,075          $44,310,112
                                                                                      ===========          ===========
The accompanying notes to consolidated financial statements
are an integral part of these statements.
</TABLE>


                                       F-3
<PAGE>

                            NORTHFIELD BANCORP, INC.
                            ------------------------
                                 AND SUBSIDIARY
                                 --------------
                               Baltimore, Maryland
                               -------------------

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      -------------------------------------

<TABLE>
<CAPTION>
                                                                                                Years Ended
                                                                                                December 31,
                                                                                                ------------
                                                                                         1999                  1998
                                                                                         ----                  ----
<S>                                                                                    <C>                  <C>
Income
------
   Interest and fees on loans (Note 5)                                                 $2,978,697           $2,566,734
   Interest on investments                                                                338,930              267,728
   Interest on mortgage backed securities                                                 154,003              149,753
                                                                                       ----------           ----------
Total interest income                                                                   3,471,630            2,984,215

Interest Expense
----------------
   Interest on deposits (Note 8)                                                        1,699,241            1,748,825
   Interest on long-term borrowings                                                       111,775                 -
   Interest on short-term borrowings                                                      124,025                1,782
                                                                                       ----------           ----------
Total interest expense                                                                  1,935,041            1,750,607
                                                                                       ----------           ----------

Net interest income                                                                     1,536,589            1,233,608
Provision for losses on loans (Note 5)                                                       -                    -
                                                                                       ----------           ----------
Net interest income after provision for losses on loans                                 1,536,589            1,233,608

Non-Interest Income
-------------------
   Fees on loans                                                                            8,006                7,803
   Fees on deposits                                                                        14,554               12,201
   All other income                                                                         6,904               10,613
                                                                                       ----------           ----------
Net non-interest income                                                                    29,464               30,617

Non-Interest Expenses
---------------------
   Compensation and related expenses                                                      481,669              352,880
   Occupancy                                                                              116,326               87,531
   Deposit insurance                                                                       22,639               20,485
   Service bureau expense                                                                  69,392               57,118
   Furniture, fixtures and equipment expense                                               26,468               22,688
   Advertising                                                                             29,479               26,383
   Professional fees                                                                       73,826               64,021
   Other                                                                                  141,458              130,096
                                                                                       ----------           ----------
Total non-interest expenses                                                               961,257              761,202
                                                                                       ----------           ----------

Income before tax provision and cumulative effect
 of accounting change                                                                     604,796              503,023
Provision for income tax (Note 13)                                                        234,439              196,238
                                                                                       ----------           ----------

Income before cumulative effect of accounting change                                      370,357              306,785
Cumulative effect of accounting change, net of tax (Note 1)                                 8,980                 -
                                                                                       ----------           ----------
Net income                                                                             $  379,337           $  306,785
                                                                                       ==========           ==========
Basic earnings per share (Note 1)                                                      $      .89           $    N/A
                                                                                       ==========           ==========
Diluted earnings per share (Note 1)                                                    $      .86           $    N/A
                                                                                       ==========           ==========
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these statements.

                                       F-4
<PAGE>

                            NORTHFIELD BANCORP, INC.
                            ------------------------
                               Baltimore, Maryland
                               -------------------

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 -----------------------------------------------
             FOR YEARS ENDED DECEMBER 31, 1999 AND DECEMBER 31, 1998
             -------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                    Accumulated                         Employee
                                                           Additional                  Other     Stock Held   Stock       Total
                                               Common       Paid-In      Retained  Comprehensive  by Rabbi  Ownership  Stockholders'
                                                Stock       Capital      Earnings     Income       Trust      Plan       Equity
                                              ---------   -----------   ----------  ----------- ----------- ---------   ------------

<S>                                           <C>         <C>           <C>         <C>         <C>         <C>          <C>

Balance - December 31, 1997                   $    -      $      -      $2,893,757  $    -      $    -      $    -       $2,893,757

Issuance of common stock                          4,754     4,415,290         -          -           -           -        4,420,044
Stock purchased by Employee
 Stock Ownership Plan                              -             -            -          -           -       (380,350)     (380,350)

Stock held by Rabbi Trust                          -             -            -          -       (134,650)       -         (134,650)

Compensation under Stock-
 Based Benefit Plan                                -              392         -          -           -         21,943        22,335
Net income                                         -             -         306,785       -           -           -          306,785
                                              ---------   -----------   ----------  ---------   ---------   ---------    ----------
Balance - December 31, 1998                       4,754     4,415,682    3,200,542       -       (134,650)   (358,407)    7,127,921

Comprehensive Income
   Net income                                                              379,337
   Cumulative effect of change in accounting
     principle, net of taxes of $513 (Note 1)                                            (815)
   Unrealized holding losses on
     available for sale securities net
     of taxes of $201,075                                                            (317,465)
Total comprehensive income                                                                                                   61,057
Conversion costs paid subsequent
   to stock issuance                                          (66,035)                                                      (66,035)

Compensation under Stock-Based
   Benefit Plan, net of taxes of $1,062                         1,530                                          36,088        37,618
Dividends declared ($.20 per share)                                        (87,919)                                         (87,919)
                                              ---------   -----------   ----------  ---------   ---------   ---------    ----------
Balance - December 31, 1999                   $   4,754   $ 4,351,177   $3,491,960  $(318,280)  $(134,650)  $(322,319)   $7,072,642
                                              =========   ===========   ==========  =========   =========   =========    ==========
</TABLE>

The accompanying notes to consolidated financial statements are an integral part
of these statements.

                                       F-5
<PAGE>

                           NORTHFIELD BANCORP, INC.
                           ------------------------
                                 AND SUBSIDIARY
                                 --------------
                              Baltimore, Maryland
                              -------------------

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                     -------------------------------------
<TABLE>
<CAPTION>


                                                                    Years Ended December 31,
                                                                  ----------------------------
                                                                      1999           1998
                                                                      ----           ----
<S>                                                               <C>            <C>
Operating Activities
--------------------
  Net income                                                      $    379,337   $    306,785
  Adjustments to Reconcile Net Income to
   Net Cash Provided by Operating Activities
   -----------------------------------------
    Net amortization of premiums and accretion of
    discounts on certificates of deposit                                    88          3,172
    Gain on sale of mortgage backed securities trading                 (14,933)             -
    Proceeds from sale of mortgage backed securities trading         1,048,335              -
    Net amortization of premiums and accretion of
    discounts on mortgage backed and investment securities              16,853            735
    Amortization of premium on mortgage loans purchased                    597              -
    Loan fees deferred                                                  54,012         99,319
    Amortization of deferred loan fees                                 (50,648)       (51,630)
    Non-cash compensation under Stock-Based Benefit Plans               37,618         22,335
    Increase in accrued interest on loans                               (7,305)       (14,453)
    (Increase) decrease in accrued interest on investments             (46,492)         5,984
    Increase in accrued interest on mortgage backed securities          (2,517)          (876)
    Provision for depreciation                                          46,165         28,640
    Increase in deferred income taxes                                  (28,922)       (31,247)
    Increase in prepaid income taxes                                      (410)             -
    (Increase) decrease in prepaid expenses and
    other assets                                                        (2,923)        26,581
    (Decrease) increase in accrued interest payable                     (5,442)         1,139
    Decrease in income taxes payable                                    (7,212)       (44,515)
    Increase in other liabilities                                      173,147        131,563
                                                                  ------------   ------------
       Net cash provided by operating activities                     1,589,348        483,532

Cash Flows from Investing Activities
------------------------------------
  Proceeds from maturing certificates of deposit                       741,000        926,000
  Purchases of certificates of deposit                                (190,000)      (981,331)
  Purchases of securities available for sale                        (4,535,874)             -
  Purchase of securities held to maturity                                    -       (799,250)
  Purchases of mortgage backed securities held to maturity            (539,642)    (1,285,283)
  Purchases of mortgage backed securities available for sale        (2,371,480)             -
  Principal collected on mortgage backed securities                    859,362      1,116,961
  Longer term loans originated                                     (13,034,443)   (11,884,678)
  Loans purchased                                                     (877,919)      (302,882)
  Principal collected on longer term loans                           6,797,992      6,346,139
  Net (increase) decrease in short-term loans                          (44,150)        53,108
  Purchases of premises and equipment                                  (14,992)      (116,591)
  Purchase of Federal Home Loan Bank stock                            (172,100)       (46,500)
                                                                  ------------   ------------
       Net cash used by investing activities                       (13,382,246)    (6,974,307)
</TABLE>

                                      F-6
<PAGE>

                            NORTHFIELD BANCORP, INC.
                            ------------------------
                                 AND SUBSIDIARY
                                 --------------
                              Baltimore, Maryland
                              -------------------

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                     ---------------------------------------
<TABLE>
<CAPTION>


                                                         Years Ended December 31,
                                                        --------------------------
                                                            1999          1998
                                                            ----          ----
<S>                                                     <C>           <C>

Cash Flows from Financing Activities
------------------------------------
  Net increase (decrease) in demand deposits,
   money market, passbook accounts and advance
   payments by borrowers for taxes and insurance        $  (266,251)   $1,588,186
  Net increase in certificates of deposit                   531,000     2,315,159
  Net increase in Federal Home Loan Bank advances         8,900,000             -
  Net proceeds from stock issuance                                -     4,420,044
  Common shares purchased under ESOP Plan                         -      (380,350)
  Common shares purchased under Rabbi Trust                       -      (134,650)
  Conversion costs paid subsequent to stock issuance        (66,035)            -
  Dividend payment                                          (87,919)            -
                                                        -----------    ----------
       Net cash provided by financing activities          9,010,795     7,808,389
                                                        -----------    ----------

Increase (decrease) in cash and cash equivalents         (2,782,103)    1,317,614
Cash and cash equivalents at beginning of year            4,062,056     2,744,442
                                                        -----------    ----------
Cash and cash equivalents at end of year                $ 1,279,953    $4,062,056
                                                        ===========    ==========

Reconciliation of cash and cash equivalents:
  Cash                                                  $   620,282    $  166,446
  Interest bearing accounts in other banks                1,038,521     4,833,876
                                                        -----------    ----------
                                                          1,658,803     5,000,322

    Less - Certificates of deposit maturing in
             90 days or more included in interest
             bearing accounts in other banks               (378,850)     (938,266)
                                                        -----------    ----------

Cash and cash equivalents                               $ 1,279,953    $4,062,056
                                                        ===========    ==========

Supplemental disclosures of cash flows information:
  Cash paid during year for:
    Interest                                            $ 1,880,930    $1,749,522
    Income taxes                                        $   278,000    $  272,000

</TABLE>

The accompanying notes to consolidated financial statements
are an integral part of these statements.

                                      F-7
<PAGE>

                            NORTHFIELD BANCORP, INC.
                            ------------------------
                                 AND SUBSIDIARY
                                 --------------
                              Baltimore, Maryland
                              -------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------



Note 1 - Summary of Significant Accounting Policies
         ------------------------------------------

      Principles of Consolidation
      ---------------------------

          The consolidated financial statements include the accounts of
      Northfield Bancorp, Inc. ("the Company") and its wholly owned subsidiary,
      Northfield Federal Savings Bank ("the Bank").  All intercompany accounts
      and transactions have been eliminated in the accompanying consolidated
      financial statements.

      Business
      --------

          The Bank's primary business activity is the acceptance of deposits
      from the general public in its market area, predominantly the Baltimore
      metropolitan region, and using the proceeds for investments and loan
      originations.  The Bank is subject to competition from other financial
      institutions.  The Bank is subject to the regulations of certain federal
      agencies and undergoes periodic examinations by those regulatory
      authorities.

      Basis of Financial Statement Presentation
      -----------------------------------------

          The consolidated financial statements have been prepared in conformity
      with generally accepted accounting principles.  In preparing the financial
      statements, management is required to make estimates and assumptions that
      affect the reported amounts of assets and liabilities as of the date of
      the statement of financial condition and revenues and expenses for the
      period.  Actual results could differ significantly from those estimates.
      Material estimates that are particularly susceptible to significant change
      in the near-term relate to the determination of the allowance for loan
      losses.  See the discussion below of the determination of that estimate.

      Investments
      -----------

          Investments classified as available for sale are carried at fair
      value.  Amortization of premiums and accretion of discounts are computed
      using the interest method over the life of the debt instrument.  Gains and
      losses on available for sale securities are determined using the specific
      identification method.



                                      F-8
<PAGE>

NORTHFIELD BANCORP, INC.
------------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


Note 1 - Summary of Significant Accounting Policies - Continued
         ------------------------------------------

       Mortgage Backed Securities
       --------------------------

          Mortgage backed securities classified as available for sale, including
       real estate mortgage conduits, ("REMICs"), are carried at fair value.
       Amortization of premiums and accretion of discounts are computed using
       the interest method.  Gains and losses on available for sale securities
       are determined using the specific identification method.  See Note 3 for
       discussion of prepayment risk and recoverability of mortgage backed
       securities.

          At December 31, 1999, mortgage backed securities classified as held to
       maturity are carried at amortized cost since management has the ability
       and intention to hold them to maturity.  Amortization of premiums and
       accretion of discounts on purchases is computed using the interest
       method.

       Loans Receivable
       ----------------

          Loans receivable that management has the intent and ability to hold
       for the foreseeable future or until maturity or pay-off are reported at
       their outstanding principal balance adjusted for any charge-offs, the
       allowance for loan losses, and any deferred fees or costs on originated
       loans.

          Amortization of premiums and accretion of discounts on loan purchases
       is computed using the interest method.

          Loan origination fees and certain direct origination costs are
       capitalized and recognized as an adjustment of the yield of the related
       loan.

          An allowance for loan losses is provided through charges to income in
       an amount that management believes will be adequate to absorb losses on
       existing loans that may become uncollectible, based on evaluations of the
       collectibility of loans and prior loan loss experience.  The evaluations
       take into consideration such factors as changes in the nature and volume
       of the loan portfolio, overall portfolio quality, review of specific
       problem loans, and current economic conditions that may affect the
       borrowers' ability to pay.  Determining the amount of the allowance for
       loan losses requires the use of estimates and assumptions.  Management
       believes the allowance for losses on loans



                                      F-9
<PAGE>

NORTHFIELD BANCORP, INC.
------------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


Note 1 - Summary of Significant Accounting Policies - Continued
         ------------------------------------------

       Loans Receivable - Continued
       ----------------

       is adequate.  While management uses available information to estimate
       losses on loans, future additions to the allowances may be necessary
       based on changes in economic conditions, particularly in the State of
       Maryland.  In addition, various regulatory agencies, as an integral part
       of their examination process, periodically review the Bank's allowances
       for losses on loans.  Such agencies may require the Bank to recognize
       additions to the allowances based on their judgments about information
       available to them at the time of their examination.  Statement of
       Financial Accounting Standards ("SFAS") No. 114, as amended by SFAS No.
       118 addresses the accounting by creditors for impairment of certain
       loans.  It is generally applicable for all loans except large groups of
       smaller balance homogeneous loans that are collectively evaluated for
       impairment, including residential mortgage loans and consumer installment
       loans.  It also applies to all loans that are restructured in a troubled
       debt restructuring involving a modification of terms.  SFAS No. 114
       requires that impaired loans be measured based on the present value of
       expected future cash flows discounted at the loan's effective interest
       rate, or at the loan's observable market price or the fair value of the
       collateral if the loan is collateral dependent.  A loan is considered
       impaired when, based on current information and events, it is probable
       that a creditor will be unable to collect all amounts due according to
       the contractual terms of the loan agreement.

          Accrual of interest is discontinued on a loan when management
       believes, after considering economic and business conditions and
       collection efforts, that the borrower's financial condition is such that
       collection of interest is doubtful.  When a payment is received on a loan
       on non-accrual status, the amount received is allocated to principal and
       interest in accordance with the contractual terms of the loan.

       Premises and Equipment
       ----------------------

          Land is carried at cost, premises and equipment are carried at cost
       less accumulated depreciation.  Depreciation is computed on the straight-
       line method, based on the useful lives of the respective assets.


                                      F-10
<PAGE>

NORTHFIELD BANCORP, INC.
------------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


Note 1 - Summary of Significant Accounting Policies - Continued
         ------------------------------------------

      Income Taxes
      ------------

          Deferred income taxes are recognized for temporary differences between
      the financial reporting basis and income tax basis of assets and
      liabilities based on enacted tax rates expected to be in effect when such
      amounts are realized or settled.  Deferred tax assets are recognized only
      to the extent that it is more likely than not that such amounts will be
      realized based on consideration of available evidence.  The effect on
      deferred tax assets and liabilities of a change in tax rates is recognized
      in income in the period that includes the enactment date.

      Statement of Cash Flows
      -----------------------

          In the statement of cash flows, cash and equivalents include cash and
      interest bearing deposits in other banks with a maturity date of less than
      ninety days.

      Employee Stock Ownership Plan
      -----------------------------

          The Company accounts for its Employee Stock Ownership Plan ("ESOP") in
      accordance with Statement of Position 93-6 of the Accounting Standards
      Division of the American Institute of Certified Public Accountants (See
      Note 11).

      Cumulative Effect of Accounting Change
      --------------------------------------

          The Company implemented SFAS No. 133, "Accounting for Derivative
      Instruments and Hedging Activities" ("SFAS No. 133") on January 1, 1999.
      In accordance with the Pronouncement's provisions, the Company
      reclassified approximately $1,071,000 of mortgage backed securities from
      held to maturity to trading.  The Company's trading portfolio consisted of
      several relatively older and smaller balance loan pools, which had market
      values that exceeded carrying values.  Management decided to sell the
      securities at the favorable market price and simultaneously reduce the
      administrative costs of the smaller pools.  On January 11, 1999, the
      Company sold the entire trading investment that had a carrying value of
      $1,033,041 and realized a gain of $8,980 net of tax.  Accordingly, the net
      realized gain of $8,980 is reflected on the consolidated statements of
      operations as the cumulative effect of an accounting change, net of taxes.


                                      F-11
<PAGE>

NORTHFIELD BANCORP, INC.
------------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


Note 1 - Summary of Significant Accounting Policies - Continued
         ------------------------------------------

      Cumulative Effect of Accounting Change - Continued
      --------------------------------------------------

          In addition, the Company reclassified $1,053,760 of mortgage backed
      securities and $799,256 of investments from held to maturity to available
      for sale.

          On January 1, 1999, the amortized costs and fair values were as
      follows:
<TABLE>
<CAPTION>

                                                   Gross       Gross
                                     Amortized   Unrealized  Unrealized
                                        Cost       Gains       Losses    Fair Value
                                     ----------  ----------  ----------  ----------
       <S>                           <C>         <C>         <C>         <C>
       Investments                   $  799,256      $    -      $5,029  $  794,227
       Mortgage backed securities     1,053,760       3,701           -   1,057,461
                                     ----------      ------      ------  ----------
                                     $1,853,016      $3,701      $5,029  $1,851,688
                                     ==========      ======      ======  ==========
</TABLE>

          Accordingly, the net unrealized loss of $1,328 at the date of transfer
      is reflected on the consolidated statements of stockholders' equity as the
      cumulative effect of a change in accounting principle, net of taxes.

      Earnings Per Share
      ------------------

          Basic earnings per share data ("EPS") is computed by dividing net
      income by the weighted average number of common shares outstanding for the
      appropriate period.  Unearned ESOP shares are not included in outstanding
      shares.  Diluted EPS is computed by dividing net income by the weighted
      average shares outstanding as adjusted for the dilutive effect of unvested
      stock awards based on the "treasury stock" method.

          Earnings per share data is not presented for the year ended December
      31, 1998, since the Bank converted to stock form in November, 1998, and
      such information would not be meaningful.  Information relating to the
      calculations of net income per share of common stock, summarized for the
      twelve months ended December 31, 1999, is as follows:
<TABLE>
<CAPTION>

                                                                  December 31, 1999
                                                                  -----------------
      <S>                                                         <C>
      Net income before other comprehensive income                      $379,337
                                                                        ========
      Weighted Average Shares
         Outstanding basic EPS                                           427,664
      Dilutive Items
         Rabbi Trust shares                                               13,465
                                                                        --------
      Adjusted weighted average shares used for dilutive items           441,129
                                                                        ========
</TABLE>
                                      F-12
<PAGE>

NORTHFIELD BANCORP, INC.
------------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


Note 2 - Investments
         -----------

          The amortized cost at and fair values of other investments are as
          follows:
<TABLE>
<CAPTION>

                                                    Gross        Gross
                                     Amortized    Unrealized   Unrealized
                                        Cost        Gains        Losses     Fair Value
                                     ----------   ----------   ----------   ----------
<S>                                  <C>          <C>          <C>          <C>
       Available for Sale
       ------------------
       December 31, 1999
       -----------------
       Federal Home Loan Mortgage
        Corporation bonds            $  748,519   $    -       $ 53,988     $  694,531
       Municipal bonds                  449,316        -         38,925        410,391
       Corporate bonds                4,137,946        -        369,318      3,768,628
                                     ----------   ----------   --------     ----------
                                     $5,335,781   $    -       $462,231     $4,873,550
                                     ==========   ==========   ========     ==========

       Held to Maturity
       ----------------
       December 31, 1998
       -----------------
       Federal Home Loan Mortgage
        Corporation bonds            $  250,000   $    -       $   -        $  250,000
       Municipal bonds                  299,256        -            888        298,368
       Corporate bonds                  250,000        -          4,141        245,859
                                     ----------   ----------   --------     ----------
                                     $  799,256   $    -       $  5,029     $  794,227
                                     ==========   ==========   ========     ==========
</TABLE>

          On January 1, 1999, the Company implemented the provisions of SFAS No.
       133 and reclassified the entire balance of investments from held to
       maturity to available for sale (See Note 1).

          No gains or losses were realized during the years ended December 31,
       1999 and 1998.

          The scheduled maturities of other investments at December 31, 1999:

                                                  Carrying
                                                    Cost
                                                  --------
       Due after five years through ten years   $  369,125
       Due after ten years                       4,504,425
                                                ----------
                                                $4,873,550
                                                ==========



                                      F-13
<PAGE>

NORTHFIELD BANCORP, INC.
------------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


Note 3 - Mortgage Backed Securities Available for Sale
         ---------------------------------------------

          Mortgage backed securities classified as available for sale at
      December 31, 1999 are as follows:
<TABLE>
<CAPTION>

                                                      Gross       Gross
                                        Amortized   Unrealized  Unrealized
                                           Cost       Gains       Losses    Fair Value
                                        ----------  ----------  ----------  ----------
<S>                                     <C>         <C>         <C>         <C>
     GNMA participating certificates    $1,861,296  $     -        $31,313  $1,829,983
     FNMA participating certificates       737,961        -         16,667     721,294
                                        ----------  ----------     -------  ----------
                                        $2,599,257  $     -        $47,980  $2,551,277
                                        ==========  ==========     =======  ==========
</TABLE>
          No gains or losses were realized during the years ended December 31,
      1999 and 1998.

Note 4 - Mortgage Backed Securities Held to Maturity
         -------------------------------------------

          The amortized cost and fair value of mortgage backed securities held
       to maturity are as follows as of December 31, 1999 and 1998,
       respectively.
<TABLE>
<CAPTION>

                                                       Gross       Gross
                                         Amortized   Unrealized  Unrealized
                                            Cost       Gains       Losses    Fair Value
                                         ----------  ----------  ----------  ----------
                                                      December 31, 1999
                                         ----------------------------------------------
<S>                                      <C>         <C>         <C>         <C>
     GNMA participating certificates     $  524,188  $     -       $54,866   $  469,322
                                         ==========  ==========    =======   ==========

                                                      December 31, 1998
                                         ----------------------------------------------
     GNMA participating certificates     $1,125,497     $37,469    $   -     $1,162,966
     FNMA participating certificates        534,884      12,123        -        547,007
     FHLMC participating certificates       462,209      12,896        -        475,105
                                         ----------  ----------    -------   ----------
                                         $2,122,590     $62,488    $   -     $2,185,078
                                         ==========  ==========    =======   ==========
</TABLE>

          On January 1, 1999, the Company implemented the provisions of SFAS No.
       133 and reclassified $1,053,760 and $1,033,041 of the mortgage backed
       securities portfolio to available for sale and trading, respectively.
       (See Note 1)



                                      F-14
<PAGE>

NORTHFIELD BANCORP, INC.
------------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


Note 5 - Loans Receivable
         ----------------

          Loans receivable at December 31, 1999 and 1998 consist of the
       following:
<TABLE>
<CAPTION>

                                                           1999        1998
                                                           ----        ----
     <S>                                              <C>           <C>
     One to four family residential mortgage loans    $39,464,486   $31,332,202
     Land                                                 172,698       123,442
     Construction loans                                 2,207,784     3,663,490
     Commercial real estate loans                       1,960,896     2,477,792
     Commercial loan collateralized by lease
      finance receivables                                 698,107       643,217
     Home equity line of credit loans                     134,281       124,849
     Loans secured by deposits                            108,044        73,326
     Premiums                                              14,614          -
                                                      -----------   -----------
                                                       44,760,910    38,438,318

     Less
     ----
      Undisbursed portion of loans in process          (1,402,261)   (2,223,105)
      Deferred loan origination fees                     (319,486)     (316,122)
      Allowance for losses on loans                      (182,951)     (197,435)
                                                      -----------   -----------
                                                       (1,904,698)   (2,736,662)
                                                      -----------   -----------
                                                      $42,856,212   $35,701,656
                                                      ===========   ===========
</TABLE>

          Residential lending is generally considered to involve less risk than
      other forms of lending, although payment experience on these loans is
      dependent to some extent on economic and market conditions in the Bank's
      lending area.  Commercial and construction loan repayments are generally
      dependent on the operations of the related properties or the financial
      condition of its borrower or guarantor.  Accordingly, repayment of such
      loans can be more susceptible to adverse conditions in the real estate
      market and the regional economy.

          A substantial portion of the Bank's loans receivable are mortgage
      loans secured by residential and commercial real estate properties located
      in the State of Maryland.  Loans are extended only after evaluation by
      management of customers' creditworthiness and other relevant factors on a
      case-by-case basis.  The Bank generally does not lend more than 90% of the
      appraised value of a property and requires private mortgage insurance on
      residential mortgages with loan-to-value ratios in excess of 80%. In
      addition, the Bank generally obtains personal guarantees of repayment from
      borrowers and/or others for construction, commercial and multifamily
      residential loans and disburses the proceeds of construction and similar
      loans only as work progresses on the related projects.
                                      F-15
<PAGE>

NORTHFIELD BANCORP, INC.
------------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


Note 5 - Loans Receivable - Continued
         ----------------

          The commercial loan collateralized by lease finance receivables
      represents a loan to a leasing company collateralized by leases receivable
      to individuals and businesses secured by personal property and is
      primarily dependent upon the financial condition of the borrower and
      lessors for repayment.

          The following is a summary of the allowance for loan losses for the
      years ended December 31:

<TABLE>
<CAPTION>

<S>                                               <C>
     Balance at December 31, 1997                 $215,500
     Provision for losses on loans                    -
     Charge-offs                                   (18,065)
                                                  --------
     Balance at December 31, 1998                  197,435
     Provision for losses on loans                    -
     Charge-offs                                   (14,484)
                                                  --------
     Balance at December 31, 1999                 $182,951
                                                  ========
</TABLE>

          A loan is considered impaired when it is probable that the Bank will
      be unable to collect all amounts due according to the contractual terms of
      the loan agreement.  The Bank did not have any impaired loans at December
      31, 1999 and 1998.

          The Bank had no non-accrual loans that were not subject to SFAS No.
      114.


          The following table presents a summary of the activity with respect to
      loans to directors and officers for the years ended December 31, 1999 and
      1998, respectively.
<TABLE>
<CAPTION>

                                                   1999        1998
                                                ----------  ----------
<S>                                             <C>         <C>
     Balance outstanding - beginning of year    $ 505,596   $ 728,439
     New loans                                    148,000      18,546
     Principal repayments                        (152,043)   (241,389)
                                                ---------   ---------
     Balance outstanding - end of year          $ 501,553   $ 505,596
                                                =========   =========
</TABLE>





                                      F-16
<PAGE>

NORTHFIELD BANCORP, INC.
------------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


Note 5 - Loans Receivable - Continued
         ----------------

          The Bank is a party to financial instruments with off-balance-sheet
      risk in the normal course of business to meet the financial needs of its
      customers.  Mortgage loan commitments, exclusive of loans in process not
      reflected in the accompanying statements at December 31, 1999, approximate
      $1,238,800.  These commitments are for mortgage loans with fixed rates
      between 7.25% and 8.5% at December 31, 1999.  At December 31, 1999, the
      Bank did not have any non-recourse leasing loan commitments.

          The credit risk involved in these financial instruments is essentially
      the same as that involved in extending loan facilities to customers.  No
      amount has been recognized in the statement of financial condition at
      December 31, 1999, as a liability for credit loss.

          Mortgage loans serviced for others are not included in the
      accompanying consolidated statements of financial condition.  The unpaid
      principal balances of these loans at December 31, 1999 and 1998,
      respectively, were $790,345 and $826,514.

          Custodial escrow balances maintained in connection with the foregoing
      loan servicing were approximately $22,000 and $18,000 at December 31, 1999
      and 1998, respectively.

Note 6 - Premises and Equipment
         ----------------------

          Premises and equipment at December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>

                                             1999        1998     Useful Lives
                                          ----------  ----------  -------------
<S>                                       <C>         <C>         <C>
     Land                                 $  15,000   $  15,000     -
     Office building and improvements       107,347     109,297   5 to 35 years
     Furniture, fixtures and equipment      259,783     285,547   5 to 15 years
                                          ---------   ---------
                                            382,130     409,844
      Less - accumulated depreciation      (284,977)   (281,519)
                                          ---------   ---------
                                          $  97,153   $ 128,325
                                          =========   =========
</TABLE>





                                      F-17
<PAGE>

NORTHFIELD BANCORP, INC.
-------------------------
 AND SUBSIDIARY
---------------
Baltimore, Maryland
-------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


Note 6 - Premises and Equipment - Continued
         ----------------------

          The Bank has entered into long-term lease agreements for the premises
       of its main and administrative offices.  Rental expense under the
       agreements for the properties for the years ended December 31, 1999 and
       1998 were $57,303 and $48,835, respectively.  At December 31, 1999, the
       minimum rental commitments under noncancellable operating leases are as
       follows:
<TABLE>
<CAPTION>

     Year Ended December 31,
     -----------------------
<S>                            <C>
         2000                  $ 57,695
         2001                    48,962
         2002                    42,000
         2003                    28,000
                               --------
                               $176,657
                               ========
</TABLE>

Note 7 - Investment in Federal Home Loan Bank of Atlanta Stock
         -----------------------------------------------------

          The Bank is required to maintain an investment in the stock of the
       Federal Home Loan Bank of Atlanta ("FHLB") in an amount equal to at least
       1% of the unpaid principal balances of the Bank's residential mortgage
       loans or 1/20 of its outstanding advances from the FHLB, whichever is
       greater.  Purchases and sales of stock are made directly with the FHLB at
       par value.

Note 8 - Deposit Accounts
         ----------------

          Deposit accounts at December 31, 1999 and 1998 consist of the
       following:
<TABLE>
<CAPTION>

                                                    1999                  1998
                                            --------------------  --------------------
                                              Amount        %       Amount        %
                                            -----------  -------  -----------  -------
<S>                                         <C>          <C>      <C>          <C>
       Demand and NOW accounts including
        non-interest bearing deposits of
        $570,560 in 1999 and $715,785
        in 1998                             $ 2,710,885    7.41%  $ 2,894,912    7.95%
       Money markets                          8,191,133   22.38     8,199,757   22.51
       Passbook savings                       2,736,225    7.47     2,901,060    7.96
       Certificates of deposit               22,954,581   62.71    22,423,581   61.54
                                            -----------  ------   -----------  ------
                                             36,592,824   99.97    36,419,310   99.96
       Accrued interest on deposits              10,034     .03        15,476     .04
                                            -----------  ------   -----------  ------
                                            $36,602,858  100.00%  $36,434,786  100.00%
                                            ===========  ======   ===========  ======

</TABLE>

                                      F-18
<PAGE>

NORTHFIELD BANCORP, INC.
------------------------
AND SUBSIDIARY
--------------
Baltimore, Maryland
-------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


Note 8 - Deposit Accounts - Continued
         ----------------


          Certificates of deposit mature as follows at December 31:

<TABLE>
<S>                                                   <C>
              2000                                    $12,852,856
              2001                                      4,515,131
              2002                                      2,959,889
              2003                                        938,500
              2004                                      1,204,817
              2005 & Thereafter                           483,388
                                                      -----------
              Total                                   $22,954,581
                                                      ===========
</TABLE>

          Interest expense on deposits is summarized as follows for the years
      ended December 31:

<TABLE>
<CAPTION>
                                                           1999         1998
                                                     ----------  -----------
<S>                                                  <C>         <C>
     NOW accounts                                    $   41,841  $    57,696
     Money markets                                      272,789      322,038
     Savings                                             76,571       93,461
     Certificates of deposit                          1,308,040    1,275,630
                                                     ----------  -----------
                                                     $1,699,241  $ 1,748,825
                                                     ==========  ===========
</TABLE>

          The Bank had deposits of $100,000 or more of approximately $5,351,995
      and $3,451,755 at December 31, 1999 and 1998, respectively.

          Deposit Insurance Reform.  Currently, there are two deposit insurance
      funds maintained by the Federal Deposit Insurance Corporation ("FDIC"),
      the Bank Insurance Fund ("BIF") and the Savings Association Insurance Fund
      ("SAIF").  The Bank's deposits are insured by SAIF.

Note 9 - Borrowings
         ----------

          Federal Home Loan Bank advances at December 31, 1999 consist of short-
      term fixed and adjustable rate advances bearing interest at 4.55% to 6.26%
      per annum and a long-term fixed rate advance bearing interest at 5.26% per
      annum.



                                      F-19
<PAGE>

NORTHFIELD BANCORP, INC.
------------------------
 AND SUBSIDIARY
 --------------
Baltimore, Maryland
-------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


Note 9 - Borrowings - Continued
         ----------

             The Bank's stock in Federal Home Loan Bank of Atlanta is pledged as
         security for the loan and under a blanket floating lien security
         agreement with the Federal Home Loan Bank of Atlanta, the Bank is
         required to maintain as collateral for its advances, qualified home
         mortgage loans in an amount equal to 175% of the advances.

             Aggregate maturities required on Federal Home Loan Bank advances at
         December 31, 1999 are as follows:

         December 31, 2000                          $5,900,000
         December 31, 2009                           3,000,000
                                                     ---------
                                                    $8,900,000
                                                     =========

             Unused advances on the short-term borrowings above totalled
         $5,840,000 at December 31, 1999.

Note 10- Employee Benefit Plan
         ---------------------

             The Bank has a 401(k) Plan which required until March 31, 1998,
         under certain conditions, a contribution of up to 5% of eligible
         employees' total compensation. The total expense related to this Plan
         for the years ended December 31, 1999 and 1998 was $2,600 and $5,126,
         respectively.

Note 11- Common Stock and Stock Benefit Plans
         ------------------------------------

             On November 12, 1998, the Bank converted from a federally chartered
         mutual savings bank to a federally chartered stock savings bank.
         Simultaneously, the Bank consummated the formation of a new holding
         company, Northfield Bancorp, Inc., of which the Bank is a wholly owned
         subsidiary. In connection with the conversion, the Company issued
         475,442 shares of its common stock, par value $.01 per share (the
         "Common Stock") for gross proceeds of $4,754,420 and net proceeds of
         $4,420,044, of which $2,210,022 was contributed to the Bank in exchange
         for all of its outstanding common stock.

                                      F-20
<PAGE>

NORTHFIELD BANCORP, INC.
------------------------
 AND SUBSIDIARY
 --------------
Baltimore, Maryland
-------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


Note 11- Common Stock and Stock Benefit Plans - Continued
         ------------------------------------

             At the time of the Conversion, the Bank established a liquidation
         account in the amount of $3,086,506, an amount equal to the Bank's
         retained earnings as of June 30, 1998. The liquidation account is
         maintained for the benefit of eligible savings account holders who
         maintained their savings accounts in the Bank after the Conversion. In
         the event of a complete liquidation (and only in such event), each
         eligible savings account holder would be entitled to receive a
         liquidation distribution from the liquidation account in an amount
         equal to the account holder's then interest in the liquidation account
         before any liquidation distribution may be made with respect to capital
         stock.

             The Company has no significant source of income other than
         dividends from the Bank. As a result, the Company's dividends will
         depend primarily upon receipt of dividends from the Bank.

             OTS regulations limit the payment of dividends and other capital
         distributions by the Bank. The Bank is able to pay dividends during a
         calendar year without regulatory approval to the extent of the greater
         of (i) an amount which will reduce by one-half its surplus capital
         ratio at the beginning of the year plus all its net income determined
         on the basis of generally accepted accounting principles for that
         calendar year, or (ii) 75% of net income for the last four calendar
         quarters.

             The Bank is restricted in paying dividends on its stock to the
         greater of the restrictions described in the preceding paragraph, or an
         amount that would reduce its retained earnings below its regulatory
         capital requirement, the accumulated bad debt deduction, or the
         liquidation account described above.

             At the time of conversion, the Bank established an Employee Stock
         Ownership Plan ("ESOP"), and acquired 38,035 shares of the common
         stock. The ESOP borrowed funds used to acquire the shares from the
         Company with a direct loan from the Company requiring annual payments
         of $29,258.

             The ESOP holds the common stock in a Trust for allocation among
         participating employees.

             All employees of the Bank who have completed one year of service
         and attained the age of 21 are eligible to participate. Participants
         will become 100% vested in their accounts after five years of service,
         commencing after January 1, 1998, or earlier upon death, disability or
         retirement.

                                      F-21
<PAGE>

NORTHFIELD BANCORP, INC.
------------------------
 AND SUBSIDIARY
 --------------
Baltimore, Maryland
-------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


Note 11- Common Stock and Stock Benefit Plans - Continued
         ------------------------------------

             The ESOP is funded by contributions made by the Bank in cash or
         common stock and dividends on the shares held in the Trust. The Bank
         recognizes compensation expense as shares are committed for release
         from collateral at their current market price. Dividends on allocated
         shares are recorded as a reduction of retained earnings and dividends
         on unallocated shares are recorded as a reduction of debt. Compensation
         cost for the year ended December 31, 1999 was $42,380.

             The ESOP shares as of December 31, 1999 were as follows:

         Allocated shares                          5,806
         Shares earned, but unallocated               --
         Unearned shares                          32,229

             The fair value of the unearned shares was $382,719 at December 31,
         1999.

             During the year ended December 31, 1997, the Bank entered into a
         non-qualified Deferred Compensation ("Rabbi Trust") agreement with all
         of its current directors. The Bank recognized compensation expense,
         under this agreement, during the years ended December 31, 1999 and 1998
         of $107,747 and $69,150, respectively. Liability under this Agreement
         is being accrued by charges to operating expense during the term of
         employment. On November 12, 1998, the Trustees of the Deferred
         Compensation Plan acquired 13,465 shares of the Company's common stock.

Note 12- Retained Earnings
         -----------------

             The Bank is subject to various regulatory capital requirements
         administered by the federal banking agencies. Failure to meet minimum
         capital requirements can initiate certain mandatory and possibly
         additional discretionary actions by regulators that, if undertaken,
         could have a direct material effect on the Bank's financial statements.
         Under capital adequacy guidelines and the regulatory framework for
         prompt corrective action, the Bank must meet specific capital
         guidelines that involve quantitative measures of the Bank's assets,
         liabilities, and certain off-balance-sheet items as calculated under
         regulatory accounting practices. The Bank's capital amounts and
         classification are also subject to qualitative judgments by the
         regulators about components, risk weightings, and other factors.

                                      F-22
<PAGE>

NORTHFIELD BANCORP, INC.
------------------------
 AND SUBSIDIARY
 --------------
Baltimore, Maryland
-------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


Note 12- Retained Earnings - Continued
         -----------------

             Quantitative measures established by regulation to ensure capital
         adequacy require the Bank to maintain minimum amounts and ratios (set
         forth in the table below) of total and Tier I capital (as defined in
         the regulations) to risk-weighted assets (as defined), and of Tier I
         capital (as defined) to average assets (as defined). Management
         believes, as of December 31, 1999, that the Bank meets all capital
         adequacy requirements to which it is subject.

             As of December 31, 1999, the most recent notification from the
         Office of Thrift Supervision has categorized the Bank as well
         capitalized under the regulatory framework for prompt corrective
         action. To be categorized as well capitalized the Bank must maintain
         minimum total risk-based, Tier I risk-based and Tier I leverage ratios
         as set forth in the table. There have been no conditions or events
         since that notification that management believes have changed the
         Bank's category.

             The following table presents the Bank's capital position based on
         the financial statements.

<TABLE>
<CAPTION>
                                                                                To Be Well
                                                                             Capitalized Under
                                                         For Capital         Prompt Corrective
                                    Actual            Adequacy Purposes      Action Provisions
                            ---------------------    -------------------    --------------------
                              Amount          %        Amount        %        Amount         %
                            ----------      -----    ----------    -----    ----------     -----
      <S>                   <C>             <C>      <C>           <C>      <C>            <C>
      December 31, 1999
      ------------------
      Tangible (1)          $5,300,053       9.8%    $  808,432     1.5%    $      N/A      N/A%
      Tier I capital (2)     5,300,053      18.6%           N/A     N/A%     1,713,180      6.0%
      Core (1)               5,300,053       9.8%     2,155,818     4.0%     2,694,773      5.0%
      Risk-weighted (2)      5,483,004      19.2%     2,284,240     8.0%     2,855,300     10.0%

      December 31, 1998
      -----------------
      Tangible (1)          $4,918,487      11.0%    $  670,342     1.5%    $      N/A      N/A%
      Tier I capital (2)     4,918,487      22.2%           N/A     N/A%     1,330,440      6.0%
      Core (1)               4,918,487      11.0%     1,340,684     3.0%     2,234,473      5.0%
      Risk-weighted (2)      5,115,922      23.1%     1,773,920     8.0%     2,217,400     10.0%
</TABLE>
       (1)  To adjusted total assets
       (2)  To risk-weighted assets.

                                      F-23
<PAGE>

NORTHFIELD BANCORP, INC.
------------------------
 AND SUBSIDIARY
 --------------
Baltimore, Maryland
-------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

Note 13- Income Taxes
         ------------

             The income tax provision consists of the following for the years
         ended December 31:

                                       1999       1998
                                       ----       ----
       Current expense               $269,317   $227,485
       Deferred expense (benefit)     (28,922)   (31,247)
                                     ---------  ---------
          Total tax expense          $240,395   $196,238
                                     =========  =========

             Of the $240,395 income tax provision in 1999, $5,956 is the tax
         effect of the expense recorded because of the cumulative change in
         accounting principle for the adoption of SFAS No. 133 (See Note 1).

             The income tax provision is reconciled to the amount computed to
         the statutory federal income tax rate as follows for December 31:

                                                   1999              1998
                                             ----------------  ----------------
                                              Amount    Rate    Amount    Rate
                                             --------  ------  --------  ------
Statutory federal income tax rate            $210,709  34.00%  $171,028  34.00%
State tax net of federal income tax benefit    29,189   4.71     23,743   4.72
Other                                             497    .01      1,467    .29
                                             --------  ------  --------  ------
                                             $240,395  38.72%  $196,238  39.01%
                                             ========  ======  ========  ======

             The tax effects of temporary differences between financial
         reporting basis and income tax basis of assets and liabilities are as
         follows at December 31:


                                                             1999        1998
                                                             ----        ----
       Deferred Tax Assets:
          Deferred loan origination fees                  $       -   $  12,787
          Deferred compensation                             117,696      73,695
          Unrealized loss on investment securities          232,420      32,160
          Allowance for loan losses                          70,656      76,249
                                                          ---------   ---------
                                                            420,772     194,891

       Deferred Tax Liabilities:
          Federal Home Loan Bank of Atlanta stock dividend  (32,595)    (32,595)
          Depreciation                                       (2,650)     (2,650)
          Excess of tax bad debt reserve over base year     (26,377)    (39,567)
          Conversion from accrual to cash method
           of accounting                                    (72,442)    (62,553)
                                                          ---------   ---------
                                                           (134,064)   (137,365)
                                                          ---------   ---------
       Net deferred tax assets                            $ 286,708   $  57,526
                                                          =========   =========

                                      F-24
<PAGE>

NORTHFIELD BANCORP, INC.
------------------------
 AND SUBSIDIARY
 --------------
Baltimore, Maryland
-------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


Note 13- Income Taxes - Continued
         ------------

             The Bank was allowed a special bad debt deduction limited generally
         to 8% of otherwise taxable income for the year beginning December 1,
         1987 through December 31, 1995. Beginning January 1, 1996 the
         percentage of taxable income method of computing the Bank's tax bad
         debt deduction is no longer allowed and the amount by which the tax
         reserve for bad debts exceeds such amount at December 31, 1987 must be
         recaptured over a six year period. A tax liability has been established
         for the recapture. If the amounts which qualified as deductions for
         federal income tax purposes prior to December 31, 1987 are later used
         for purposes other than to absorb loan losses, including distributions
         in liquidations, they will be subject to federal income tax at the then
         current corporate rate. Retained earnings at December 31, 1999 and 1998
         include $577,687, for which no provision for federal income tax has
         been provided. The unrecorded deferred income tax liability on the
         above amount was approximately $223,875.

Note 14- Disclosures About Fair Value of Financial Instruments
         -----------------------------------------------------

             The estimated fair values of the Bank's financial instruments are
         summarized below. The fair values of a significant portion of these
         financial instruments are estimates derived using present value
         techniques prescribed by the FASB and may not be indicative of the net
         realizable or liquidation values. Also, the calculation of estimated
         fair values is based on market conditions at a specific point in time
         and may not reflect current or future fair values.

             The carrying amount is a reasonable estimate of fair value for
         interest bearing deposits in other banks due to the short-term nature
         of that investment. Fair value is based upon net asset values for
         investment securities. Bid prices published in financial newspapers for
         mortgage backed securities were used to estimate fair value for these
         investments. The carrying amount of Federal Home Loan Bank of Atlanta
         stock is a reasonable estimate of fair value. Loans receivable were
         discounted using a single discount rate, comparing the current rates at
         which similar loans would be made to borrowers with similar credit
         ratings and for the same remaining maturities, except for adjustable
         rate mortgages which were considered to be at market rates. These rates
         were used for each aggregated category of loans as reported on the
         Office of Thrift Supervision Quarterly Report. The fair value of demand
         deposits, savings accounts and money market deposits is the amount
         payable on demand at the reporting date. The fair value of fixed-
         maturity certificates of deposit is estimated using the rates currently
         offered on deposits of similar remaining maturities.

                                      F-25
<PAGE>

NORTHFIELD BANCORP, INC.
------------------------
 AND SUBSIDIARY
 --------------
Baltimore, Maryland
-------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


Note 14- Disclosures About Fair Value of Financial Instruments - Continued
         -----------------------------------------------------


                                                          December 31, 1999
                                                         --------------------
                                                         Carrying   Estimated
                                                          Amount   Fair Value
                                                         --------  ----------
                                                        (Amounts in Thousands)
   Financial Assets
   ----------------
      Interest bearing deposits
       in other banks                                    $ 1,039      $ 1,039
      Investments                                          4,874        4,874
      Mortgage backed securities available for sale        2,551        2,551
      Mortgage backed securities held to maturity            524          469
      Loans receivable                                    42,856       40,137
      Federal Home Loan Bank of Atlanta stock                445          445

   Financial Liabilities
   ---------------------
      Savings                                            $ 2,736      $ 2,736
      NOW and money market deposit accounts               10,902       10,902
      Certificates of deposit                             22,955       22,980
      Advance payment by borrowers for expenses              554          554
      Borrowings                                           8,900        8,603


                                      F-26