UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2004
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission file number 0-14294
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Greater Community Bancorp
---------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-2545165
------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Union Boulevard, Totowa, New Jersey 07512
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (973) 942-1111
-------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [_]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act.)
YES [X] NO [_]
Indicate the number of shares outstanding of each of the issuer's class of
common stock, as of the latest practicable date: Common Stock $0.50 par value -
7,369,441 shares at August 2, 2004.
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheets at June 30, 2004 (unaudited)
and December 31, 2003................................................ 1
Consolidated Statements of Income (unaudited)
Three and Six months ended June 30, 2004 and 2003.................... 2
Consolidated Statements of Changes in Shareholders' Equity (unaudited)
Six months ended June 30, 2004 and 2003.............................. 3
Consolidated Statements of Cash Flows (unaudited)
Six months ended June 30, 2004 and 2003.............................. 4
Notes to Consolidated Financial Statements (unaudited).................. 5
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations............................ 8
Item 3 - Quantitative and Qualitative Disclosures About Market Risk..... 15
Item 4 - Controls and Procedures........................................ 16
PART II - OTHER INFORMATION
Items 1 through 6....................................................... 17
Signatures.............................................................. 18
Exhibit Index........................................................... E-1
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
June 30, December 31,
ASSETS 2004 2003
---------- ---------
CASH AND DUE FROM BANKS - Non interest-bearing $ 27,547 $ 19,233
FEDERAL FUNDS SOLD 37,200 10,000
--------- ---------
Total cash and cash equivalents 64,747 29,233
DUE FROM BANKS - Interest-bearing 6,456 7,539
INVESTMENT SECURITIES - Available-for-sale 139,730 152,513
INVESTMENT SECURITIES - Held-to-maturity (aggregate fair values of
$3,615 and $2,712 as of June 30,2004 and December 31, 2003, respectively) 3,635 2,726
--------- ---------
143,365 155,239
LOANS and LEASES, net of unearned income 544,347 523,799
Less: Allowance for loan and lease losses (8,610) (8,142)
--------- ---------
Net loans and leases 535,737 515,657
PREMISES AND EQUIPMENT, net 7,447 7,545
ACCRUED INTEREST RECEIVABLE 2,670 2,635
OTHER REAL ESTATE OWNED 849 824
BANK-OWNED LIFE INSURANCE 14,277 13,026
GOODWILL 11,574 11,574
OTHER ASSETS 12,810 9,853
--------- ---------
TOTAL ASSETS $ 799,932 $ 753,125
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
Non interest-bearing $ 162,873 $ 154,462
Interest-bearing 178,186 158,719
Savings 100,995 102,152
Time deposits less than $100 147,556 110,243
Time Deposits $100 and over 33,395 35,137
--------- ---------
Total deposits 623,005 560,713
FHLB ADVANCES 85,000 85,000
FEDERAL FUNDS PURCHASED -- 15,700
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE 8,171 10,047
ACCRUED INTEREST PAYABLE 1,514 1,475
OTHER LIABILITIES 5,800 5,620
GUARANTEED PREFERRED BENEFICIAL INTEREST IN THE COMPANY'S
SUBORDINATED DEBT 24,000 24,000
--------- ---------
TOTAL LIABILITIES $ 747,490 $ 702,555
--------- ---------
SHAREHOLDERS' EQUITY:
Common stock, par value $0.50 per share: 20,000,000 shares
authorized, 7,369,441 and 7,180,090 shares issued and outstanding
at June 30, 2004 and December 31, 2003, respectively 3,685 3,502
Additional paid-in capital 45,983 41,788
Retained earnings 2,141 2,735
Accumulated other comprehensive income 633 2,545
--------- ---------
Total shareholders' equity 52,442 50,570
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 799,932 $ 753,125
--------- ---------
(See notes to Consolidated Financial Statements)
1
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data, unaudited)
Three Months Six Months
Ending June 30, Ending June 30
------------------- --------------------
2004 2003 2004 2003
------- ------- -------- --------
INTEREST INCOME:
Loans and leases $ 8,204 $ 7,672 $ 16,495 $ 15,483
Investment securities 1,338 1,611 2,824 3,437
Federal funds sold and deposits with banks 163 114 263 253
------- ------- -------- --------
Total interest income 9,705 9,397 19,582 19,173
------- ------- -------- --------
INTEREST EXPENSE:
Deposits 1,502 1,476 2,827 3,126
Short-term borrowings 1,113 1,122 2,263 2,235
Long-term borrowings 507 507 1,014 1,016
------- ------- -------- --------
Total interest expense 3,122 3,105 6,104 6,377
------- ------- -------- --------
NET INTEREST INCOME 6,583 6,292 13,478 12,796
------- ------- -------- --------
PROVISION FOR LOAN AND LEASE LOSSES 356 138 717 454
------- ------- -------- --------
Net interest income after provision for loan
and lease losses 6,227 6,154 12,761 12,342
------- ------- -------- --------
NON-INTEREST INCOME:
Service charges on deposit accounts 725 702 1,429 1,322
Other commission and fees 158 153 382 308
Loan fee income 108 201 186 389
Gain on sale of investment securities 530 214 819 504
Gain on sale of leases 1 39 2 42
Bank owned life insurance 126 151 251 304
All other income 213 219 419 457
------- ------- -------- --------
Total non-interest income 1,861 1,679 3,488 3,326
NON-INTEREST EXPENSES:
Salaries and employee benefits 3,152 3,044 6,305 6,005
Occupancy and equipment 873 856 1,817 1,771
Regulatory, professional and other fees 488 671 995 1,291
Computer services 139 135 281 246
Office expenses 295 347 595 670
Other operating expenses 537 601 1,051 1,163
------- ------- -------- --------
Total non-interest expenses 5,484 5,654 11,044 11,146
------- ------- -------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES 2,604 2,179 5,205 4,522
------- ------- -------- --------
PROVISION FOR INCOME TAXES 769 642 1,551 1,346
------- ------- -------- --------
NET INCOME $ 1,835 $ 1,537 $ 3,654 $ 3,176
======= ======= ======== ========
Weighted Average Shares outstanding - Basic 7,356 7,386 7,289 7,390
======= ======= ======== ========
Weighted Average Shares outstanding - Diluted 7,691 7,861 7,641 7,851
======= ======= ======== ========
Earnings per share - Basic $ 0.25 $ 0.21 $ 0.50 $ 0.43
======= ======= ======== ========
Earnings per share - Diluted $ 0.24 $ 0.20 $ 0.48 $ 0.40
======= ======= ======== ========
(See notes to Consolidated Financial Statements)
2
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands, unaudited)
Six months ended June 30, 2004
Accumulated
Common Additional Other Total Comprehensive
Stock Paid-in Retained Comprehensive Shareholders' Income
Capital Earnings Income Equity
------- ---------- -------- ------------- ------------- -------------
Balance, January 1, 2004 $ 3,502 $ 41,788 $ 2,735 $ 2,545 $ 50,570 --
Net income 3,654 3,654 $ 3,654
2.5% stock dividend 90 2,484 (2,574) --
Exercise of stock options 87 1,519 1,606
Issuance of common stock 6 192 198
Cash dividends of $0.23 (1,674) (1,674)
per share
Other comprehensive income,
net of reclassification,
adjustments and taxes (1,912) (1,912) (1,912)
--------
Total comprehensive income $ 1,742
--------
======= ========== ======== =========== ========
Balance, June 30, 2004 $ 3,685 $ 45,983 $ 2,141 $ 633 $ 52,442
------- ---------- -------- ----------- --------
Six months ended June 30, 2003
Accumulated
Common Additional Other Total Comprehensive
Stock Paid-in Retained Comprehensive Shareholders' Income
Capital Earnings Income Equity
------- ---------- -------- ------------- ------------- -------------
Balance, January 1, 2003 $ 3,511 $ 42,856 $ 1,721 $ 3,410 $ 51,498 --
Net income 3,176 3,176 $ 3,176
2.5% stock dividend 88 2,591 (2,679) --
Exercise of stock options 24 411 435
Cash dividends of $0.21
per share (1,502) (1,502)
Other comprehensive loss, net of
Reclassification, adjustments
and taxes 193 193 193
--------
Total comprehensive income $ 3,369
--------
Retirement of treasury stock (20) (660) -- -- (680)
------- -------- -------- ------- --------
Balance, June 30, 2003 $ 3,603 $ 45,198 $ 716 $ 3,603 $ 53,120
------- -------- -------- ------- --------
(See notes to Consolidated Financial Statements)
3
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
Six months ended
June 30,
2004 2003
---------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,654 $ 3,176
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 594 508
Amortization of premium on securities, net 466 1,552
Gains on sales of leases (2) --
Gains on sales of securities, net (819) (501)
Provision for loan and lease losses 717 454
(Increase) decrease in accrued interest receivable (35) 140
(Increase) decrease in Bank owned life insurance and other assets (4,208) (207)
Increase (decrease) in accrued interest and other liabilities 220 (1,897)
--------- --------
Net cash provided by operating activities 587 3, 225
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Available-for-sale investment securities
Purchases (25,712) (86,181)
Sales 2,272 4,830
Maturities and principal paydowns 33,949 71,575
Held-to-maturity investment securities
Purchases (912) --
Maturities and principal paydowns 3 2,225
Net decrease (increase) in interest-bearing deposits with banks 1,083 (3,081)
Net (increase) decrease in loans (20,080) (15,680)
Capital expenditures, net (496) (451)
(Increase) decrease in real estate owned (25) --
--------- --------
Net cash provided by (used in) investing activities (9,918) (26,763)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposit accounts 62,291 27,375
(Decrease) increase in federal funds purchased and securities sold under
agreement to repurchase (17,576) 1,919
Proceeds from FHLB advances -- 5,000
Dividends paid (1,674) (1,498)
Proceeds from exercise of stock options 1,606 435
Proceeds from issuance of stock 198 --
Redemption of stock -- (680)
Net cash provided by financing activities 44,845 32,551
--------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 35,514 $ 9,013
CASH AND CASH EQUIVALENTS, beginning of the period $ 29,233 $ 37,133
--------- --------
CASH AND CASH EQUIVALENTS, end of the period $ 64,747 $ 46,146
========= ========
(See notes to Consolidated Financial Statements)
4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In the opinion of management, these unaudited financial statements contain all
disclosures necessary to present fairly the Company's consolidated financial
position at June 30, 2004, the consolidated results of operations for the
three and six months ended June 30, 2004 and 2003 and cash flows for the six
months ended June 30, 2004 and 2003. The financial statements reflect all
adjustments (consisting solely of normal recurring adjustments) that in the
opinion of management are necessary to present fairly the financial position
and results of operations for the interim periods. Certain information and
footnote disclosure normally included in financial statements under generally
accepted accounting principles have been condensed or omitted pursuant to the
Securities and Exchange Commission rules and regulations. These financial
statements should be read in conjunction with the annual financial statements
and notes thereto included in Form 10-K for the fiscal year ended December
31, 2003. Unless otherwise indicated, all dollar figures in the tables below,
except for per share data, are set forth in thousands.
DIVIDEND
On June 15, 2004, the Company's Board of Directors declared a 2.5% stock
dividend and a quarterly cash dividend of 12.0 cents ($0.12) per share on the
Company's common stock. The record date of the dividends was July 15, 2004 and
the issue date was July 30, 2004. Accordingly, on July 30, 2004, the Company
issued 179,379 shares of common stock, increasing the number of shares
outstanding to 7,369,441. The financial information for the year 2003 in this
Form 10-Q has been restated retroactively to reflect the 2.5% stock dividend.
EARNINGS PER SHARE COMPUTATION
The Company's reported diluted earnings per share of $0.48 and $0.40 for the
six-month periods and $0.24 and $0.20 for the three-month periods ended June
30, 2004 and 2003, respectively, both take into consideration the dilutive
effects of the Company's outstanding common stock equivalents, namely stock
options.
For the Six Months Ended June 30, 2004
------------------------------------------
Weighted
Income Average Shares Per Share
(Numerator) (Denominator) Amount
----------- --------------- --------
Basic EPS
Net income available to common stockholders $ 3,654 7,289 $ 0.50
Effect Of Dilutive Securities
Stock options -- 352 (0.02)
------- ----- -------
Diluted EPS
Net income available to common stockholders plus assumed conversions $ 3,654 7,641 $ 0.48
======= ===== =======
For the Six Months Ended June 30, 2003
------------------------------------------
Weighted
Income Average Shares Per Share
(Numerator) (Denominator) Amount
----------- --------------- --------
Basic EPS
Net income available to common stockholders $ 3,176 7,390 $ 0.43
Effect of Dilutive Securities
Stock options -- 461 (0.03)
------- ----- -------
Diluted EPS
Net income available to common stockholders plus assumed conversions $ 3,176 7,851 $ 0.40
======= ===== =======
5
STOCK OPTIONS
At June 30, 2004, the Company has four stock-based employee and director
compensation plans. The Company accounts for these plans under the recognition
and measurement principles of APB No. 25, Accounting for Stock Issued to
Employees, and related interpretations. Accordingly, no compensation has been
recognized for the plans in 2004 and 2003. In addition, as all options granted
under these plans had an exercise price equal to the market value of the
underlying common stock on the date of grant, no stock-based employee and
director compensation cost is included in determining net income. The
following table illustrates the effect on net income and earnings per share if
the Company had applied the fair value recognition provisions of SFAS No.
123, Accounting for Stock-Based Compensation, to stock-based employee and
director compensation.
Six Months Ended June 30,
------------------------
2004 2003
----------- ---------
Net income As reported $ 3,654 $ 3,176
Less: stock-based compensation costs determined
under fair value-based method for all awards (123) (127)
------- -------
Pro forma $ 3,531 $ 3,049
======= =======
Earnings per share of common stock - basic As reported $ 0.50 $ 0.43
Pro forma $ 0.48 $ 0.41
Earnings per share of common stock-diluted As reported $ 0.48 $ 0.40
Pro forma $ 0.46 $ 0.39
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes options-pricing model with the following weighted-average
assumptions used for grants in 2003 and 2004: dividend yields of 3.4%;
expected volatility of 34%; risk-free interest rates of 5.82%; and expected
lives of five and ten years. The Company granted 20,000 stock options during
the six- month period ended June 30, 2004.
NEW ACCOUNTING PRONOUNCEMENTS
Off Balance Sheet Guarantees
The Company adopted FASB Interpretation 45 (FIN 45), Guarantor's Accounting
and Disclosure Requirements for Guarantees, including Indirect Guarantees of
Indebtedness of Others, on January 1, 2003. FIN 45 requires a guarantor
entity, at the inception of a guarantee covered by the measurement provisions
of the interpretation, to record a liability for the fair value of the
obligation undertaken in issuing the guarantee. The Company has issued
financial and performance letters of credit. Financial letters of credit
require the Company to make payment if the customer's financial condition
deteriorates, as defined in the agreements. Performance letters of credit
require the Company to make payments if the customer fails to perform certain
non-financial contractual obligations. The Company previously did not record a
liability when guaranteeing obligations unless it became probable that the
Company would have to perform under the guarantee. FIN 45 applies
prospectively to guarantees the Company issues or modifies subsequent to
December 31, 2003.
The Company defines the initial fair value of these letters of credit as the
fee received from the customer. The maximum potential undiscounted amount of
potential future payments of these letters of credit as of June 30, 2004 is
$2.9 million. Generally these letters of credit are good for a term of one
year at which time they are automatically renewed for the same term. Amounts
due under these letters of credit would be reduced by any proceeds that the
Company would be able to obtain in liquidating the collateral for the loans,
which varies depending on the customer.
Variable Interest Entities
In January 2003, the FASB issued FASB Interpretation 46 (FIN 46),
Consolidation of Variable Interest Entities. FIN 46 clarifies the application
of Accounting Research Bulletin 51, Consolidated Financial Statements, for
certain entities that do not have sufficient equity at risk for the entity to
finance its activities without additional subordinated financial support from
other parties or in which equity investors do not have the characteristics of
a controlling financial interest ("variable interest entities"). Variable
interest entities within the scope of FIN 46 will be required to be
consolidated by their primary beneficiary. The primary beneficiary of a
variable interest entity is determined to be the party that absorbs a majority
of the entity's expected losses, receives a majority of its expected returns,
or both. FIN 46 applies immediately to variable interest entities created
after January 31, 2003, and to variable interest entities in which an
enterprise obtains an interest after that date. It applies in the first fiscal
year or interim period beginning after June 15, 2003, to variable interest
entities in which an enterprise holds a variable interest that it acquired
before February 1, 2003. As of June 30, 2004, the Company has not acquired any
new variable interest entities.
6
The Company has also evaluated the impact of FIN 46 on variable interest
entities consolidated by the Company prior to the issuance of FIN 46.
Management has determined that GCB Capital Trust II qualifies as a variable
interest entity under FIN 46. In 2002, GCB Capital Trust II issued mandatorily
redeemable preferred stock to investors and loaned the proceeds to the
Company. GCB Capital Trust II holds, as its sole asset, subordinated
debentures issued by the Company in 2002. The timing and amount of payments on
the subordinated debentures are the same as the timing and amount of payments
by GCB Capital Trust II on the mandatorily redeemable preferred stock. GCB
Capital Trust II is currently included in the Company's consolidated balance
sheet under the caption Guaranteed Preferred Beneficial Interest in the
Company's Subordinated Debt and statements of income under the caption
Interest Expense on Long-term Borrowings. Management believes that GCB Capital
Trust II should continue to be included in the Company's consolidated
financial statements after the effective date of FIN 46. However, as
additional interpretations related to entities similar to GCB Capital Trust II
become available, management will reevaluate its conclusion that GCB Capital
Trust II should be included in the consolidated financial statements and its
potential impact to its Tier I capital calculation under such interpretations.
Derivative Instruments
The Company adopted Statement of Financial Accounting Standard 149 (SFAS No.
149), Amendment of Statement 133 on Derivative Instruments and Hedging
Activities, on July 1, 2003. SFAS No. 149 clarifies and amends SFAS No. 133
for implementation issues raised by constituents or includes the conclusions
reached by the FASB on certain FASB Staff Implementation Issues. Statement 149
also amends SFAS No. 133 to require a lender to account for loan commitments
related to mortgage loans that will be held for sale as derivatives. SFAS No.
149 is effective for contracts entered into or modified after June 30, 2003.
The Company periodically enters into commitments with its customers which it
intends to sell in the future. The adoption of SFAS No. 149 did not have a
material impact on the Company's financial position or results of operations.
Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity
The FASB issued SFAS No. 150, Accounting for Certain Financial Instruments
with Characteristics of both Liabilities and Equity, on May 15, 2003. SFAS No.
150 changes the classification in the statement of financial position of
certain common financial instruments from either equity or mezzanine
presentation to liabilities and requires an issuer of those financial
statements to recognize changes in fair value or redemption amount, as
applicable, in earnings. SFAS No. 150 is effective for public companies
for financial instruments entered into or modified after May 31, 2003 and is
effective at the beginning of the first interim period beginning after
September15, 2003. Management has not entered into any financial instruments
that would qualify under SFAS No.150 after May 31, 2003. The Company currently
classifies its Guaranteed Preferred Beneficial Interest in the Company's
Subordinated Debt as a liability. As a result, management does not anticipate
the adoption of SFAS No. 150 to have a material impact on the Company's
financial position or results of operations.
Accounting for Loans or Certain Debt Securities Acquired in a Transfer
In October 2003, the AICPA issued SOP 03-3 Accounting for Loans or Certain
Debt Securities Acquired in a Transfer. SOP 03-3 applies to a loan with the
evidence of deterioration of credit quality since origination acquired by
completion of a transfer for which it is probable at acquisition, that the
Company will be unable to collect all contractually required payments
receivable. SOP 03-3 requires that the Company recognize the excess of all
cash flows expected at acquisition over the investor's initial investment in
the loan as interest income on a level-yield basis over the life of the loan
as the accretable yield. The loan's contractual required payments receivable
in excess of the amount of its cash flows accepted at acquisition
(nonaccretable difference) should not be recognized as an adjustment to yield,
a loss accrual or a valuation allowance for credit risk. SOP 03-3 is
effective for loans acquired in fiscal years beginning after December 31,
2004. Early adoption is permitted. Management is currently evaluating the
provisions of SOP 03-3.
7
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION (continued)
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis of the Company's consolidated financial
condition as of June 30, 2004 and the results of operations for the three- and
six-month periods ended June 30, 2004 and 2003 should be read in conjunction
with the consolidated financial statements, including notes thereto, included
in the Company's latest annual report on Form 10-K for the fiscal year ended
December 31, 2003, and the other information therein. The consolidated
balance sheet as of June 30, 2004 and the statements of operations and cash
flows for the six month periods ended June 30, 2004 and 2003 are unaudited but
include, in the opinion of the management, all adjustments considered
necessary for a fair presentation of such data. As used herein, the term
"Company" refers to Greater Community Bancorp and subsidiaries, the term
"Subsidiary Banks" refers to Greater Community Bank (GCB), Bergen Commercial
Bank (BCB) and Rock Community Bank (RCB), and the term "Trust" refers to GCB
Capital Trust and GCB Capital Trust II. Unless otherwise indicated, data is
presented for the Company and its Subsidiaries in the aggregate. Unless
otherwise indicated, all dollar figures in the tables below, except for per
share data, are set forth in thousands.
PURPOSE OF DISCUSSION AND ANALYSIS
The purpose of this analysis is to provide you with information relevant to
understanding and assessing the Company's financial condition and results of
operations for the six months ended June 30, 2004. In order to appreciate this
analysis more fully you are encouraged to review the consolidated financial
statements and statistical data presented in this report and in the MD&A
section of the Company's Form 10-K for the year ended December 31, 2003.
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
The information disclosed in this document, both in this MD&A section and
elsewhere, includes forward-looking statements that are made in reliance upon
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Such statements are not historical facts. They include expressions about
management's confidence and strategies and its expectations about new and
existing programs and products, relationships, opportunities, technology and
market conditions. These statements may be identified by an asterisk (*) or
such forward-looking terminology as "expect", "look", "believe", "anticipate",
"may", "will" or similar statements or variations of such terms. Such forward-
looking statements involve certain risks and uncertainties. These include, but
are not limited to, the ability of the Company's Subsidiary Banks to generate
deposits and loans and attract qualified employees, the direction of interest
rates, continued levels of loan quality and origination volume, continued
relationships with major customers including sources for loans, as well as the
effects of economic conditions, legal and regulatory barriers and structure,
and competition. Actual results may differ materially from such
forward-looking statements. The Company is not obligated to update and does
not undertake to update any such forward-looking statements made herein.
SIGNIFICANT ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES
The accounting and reporting policies of the Company conform with accounting
principles generally accepted in the United States of America and general
practices within the financial services industry. The preparation of financial
statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and the
assumptions that affect the amounts reported in the financial statements and
the accompanying notes. Actual results could differ from those estimates. All
intercompany transactions have been eliminated.
The Company considers that the determination of the allowance for loan and
lease losses involves a higher degree of judgment and complexity than its
other significant accounting policies. The allowance for loan and lease losses
is calculated with the objective of maintaining a reserve level believed by
management to be sufficient to absorb estimated credit losses. Management's
determination of the adequacy of the allowance is based on periodic
evaluations of the loan and lease portfolios and other relevant factors.
However, this evaluation is inherently subjective as it requires material
estimates, including, among others, expected default probabilities, loss in
the event of default, expected commitment usage, the amounts and timing of
expected future cash flows on impaired loans, mortgages, and general amounts
for historical loss experience. The process also considers economic
conditions, uncertainties in estimating losses and inherent risks in the loan
and lease portfolios. All of these factors may be susceptible to significant
change. To the extent actual outcomes differ from management estimates,
additional provisions for loan and lease losses may be required that would
adversely impact earnings in future periods.
8
The Company recognizes deferred tax assets and liabilities for the future tax
effects of temporary differences, net operating loss carry forwards and tax
credits. Deferred tax assets are subject to management's judgment based upon
available evidence that future realization is more likely than not. If
management determines that the Company may be unable to realize all or part of
net deferred tax assets in the future, a direct charge to income tax expense
may be required to reduce the recorded value of the net deferred tax asset to
the expected realizable amount.
The Company adopted SFAS No. 142, Goodwill and Intangible Assets, on January
1, 2002. This SFAS modifies the accounting for all purchased goodwill and
intangible assets. SFAS No. 142 includes requirements to test goodwill and
indefinite lived intangible assets for impairment rather than amortize them.
On January 1, 2002, the Company stopped amortizing goodwill, which had
previously approximated $800,000 annually. The Company did not identify any
impairment of goodwill during its transitional testing of its outstanding
goodwill.
Business Overview
The Company is registered with the Federal Reserve Board as a financial
holding company. Its primary business is banking, which it conducts in
northern New Jersey through its three wholly-owned New Jersey Subsidiary
Banks.
The Company is a diversified financial services company operating commercial
and retail banking and securities brokerage services through a third party
provider primarily in the Company's geographic markets in northern counties of
New Jersey. Highland Capital Corp., a wholly-owned non-bank subsidiary of one
of the Subsidiary Banks, engaged in the business of leasing equipment to small
and mid-size businesses on a national basis.
Financial services providers are challenged by intense competition, changing
customer demands, increased pricing pressures and the ongoing impact of
deregulation. This is more so for traditional loan and deposit services due to
continuous competitive pressures as both banks and non-banks compete for
customers with a broad array of banking, investment and capital market
products. Despite the challenges and competition, our key strengths of service
and local delivery continue to attract high-quality business to our Company.
The Company has traditionally focused on the commercial side of banking to
drive its revenue growth. However, we are also adding several new initiatives
to improve our retail penetration. The Company is in the process of developing
an array of new products and services to attract new customers, and is
expanding its retail branch network in areas that are under-served by
community banks. The Company's funding strategy, based on remixing of deposits
toward lower cost core deposits, continues to be successful.
The Company's expansion of its branch network continues into Parsippany, NJ,
where it expects to open a new branch in the third quarter of 2004 with more
branches on the horizon in the coming year. The Company, like most other
companies whose securities are publicly-traded, is experiencing significant
expenses as well as devoting substantial personnel resources to comply with
the Sarbanes-Oxley Act of 2002 and related SEC regulations and guidelines of
the NASDAQ Stock Market, Inc.
Earnings Summary
Net income for the first six months of 2004 was $3.7 million, an increase of
$478,000 or 15.1% compared to $3.1 million reported for the first six months
of 2003. Diluted earnings per share for the period were $0.48, a 20.0%
increase over $0.40 reported for the same period in the prior year.
For the second quarter of 2004, net income was $1.8 million, an increase of
$298,000 or 19.4% over the $1.5 million reported for the second quarter of
2003. Diluted earnings per share were $0.24, an increase of 20.0% over the
$0.20 reported for the prior-year quarter
The increase in net income includes increases in gains from the sale of
securities of $315,000 for the first six months of 2004 and $316,000 for the
second quarter, compared with the amounts of such gains in the comparable
periods in 2003. Total revenue, consisting of net interest income and non-
interest income, was $17.0 million for the six-month period, an increase of
5.2% over the same period in the prior year, reflecting strong loan growth.
For the most recent three-month period, total revenue increased 5.9% to $8.4
million over the same period in 2003.
The annualized returns on average equity (ROE) and average assets (ROA) for
the first six months of 2004 were 13.9% and 0.94%, respectively, compared
with 12.3% and 0.88% for the same period in the prior year. For the second
quarter of 2004, the ROE and ROA were 13.8% and 0.93%, respectively, compared
with 11.8% and 0.84% for the prior year second quarter.
9
Net Interest Income
Net interest income for the six months ended June 30, 2004 was $13.5 million,
representing an increase of $682,000 or 5.3% from $12.8 million earned for the
six months ended June 30, 2003. The increase in net interest income results
from an increase in total interest income due to an increase in average
interest-earning assets coupled with a decrease in total interest expense on
paying liabilities. Interest income on loans and leases increased by $1.0
million while interest income on investment securities decreased by $613,000.
Interest income on federal funds sold and deposits with banks increased
moderately. Interest paid on deposits decreased $299,000 in spite of an
increase in average interest-bearing deposits while interest expense on short-
term borrowings increased moderately.
For the second quarter of 2004, net interest income increased 4.6% to $6.6
million as a result of an increase in average loans and leases and federal
funds sold compared to the same period in the prior year. Total interest
income increased $308,000 to $9.7 million. Interest income on loans and leases
and federal funds sold and deposits with banks increased by $532,000 and
$49,000, respectively, offset by a decrease of $273,000 in interest income on
investment securities. Interest expense on deposits increased $26,000
primarily related to the increase in average time deposits outstanding for the
quarter while the interest paid on short-term borrowings declined moderately.
The Company's net interest margin for the six month period ended June 30,
2004, declined 3 basis points compared to the same period in the prior year.
For the second quarter the net interest margin declined 11 basis points from
the year- ago quarter.
The following table reflects the components of net interest income for the six
months ended June 30, 2004 and 2003.
For the Six Months Ended June 30,
-------------------------------------------------------------------------
2004 2003
------------------------------------ -----------------------------------
Average Interest Average Average Interest Average
Balance Earned/Paid Yield/Rate Balance Earned/Paid Yield/Rate
--------- ----------- ---------- --------- ----------- ----------
ASSETS
Earning Assets:
Investment securities $ 149,582 $ 2,824 3.80% $ 200,198 $ 3,437 3.46%
Due from banks - interest-bearing 7,723 102 2.66% 10,973 138 2.54%
Federal funds sold 34,384 161 0.94% 18,302 115 1.27%
Loans1- Net unearned income 529,900 16,495 6.26% 445,019 15,483 7.02%
--------- -------- --------- --------
Total earning assets 721,589 19,582 5.46% 674,492 19,173 5.73%
Less: Allowance for loan and lease losses (8,441) -- (7,532) --
All other assets 68,816 -- 61,137 --
--------- -------- --------- --------
Total assets $ 781,964 $ 19,582 $ 728,097 $ 19,173
========= ======== ========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing Liabilities:
Savings and interest-bearing deposits $ 264,004 $ 929 0.71% $ 253,290 $ 1,118 0.89%
Time deposits 180,366 1,898 2.12% 158,631 2,008 2.55%
Federal funds and short-term borrowings 97,845 2,263 4.65% 93,248 2,235 4.83%
Long term borrowing 24,000 1,014 8.50% 24,000 1,016 8.54%
--------- -------- --------- --------
Total interest-bearing liabilities 566,215 6,104 2.17% 529,169 6,377 2.43%
Demand deposits 156,236 -- 139,935 --
Other liabilities 6,514 -- 6,957 --
Shareholders' equity 52,999 -- 52,036 --
--------- -------- --------- --------
Total liabilities and shareholders' equity $ 781,964 6,104 $ 728,097 $ 6,377
========= ======== ========= ========
NET INTEREST INCOME $ 13,478 $ 12,796
======== ========
NET INTEREST MARGIN [2] 3.76% 3.79%
==== ====
- ------------------------
1 Includes non-accrual loans, the effect of which is to reduce the yield
earned on loans, and deferred loan fees.
2 Net interest income divided by total earning assets
10
Non-Interest Income
Non-interest income continues to represent a considerable source of income for
the Company, constituting 26% of net interest income for the six months ended
June 30, 2004. Gains from the sale of securities during the first six months
of 2004 increased by $315,000 or 63% to $819,000 compared to such gains during
the first half of 2003. Gains from the sale of securities during the second
quarter of 2004 increased 148% to $530,000 compared to the second three
quarter of 2003. Excluding the gain on sale of investment securities,
non-interest income decreased by $153,000 and $134,000 for the six- and
three-month periods ended June 30, 2004, respectively, compared to the same
periods in the prior year. Such decrease was a direct result of a decline in
fee income on mortgages sold due to a gradual slow down of mortgage
refinancing activity. Service charges on deposits and other commissions and
fees showed growth compared to the same periods in 2003, while income on
bank owned life insurance declined when compared to the same periods in 2003
primarily as a result of a decline in interest rate.
Non-Interest Expenses
Total non-interest expense decreased from $11.1 million in the first six
months of 2003 to $11.0 million in 2004, a decrease of $102,000. The largest
component of non-interest expenses, salaries and employee benefits, increased
$300,000 or 5.0% reflecting annual increases in compensation and health care
costs. Regulatory, professional and other fees declined $296,000 to $1.0
million primarily as a result of decreased legal costs. Office expenses and
other operational expenses decreased $75,000 and $112,000, respectively, as
the Company continues to monitor and control its spending, while occupancy and
equipment expense and computers expenses increased moderately.
For the second quarter of 2004, total non-interest expense decreased $170,000
from the level reported in the prior year to $5.5 million. Salaries and
employee benefits increased $108,000 or 3.5% to $3.1 million over the second
quarter of 2003 as a result of annual increases in compensation and rising
health care costs. Regulatory and professional fees decreased $183,000 or
27.3% to $488,000 resulting from a decline in legal costs. The decline in
office expenses and all other operating expenses reflects management's efforts
towards controlling expenses.
Provision for Loan and Lease Losses
The provision for loan and lease losses for the three and six months ended
June 30, 2004 increased by $218,000 and $263,000, respectively, over the
same periods in 2003. The increases are primarily due to the increases in
average loan and lease portfolio compared to the same periods in 2003 and
management's continued evaluation and monitoring of the loan and lease
portfolios and the related allowance for loan and lease losses.
Provision for Income Taxes
The provision for income taxes for the three and six months ended June 30,
2004 was $769,000 and $1.6 million, respectively, or an effective rate of
30.0%. The increases of $127,000 and $205,000, respectively, over the
corresponding periods in 2003 are directly related to increases in earnings.
FINANCIAL CONDITION
ASSETS
Between December 31, 2003 and June 30, 2004 total assets increased by $46.0
million to $799.9 million. Although the majority of the increase is
attributable to the growth of the Company's assets, particularly in loans and
cash and cash equivalents, much of the increase was fueled by growth in core
deposits.
Loans and Leases, Asset Quality and Allowance for Loan and Lease Losses
Gross Loans And Leases
Gross loans and leases increased from December 31, 2003 to June 30, 2004 by
$20.6 million to $545.1 million. The increase resulted primarily from strong
growth particularly in nonresidential real estate, commercial loans and lease
financing receivables.
The following table reflects the composition of the gross loan portfolio as of
June 30, 2004 and December 31, 2003:
11
June 30, 2004 December 31, 2003
------------- -----------------
Loans secured by one-to-four-family residential properties $ 145,633 $ 148,121
Loans secured by multi-family residential properties 9,940 11,619
Loans secured by nonresidential properties 275,256 260,318
Loans to individuals 6,127 5,686
Commercial loans 41,321 37,532
Construction loans 34,870 37,640
Lease financing receivables 31,308 23,181
Other loans 681 449
--------- ---------
Total gross loans and leases $ 545,136 $ 524,546
========= =========
Assets Quality
Nonperforming assets include nonaccrual loans and leases, loans past due 90
days and accruing and other real estate owned (OREO). At June 30, 2004,
nonperforming loans and leases totaled $2.0 million or 0.37% of total gross
loans, a decrease of 6 basis points from the level reported at December 31,
2003. Of the total nonperforming loans, nonaccruing loans accounted for $1.8
million or 0.32% of total loans, as compared to $2.0 million or 0.38% of total
loans at December 31, 2003. Loans past due 90 days or more and still accruing
at June 30, 2004 decreased $202,000 to $111,000 compared to $313,000 at
December 31, 2003.
Management believes the asset quality remains strong as indicated by the
consistent level of nonperforming assets and strong reserves. The Company
maintains adequate reserves and believes that additional reserves are not
required. Management will continue to monitor the loan and lease portfolios
closely.
The following table sets forth the composition of the Company's nonperforming
assets which includes loans which are on a nonaccrual basis, loans which have
been renegotiated to provide a reduction or deferral of interest or principal
for reasons related to the debtor's financial difficulties and loans
contractually past due ninety days or more as to interest or principal
payments. All of such assets were domestic assets since the Company had no
foreign loans.
June 30, 2004 December 31, 2003
------------- -----------------
Nonaccruing loans and leases $ 1,768 $ 2,010
Renegotiated loans 229 252
-------- --------
Total nonperforming loans and leases 1,997 2,262
Loans past due 90 days and accruing 111 313
Other real estate owned 849 824
-------- --------
Total nonperforming assets $ 2,957 $ 3,399
======== ========
Nonperforming loans and leases to total gross loans and leases 0.37% 0.43%
Nonperforming assets to total gross loans and leases 0.54% 0.65%
Nonperforming assets to total assets 0.37% 0.45%
Allowance for loan and lease losses to nonperforming loans and
leases 431.15% 359.95%
Allowance for loan and lease losses to nonperforming assets 291.17% 239.54%
For the six months ended June 30, 2004 and 2003, gross interest income of
$97,000 and $96,000, respectively, would have been recorded on loans accounted
for on a nonaccrual basis if the loans had been current throughout the
periods.
Impaired Loans
In accordance with SFAS No. 114, the Company utilizes the following
information when measuring its allowance for loan losses. A loan is considered
impaired when it is probable that the Company will be unable to collect all
amounts due according to the contractual terms of the loan agreement. These
loans consist primarily of nonaccruing loans where situations exist which have
reduced the probability of collection in accordance with contractual terms.
12
As of the dates indicated, the balance of impaired loans was $1.8 million and
$2.1 million at June 30, 2004 and December 31, 2003, respectively. The
allowance for loan and lease losses associated with impaired loans was
$280,000 and $455,000 for the two periods, respectively.
June 30, December 31,
2004 2003
-------- ------------
Impaired loans
Recorded investment $ 1,811 $ 2,100
Valuation allowance 280 455
This valuation allowance is included in the allowance for loan losses on the
Company's consolidated balance sheets.
The average recorded investment in impaired loans for the six month period
ended June 30, 2004 was $1.7 million compared to $2.1 million at December 31,
2003.
Interest payments received on impaired loans are recorded as interest income
unless collection of the remaining recorded investment is doubtful, in which
event payments received are recorded as reductions of principal. The Company
recognized interest income on impaired loans of $17,000 for the six-month
period ended June 30, 2004.
Analysis of the Allowance for Loan and Lease Losses
Between December 31, 2003 and June 30, 2004, the allowance for loan and lease
losses increased $468,000 to $8.6 million. The allowance constituted 1.58% and
1.55% of gross loans on June 30, 2004 and December 31, 2003, respectively.
The provision for loan and lease losses added $717,000 for the six-month
period, while net charge-offs were $249,000. Management believes the allowance
for loan losses at June 30, 2004 of $8.6 million or 291% of nonperforming
assets is adequate.
The Allowance for loan and lease losses is maintained at a level estimated to
absorb probable losses in the loan and lease portfolio. The methodology for
evaluating the adequacy of the allowance consists for several significant
criteria, which include the allocated allowance, specific allowance for
identified criticized loans and allowance for impaired loans.
The following table represents transactions affecting the allowance for loan
and lease losses during the six-month periods ended June 30, 2004 and 2003.
2004 2003
------- -------
Balance at beginning of year $ 8,142 $ 7,298
Charge-offs:
Commercial 40 7
Lease financing receivables 488 372
Installment loans to individuals 0 3
Credit cards and related plans 2 1
------- -------
530 383
Recoveries:
Commercial 114 34
Lease financing receivables 156 7
Real estate - mortgage 0 39
Installment loans to individuals 2 1
Credit cards and related plans 9 6
------- -------
281 87
------- -------
Net charge-offs 249 296
Provision charged to operations 717 454
------- -------
Balance at end of period, June 30 $ 8,610 $ 7,456
======= =======
Ratio of net charge-offs during the six-month period
to average loans and leases outstanding during the
period.
0.05% 0.07%
Investment Securities
Securities decreased by a net amount of $11.9 million from December 31, 2003
to June 30, 2004. The net decrease resulted primarily from $26.6 million of
purchases of additional securities being more than offset by $38.0 million in
prepayments, maturities and sales during the six-month period. The decrease
reflects a $12.8 million decrease in securities available for sale partially
offset by a $1.0 million increase in securities held to maturity.
13
Cash
Cash and cash equivalents increased by $35.5 million to $64.7 million between
December 31, 2003 and June 30, 2004. The majority of such increase is a result
of an increase in total deposits.
LIABILITIES
Between December 31, 2003 and June 30, 2004, total liabilities increased by
$44.9 million to $747.5 million. The increase is primarily attributable to a
$62.3 million increase in total deposits partially offset by the payoff of
federal funds purchased.
Deposits
Total deposits increased by $62.3 million to $623.0 million. The majority of
the increase is primarily attributable to a deposit promotion initiative
whereby the Company attracted institutional investors to invest in time
deposits with varying maturities ranging from 3 months to 5 years.
Liquidity
The Company actively manages its liquidity under the direction of the
Asset/Liability Management Committees of the Bank Subsidiaries. During the
last two years, the Company has been liquid and its liquidity has been
sufficient to meet loan demand and the possible outflow of deposits.
Sources of liquidity at June 30, 2004 totaled $210.9 million or 26% of total
assets, consisting of investment securities available for sale, cash and cash
equivalents and interest-bearing due from banks. On the other hand, other
sources of funding needs include time deposits over $100 thousand which can
be affected by the interest rates offered and FHLB advances. Additionally,
liquidity can be derived from scheduled loan and investment payments of
principal and interest as well as prepayments received.
As of June 30, 2004, the aggregate amount of contractual obligations and other
commitments requiring potential cash outflows has not changed materially
compared to the amounts reported at December 31, 2003.
Capital Adequacy, Regulatory Capital Ratios and Dividends
The Company is subject to regulation by the Board of Governors of the Federal
Reserve System (Federal Reserve Board). The Subsidiary Banks are subject to
regulation by both the Federal Deposit Insurance Corporation (FDIC) and the
New Jersey Department of Banking and Insurance (Department). Such regulators
have promulgated risk-based capital guidelines that require the Company and
the Subsidiary Banks to meet those guidelines that involve quantitative
measures of assets and certain off-balance sheet items as calculated under
regulatory accounting practices (risk-adjusted assets).
Total shareholders' equity of $52.4 million at June 30, 2004 was 6.5% of
total assets, an increase of $1.9 million compared with $50.6 million or
6.7% of total assets at December 31, 2003. Such increase is primarily
attributable to an increase in retained earnings and issuance of stock
pursuant to the exercise of stock options during the six-month period. The
Company and the Subsidiary Banks remain well-capitalized for regulatory
purposes and management believes present capital is adequate to support
contemplated future internal growth.
14
The following table sets forth selected regulatory capital ratios for the
Company and the Subsidiary Banks and the required minimum regulatory ratios at
June 30, 2004:
To Be Well-Capitalized
Under Prompt
For Capital Corrective Action
Actual Adequacy Purposes Provisions
--------------- -------------------- --------------------
Amount Ratio Amount Ratio Amount Ratio
-------- ----- -------- ----- -------- -------
Total capital (to risk-weighted assets) $ 73,206 11.93% $ 49,104 8.00% N/A N/A
Greater Community Bancorp 38,318 10.26 29,879 8.00 $ 37,349 10.00%
Greater Community Bank 21,633 10.41 16,620 8.00 20,775 10.00
Bergen Commercial Bank 5,653 19.31 2,341 8.00 2,927 10.00
Rock Community Bank
Tier 1 capital (to risk-weighted assets) 57,505 9.37 24,552 4.00 N/A N/A
Greater Community Bancorp 33,648 9.01 14,940 4.00 22,409 6.00
Greater Community Bank 19,079 9.18 8,310 4.00 12,465 6.00
Bergen Commercial Bank 5,285 18.06 1,171 4.00 1,756 6.00
Rock Community Bank
Tier 1 capital (to average assets) 57,505 7.32 31,433 4.00 N/A N/A
Greater Community Bancorp 33,648 6.87 19,595 4.00 24,493 5.00
Greater Community Bank 19,079 7.54 10,124 4.00 12,656 5.00
Bergen Commercial Bank 5,285 14.95 1,414 4.00 1,767 5.00
Rock Community Bank
For the last two quarters of 2003 and the first quarter of 2004 the Company
declared cash dividends at the rate of $0.11 per share, or an annual rate of
$0.44 per share. During the second quarter of 2004 the Company increased the
declared quarterly dividend to $0.12 per share, or an annual dividend rate of
$0.48 per share. The combined effect of the Company's declaration of a 2.5%
stock dividend during the second quarter of 2004 and the $0.01 per share
increase in the rate of the quarterly cash dividend was to increase the annual
return from cash dividends by 11.8%. The Company's Board of Directors believes
that cash dividends are an important component of shareholder value and that
at its current level of performance and capital, the Company will continue
its current dividend policy of quarterly cash dividends to its shareholders.
Some Specific Factors Affecting Future Results of Operations
Future movement of interest rates cannot be predicted with certainty. In all
of the year 2003 and during the first part of 2004, the Company, along with
other financial institutions, has experienced a stable rate environment.
However, in the second quarter of 2004, the regulators did effect an interest
rate increase and they will continue to monitor the future movements of
interest rates. The Company's decision to retain the leases in the portfolio
at Highland Capital Corp., its small-ticket equipment leasing and financing
subsidiary, is having a negative impact on current earnings but management
believes that the impact of this decision on earnings will be favorable over
the longer term. Because overall future performance is dependent on many other
factors, past performance is not necessarily an indication of future results
and there can be no guarantee regarding future overall results of operations.
The Company's interest rate risk profile is positioned in such a way that any
future increases in interest rates will positively impact the results of
operations.
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
The Company manages interest rate risk and market risk by identifying interest
rate risk exposures using simulation analysis, economic value at risk and gap
analysis models. There has been no material change in the Company's assessment
of its sensitivity to market risk since its presentation in its 2003 Form
10-K filed with Securities and Exchange Commission.
15
Item 4 - Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
The management of the Company, including the Chief Executive Officer and the
Chief Financial Officer, has conducted an evaluation of the effectiveness of
the Company's disclosure controls and procedures pursuant to Rule 13a-14 under
the Securities Exchange Act of 1934 as of a date (the "Evaluation Date")
within 90 days prior to the filing date of this report. Based on that
evaluation, the Chief Executive Officer and the Chief Financial Officer
concluded that, as of the Evaluation Date, the Company's disclosure controls
and procedures were effective in ensuring that all material information
relating to the Company, including its consolidated subsidiaries, required to
be filed in this quarterly report has been made known to them in a timely
manner.
(b) Changes in internal controls.
There have been no significant changes made in the Company's internal controls
or in other factors that could significantly affect internal controls
subsequent to the Evaluation Date.
16
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
The Company and its subsidiaries are parties in the ordinary course of
business to litigation involving collection matters, contract claims and
other miscellaneous causes of action arising from their business.
Management does not consider that any such proceedings depart from usual
routine litigation, and in its judgement neither the Company's
consolidated financial position nor its results of operations will be
affected materially by any present proceedings.
Item 2 - Changes in Securities, Use of Proceeds and Issuer Purchases of
Equity Securities
None.
Item 3 - Defaults Upon Senior Securities
None.
Item 4 - Submission of Matters to a Vote of Security Holders
See Item 4, Part II, of form 10-Q for the quarter ended March 31, 2004,
with respect to the Annual Meeting of Stockholders for 2004 held on April
20, 2004.
Item 5 - Other Information
None.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits.
---------
An exhibit index has been filed as part of this report on page
E-1 and is incorporated by reference.
(b) Reports on Form 8-K.
--------------------
On June 16, 2004, the Company Filed a Form 8-K with the
Securities and Exchange Commission reporting the announcement of
the Company declaring a 2.5% stock dividend and a quarterly cash
dividend of $0.12 per share, and the adoption of Code of Ethics.
On July 21, 2004, the Company Filed a Form 8-K with the
Securities and Exchange Commission reporting the Company's
announcement of its earnings for the second quarter ending June
30, 2004.
17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Greater Community Bancorp (registrant)
Date: August 9, 2004 BY: /s/ Naqi A. Naqvi
------------------------------------
Naqi A. Naqvi
Senior Vice President, Treasurer & CFO
(Duly Authorized Officer and Principal
Financial Officer)
18
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
WASHINGTON, D.C. 20549
EXHIBITS
--------
TO
FORM 10-Q
For the quarter ended June 30, 2004
-----------------------------------
Commission File No. 0-14294
Greater Community Bancorp
-------------------------
Exhibit Index
Certain of the following exhibits, as indicated parenthetically, were
previously filed as exhibits to registration statements filed by Greater
Community Bancorp ("registrant") under the Securities Act of 1933, as amended,
or to reports or registration statements filed by registrant under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
respectively, and are hereby incorporated by reference to such statements or
reports.
Exhibit
No. Description
3.1 Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.4 to Form 10-QSB
for the quarter ended June 30, 1998, filed on August 14, 1998)
3.2 Bylaws of the Company as amended and restated effective May 15, 2001 (incorporated by reference to Exhibit
3.2 to Form 8-K filed on June 18, 2001)
4.1 Junior Subordinated Indenture between the Company and Deutsche Bank Trust Company Americas as Trustee, dated
May 24, 2002 (incorporated by reference to Exhibit 4.1 of Exhibits to Form S-3 Registration Statement filed
by GCB Capital Trust II and Greater Community Bancorp under the Securities Act of 1933, Registration Nos.
333-89050, 333-89050-01, filed May 24, 2002)
4.4 Amended and Restated Trust among Greater Community Bancorp as Depositor, Deutsche Bank Trust Company Americas
as Property Trustee, and Deutsche Bank Trust (Delaware) as Delaware Trustee, dated May 24, 2002 incorporated
by reference to Exhibit 4.4 of Exhibits on Form S-3 Registration Statement filed by GCB Capital Trust II and
Greater Community Bancorp under the Securities Act of 1933, Registration Nos. 333-89050, 333-89050-01, filed
May 24, 2002)
4.6 Guarantee Agreement between Greater Community Bancorp (as Guarantor) and Deutsche Bank Trust Company Americas
(as Trustee) dated May 24, 2002 (incorporated by reference to Exhibit 4.6 of Exhibits to Form S-3 Registration
Statement filed by GCB Capital Trust II and Greater Community Bancorp under the Securities Act of 1933,
Registration Nos. 333-89050, 333-89050-01, filed May 24, 2002)
10.1 Employment Agreement of George E. Irwin dated July 31, 1998 (incorporated by reference to Exhibit 10.1 to
Form 10-KSB for the year ended December 31, 1998, filed on March 17, 1999)
10.2 Employment Agreement of C. Mark Campbell dated July 31, 1998 (incorporated by reference to Exhibit 10.2 to
Form 10-KSB for the year ended December 31, 1998, filed on March 17, 1999)
10.3 Employment Agreement of Erwin D. Knauer dated July 1, 1999 (incorporated by reference to Exhibit 10.3 to
Form 10-Q for quarter ended September 30, 1999)
10.4 Executive Supplemental Retirement Income Agreement for George E. Irwin dated as of January 1, 1999 among
Great Falls Bank, George E. Irwin and Greater Community Bancorp (as guarantor) (incorporated by reference
to Exhibit 10.4 to Form 10-K for the year ended December 31, 1999)
10.5 Executive Supplemental Retirement Income Agreement for C. Mark Campbell dated as of January 1, 1999
among Bergen Commercial Bank, C. Mark Campbell and Greater Community Bancorp (as guarantor) (incorporated
by reference to Exhibit 10.5 to Form 10-K for the year ended December 31, 1999)
10.6 Greater Community Bancorp 2001 Employee Stock Option Plan adopted February 20, 2001 (incorporated by
reference to Exhibit 10.6 to Form 10-K for the year ended December 31, 2000)
10.7 Greater Community Bancorp 2001 Stock Option Plan for Nonemployee Directors adopted February 20, 2001
(incorporated by reference to Exhibit 10.7 to Form 10-K for the year ended December 31, 2000)
10.8 Amended Employment Agreement of George E. Irwin dated August 1, 2003 (incorporated by reference to Exhibit
10.8 to Form 8-K filed on August 1, 2003)
10.9 Executive Supplemental Retirement Income Agreement for Anthony M. Bruno, Jr. dated as of February 1, 2004
among Greater Community Bank, Anthony M. Bruno, Jr. and Greater Community Bancorp (as guarantor)
(incorporated by reference to Exhibit 10.9 to Form 10-Q filed on May 10, 2004)
31.1 Certification of Chief Executive Officer dated August 9, 2004
31.2 Certification of Chief Financial Officer dated August 9, 2004
32.1 Certification of Officers pursuant to 18 U.S.C. Section 1350 dated August 9, 2004
E-1