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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
--------------------
Quarter ended September 30, 2002 Commission file number 0-14403
BRUNSWICK BANCORP
------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
--------------------
NEW JERSEY 22-2610694
- ------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
NEW BRUNSWICK, NEW JERSEY 08901
- --------------------------------------- ----------
(Address of Principal Executive Office) (Zip Code)
(732) 247-5800
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(Registrant's Telephone Number Including Area Code)
NOT APPLICABLE
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(Former Name, Former Address and Former Fiscal Year
If Changed Since Last Report)
COMMON STOCK, NO PAR VALUE 2,094,875 SHARES
- -------------------------- -----------------------------------
(Class of Stock) (Outstanding at September 30, 2002)
--------------------
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 periods that the registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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BRUNSWICK BANCORP AND SUBSIDIARIES
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
September 30, 2002 and December 31, 2001 1
Consolidated Statements of Income
Nine Months Ended September 30, 2002, 2001 and 2000 2
Consolidated Statements of Income
Quarters Ended September 30, 2002, 2001 and 2000 3
Consolidated Statements of Stockholders' Equity
Nine Months Ended September 30, 2002, 2001 and 2000 4
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 2002, 2001 and 2000 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operation 8-9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
Certification of Quarterly Report 12
Page 1
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
September 30 December 31
2002 2001
------------- -------------
ASSETS:
Cash and due from banks $ 7,618,395 $ 9,064,753
Federal funds sold 26,700,000 6,000,000
------------- -------------
Total cash and cash equivalents 34,318,395 15,064,753
Securities held to maturity 29,913,896 34,913,592
Loans receivable, net 58,503,064 56,090,636
Premises and equipment 1,206,533 1,256,514
Accrued interest receivable 802,413 1,139,374
Other assets 576,812 538,815
------------- -------------
TOTAL ASSETS $ 125,321,113 $ 109,003,684
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Deposits:
Non-interest bearing $ 30,807,886 $ 29,118,166
Interest bearing 65,792,198 52,509,335
------------- -------------
Total deposits 96,600,084 81,627,501
Borrowed funds 540,770 704,482
Accrued Interest payable 148,056 177,569
Other liabilities 444,124 248,324
------------- -------------
Total liabilities 97,733,034 82,757,876
------------- -------------
Stockholders' equity
Common stock, no par value
Authorized 10,000,000 shares
Issued 2,094,875 shares, September 30, 2002
and 1,904,532 shares, December 31, 2001 4,189,750 3,809,064
Additional paid-in capital 2,592,694 2,973,380
Retained earnings 21,741,179 20,473,038
Deferred stock compensation (838,925) (917,900)
Treasury stock at cost, 10,553 and 10,230 shares (96,619) (91,774)
------------- -------------
Total stockholders' equity 27,588,079 26,245,808
------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 125,321,113 $ 109,003,684
------------- -------------
Page 2
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2002, 2001 AND 2000
UNAUDITED
2002 2001 2000
---------- ---------- ----------
INTEREST INCOME:
Interest and fees on loans receivable $4,088,429 $4,154,751 $3,712,871
Interest on investments 1,489,319 1,466,711 1,133,076
Interest on Federal funds sold 198,960 698,003 1,317,319
---------- ---------- ----------
Total interest income 5,776,708 6,319,465 6,163,266
---------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 549,081 1,194,503 1,466,604
Interest on borrowed funds 3,160 7,572 13,477
---------- ---------- ----------
Total interest expense 552,241 1,202,075 1,480,081
---------- ---------- ----------
Net interest income 5,224,467 5,117,390 4,683,185
Provision for credit losses 175,000 28,000 225,000
---------- ---------- ----------
Net interest income after provision
for credit losses 5,049,467 5,089,390 4,458,185
---------- ---------- ----------
NON-INTEREST INCOME:
Service fees 694,881 674,863 788,050
Other non-interest income 23,049 44,074 69,281
---------- ---------- ----------
Total non-interest income 717,930 718,937 857,331
---------- ---------- ----------
NON-INTEREST EXPENSES
Salaries and wages 1,379,107 1,453,278 1,386,729
Employee benefits 538,971 533,402 421,198
Occupancy 540,859 542,794 475,837
Furniture and equipment 147,134 166,474 160,329
Other non-interest expenses 890,892 934,874 913,747
---------- ---------- ----------
Total non-interest expenses 3,496,963 3,630,822 3,357,840
---------- ---------- ----------
Income before income tax expense 2,270,434 2,177,505 1,957,676
Income tax expense 1,000,750 895,450 910,860
---------- ---------- ----------
NET INCOME $1,269,684 $1,282,055 $1,046,816
---------- ---------- ----------
NET INCOME PER SHARE $ 0.61 $ 0.67 $ 0.50
---------- ---------- ----------
Page 3
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
QUARTERS ENDED SEPTEMBER 30, 2002, 2001 AND 2000
UNAUDITED
2002 2001 2000
---------- ---------- ----------
INTEREST INCOME:
Interest and fees on loans receivable $1,324,241 $1,356,676 $1,321,997
Interest on investments 458,189 457,425 490,088
Interest on Federal funds sold 91,149 200,511 338,460
---------- ---------- ----------
Total interest income 1,873,579 2,014,612 2,150,545
---------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 175,942 327,087 489,083
Interest on borrowed funds 1,240 1,740 4,312
---------- ---------- ----------
Total interest expense 177,182 328,827 493,395
---------- ---------- ----------
Net interest income 1,696,397 1,685,785 1,657,150
Provision for credit losses 100,000 21,000 75,000
---------- ---------- ----------
Net interest income after provision
for credit losses 1,596,397 1,664,785 1,582,150
---------- ---------- ----------
NON-INTEREST INCOME:
Service fees 253,130 212,253 245,201
Other non-interest income 5,095 20,940 4,081
---------- ---------- ----------
Total non-interest income 258,225 233,193 249,282
---------- ---------- ----------
NON-INTEREST EXPENSES
Salaries and wages 443,338 495,199 448,463
Employee benefits 171,745 181,180 138,081
Occupancy 188,361 184,824 161,424
Furniture and equipment 51,567 46,659 56,355
Other non-interest expenses 281,061 274,304 248,133
---------- ---------- ----------
Total non-interest expenses 1,136,072 1,182,166 1,052,456
---------- ---------- ----------
Income before income tax expense 718,550 715,812 778,976
Income tax expense 333,410 314,800 440,892
---------- ---------- ----------
NET INCOME $ 385,140 $ 401,012 $ 338,084
---------- ---------- ----------
NET INCOME PER SHARE $ 0.18 $ 0.19 $ 0.16
---------- ---------- ----------
Page 4
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 2002, 2001 AND 2000
UNAUDITED
DEFERRED
STOCK
COMMON RETAINED COMPEN- TREASURY
STOCK SURPLUS EARNINGS SATION STOCK TOTAL
------------ ------------ ------------ ------------ ------------ ------------
Balance, December 31, 1999 $ 1,804,532 $ 3,924,112 $ 17,020,826 $ -- $ (91,774) $ 22,657,696
Net income -- -- 1,046,816 -- -- 1,046,816
Stock split 1,804,532 (1,804,532) -- -- -- --
Restricted stock awards 120,000 (120,000) -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Balance, September 30, 2000 $ 3,729,064 $ 1,999,580 $ 18,067,642 $ -- $ (91,774) $ 23,704,512
------------ ------------ ------------ ------------ ------------ ------------
Balance, December 31, 2000 $ 3,729,064 $ 2,621,380 $ 18,647,756 $ (580,400) $ (91,774) $ 24,326,026
Net income -- -- 1,282,055 -- -- 1,282,055
Deferred stock compensation 80,000 352,000 -- (432,000) -- --
Amortization of deferred
stock compensation -- -- -- 71,575 -- 71,575
------------ ------------ ------------ ------------ ------------ ------------
Balance, September 30, 2001 $ 3,809,064 $ 2,973,380 $ 19,929,811 $ (940,825) $ (91,774) $ 25,679,656
------------ ------------ ------------ ------------ ------------ ------------
Balance, December 31, 2001 $ 3,809,064 $ 2,973,380 $ 20,473,038 $ (917,900) $ (91,774) $ 26,245,808
Net income -- -- 1,269,684 -- -- 1,269,684
Stock dividend 380,686 (380,686) (1,543) -- -- (1,543)
Amortization of deferred
stock compensation -- -- -- 78,975 -- 78,975
Purchase of treasury stock -- -- -- -- (4,845) (4,845)
------------ ------------ ------------ ------------ ------------ ------------
Balance, September 30, 2002 $ 4,189,750 $ 2,592,694 $ 21,741,179 $ (838,925) $ (96,619) $ 27,588,079
------------ ------------ ------------ ------------ ------------ ------------
Page 5
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2002, 2001 AND 2000
UNAUDITED
2002 2001 2000
------------ ------------ ------------
OPERATING ACTIVITIES:
Net income $ 1,269,684 $ 1,282,055 $ 1,046,816
Adjustments to reconcile net income to cash
provided by operating activities:
Provision for credit losses 175,000 28,000 225,000
Depreciation and amortization 99,037 142,305 124,433
Net accretion of securities discounts (83,282) (63,365) (43,174)
(Increase) decrease in other assets 298,964 351,298 (711,894)
Increase (decrease) in other liabilities 166,287 284,106 308,252
------------ ------------ ------------
Net cash provided (used) by operating activities 1,925,690 2,024,399 949,433
------------ ------------ ------------
INVESTING ACTIVITIES:
Maturities of securities 16,000,000 9,000,000 4,100,000
Principal repayments on securities 67,304 49,739 39,806
Purchases of securities (10,984,326) (11,000,000) (14,324,500)
Net (increase) decrease in loans receivable (2,587,428) (719,927) (8,490,949)
Acquisitions of premises and equipment (59,419) (160,225) (391,735)
Proceeds from sales of premises and equipment 10,363 890,845 --
------------ ------------ ------------
Net cash provided (used) by investing activities 2,446,494 (1,939,568) (19,067,378)
------------ ------------ ------------
FINANCING ACTIVITIES:
Cash paid in lieu of fractional shares (1,543) -- --
Amortization of deferred stock compensation 78,975 71,575 --
Purchase of treasury stock (4,845) -- --
Net increase (decrease) in non-interest
bearing deposits 1,689,720 557,087 2,302,638
Net increase (decrease) in interest
bearing deposits 13,282,863 (3,252,651) (5,099,556)
Net increase (decrease) in borrowed funds (163,712) 115,578 (303,160)
------------ ------------ ------------
Net cash provided (used) by financing activities 14,881,458 (2,508,411) (3,100,078)
------------ ------------ ------------
Increase (decrease) in cash and cash equivalents 19,253,642 (2,423,580) (21,218,023)
Cash and cash equivalents at January 1 15,064,753 39,271,870 40,505,416
------------ ------------ ------------
Cash and cash equivalents at September 30 $ 34,318,395 $ 36,848,290 $ 19,287,393
------------ ------------ ------------
Page 6
BRUNSWICK BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information, and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. They do not include all the information and footnotes required
by generally accepted accounting principles for complete financial statements.
The information presented includes all normal and recurring adjustments
considered necessary for a fair presentation of the interim period results.
NOTE 2
SECURITIES HELD TO MATURITY
The following is a comparative summary of the book values and estimated market
values of securities held to maturity:
SEPTEMBER 30, 2002
BOOK MARKET
VALUE VALUE
----------- -----------
U.S. Government and agency securities $27,963,896 $28,596,128
Other securities 1,950,000 1,950,000
----------- -----------
$29,913,896 $30,546,128
----------- -----------
DECEMBER 31, 2001
BOOK MARKET
VALUE VALUE
----------- -----------
U.S. Government and agency securities $32,963,592 $33,239,087
Other securities 1,950,000 1,950,000
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$34,913,592 $35,189,087
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Page 7
BRUNSWICK BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3
NET LOANS RECEIVABLE
The composition of net loans receivable is as follows:
SEPTEMBER 30 DECEMBER 31
2002 2001
----------- -----------
Commercial loans $30,810,295 $25,902,467
Real estate loans 28,427,051 30,221,330
Consumer loans 600,976 847,005
----------- -----------
59,838,322 56,970,802
Less:
Allowance for credit losses 1,216,742 800,000
Unearned income 118,516 80,166
----------- -----------
$58,503,064 $56,090,636
----------- -----------
NOTE 4
PREMISES AND EQUIPMENT
The major components of premises and equipment are as follows:
SEPTEMBER 30 DECEMBER 31
2002 2001
---------- ----------
Land $ 516,927 $ 516,927
Bank premises 764,618 745,958
Leasehold improvements 183,024 183,023
Furniture and equipment 1,136,978 1,178,536
---------- ----------
2,601,547 2,624,444
Less accumulated depreciation
and amortization 1,395,014 1,367,930
---------- ----------
$1,206,533 $1,256,514
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Page 8
BRUNSWICK BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
SEPTEMBER 30, 2002
There were some significant changes in the Corporation's Balance Sheet since
December 31, 2001. The most noticeable was a $16,000,000 increase in total
assets which logically resulted from a similar increase in deposits.
The increase in available funding mostly affected Federal funds sold which
increased by $20,700,000. Due to maturing investments, securities decreased by
$5,000,000 while there was a $2,400,000 increase in net loans.
The allowance for credit losses increased by approximately $417,000, which was
due to $175,000 in credit loss provisions and net recoveries totaling $242,000.
At September 30, 2002 the allowance for credit losses totaled $1,216,742 which
represented 31% of all past due and nonaccrual loans.
Mostly due to the current year's earnings, stockholders' equity increased by
approximately $1,342,000 and the Corporation continues to be classified as "Well
Capitalized". At September 30, 2002 our risk-based capital ratio was 42.3% which
is over five times the regulatory requirement.
The results of operations for the first three quarters of 2002, compared to the
same period of 2001, show a increase in income before taxes of approximately
$93,000.
Although there were volume increases in interest sensitive assets and
liabilities, declining interest rates brought about decreases in interest income
and expense of $543,000 and $650,000, respectively. The resulting $107,000
increase in net interest income is analyzed in detail on page 9.
Credit loss provisions during the current nine month period exceeded last year's
provisions during the same period by $147,000. This additional expense however
was offset by a $134,000 decrease in non-interest expenses.
In Management's opinion, the Corporation's liquidity position is strong, based
on its high level of core deposits, the stability of its other funding sources
and the support provided by its capital base.
Page 9
BRUNSWICK BANCORP AND SUBSIDIARIES
ANALYSIS OF CHANGES IN NET INTEREST INCOME
Increase (Decrease) Due to Changes in
----------------------------------------
Volume Rates Total
--------- --------- ---------
Nine Months Ended September 30, 2002
Versus
Nine Months Ended September 30, 2001
- ------------------------------------
Interest income on:
Loans receivable $ 168 $ (234) $ (66)
Securities held to maturity 189 (167) 22
Federal funds sold 6 (505) (499)
--------- --------- ---------
Total interest income 363 (906) (543)
--------- --------- ---------
Interest expense on:
Deposits 9 (654) (645)
Borrowed funds -- (5) (5)
--------- --------- ---------
Total interest expense 9 (659) (650)
--------- --------- ---------
Net interest income $ 354 $ (247) $ 107
--------- --------- ---------
Quarter Ended September 30, 2002
Versus
Quarter Ended September 30, 2001
- --------------------------------
Interest income on:
Loans receivable $ 63 $ (95) $ (32)
Securities held to maturity 104 (103) 1
Federal funds sold (2) (108) (110)
--------- --------- ---------
Total interest income 165 (306) (141)
--------- --------- ---------
Interest expense on:
Deposits 25 (176) (151)
Borrowed funds -- (1) (1)
--------- --------- ---------
Total interest expense 25 (177) (152)
--------- --------- ---------
Net interest income $ 140 $ (129) $ 11
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Page 10
BRUNSWICK BANCORP AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
- --------------------------------
The Corporation filed no Form 8-K during the three months ended September 30,
2002.
Page 11
BRUNSWICK BANCORP AND SUBSIDIARIES
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 duly authorized.
BRUNSWICK BANCORP AND SUBSIDIARIES
10/21/02 Roman T. Gumina
- --------------- -------------------------------------
Date Roman T. Gumina, President
10/21/02 Thomas Fornale
- --------------- -------------------------------------
Date Thomas Fornale, Treasurer
Page 12
CERTIFICATION OF QUARTERLY REPORT
I, Carmen J. Gumina, Chief Executive Officer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Brunswick Bancorp;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer's and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: October 21, 2002 Carmen J. Gumina
----------------
Carmen J. Gumina
Chief Executive Officer