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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 March 31, 2003 Commission file number 0-14403
BRUNSWICK BANCORP
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(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 March 31, 2003)
--------------------
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 [ ]
BRUNSWICK BANCORP AND SUBSIDIARIES
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
March 31, 2003 and December 31, 2002 1
Consolidated Statements of Income
Three Months Ended March 31, 2003, 2002 and 2001 2
Consolidated Statements of Stockholders' Equity
Three Months Ended March 31, 2003, 2002 and 2001 3
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2003, 2002 and 2001 4
Notes to Consolidated Financial Statements 5-6
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operation 7-8
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
Certification of Quarterly Report 11
Page 1
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
March 31 December 31
2003 2002
-------------- -----------------
ASSETS:
Cash and due from banks $ 9,056,418 $ 8,629,080
Federal funds sold 17,000,000 25,000,000
-------------- -----------------
Total cash and cash equivalents 26,056,418 33,629,080
Securities held to maturity 19,936,768 27,919,222
Loans receivable, net 63,332,518 58,519,930
Premises and equipment 1,213,649 1,204,755
Accrued interest receivable 583,102 809,817
Other assets 671,459 624,030
-------------- -----------------
TOTAL ASSETS $ 111,793,914 $ 122,706,834
-------------- -----------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Deposits:
Non-interest bearing $ 30,694,000 $ 32,931,180
Interest bearing 51,658,828 60,389,845
-------------- -----------------
Total deposits 82,352,828 93,321,025
Borrowed funds 113,805 610,615
Accrued interest payable 108,244 112,904
Other liabilities 587,260 373,580
-------------- -----------------
Total liabilities 83,162,137 94,418,124
-------------- -----------------
Stockholders' equity
Common stock, no par value
Authorized 10,000,000 shares;
Issued and outstanding 2,094,532 shares
at March 31, 2003 and December 31, 2002 4,189,750 4,189,750
Additional paid-in capital 2,592,694 2,592,694
Retained earnings 22,732,227 22,415,485
Deferred stock compensation (786,275) (812,600)
Treasury stock at cost, 10,553 shares (96,619) (96,619)
-------------- -----------------
Total stockholders' equity 28,631,777 28,288,710
-------------- -----------------
TOTAL LIABILITIES AND
STOCKHODER' EQUITY $ 111,793,914 $ 122,706,834
-------------- -----------------
Page 2
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2003, 2002 AND 2001
UNAUDITED
2003 2002 2001
INTEREST INCOME: ---------- ---------- ----------
Interest and fees on loans receivable $1,333,746 $1,400,409 $1,430,056
Interest on investments 336,919 509,732 501,619
Interest on Federal funds sold 53,034 54,606 265,543
---------- ---------- ----------
Total interest income 1,723,699 1,964,747 2,197,218
---------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 143,416 197,502 459,684
Interest on borrowed funds 525 1,313 3,753
---------- ---------- ----------
Total interest expense 143,941 198,815 463,437
---------- ---------- ----------
Net interest income 1,579,758 1,765,932 1,733,781
Provision for credit losses 75,000 50,000 ----
---------- ---------- ----------
Net interest income after provision
for credit losses 1,504,758 1,715,932 1,733,781
---------- ---------- ----------
NON-INTEREST INCOME:
Service fees 217,732 206,496 219,203
Other non-interest income 6,630 14,534 17,540
---------- ---------- ----------
Total non-interest income 224,362 221,030 236,743
---------- ---------- ----------
NON-INTEREST EXPENSES
Salaries and wages 451,471 467,012 466,240
Employee benefits 194,353 195,169 167,707
Occupancy 190,581 173,962 178,836
Furniture and equipment 41,364 45,413 53,239
Other non-interest expenses 261,309 335,161 347,279
---------- ---------- ----------
Total non-interest expenses 1,139,078 1,216,717 1,213,301
---------- ---------- ----------
Income before income tax expense 590,042 720,245 757,223
Income tax expense 273,300 317,000 302,100
---------- ---------- ----------
NET INCOME $ 316,742 $ 403,245 $ 455,123
---------- ---------- ----------
NET INCOME PER SHARE $ 0.15 $ 0.19 $ 0.22
---------- ---------- ----------
Page 3
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2003, 2002 AND 2001
UNAUDITED
DEFERRED
STOCK
COMMON RETAINED COMPEN- TREASURY
STOCK SURPLUS EARNINGS SATION STOCK TOTAL
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 2000 $ 3,729,064 $ 2,621,380 $18,647,756 $ (580,400) $ (91,774) $24,326,026
Net income ---- ---- 455,123 ---- ---- 455,123
Deferred stock compensation 80,000 420,000 ---- (500,000) ---- ----
Amortization of deferred
stock compensation ---- ---- ---- 15,525 ---- 15,525
----------- ----------- ----------- ----------- ----------- -----------
Balance, March 31, 2001 $ 3,809,064 $ 3,041,380 $19,102,879 $(1,064,875) $ (91,774) $24,796,674
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 2001 $ 3,809,064 $ 2,973,380 $20,473,038 $ (917,900) $ (91,774) $26,245,808
Net income ---- ---- 403,245 ---- ---- 403,245
Amortization of deferred
stock compensation ---- ---- ---- 26,325 ---- 26,325
----------- ----------- ----------- ----------- ----------- -----------
Balance, March 31, 2002 $ 3,809,064 $ 2,973,380 $20,876,283 $ (891,575) $ (91,774) $26,675,378
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 2002 $ 4,189,750 $ 2,592,694 $22,415,485 $ (812,600) $ (96,619) $28,288,710
Net income ---- ---- 316,742 ---- ---- 316,742
Amortization of deferred
stock compensation ---- ---- ---- 26,325 ---- 26,325
----------- ----------- ----------- ----------- ----------- -----------
Balance, March 31, 2003 $ 4,189,750 $ 2,592,694 $22,732,227 $ (786,275) $ (96,619) $28,631,777
----------- ----------- ----------- ----------- ----------- -----------
Page 4
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2003, 2002 AND 2001
UNAUDITED
2003 2002 2001
------------ ------------ ------------
OPERATING ACTIVITIES:
Net income $ 316,742 $ 403,245 $ 455,123
Adjustments to reconcile net income to cash
provided by operating activities:
Provision for credit losses 75,000 50,000 ----
Depreciation and amortization 31,690 33,376 48,512
Net accretion of securities discounts (32,259) (27,679) (10,495)
Amortization of deferred stock compensation 26,325 26,325 ----
(Increase) decrease in other assets 179,286 2,927 80,244
Increase (decrease) in other liabilities 209,020 369,608 455,874
------------ ------------ ------------
Net cash provided (used) by operating activities 805,804 857,802 1,029,258
------------ ------------ ------------
INVESTING ACTIVITIES:
Maturities of securities 13,000,000 11,000,000 6,000,000
Principal repayments on securities 14,713 22,353 5,953
Purchases of securities (5,000,000) (10,984,326) (11,000,000)
Net (increase) decrease in loans receivable (4,887,588) (848,805) (105,372)
Acquisitions of premises and equipment (40,584) ---- (3,990)
Proceeds from sale of premises ---- 10,363 ----
------------ ------------ ------------
Net cash provided (used) by investing activities 3,086,541 (800,415) (5,103,409)
------------ ------------ ------------
FINANCING ACTIVITIES:
Net increase (decrease) in non-interest
bearing deposits (2,237,180) (515,609) 1,782,923
Net increase (decrease) in interest
bearing deposits (8,731,017) 4,040,358 (7,751,844)
Net increase (decrease) in borrowed funds (496,810) (144,827) (286,250)
------------ ------------ ------------
Net cash provided (used) by financing activities (11,465,007) 3,379,922 (6,255,171)
------------ ------------ ------------
Increase (decrease) in cash and cash equivalents (7,572,662) 3,437,309 (10,329,322)
Cash and cash equivalents at January 1 33,629,080 15,064,753 39,271,870
------------ ------------ ------------
Cash and cash equivalents at March 31 $ 26,056,418 $ 18,502,062 $ 28,942,548
------------ ------------ ------------
Page 5
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
concidered 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:
MARCH 31, 2003
BOOK MARKET
VALUE VALUE
----------------- -----------------
U.S. Government and agency securities $ 17,986,768 $ 18,469,377
Other securities 1,950,000 1,950,000
----------------- -----------------
$ 19,936,768 $ 20,419,377
----------------- -----------------
DECEMBER 31, 2002
BOOK MARKET
VALUE VALUE
----------------- -----------------
U.S. Government and agency securities $ 25,969,222 $ 26,536,242
Other securities 1,950,000 1,950,000
----------------- -----------------
$ 27,919,222 $ 28,486,242
----------------- -----------------
Page 6
BRUNSWICK BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3
NET LOANS RECEIVABLE
The composition of net loans receivabe is as follows:
MARCH 31 DECEMBER 31
2003 2002
------------- -----------
Commercial loans $ 33,674,672 $31,362,179
Real estate loans 29,976,407 27,397,939
Cosumer loans 671,735 681,175
------------- -----------
64,322,814 59,441,293
Less:
Allowance for credit losses 875,168 800,000
Unearned income 115,128 121,363
------------- -----------
$ 63,332,518 $58,519,930
------------- -----------
NOTE 4
PREMISES AND EQUIPMENT
The major components of premises and equipment are as follows:
MARCH 31 DECEMBER 31
2003 2002
------------- -----------
Land $ 516,927 $ 516,927
Bank premises 785,083 744,499
Leasehold improvements 183,023 183,023
Furniture and equipment 1,189,920 1,189,920
------------- -----------
2,674,953 2,634,369
Less accumulated depreciation
and amortization 1,461,304 1,429,614
------------- -----------
$ 1,213,649 $ 1,204,755
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Page 7
BRUNSWICK BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
MARCH 31, 2003
There were some significant changes in the Corporation's Balance Sheet since
December 31, 2002. The most noticeable was a $11,000,000 decrease in total
assets which logically resulted from a similar decrease in deposits.
The decrease in available funding mostly affected Federal funds sold which
decreased by $8,000,000. Due to maturing investments, securities decreased by
$7,600,000 while there was a $4,800,000 increase in net loans.
The allowance for credit losses increased by approximately $75,000, which was
almost entirely due to credit loss provisions. At March 31, 2003 the allowance
for credit losses totaled $875,168 which represented 30% of all past due and
nonaccrual loans.
Mostly due to the current year's earnings, stockholders' equity increased by
approximately $343,000 and the Corporation continues to be classified as "Well
Capitalized". At March 31, 2003 our risk-based capital ratio was 43.1% which is
over five times the regulatory requirement.
The results of operations for the first quarter of 2003, compared to the same
period of 2002, show a decrease in income before taxes of approximately $130,000
which was mainly the result of a decrease in net interest income.
Although there were volume increases in interest sensitive assets and
liabilities, declining interest rates brought about decreases in interest income
and expense of $241,000 and $55,000, respectively. The resulting $186,000
decrease in net interest income is analyzed in detail on page 8.
Credit loss provisions during the current period exceeded last year's provisions
during the same period by $25,000. There was very little change in non-interest
income while non-interest expenses decreased by approximately $78,000.
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 8
BRUNSWICK BANCORP AND SUBSIDIARIES
ANALYSIS OF CHANGES IN NET INTEREST INCOME
Increase (Decrease) Due to Changes in
-------------------------------------
Volume Rates Total
-------- -------- --------
Three Months Ended March 31, 2003
Versus
Three Months Ended March 31, 2002
Interest income on:
Loans receivable $ 151 $ (217) $ (66)
Securities held to maturity (135) (38) (173)
Federal funds sold 22 (24) (2)
-------- -------- --------
Total interest income 38 (279) (241)
-------- -------- --------
Interest expense on:
Deposits 5 (59) (54)
Borrowed funds --- (1) (1)
-------- -------- --------
Total interest expense 5 (60) (55)
-------- -------- --------
Net interest income $ 33 $ (219) $ (186)
-------- -------- --------
Page 9
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 March 31, 2003.
Page 10
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
04/11/03 Roman T. Gumina
- --------------- --------------------------
Date Roman T. Gumina, President
04/11/03 Thomas Fornale
- --------------- --------------------------
Date Thomas Fornale, Treasurer
Page 11
CERTIFICATION OF QUARTERLY REPORT
I, Carmen J. Gumina, Chief Executive Officer, and I, Thomas Fornale,
Chief Financial Officer, Certify that:
1. We have reviewed this quarterly report on Form 10-Q of Brunswick
Bancorp:
2. Based on our knowledge, this 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 report;
3. Based on our knowledge, the financial statements, and other financial
information included in this 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 report;
4. The registrant's other certifying officers and we 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 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 report (the "Evaluation Date") and
c) presented in this 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 we have disclosed, based
on our most recent evaluation, to the registrant's auditor and the
audit committee of the registrant's board of directors:
a) all significant deficiencies in the design of operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have have identified for the
registrant's auditors any material weakness 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 we have indicated in
this 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 corrective actions with regard to significant deficiencies
and material weaknesses.
Date: 4/11/03 /s/ Carmen J. Gumina
--------------------------
Carmen J. Gumina
Chief Executive Officer
Date: 4/11/03 /s/ Thomas Fornale
--------------------------
Thomas Fornale
Chief Financial Officer