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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 June 30, 2003 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 June 30, 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
June 30, 2003 and December 31, 2002 1
Consolidated Statements of Income
Six Months Ended June 30, 2003, 2002 and 2001 2
Consolidated Statements of Income
Quarters Ended June 30, 2003, 2002 and 2001 3
Consolidated Statements of Stockholders' Equity
Six Months Ended June 30, 2003, 2002 and 2001 4
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2003, 2002 and 2001 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
June 30 December 31
2003 2002
------------- -------------
ASSETS:
Cash and due from banks $ 39,287,297 $ 8,629,080
Federal funds sold 11,000,000 25,000,000
------------- -------------
Total cash and cash equivalents 50,287,297 33,629,080
Securities held to maturity 15,041,776 27,919,222
Loans receivable, net 60,249,109 58,519,930
Premises and equipment 1,181,956 1,204,755
Accrued interest receivable 524,923 809,817
Other assets 522,892 624,030
------------- -------------
TOTAL ASSETS $ 27,807,953 $ 122,706,834
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities
Deposits
Non-interest bearing $ 34,089,069 $ 32,931,180
Interest bearing 63,901,198 60,389,845
------------- -------------
Total deposits 97,990,267 93,321,025
Borrowed funds 458,365 610,615
Accrued interest payable 141,177 112,904
Other liabilities 268,442 373,580
------------- -------------
TOTAL LIABILITIES 98,858,251 94,418,124
------------- -------------
Stockholders' equity
Common stock, no par value
Authorized 10,000,000 shares;
Issued and outstanding 2,094,532 shares
at June 30, 2003 and December 31, 2002 4,189,750 4,189,750
Additional paid-in capital 2,592,694 2,592,694
Retained earnings 23,005,487 22,415,485
Deferred stock compensation (759,950) (812,600)
Treasury stock at cost, 8,553 and 10,553 shares (78,279) (96,619)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 28,949,702 28,288,710
------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 127,807,953 $ 122,706,834
------------- -------------
Page 2
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 2003, 2002 AND 2001
UNAUDITED
2003 2002 2001
---------- ---------- ----------
INTEREST INCOME:
Interest and fees on loans receivable $2,619,699 $2,764,188 $2,798,075
Interest on investments 594,899 1,031,130 1,009,286
Interest on Federal funds sold 110,262 107,811 497,492
Interest on deposits with banks 26,302 -- --
---------- ---------- ----------
Total interest income 3,351,162 3,903,129 4,304,853
---------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 298,739 373,139 867,416
Interest on borrowed funds 789 1,920 5,832
---------- ---------- ----------
Total interest expense 299,528 375,059 873,248
---------- ---------- ----------
Net interest income 3,051,634 3,528,070 3,431,605
Provision for credit losses 150,000 75,000 7,000
---------- ---------- ----------
Net interest income after provision
for credit losses 2,901,634 3,453,070 3,424,605
---------- ---------- ----------
NON-INTEREST INCOME:
Service fees 458,799 441,751 462,610
Other non-interest income 14,920 17,954 23,134
---------- ---------- ----------
Total non-interest income 473,719 459,705 485,744
---------- ---------- ----------
NON-INTEREST EXPENSES:
Salaries and wages 916,228 935,769 958,079
Employee benefits 369,473 367,226 352,222
Occupancy 374,751 352,498 357,970
Furniture and equipment 90,922 95,567 119,815
Other non-interest expenses 535,687 609,831 660,570
---------- ---------- ----------
Total non-interest expenses 2,287,061 2,360,891 2,448,656
---------- ---------- ----------
Income before income tax expense 1,088,292 1,551,884 1,461,693
Income tax expense 498,290 667,340 580,650
---------- ---------- ----------
NET INCOME $ 590,002 $ 884,544 $ 881,043
---------- ---------- ----------
NET INCOME PER SHARE $ 0.28 $ 0.42 $ 0.42
---------- ---------- ----------
Page 3
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
QUARTERS ENDED JUNE 30, 2003, 2002 AND 2001
UNAUDITED
2003 2002 2001
---------- ---------- ----------
INTEREST INCOME:
Interest and fees on loans receivable $1,285,953 $1,363,779 $1,368,019
Interest on investments 257,980 521,398 507,667
Interest on Federal funds sold 57,228 53,205 231,949
Interest on deposits with banks 26,302 -- --
---------- ---------- ----------
Total interest income 1,627,463 1,938,382 2,107,635
---------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 155,323 175,637 407,732
Interest on borrowed funds 264 607 2,079
---------- ---------- ----------
Total interest expense 155,587 176,244 409,811
---------- ---------- ----------
Net interest income 1,471,876 1,762,138 1,697,824
Provision for credit losses 75,000 25,000 7,000
---------- ---------- ----------
Net interest income after provision
for credit losses 1,396,876 1,737,138 1,690,824
---------- ---------- ----------
NON-INTEREST INCOME:
Service fees 241,067 235,255 243,407
Other non-interest income 8,290 3,420 5,594
---------- ---------- ----------
Total non-interest income 249,357 238,675 249,001
---------- ---------- ----------
NON-INTEREST EXPENSES:
Salaries and wages 464,757 468,757 491,839
Employee benefits 175,120 172,057 184,515
Occupancy 184,170 178,536 179,134
Furniture and equipment 49,558 50,154 66,576
Other non-interest expenses 274,378 274,670 313,291
---------- ---------- ----------
Total non-interest expenses 1,147,983 1,144,174 1,235,355
---------- ---------- ----------
Income before income tax expense 498,250 831,639 704,470
Income tax expense 224,990 350,340 278,550
---------- ---------- ----------
NET INCOME $ 273,260 $ 481,299 $ 425,920
---------- ---------- ----------
NET INCOME PER SHARE $ 0.13 $ 0.23 $ 0.20
---------- ---------- ----------
Page 4
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 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 -- -- 881,043 -- -- 881,043
Deferred stock compensation 80,000 420,000 -- (500,000) -- --
Amortization of deferred
stock compensation -- -- -- 43,550 -- 43,550
---------- ----------- ------------ ----------- -------- ------------
Balance, June 30, 2001 $3,809,064 $ 3,041,380 $ 19,528,799 $(1,036,850) $(91,774) $ 25,250,619
---------- ----------- ------------ ----------- -------- ------------
Balance, December 31, 2001 $3,809,064 $ 2,973,380 $ 20,473,038 $ (917,900) $(91,774) $ 26,245,808
Net income -- -- 884,544 -- -- 884,544
Stock dividend 380,686 (380,686) (1,543) -- -- (1,543)
Amortization of deferred
stock compensation -- -- -- 52,650 -- 52,650
Purchase of treasury stock -- -- -- -- (3,405) (3,405)
---------- ----------- ------------ ----------- -------- ------------
Balance, June 30, 2002 $4,189,750 $ 2,592,694 $ 21,356,039 $ (865,250) $(95,179) $ 27,178,054
---------- ----------- ------------ ----------- -------- ------------
Balance, December 31, 2002 $4,189,750 $ 2,592,694 $ 22,415,485 $ (812,600) $(96,619) $ 28,288,710
Net income -- -- 590,002 -- -- 590,002
Amortization of deferred
stock compensation -- -- -- 52,650 -- 52,650
Stock options exercised -- -- -- -- 18,340 18,340
---------- ----------- ------------ ----------- -------- ------------
Balance, June 30, 2003 $4,189,750 $ 2,592,694 $ 23,005,487 $ (759,950) $(78,279) $ 28,949,702
---------- ----------- ------------ ----------- -------- ------------
Page 5
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2003, 2002 AND 2001
UNAUDITED
2003 2002 2001
------------ ------------ ------------
OPERATING ACTIVITIES:
Net income $ 590,002 $ 884,544 $ 881,043
Adjustments to reconcile net income to cash
provided by operating activities:
Provision for credit losses 150,000 75,000 7,000
Depreciation and amortization 63,383 67,187 101,970
Net accretion of securities discounts (52,070) (59,713) (35,724)
Amortization of deferred stock compensation 52,650 52,650 43,550
(Increase) decrease in other assets 386,032 (32,652) (175,940)
Increase (decrease) in other liabilities (76,865) 133,279 213,849
------------ ------------ ------------
Net cash provided (used) by operating activities 1,113,132 1,120,295 1,035,748
------------ ------------ ------------
INVESTING ACTIVITIES:
Maturities of securities 18,150,000 11,000,000 6,000,000
Principal repayments on securities 29,516 49,061 26,640
Purchases of securities (5,250,000) (10,984,326) (11,000,000)
Net (increase) decrease in loans receivable (1,879,179) 828,190 45,959
Acquisitions of premises and equipment (40,584) (59,419) (160,225)
Proceeds from sales of premises and equipment -- 10,363 878,223
------------ ------------ ------------
Net cash provided (used) by investing activities 11,009,753 843,869 (4,209,403)
------------ ------------ ------------
FINANCING ACTIVITIES:
Cash paid in lieu of fractional shares -- (1,543) --
Purchase of treasury stock -- (3,405) --
Stock options excercised 18,340 -- --
Net increase (decrease) in non-interest
bearing deposits 1,157,889 651,573 2,473,561
Net increase (decrease) in interest
bearing deposits 3,511,353 2,235,583 (10,937,553)
Net increase (decrease) in borrowed funds (152,250) (414,169) 38,412
------------ ------------ ------------
Net cash provided (used) by financing activities 4,535,332 2,468,039 (8,425,580)
------------ ------------ ------------
Increase (decrease) in cash and cash equivalents 16,658,217 4,432,203 (11,599,235)
Cash and cash equivalents at January 1 33,629,080 15,064,753 39,271,870
------------ ------------ ------------
Cash and cash equivalents at June 30 $ 50,287,297 $ 19,496,956 $ 27,672,635
------------ ------------ ------------
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
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:
JUNE 30, 2003
BOOK MARKET
VALUE VALUE
----------- -----------
U.S. Government and agency securities $12,991,776 $13,386,843
Other securities 2,050,000 2,050,000
----------- -----------
$15,041,776 $15,436,843
----------- -----------
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 7
BRUNSWICK BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3
NET LOANS RECEIVABLE
The composition of net loans receivable is as follows:
JUNE 30 DECEMBER 31
2003 2002
----------- -----------
Commercial loans $33,656,955 $31,362,179
Real estate loans 26,884,032 27,397,939
Consumer loans 776,736 681,175
----------- -----------
61,317,723 59,441,293
Less:
Allowance for credit losses 950,996 800,000
Unearned income 117,618 121,363
----------- -----------
$60,249,109 $58,519,930
----------- -----------
NOTE 4
PREMISES AND EQUIPMENT
The major components of premises and equipment are as follows:
JUNE 30 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 1,492,997 1,429,614
---------- ----------
$1,181,956 $1,204,755
---------- ----------
Page 8
BRUNSWICK BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
JUNE 30, 2003
There were some significant changes in the Corporation's Balance Sheet since
December 31, 2002. The most noticeable were a $16,700,000 increase in cash and
cash equivalents and a decrease in securities of $12,900,000, which was due to
maturation.
Cash and due from banks increased by approximately $30,000,000 because of an
interest bearing balance of that amount in an account recently opened in a
corespondent bank. The funding was provided by the aforementioned $12,900,000
decrease in securities, and a decrease in federal funds sold of $14,000,000.
Additionally, there was a modest increase in loans of $1,700,000 and total
assets increased by approximately $5,000,000.
The allowance for credit losses increased by approximately $150,000, which was
almost entirely due to credit loss provisions. At June 30, 2003 the allowance
for credit losses totaled $950,996 which represented 51% of all loans that were
past due or in nonaccrual.
Mostly due to the current year's earnings, stockholders' equity increased by
approximately $661,000 and the Corporation continues to be classified as "Well
Capitalized". At June 30, 2003 our risk-based capital ratio was 42.3% which is
over five times the regulatory requirement.
The results of operations for the first half of 2003, compared to the same
period of 2002, show a decrease in income before taxes of approximately $464,000
which was mainly the result of a decrease in net interest income.
Declining interest rates brought about decreases in interest income and expense
of $551,000 and $75,000, respectively. The resulting $476,000 decrease in net
interest income is analyzed in detail on page 9.
Credit loss provisions during the current period exceeded last year's provisions
during the same period by $75,000. There was very little change in non-interest
income while non-interest expenses decreased by approximately $74,000.
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 9
BRUNSWICK BANCORP AND SUBSIDIARIES
ANALYSIS OF CHANGES IN NET INTEREST INCOME
Increase (Decrease) Due to Changes in
-----------------------------------------
Volume Rates Total
------ ----- -----
Six Months Ended June 30, 2003
Versus
Six Months Ended June 30, 2002
Interest income on:
Loans receivable $ 244 $(388) $(144)
Securities held to maturity (363) (73) (436)
Short term investment 81 (52) 29
------ ----- -----
Total interest income (38) (513) (551)
------ ----- -----
Interest expense on:
Deposits (37) (37) (74)
Borrowed funds (1) -- (1)
------ ----- -----
Total interest expense (38) (37) (75)
------ ----- -----
Net interest income $ 0 $(476) $(476)
------ ----- -----
Quarter Ended June 30, 2003
Versus
Quarter Ended June 30, 2002
Interest income on:
Loans receivable $ 112 $(190) $ (78)
Securities held to maturity (195) (69) (264)
Short term investment 57 (27) 30
------ ----- -----
Total interest income (26) (286) (312)
------ ----- -----
Interest expense on:
Deposits 15 (36) (21)
Borrowed funds (1) -- (1)
------ ----- -----
Total interest expense -- (36) (22)
------ ----- -----
Net interest income $ (26) $(250) $(290)
------ ----- -----
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 June 30, 2003.
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
07/22/03 Carmen J. Gumina
- -------------------- -------------------------------
Date Carmen J. Gumina
Chairman of the Board & President
07/22/03 Thomas Fornale
- -------------------- -------------------------------
Date Thomas Fornale, Treasurer
Page 12
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: 07/22/03 Carmen J. Gumina
------------------ ------------------------
Carmen J. Gumina
Chief Executive Officer
Date: 07/22/03 Thomas Fornale
------------------ ------------------------
Thomas Fornale
Chief Financial Officer