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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, 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 Setember 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
September 30, 2003 and December 31, 2002 1
Consolidated Statements of Income
Nine Months Ended September 30, 2003, 2002 and 2001 2
Consolidated Statements of Income
Quarters Ended September 30, 2003, 2002 and 2001 3
Consolidated Statements of Stockholders' Equity
Nine Months Ended September 30, 2003, 2002 and 2001 4
Consolidated Statements of Cash Flows
Nine Months Ended September 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
302 Certification: CEO 12
302 Certification: CFO 13
906 Certification: CEO 14
906 Certification: CFO 15
Page 1
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
September 30 December 31
2003 2002
------------ ------------
ASSETS:
Cash and due from banks $ 28,472,767 $ 8,629,080
Federal funds sold 9,000,000 25,000,000
------------ ------------
Total cash and cash equivalents 37,472,767 33,629,080
Securities held to maturity 24,621,784 27,919,222
Loans receivable, net 62,403,747 58,519,930
Premises and equipment 798,991 1,204,755
Accrued interest receivable 598,388 809,817
Other assets 566,720 624,030
------------ ------------
TOTAL ASSETS $126,462,397 $122,706,834
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Deposits:
Non-interest bearing $ 35,036,255 $ 32,931,180
Interest bearing 61,444,893 60,389,845
------------ ------------
Total deposits 96,481,148 93,321,025
Borrowed funds 85,255 610,615
Accrued Interest payable 136,329 112,904
Other liabilities 370,620 373,580
------------ ------------
Total liabilities 97,073,352 94,418,124
------------ ------------
Stockholders' equity
Common stock, no par value
Authorized 10,000,000 shares
Issued and outstanding 2,094,875 shares
at September 30, 2003 and December 31, 2002 4,189,750 4,189,750
Additional paid-in capital 2,592,694 2,592,694
Retained earnings 23,356,269 22,415,485
Deferred stock compensation (733,625) (812,600)
Treasury stock at cost, 1,753 and 10,553 shares (16,043) (96,619)
------------ ------------
Total stockholders' equity 29,389,045 28,288,710
------------ ------------
TOTAL LIABILITIES AND
STOCKHODER' EQUITY $126,462,397 $122,706,834
------------ ------------
Page 2
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2003, 2002 AND 2001
UNAUDITED
2003 2002 2001
----------- ----------- -----------
INTEREST INCOME:
Interest and fees on loans receivable $ 3,939,511 $ 4,088,429 $ 4,154,751
Interest on investments 813,721 1,489,319 1,466,711
Interest on Federal funds sold 138,446 198,960 698,003
Interest on deposits with banks 89,852 ---- ----
----------- ----------- -----------
Total interest income 4,981,530 5,776,708 6,319,465
----------- ----------- -----------
INTEREST EXPENSE:
Interest on deposits 409,512 549,081 1,194,503
Interest on borrowed funds 1,350 3,160 7,572
----------- ----------- -----------
Total interest expense 410,862 552,241 1,202,075
----------- ----------- -----------
Net interest income 4,570,668 5,224,467 5,117,390
Provision for credit losses 225,000 175,000 28,000
----------- ----------- -----------
Net interest income after provision
for credit losses 4,345,668 5,049,467 5,089,390
----------- ----------- -----------
NON-INTEREST INCOME:
Service fees 691,984 694,881 674,863
Other non-interest income 50,217 23,049 44,074
----------- ----------- -----------
Total non-interest income 742,201 717,930 718,937
----------- ----------- -----------
NON-INTEREST EXPENSES
Salaries and wages 1,386,491 1,379,107 1,453,278
Employee benefits 554,103 538,971 533,402
Occupancy 550,818 540,859 542,794
Furniture and equipment 134,402 147,134 166,474
Other non-interest expenses 765,934 890,892 934,874
----------- ----------- -----------
Total non-interest expenses 3,391,748 3,496,963 3,630,822
----------- ----------- -----------
Income before income tax expense 1,696,121 2,270,434 2,177,505
Income tax expense 755,337 1,000,750 895,450
----------- ----------- -----------
NET INCOME $ 940,784 $ 1,269,684 $ 1,282,055
----------- ----------- -----------
NET INCOME PER SHARE $ 0.45 $ 0.61 $ 0.67
----------- ----------- -----------
Page 3
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
QUARTERS ENDED SEPTEMBER 30, 2003, 2002 AND 2001
UNAUDITED
2003 2002 2001
------------ ------------ ------------
INTEREST INCOME:
Interest and fees on loans receivable $ 1,319,812 $ 1,324,241 $ 1,356,676
Interest on investments 218,822 458,189 457,425
Interest on Federal funds sold 28,184 91,149 200,511
Interest on deposits with banks 63,550 ---- ----
------------ ------------ ------------
Total interest income 1,630,368 1,873,579 2,014,612
------------ ------------ ------------
INTEREST EXPENSE:
Interest on deposits 110,773 175,942 327,087
Interest on borrowed funds 561 1,240 1,740
------------ ------------ ------------
Total interest expense 111,334 177,182 328,827
------------ ------------ ------------
Net interest income 1,519,034 1,696,397 1,685,785
Provision for credit losses 75,000 100,000 21,000
------------ ------------ ------------
Net interest income after provision
for credit losses 1,444,034 1,596,397 1,664,785
------------ ------------ ------------
NON-INTEREST INCOME:
Service fees 233,185 253,130 212,253
Other non-interest income 35,297 5,095 20,940
------------ ------------ ------------
Total non-interest income 268,482 258,225 233,193
------------ ------------ ------------
NON-INTEREST EXPENSES
Salaries and wages 470,263 443,338 495,199
Employee benefits 184,630 171,745 181,180
Occupancy 176,067 188,361 184,824
Furniture and equipment 43,480 51,567 46,659
Other non-interest expenses 230,247 281,061 274,304
------------ ------------ ------------
Total non-interest expenses 1,104,687 1,136,072 1,182,166
------------ ------------ ------------
Income before income tax expense 607,829 718,550 715,812
Income tax expense 257,047 333,410 314,800
------------ ------------ ------------
NET INCOME $ 350,782 $ 385,140 $ 401,012
------------ ------------ ------------
NET INCOME PER SHARE $ 0.17 $ 0.18 $ 0.19
------------ ------------ ------------
Page 4
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 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 ---- ---- 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
---------------- -------------- -------------- ------------ -------------- ------------
Balance, December 31, 2002 $ 4,189,750 $ 2,592,694 $ 22,415,485 $ (812,600) $ (96,619) $ 28,288,710
Net income ---- ---- 940,784 ---- ---- 940,784
Amortization of deferred
stock compensation ---- ---- ---- 78,975 ---- 78,975
Stock options excercised ---- ---- ---- ---- 80,576 80,576
---------------- -------------- -------------- ------------ -------------- ------------
Balance, September 30, 2003 $ 4,189,750 $ 2,592,694 $ 23,356,269 $ (733,625) $ (16,043) $ 29,389,045
---------------- -------------- -------------- ------------ -------------- ------------
Page 5
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2003, 2002 AND 2001
UNAUDITED
2003 2002 2001
--------------- ---------------- ---------------
OPERATING ACTIVITIES:
Net income $ 940,784 $ 1,269,684 $ 1,282,055
Adjustments to reconcile net income to cash
provided by operating activities:
Provision for credit losses 225,000 175,000 28,000
Depreciation and amortization 91,868 99,037 142,305
Net accretion of securities discounts (70,326) (83,282) (63,365)
Amortization of deferred stock compensation 78,975 78,975 71,575
(Increase) decrease in other assets 268,739 298,964 351,298
Increase (decrease) in other liabilities 20,465 166,287 284,106
--------------- ---------------- ---------------
Net cash provided (used) by operating activities 1,555,505 2,004,665 2,095,974
--------------- ---------------- ---------------
INVESTING ACTIVITIES:
Maturities of securities 18,150,000 16,000,000 9,000,000
Principal repayments on securities 42,764 67,304 49,739
Purchases of securities (14,825,000) (10,984,326) (11,000,000)
Net (increase) decrease in loans receivable (4,108,817) (2,587,428) (719,927)
Acquisitions of premises and equipment (40,584) (59,419) (160,225)
Proceeds from sales of premises and equipment 354,480 10,363 890,845
--------------- ---------------- ---------------
Net cash provided (used) by investing activities (427,157) 2,446,494 (1,939,568)
--------------- ---------------- ---------------
FINANCING ACTIVITIES:
Cash paid in lieu of fractional shares ---- (1,543) ----
Purchase of treasury stock ---- (4,845) ----
Stock options excercised 80,576 ---- ----
Net increase (decrease) in non-interest
bearing deposits 2,105,075 1,689,720 557,087
Net increase (decrease) in interest
bearing deposits 1,055,048 13,282,863 (3,252,651)
Net increase (decrease) in borrowed funds (525,360) (163,712) 115,578
--------------- ---------------- ---------------
Net cash provided (used) by financing activities 2,715,339 14,802,483 (2,579,986)
--------------- ---------------- ---------------
Increase (decrease) in cash and cash equivalents 3,843,687 19,253,642 (2,423,580)
Cash and cash equivalents at January 1 33,629,080 15,064,753 39,271,870
--------------- ---------------- ---------------
Cash and cash equivalents at September 30 $ 37,472,767 $ 34,318,395 $ 36,848,290
--------------- ---------------- ---------------
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, 2003
BOOK MARKET
VALUE VALUE
--------------------- -------------------
U.S. Government and agency securities $ 22,571,784 $ 22,841,829
Other securities 2,050,000 2,050,000
--------------------- -------------------
$ 24,621,784 $ 24,891,829
--------------------- -------------------
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
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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
2003 2002
-------------------- -------------------
Commercial loans $ 36,724,635 $ 31,362,179
Real estate loans 26,009,324 27,397,939
Cosumer loans 816,405 681,175
-------------------- -------------------
63,550,364 59,441,293
Less:
Allowance for credit losses 1,046,164 800,000
Unearned income 100,453 121,363
-------------------- -------------------
$ 62,403,747 $ 58,519,930
-------------------- -------------------
NOTE 4
PREMISES AND EQUIPMENT
The major components of premises and equipment are as follows:
SEPTEMBER 30 DECEMBER 31
2003 2002
------------------- -----------------
Land $ 240,705 $ 516,927
Bank premises 706,826 744,499
Leasehold improvements 183,023 183,023
Furniture and equipment 1,189,920 1,189,920
------------------- -----------------
2,320,474 2,634,369
Less accumulated depreciation
and amortization 1,521,483 1,429,614
------------------- -----------------
$ 798,991 $ 1,204,755
------------------- -----------------
Page 8
BRUNSWICK BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
SEPTEMBER 30, 2003
There were some significant changes in the Corporation's Balance Sheet since
December 31, 2002. The most noticeable were a $19,800,000 increase in cash and
cash due from banks and a decrease in federal funds sold of $16,000,000.
Cash and due from banks increased by approximately $19,800,000 mainly because of
an interest bearing balance of $16,000,000 in an account recently opened in a
corespondent bank. The funding was provided by the aforementioned $16,000,000
decrease in federal funds sold.
Additionally, there was an increase in loans of $3,900,000, securities decreased
by $3,300,000 and total assets increased by approximately $3,800,000.
The allowance for credit losses increased by $246,000, which was due to credit
loss provisions $225,000 and recoveries totaling $21,000. At September 30, 2003
the allowance for credit losses totaled $1,046,164 which represented 36% of all
loans that were past due or in nonaccrual.
Mostly due to the current year's earnings, stockholders' equity increased by
approximately $1,100,000 and the Corporation continues to be classified as "Well
Capitalized". At September 30, 2003 our risk-based capital ratio was 42.8% which
is over five times the regulatory requirement.
The results of operations for the first three quarters of 2003, compared to the
same period of 2002, show a decrease in income before taxes of approximately
$514,000 which was mainly the result of a decrease in net interest income.
Declining interest rates brought about decreases in interest income and expense
of $795,000 and $141,000, respectively. The resulting $654,000 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 $50,000. There was very little change in non-interest
income while non-interest expenses decreased by approximately $105,000.
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
------ ----- ------
Nine Months Ended September 30, 2003
Versus
Nine Months Ended September 30, 2002
Interest income on:
Loans receivable $ 198 $(346) $(148)
Securities held to maturity (576) (99) (675)
Short term investments 48 (19) 29
----- ----- -----
Total interest income (330) (464) (794)
----- ----- -----
Interest expense on:
Deposits 9 (148) (139)
Borrowed funds (1) --- (1)
----- ----- -----
Total interest expense 8 (148) (140)
----- ----- -----
Net interest income $(338) $(316) $(654)
----- ----- -----
Quarter Ended September 30, 2003
Versus
Quarter Ended September 30, 2002
-----
Interest income on:
Loans receivable $ 82 $ (87) $ (5)
Securities held to maturity (215) (24) (239)
Short term investments (49) (48) 1
----- ----- -----
Total interest income (84) (159) (243)
----- ----- -----
Interest expense on:
Deposits 2 (67) (65)
Borrowed funds --- --- ---
----- ----- -----
Total interest expense 2 (67) (65)
----- ----- -----
Net interest income $ (86) $ (92) $(178)
----- ----- -----
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,
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 SUBSIDIARIES
10/23/03 /s/ Carmen J. Gumina
- ------------- ------------------------------------------
Date Carmen J. Gumina, President & CEO
10/23/03 /s/ Thomas Fornale
- ------------- ------------------------------------------
Date Thomas Fornale, Treasurer