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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
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Quarter ended June 30, 2004 Commission file number 0-14403
BRUNSWICK BANCORP
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(Exact Name of Registrant as Specified in its Charter)
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NEW JERSEY 22-2610694
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
NEW BRUNSWICK, NEW JERSEY 08901
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(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 2,162,622 SHARES
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(Class of Stock) (Outstanding at June 30, 2004)
--------------------
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
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
June 30, 2004 and December 31, 2003 1
Consolidated Statements of Income
Six Months Ended June 30, 2004, 2003 and 2002 2
Consolidated Statements of Income
Quarters Ended June 30, 2004, 2003 and 2002 3
Consolidated Statements of Stockholders' Equity
Six Months Ended June 30, 2004, 2003 and 2002 4
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2004, 2003 and 2002 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
June 30 December 31
2004 2003
------------- -------------
ASSETS:
Cash and due from banks $ 7,566,739 $ 16,842,265
Federal funds sold 18,000,000 9,000,000
------------- -------------
Total cash and cash equivalents 25,566,739 25,842,265
Securities held to maturity 39,360,000 31,131,046
Loans receivable, net 61,898,655 61,468,161
Premises and equipment 921,582 799,922
Accrued interest receivable 645,943 536,161
Other assets 1,100,724 991,245
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TOTAL ASSETS $ 129,493,643 $ 120,768,800
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Deposits:
Non-interest bearing $ 34,190,535 $ 31,890,613
Interest bearing 63,060,450 57,523,877
------------- -------------
Total deposits 97,250,985 89,414,490
Borrowed funds 198,091 606,582
Accrued interest payable 103,395 76,953
Other liabilities 290,264 187,593
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Total liabilities 97,842,735 90,285,618
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Stockholders' equity
Common stock, no par value
Authorized 10,000,000 shares;
Issued and outstanding 2,162,622 shares
at June 30, 2004 and 2,111,722 shares
at December 31, 2003 4,325,244 4,223,444
Additional paid-in capital 3,073,020 2,712,139
Retained earnings 24,907,294 24,254,899
Deferred stock compensation (654,650) (707,300)
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Total stockholders' equity 31,650,908 30,483,182
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TOTAL LIABILITIES AND
STOCKHOLDER' EQUITY $ 129,493,643 $ 120,768,800
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Page 2
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 2004, 2003 AND 2002
UNAUDITED
2004 2003 2002
---------- ---------- ----------
INTEREST INCOME:
Interest and fees on loans receivable $2,370,761 $2,619,699 $2,764,188
Interest on investments 680,285 594,899 1,031,130
Interest on Federal funds sold 81,929 110,262 107,811
Interest on deposits with banks 3,952 26,302 --
---------- ---------- ----------
Total interest income 3,136,927 3,351,162 3,903,129
---------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 155,051 298,739 373,139
Interest on borrowed funds 858 789 1,920
---------- ---------- ----------
Total interest expense 155,909 299,528 375,059
---------- ---------- ----------
Net interest income 2,981,018 3,051,634 3,528,070
Provision for credit losses 90,000 150,000 75,000
---------- ---------- ----------
Net interest income after provision
for credit losses 2,891,018 2,901,634 3,453,070
---------- ---------- ----------
NON-INTEREST INCOME:
Service fees 475,798 458,799 441,751
Other non-interest income 14,290 14,920 17,954
---------- ---------- ----------
Total non-interest income 490,088 473,719 459,705
---------- ---------- ----------
NON-INTEREST EXPENSES
Salaries and wages 909,441 916,228 935,769
Employee benefits 404,200 369,473 367,226
Occupancy 382,892 374,751 352,498
Furniture and equipment 93,197 90,922 95,567
Other non-interest expenses 529,982 535,687 609,831
---------- ---------- ----------
Total non-interest expenses 2,319,712 2,287,061 2,360,891
---------- ---------- ----------
Income before income tax expense 1,061,394 1,088,292 1,551,884
Income tax expense 408,999 498,290 667,340
---------- ---------- ----------
NET INCOME $ 652,395 $ 590,002 $ 884,544
---------- ---------- ----------
NET INCOME PER SHARE:
Basic earnings per share $ 0.30 $ 0.27 $ 0.41
---------- ---------- ----------
Diluted earnings per share $ 0.26 $ 0.23 $ 0.36
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Average shares outstanding-basic 2,151,088 2,151,088 2,151,088
---------- ---------- ----------
Average shares outstanding-diluted 2,240,360 2,240,360 2,240,360
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Page 3
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
QUARTERS ENDED JUNE 30, 2004, 2003 AND 2002
UNAUDITED
2004 2003 2002
---------- ---------- ----------
INTEREST INCOME:
Interest and fees on loans receivable $1,173,354 $1,285,953 $1,363,779
Interest on investments 350,318 257,980 521,398
Interest on Federal funds sold 52,724 57,228 53,205
Interest on deposits with banks -- 26,302 --
---------- ---------- ----------
Total interest income 1,576,396 1,627,463 1,938,382
---------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 78,399 155,323 175,637
Interest on borrowed funds 375 264 607
---------- ---------- ----------
Total interest expense 78,774 155,587 176,244
---------- ---------- ----------
Net interest income 1,497,622 1,471,876 1,762,138
Provision for credit losses 45,000 75,000 25,000
---------- ---------- ----------
Net interest income after provision
for credit losses 1,452,622 1,396,876 1,737,138
---------- ---------- ----------
NON-INTEREST INCOME:
Service fees 241,635 241,067 235,255
Other non-interest income 7,140 8,290 3,420
---------- ---------- ----------
Total non-interest income 248,775 249,357 238,675
---------- ---------- ----------
NON-INTEREST EXPENSES
Salaries and wages 454,130 464,757 468,757
Employee benefits 184,466 175,120 172,057
Occupancy 180,878 184,170 178,536
Furniture and equipment 51,861 49,558 50,154
Other non-interest expenses 270,515 274,378 274,670
---------- ---------- ----------
Total non-interest expenses 1,141,850 1,147,983 1,144,174
---------- ---------- ----------
Income before income tax expense 559,547 498,250 831,639
Income tax expense 173,999 224,990 350,340
---------- ---------- ----------
NET INCOME $ 385,548 $ 273,260 $ 481,299
---------- ---------- ----------
NET INCOME PER SHARE:
Basic earnings per share $ 0.18 $ 0.13 $ 0.22
---------- ---------- ----------
Diluted earnings per share $ 0.16 $ 0.11 $ 0.19
---------- ---------- ----------
Average shares outstanding-basic 2,151,088 2,151,088 2,151,088
---------- ---------- ----------
Average shares outstanding-diluted 2,240,360 2,240,360 2,240,360
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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, 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
Proceeds from issuance of
stock-stock option plan -- -- -- -- 18,340 18,340
------------ ------------ ------------ ------------ ------------ ------------
Balance, June 30, 2003 $ 4,189,750 $ 2,592,694 $ 23,005,487 $ (759,950) $ (78,279) $ 28,949,702
------------ ------------ ------------ ------------ ------------ ------------
Balance, December 31, 2003 $ 4,223,444 $ 2,712,139 $ 24,254,899 $ (707,300) $ -- $ 30,483,182
Net income -- -- 652,395 -- -- 652,395
Amortization of deferred
stock compensation -- -- -- 52,650 -- 52,650
Proceeds from issuance of
stock-stock option plan 101,800 360,881 -- -- -- 462,681
------------ ------------ ------------ ------------ ------------ ------------
Balance, June 30, 2004 $ 4,325,244 $ 3,073,020 $ 24,907,294 $ (654,650) $ -- $ 31,650,908
------------ ------------ ------------ ------------ ------------ ------------
Page 5
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2004, 2003 AND 2002
UNAUDITED
2004 2003 2002
------------ ------------ ------------
OPERATING ACTIVITIES:
Net income $ 652,395 $ 590,002 $ 884,544
Adjustments to reconcile net income to cash
provided by operating activities:
Provision for credit losses 90,000 150,000 75,000
Depreciation and amortization 62,013 63,383 67,187
Net accretion of securities discounts (10,048) (52,070) (59,713)
Amortization of deferred stock compensation 52,650 52,650 52,650
Net change in:
Accrued interest receivable (109,782)
Accrued interest payable 26,442
Other assets (109,479) 386,032 (32,652)
Other liabilities 102,671 (76,865) 133,279
------------ ------------ ------------
Net cash provided by operating activities 756,862 1,113,132 1,120,295
------------ ------------ ------------
INVESTING ACTIVITIES:
Maturities of investment securities 28,700,000 18,150,000 11,000,000
Principal repayments on investment securities 91,094 29,516 49,061
Purchases of investment securities (37,010,000) (5,250,000) (10,984,326)
Net change in loans receivable (520,494) (1,879,179) 828,190
Acquisitions of premises and equipment (183,673) (40,584) (59,419)
Proceeds from sales of premises and equipment -- -- 10,363
------------ ------------ ------------
Net cash provided by (used in) investing activities (8,923,073) 11,009,753 843,869
------------ ------------ ------------
FINANCING ACTIVITIES:
Cash paid in lieu of fractional shares -- -- (1,543)
Purchase of treasury stock -- -- (3,405)
Proceeds from issuance of stock-stock option plan 462,681 18,340 --
Net increase (decrease) in non-interest
bearing deposits 2,299,922 1,157,889 651,573
Net increase (decrease) in interest
bearing deposits 5,536,573 3,511,353 2,235,583
Net increase (decrease) in borrowed funds (408,491) (152,250) (414,169)
------------ ------------ ------------
Net cash provided by (used in ) financing activities 7,890,685 4,535,332 2,468,039
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents (275,526) 16,658,217 4,432,203
Cash and cash equivalents at January 1 25,842,265 33,629,080 15,064,753
------------ ------------ ------------
Cash and cash equivalents at June 30 $ 25,566,739 $ 50,287,297 $ 19,496,956
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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; 2004
BOOK MARKET
VALUE VALUE
------------ -----------
U.S. Government and agency securities $36,210,000 $35,706,113
Other securities 3,150,000 3,130,000
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$39,360,000 $38,836,113
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DECEMBER 31, 2003
BOOK MARKET
VALUE VALUE
----------------- -----------
U.S. Government and agency securities $29,081,046 $29,124,083
Other securities 2,050,000 2,050,000
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$31,131,046 $31,174,083
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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 receivabe is as follows:
JUNE 30 DECEMBER 31
2004 2003
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Commercial loans $41,548,565 $40,013,237
Real estate loans 20,516,039 21,554,333
Cosumer loans 838,886 806,893
----------- -----------
62,903,490 62,374,463
Less:
Allowance for credit losses 890,131 800,000
Unearned income 114,704 106,302
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$61,898,655 $61,468,161
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NOTE 4
PREMISES AND EQUIPMENT
The major components of premises and equipment are as follows:
JUNE 30 DECEMBER 31
2004 2003
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Land $ 300,705 $ 300,705
Bank premises 646,826 646,826
Leasehold improvements 226,121 183,023
Furniture and equipment 1,362,023 1,221,449
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2,535,675 2,352,003
Less accumulated depreciation
and amortization 1,614,093 1,552,081
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$ 921,582 $ 799,922
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Page 8
BRUNSWICK BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
JUNE 30, 2004
The most noticeably changes in the Corporation's Balance Sheet since December
31, 2003 were a $9,300,000 decrease in cash and due from banks, an increases in
federal funds sold, investment securities and deposits of $9,000,000, $8,200,000
and $7,800,000, respectively.
Cash and due from banks decreased by approximately $9,300,000 mainly because of
a $6,100,000 reduction in an interest bearing account with a corespondent bank.
This, for the most part, resulted in the aforementioned $9,000,000 increase in
federal funds sold.
The $7,800,000 increase in securities was mostly the result in investments in US
Government Agencies securities and with the increase in deposits, the
Corporation's interest earning assets increased by approximately $11,600,000.
The allowance for credit losses increased by $90,000, which was due to credit
loss provisions. At June 30, 2004 the allowance for credit losses totaled
$890,131 which represented 26% of all loans that were past due or in nonaccrual.
Stockholders' equity increased by approximately $1,168,000 mainly because of the
addition of current earnings totaling $652,000 and additional capital of
$463,000 that resulted from stock options exercised by directors and employees.
The Corporation continues to be classified as "Well Capitalized". At June 30,
2004 our risk-based capital ratio was 40.5% which is over five times the
regulatory requirement.
The results of operations for the first half of 2004, compared to the same
period of 2003, show a slight decrease in income before taxes of approximately
$27,000.
Although interest earning assets increased in volume, lower interest rates
brought about decreases in interest income and expense of $214,000 and $143,000,
respectively. The resulting $71,000 decrease in net interest income is analyzed
in detail on page 9.
Credit loss provisions totaled $90,000 during the current period compared to
$150,000 during the first half of 2003. Finally non-interest income and
non-interest expenses increased by $16,000 and $33,000, respectively.
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, 2004
Versus
Six Months Ended June 30, 2003
Interest income on:
Loans receivable $ (31) $(218) $(249)
Securities held to maturity 227 (142) 85
Short term investment (23) (28) (51)
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Total interest income 173 (388) (215)
----- ----- -----
Interest expense on:
Deposits 26 (170) (144)
Borrowed funds -- -- --
----- ----- -----
Total interest expense 26 (170) (144)
----- ----- -----
Net interest income $ 147 $(218) $ (71)
----- ----- -----
Quarter Ended June 30, 2004
Versus
Quarter Ended June 30, 2003
Interest income on:
Loans receivable $ (11) $(102) $(113)
Securities held to maturity 163 (71) 92
Short term investment (14) (16) (30)
----- ----- -----
Total interest income 138 (189) (51)
----- ----- -----
Interest expense on:
Deposits 2 (79) (77)
Borrowed funds -- -- --
----- ----- -----
Total interest expense -- (79) (77)
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Net interest income $ 138 $(110) $ 26
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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 June 30, 2004.
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
07/22/04 /s/ Carmen J. Gumina
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Date Carmen J. Gumina, CEO
07/22/04 /s/ Thomas Fornale
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Date Thomas Fornale, Treasurer