10-Q 1 y13930e10vq.txt FORM 10-Q 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, 2005 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 (Registrant's Telephone Number Including Area Code) NOT APPLICABLE (Former Name, Former Address and Former Fiscal Year If Changed Since Last Report) COMMON STOCK, NO PAR VALUE 2,589,696 SHARES (Class of Stock) (Outstanding at September 30, 2005)
---------- Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] 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, 2005 and December 31, 2004 1 Consolidated Statements of Income Nine Months Ended September 30, 2005, 2004 and 2003 2 Consolidated Statements of Income Quarters Ended September 30, 2005, 2004 and 2003 3 Consolidated Statements of Stockholders' Equity Nine Months Ended September 30, 2005, 2004 and 2003 4 Consolidated Statements of Cash Flows Nine Months Ended September 30, 2005, 2004 and 2003 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 2005 2004 ------------ ------------ ASSETS: Cash and due from banks $ 8,429,180 $ 6,904,689 Federal funds sold 14,000,000 22,000,000 ------------ ------------ Total cash and cash equivalents 22,429,180 28,904,689 Securities held to maturity 36,855,000 34,505,000 Loans receivable, net 67,524,622 65,675,788 Premises and equipment 938,897 992,910 Accrued interest receivable 471,712 678,327 Other assets 428,973 992,740 ------------ ------------ TOTAL ASSETS $128,648,384 $131,749,454 ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY: Liabilities: Deposits: Non-interest bearing $ 38,754,672 $ 32,618,470 Interest bearing 54,612,488 65,858,450 ------------ ------------ Total deposits 93,367,160 98,476,920 Borrowed funds 359,076 278,661 Accrued Interest payable 129,633 65,620 Other liabilities 313,959 109,838 ------------ ------------ Total liabilities 94,169,828 98,931,039 ------------ ------------ Stockholders' equity Common stock, no par value Authorized 10,000,000 shares Issued and outstanding 2,589,696 shares at September 30, 2005 and 2,184,747 shares ar December 31, 2004 5,179,392 4,369,494 Additional paid-in capital 2,967,863 3,437,550 Retained earnings 26,854,326 25,759,478 Deferred stock compensation (523,025) (602,000) Treasury stock at cost, 11,239 shares at December 31, 2004 -- (146,107) ------------ ------------ Total stockholders' equity 34,478,556 32,818,415 ------------ ------------ TOTAL LIABILITIES AND STOCKHODER' EQUITY $128,648,384 $131,749,454 ------------ ------------
Page 2 BRUNSWICK BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME NINE MONTHS ENDED SEPTEMBER 30, 2005, 2004 AND 2003 UNAUDITED
2005 2004 2003 ---------- ---------- ---------- INTEREST INCOME: Interest and fees on loans receivable $3,862,261 $3,609,612 $3,939,511 Interest on investments 957,932 1,048,512 813,721 Interest on Federal funds sold 435,850 141,407 138,446 Interest on deposits with banks -- 3,952 89,852 ---------- ---------- ---------- Total interest income 5,256,043 4,803,483 4,981,530 ---------- ---------- ---------- INTEREST EXPENSE: Interest on deposits 309,687 233,601 409,512 Interest on borrowed funds 2,567 1,232 1,350 ---------- ---------- ---------- Total interest expense 312,254 234,833 410,862 ---------- ---------- ---------- Net interest income 4,943,789 4,568,650 4,570,668 Provision for credit losses 135,000 135,000 225,000 ---------- ---------- ---------- Net interest income after provision for credit losses 4,808,789 4,433,650 4,345,668 ---------- ---------- ---------- NON-INTEREST INCOME: Service fees 650,026 686,938 691,984 Other non-interest income 27,300 20,440 50,217 ---------- ---------- ---------- Total non-interest income 677,326 707,378 742,201 ---------- ---------- ---------- NON-INTEREST EXPENSES Salaries and wages 1,494,785 1,385,238 1,386,491 Employee benefits 555,604 582,983 554,103 Occupancy 681,325 607,224 550,818 Furniture and equipment 144,606 133,364 134,402 Other non-interest expenses 876,143 801,564 765,934 ---------- ---------- ---------- Total non-interest expenses 3,752,463 3,510,373 3,391,748 ---------- ---------- ---------- Income before income tax expense 1,733,652 1,630,655 1,696,121 Income tax expense 638,804 689,629 755,337 ---------- ---------- ---------- NET INCOME $1,094,848 $ 941,026 $ 940,784 ---------- ---------- ---------- NET INCOME PER SHARE: Basic earnings per share $ 0.43 $ 0.37 $ 0.38 ---------- ---------- ---------- Diluted earnings per share $ 0.42 $ 0.36 $ 0.38 ---------- ---------- ---------- Average shares outstanding-basic 2,548,046 2,509,603 2,444,021 ---------- ---------- ---------- Average shares outstanding-diluted 2,587,206 2,608,223 2,502,809 ---------- ---------- ----------
Page 3 BRUNSWICK BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME QUARTERS ENDED SEPTEMBER 30, 2005, 2004 AND 2003 UNAUDITED
2005 2004 2003 ---------- ---------- ---------- INTEREST INCOME: Interest and fees on loans receivable $1,421,283 $1,238,851 $1,319,812 Interest on investments 215,113 368,227 218,822 Interest on Federal funds sold 130,806 59,478 28,184 Interest on deposits with banks -- -- 63,550 ---------- ---------- ---------- Total interest income 1,767,202 1,666,556 1,630,368 ---------- ---------- ---------- INTEREST EXPENSE: Interest on deposits 132,010 78,550 110,773 Interest on borrowed funds 1,102 374 561 ---------- ---------- ---------- Total interest expense 133,112 78,924 111,334 ---------- ---------- ---------- Net interest income 1,634,090 1,587,632 1,519,034 Provision for credit losses 45,000 45,000 75,000 ---------- ---------- ---------- Net interest income after provision for credit losses 1,589,090 1,542,632 1,444,034 ---------- ---------- ---------- NON-INTEREST INCOME: Service fees 198,119 211,140 233,185 Other non-interest income 8,085 6,150 35,297 ---------- ---------- ---------- Total non-interest income 206,204 217,290 268,482 ---------- ---------- ---------- NON-INTEREST EXPENSES Salaries and wages 510,738 475,797 470,263 Employee benefits 180,232 178,783 184,630 Occupancy 227,232 224,332 176,067 Furniture and equipment 39,957 40,167 43,480 Other non-interest expenses 277,925 271,582 230,247 ---------- ---------- ---------- Total non-interest expenses 1,236,084 1,190,661 1,104,687 ---------- ---------- ---------- Income before income tax expense 559,210 569,261 607,829 Income tax expense 115,846 280,630 257,047 ---------- ---------- ---------- NET INCOME $ 443,364 $ 288,631 $ 350,782 ---------- ---------- ---------- NET INCOME PER SHARE: Basic earnings per share $ 0.17 $ 0.12 $ 0.14 ---------- ---------- ---------- Diluted earnings per share $ 0.17 $ 0.11 $ 0.14 ---------- ---------- ---------- Average shares outstanding-basic 2,548,046 2,509,603 2,444,021 ---------- ---------- ---------- Average shares outstanding-diluted 2,587,206 2,608,223 2,502,809 ---------- ---------- ----------
Page 4 BRUNSWICK BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY NINE MONTHS ENDED SEPTEMBER 30, 2005, 2004 AND 2003 UNAUDITED
DEFERRED COMMON RETAINED STOCK TREASURY STOCK SURPLUS EARNINGS COMPENSATION STOCK TOTAL ---------- ----------- ----------- ------------ --------- ----------- 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 Proceeds from issuance of stock-stock option plan -- -- -- -- 80,576 80,576 ---------- ----------- ----------- --------- --------- ----------- Balance, September 30, 2003 $4,189,750 $ 2,592,694 $23,356,269 $(733,625) $ (16,043) $29,389,045 ---------- ----------- ----------- --------- --------- ----------- Balance, December 31, 2003 $4,223,444 $ 2,712,139 $24,254,899 $(707,300) $ -- $30,483,182 Net income -- -- 941,026 -- -- 941,026 Amortization of deferred stock compensation -- -- -- 78,975 -- 78,975 Proceeds from issuance of stock-stock option plan 114,650 406,434 -- -- -- 521,084 ---------- ----------- ----------- --------- --------- ----------- Balance, September 30, 2004 $4,338,094 $ 3,118,573 $25,195,925 $(628,325) $ -- $32,024,267 ---------- ----------- ----------- --------- --------- ----------- Balance, December 31, 2004 $4,369,494 $ 3,437,550 $25,759,478 $(602,000) $(146,107) $32,818,415 Net income -- -- 1,094,848 -- -- 1,094,848 Issuance of stock-stock split 728,608 (728,608) -- -- -- -- Amortization of deferred stock compensation -- -- -- 78,975 -- 78,975 Proceeds from issuance of stock-stock option plan 81,290 235,335 -- -- 146,107 462,732 Tax benefit from stock option plan -- 23,586 -- -- -- 23,586 ---------- ----------- ----------- --------- --------- ----------- Balance, September 30, 2004 $5,179,392 $ 2,967,863 $26,854,326 $(523,025) $ -- $34,478,556 ---------- ----------- ----------- --------- --------- -----------
Page 5 BRUNSWICK BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2005, 2004 AND 2003 UNAUDITED
2005 2004 2003 ------------ ------------ ------------ OPERATING ACTIVITIES: Net income $ 1,094,848 $ 941,026 $ 940,784 Adjustments to reconcile net income to cash provided by operating activities: Provision for credit losses 135,000 135,000 225,000 Depreciation and amortization 111,277 96,794 91,868 Net accretion of securities discounts -- (10,048) (70,326) Tax benefit from stock option plan 23,586 -- -- Amortization of deferred stock compensation 78,975 78,975 78,975 Net change in: -- -- -- Accrued interest receivable 206,615 9,141 211,429 Accrued interest payable 64,013 38,058 23,425 Other assets 563,767 (108,440) 57,310 Other liabilities 204,121 184,485 (2,960) ------------ ------------ ------------ Net cash provided by operating activities 2,482,202 1,364,991 1,555,505 ------------ ------------ ------------ INVESTING ACTIVITIES: Maturities of investment securities 650,000 42,410,000 18,150,000 Principal repayments on investment securities -- 91,094 42,764 Purchases of investment securities (3,000,000) (49,615,000) (14,825,000) Net change in loans receivable (1,983,834) (537,523) (4,108,817) Acquisitions of premises and equipment (57,264) (293,387) (40,584) Proceeds from sales of premises and equipment -- -- 354,480 ------------ ------------ ------------ Net cash provided by (used in) investing activities (4,391,098) (7,944,816) (427,157) ------------ ------------ ------------ FINANCING ACTIVITIES: Proceeds from issuance of stock-stock option plan 462,732 521,084 80,576 Net increase (decrease) in non-interest bearing deposits 6,136,202 2,857,115 2,105,075 Net increase (decrease) in interest bearing deposits (11,245,962) 1,689,130 1,055,048 Net increase (decrease) in borrowed funds 80,415 (412,824) (525,360) ------------ ------------ ------------ Net cash provided by (used in) financing activities (4,566,613) 4,654,505 2,715,339 ------------ ------------ ------------ Increase (decrease) in cash and cash equivalents (6,475,509) (1,925,320) 3,843,687 Cash and cash equivalents at January 1 28,904,689 25,842,265 33,629,080 ------------ ------------ ------------ Cash and cash equivalents at September 30 $ 22,429,180 $ 23,916,945 $ 37,472,767 ------------ ------------ ------------
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:
SEPTEMBER 30, 2005 -------------------------- BOOK VALUE MARKET VALUE ----------- ------------ U.S. Government and agency securities $29,105,000 $28,411,338 Other securities 7,750,000 7,411,250 ----------- ----------- $36,855,000 $35,822,588 ----------- -----------
DECEMBER 31, 2004 -------------------------- BOOK VALUE MARKET VALUE ----------- ------------ U.S. Government and agency securities $29,105,000 $28,829,213 Other securities 5,400,000 5,368,750 ----------- ----------- $34,505,000 $34,197,963 ----------- -----------
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:
SEPTEMBER 30 DECEMBER 31 2005 2004 ------------ ----------- Commercial loans $41,252,166 $44,835,243 Real estate loans 26,475,927 20,925,029 Cosumer loans 835,691 860,921 ----------- ----------- 68,563,784 66,621,193 Less: Allowance for credit losses 934,832 800,000 Unearned income 104,330 145,405 ----------- ----------- $67,524,622 $65,675,788 ----------- -----------
NOTE 4 PREMISES AND EQUIPMENT The major components of premises and equipment are as follows:
SEPTEMBER 30 DECEMBER 31 2005 2004 ------------ ----------- Land $ 300,705 $ 300,705 Bank premises 646,826 646,826 Leasehold improvements 232,594 232,594 Furniture and equipment 1,421,464 1,364,200 ---------- ---------- 2,601,589 2,544,325 Less accumulated depreciation and amortization 1,662,692 1,551,415 ---------- ---------- $ 938,897 $ 992,910 ---------- ----------
Page 8 BRUNSWICK BANCORP AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS SEPTEMBER 30, 2005 The most notable change in the Corporation's Balance Sheet since December 31, 2004 is a decrease in Federal funds sold of $8,000,000. This decrease was partially offset by increases in securities and loans of $2,350,000 and $1,849,000, respectively. The resulting $3,801,000 net decrease in interest earning assets was brought about by a decrease in deposits of $5,110,000. The allowance for credit losses increased by approximately $135,000, which was due to credit loss provisions. At September 30, 2005 the allowance for credit losses totaled $934,832 which represented 35% of all loans that were past due or in nonaccrual. Stockholders' equity increased by approximately $1,660,000 mainly because of the addition of current earnings totaling $1,095,000 and an additional $463,000 resulting from the issuance of stock through the stock option plan. For additional information, refer to the Consolidated Statements of Stockholders' Equity on page 4. The Corporation continues to be classified as "Well Capitalized". At September 30, 2005 our risk-based capital ratio was 41.7% which is over five times the regulatory requirement. The results of operations for the first three quarters of 2005, compared to the same period of 2004, show a slight increase in income before taxes of approximately $103,000. During the current year the Corporation profited from slightly higher interest rates and increased volume. Interest income and expense increased by $452,000 and 77,000, respectively. The resulting $375,000 increase in net interest income is analyzed in detail on page 9. Finally, there was a slight decrease of $30,000 in non-interest income and non-interest expenses increased by approximately $242,000. Most of this increase resulted from additional expenses incurred from the addition of a new branch office which opened for business during July, 2004. 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, 2005 Versus Nine Months Ended September 30, 2004 Interest income on: Loans receivable $240 $ 12 $ 252 Securities held to maturity 77 (168) (91) Short term investments 21 270 291 ---- ----- ----- Total interest income 338 114 452 ---- ----- ----- Interest expense on: Deposits 24 52 76 Borrowed funds -- 1 1 ---- ----- ----- Total interest expense 24 53 77 ---- ----- ----- Net interest income $314 $ 61 $ 375 ---- ----- ----- Quarter Ended September 30, 2005 Versus Quarter Ended September 30, 2004 Interest income on: Loans receivable $113 $ 69 $ 182 Securities held to maturity 4 (157) (153) Short term investments (21) 93 72 ---- ----- ----- Total interest income 96 5 101 ---- ----- ----- Interest expense on: Deposits (7) 60 53 Borrowed funds -- 1 1 ---- ----- ----- Total interest expense (7) 61 54 ---- ----- ----- Net interest income $103 $ (56) $ 47 ---- ----- -----
Page 10 BRUNSWICK BANCORP AND SUBSIDIARIES PART II - OTHER INFORMATION ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K The Corporation did not file Form 8-K during the three months ended September 30, 2005. 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 Carmen J. Gumina 10/20/05 ---------------------------------------- Date Carmen J. Gumina, President & CEO Thomas Fornale 10/20/05 ---------------------------------------- Date Thomas Fornale, Treasurer