<PAGE> 1
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, 1999 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 (IRS 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, PAR VALUE $2.00 902,266 SHARES
(Class of Stock) Outstanding at June 30, 1999
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
----- -----
<PAGE> 2
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1999 1998
------------- -------------
<S> <C> <C>
ASSETS:
Cash and due from banks $ 6,131,246 $ 6,448,304
Federal funds sold 34,200,000 34,000,000
Securities held to maturity 23,064,281 23,065,507
Loans receivable, net 41,138,175 43,166,736
Premises and equipment 1,496,633 1,503,332
Foreclosed real estate 62,242 132,615
Other assets 933,341 824,794
------------- -------------
TOTAL ASSETS $ 107,025,918 $ 109,141,288
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Deposits:
Demand deposits 27,059,480 24,587,736
NOW accounts 28,216,139 30,604,280
Savings deposits 12,914,591 15,216,904
Time deposits 15,959,924 16,545,989
------------- -------------
Total deposits 84,150,134 86,954,909
Borrowed funds 423,500 511,512
Accrued expenses and other liabilities 546,742 333,317
------------- -------------
Total liabilities 85,120,376 87,799,738
------------- -------------
Stockholders' equity:
Common stock, par value $2.00:
Authorized 3,000,000 shares:
issued 902,266 shares, March 31, 1999
and 721,920 shares, December 31, 1998 1,804,532 1,443,840
Additional paid-in capital 3,924,112 4,284,804
Retained earnings 16,268,672 15,704,680
Treasury stock at cost (91,774) (91,774)
------------- -------------
Total Stockholders' equity 21,905,542 21,341,550
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 107,025,918 $ 109,141,288
============= =============
</TABLE>
<PAGE> 3
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 1999, 1998 AND 1997
UNAUDITED
<TABLE>
<CAPTION>
INTEREST INCOME 1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Interest and fees on loans $2,119,781 $2,722,512 $2,827,851
Interest on investment securities:
Taxable 727,077 370,516 519,398
Exempt from Federal income tax -- 1,918 3,955
Interest on Federal funds sold 820,194 827,239 451,353
---------- ---------- ----------
Total interest income 3,667,052 3,922,185 3,802,557
---------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 932,149 979,800 967,928
Interest on borrowed funds 4,104 6,534 7,018
---------- ---------- ----------
Total interest expense 936,253 986,334 974,946
---------- ---------- ----------
Net interest income 2,730,799 2,935,851 2,827,611
Provision for credit losses 75,000 150,000 360,000
---------- ---------- ----------
Net interest income after provision
for credit losses 2,655,799 2,785,851 2,467,611
---------- ---------- ----------
NON-INTEREST INCOME:
Service fees 490,201 414,822 425,561
Other non-interest income 13,655 11,394 --
---------- ---------- ----------
Total non-interest income 503,856 426,216 425,561
---------- ---------- ----------
NON-INTEREST EXPENSES:
Salaries and wages 888,545 831,348 823,641
Employee benefits 241,726 249,344 227,407
Occupancy 314,635 288,013 322,781
Furniture and equipment 106,941 110,387 94,306
Other non-interest expenses 648,925 605,629 609,745
---------- ---------- ----------
Total non-interest expenses 2,200,772 2,084,721 2,077,880
---------- ---------- ----------
Income before income taxes 958,883 1,127,346 815,292
Income tax expense 390,335 457,584 357,419
---------- ---------- ----------
NET INCOME $ 568,548 $ 669,762 $ 457,873
========== ========== ==========
NET INCOME PER SHARE $ 0.63 $ 0.74 $ 0.51
========== ========== ==========
</TABLE>
<PAGE> 4
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
QUARTERS ENDED JUNE 30, 1999, 1998 AND 1997
UNAUDITED
<TABLE>
<CAPTION>
INTEREST INCOME: 1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Interest and fees on loans $1,085,244 $1,330,461 $1,482,187
Interest on investment securities:
Taxable 353,557 177,049 296,838
Exempt from Federal income tax -- 827 1,855
Interest on Federal funds sold 415,919 462,781 222,209
---------- ---------- ----------
Total interest income 1,854,720 1,971,118 2,003,089
---------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 448,720 508,409 484,747
Interest on borrowed funds 2,265 2,732 3,586
---------- ---------- ----------
Total interest expense 450,985 511,141 488,333
---------- ---------- ----------
Net interest income 1,403,735 1,459,977 1,514,756
Provision for credit losses 50,000 75,000 190,000
---------- ---------- ----------
Net interest income after provision
for credit losses 1,353,735 1,384,977 1,324,756
---------- ---------- ----------
NON-INTEREST INCOME:
Service fees 268,577 213,873 236,609
Other non-interest income 4,080 7,314 --
---------- ---------- ----------
Total non-interest income 272,657 221,187 236,609
---------- ---------- ----------
NON-INTEREST EXPENSES:
Salaries and wages 459,822 416,993 424,062
Employee benefits 125,517 123,783 117,867
Occupancy 166,143 141,469 168,344
Furniture and equipment 47,945 69,942 53,817
Other non-interest expenses 356,840 290,975 319,565
---------- ---------- ----------
Total non-interest expenses 1,156,267 1,043,162 1,083,655
---------- ---------- ----------
Income before income taxes 470,125 563,002 477,710
Income tax expense 192,135 245,684 200,939
---------- ---------- ----------
NET INCOME $ 277,990 $ 317,318 $ 276,771
========== ========== ==========
NET INCOME PER SHARE $ 0.31 $ 0.35 $ 0.31
========== ========== ==========
</TABLE>
<PAGE> 5
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1999, 1998 AND 1997
UNAUDITED
<TABLE>
<CAPTION>
COMMON RETAINED TREASURY
STOCK SURPLUS EARNINGS STOCK TOTAL
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ 1,443,840 $ 4,284,804 $ 12,924,286 $ -- $ 18,652,930
Net income -- -- 457,873 -- 457,873
------------ ------------ ------------ ------------ ------------
Balance, June 30, 1997 $ 1,443,840 $ 4,284,804 $ 13,382,159 $ -- $ 19,110,803
============ ============ ============ ============ ============
Balance, December 31, 1997 $ 1,443,840 $ 4,284,804 $ 14,168,828 $ (71,897) $ 19,825,575
Net income -- -- 669,762 -- 669,762
Purchase of treasury stock -- -- -- (15,497) (15,497)
------------ ------------ ------------ ------------ ------------
Balance, June 30, 1998 $ 1,443,840 $ 4,284,804 $ 14,838,590 $ (87,394) $ 20,479,840
============ ============ ============ ============ ============
Balance, December 31, 1998 $ 1,443,840 $ 4,284,804 $ 15,704,680 $ (91,774) $ 21,341,550
Net income -- -- 568,548 -- 568,548
Stock split 360,692 (360,692) (4,556) -- (4,556)
------------ ------------ ------------ ------------ ------------
Balance, June 30, 1999 $ 1,804,532 $ 3,924,112 $ 16,268,672 $ (91,774) $ 21,905,542
============ ============ ============ ============ ============
</TABLE>
<PAGE> 6
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1999, 1998 AND 1997
UNAUDITED
<TABLE>
<CAPTION>
OPERATING ACTIVITIES: 1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Net income $ 568,548 $ 669,762 $ 457,873
Adjustments to reconcile net income to
cash provided by operating activities:
Provision for credit losses 75,000 150,000 360,000
Depreciation and amortization 70,911 68,894 71,388
Net accretion of securities discounts (104,566) (172,497) (24,583)
(Increase) decrease in other assets (108,547) (1,986) (419,984)
Increase (decrease) in accrued expenses
and other liabilities 213,425 75,373 63,071
------------ ------------ ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 714,771 789,546 507,765
------------ ------------ ------------
INVESTING ACTIVITIES:
Net (increase) decrease in Federal funds sold (200,000) (6,100,000) (5,100,000)
Maturities of investment securities -- 10,009,840 12,000,000
Principal repayments on investment securities 105,792 151,420 83,847
Purchase of investment securities -- (7,079,870) (11,012,300)
Net (increase) decrease in loans receivable 2,023,934 2,597,531 (1,564,447)
Acquisitions of premises and equipment (64,212) (343,894) (139,138)
------------ ------------ ------------
NET CASH PROVIDED BY
INVESTING ACTIVITIES 1,865,514 (764,973) (5,732,038)
------------ ------------ ------------
FINANCING ACTIVITIES:
Dividends paid (4,556) -- --
Net increase (decrease) in demand deposits 2,471,744 4,636,039 (18,751)
Net increase (decrease) in NOW accounts (2,388,141) 6,608,805 1,123,531
Net increase (decrease) in savings deposits (2,302,313) (580,711) (750,680)
Net increase (decrease) in time deposits (586,065) (7,723,147) 2,394,706
Net increase (decrease) in borrowed funds (88,012) 15,102 203,485
Purchase of treasury stock -- (15,497) --
------------ ------------ ------------
NET CASH USED BY
FINANCING ACTIVITIES (2,897,343) 2,940,591 2,952,291
------------ ------------ ------------
Increase (decrease) in cash and cash equivalents (317,058) 2,965,164 (2,271,982)
Cash and cash equivalents at January 1 6,448,304 4,933,343 9,190,838
------------ ------------ ------------
Cash and cash equivalents at June 30 $ 6,131,246 $ 7,898,507 $ 6,918,856
============ ============ ============
</TABLE>
<PAGE> 7
BRUNSWICK BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999
UNAUDITED
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. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principals for complete
financial statements. In the opinion of management, the information presented
includes all normal and recurring adjustments considered necessary for a fair
presentation of the interim period results.
NOTE 2
INVESTMENT SECURITIES
The following is a comparative summary of the book values and estimated market
values of investment securities:
<TABLE>
<CAPTION>
JUNE 30, 1999
BOOK MARKET
VALUE VALUE
----------- -----------
<S> <C> <C>
U.S. Government and agencies $21,014,281 $21,168,655
Other securities 2,050,000 2,052,800
----------- -----------
$23,064,281 $23,221,455
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1998
BOOK MARKET
VALUE VALUE
----------- -----------
<S> <C> <C>
U.S. Government and agencies $21,015,507 $21,468,949
Other securities 2,050,000 2,062,735
----------- -----------
$23,065,507 $23,531,684
=========== ===========
</TABLE>
<PAGE> 8
BRUNSWICK BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
UNAUDITED
NOTE 3
NET LOANS
The composition of net loans is as follows:
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1999 1998
----------- -----------
<S> <C> <C>
Commercial loans $14,602,517 $16,306,888
Real estate loans 26,170,599 26,439,746
Consumer Loans 1,227,495 1,328,750
----------- -----------
42,000,611 44,075,384
Less:
Allowance for credit losses 787,159 801,059
Unearned income 75,277 107,589
----------- -----------
$41,138,175 $43,166,736
=========== ===========
</TABLE>
NOTE 4
PREMISES AND EQUIPMENT
The major components of premises and equipment are as follows:
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1999 1998
---------- -----------
<S> <C> <C>
Land $ 850,372 $ 850,372
Buildings 626,261 562,049
Leasehold improvements 70,137 70,137
Equipment 1,089,121 1,089,121
---------- -----------
2,635,891 2,571,679
Less accumulated depreciation and 1,139,258 1,068,347
amortization
---------- -----------
$1,496,633 $ 1,503,332
========== ===========
</TABLE>
<PAGE> 9
BRUNSWICK BANCORP AND SUBSIDIARIES
ANALYSIS OF CHANGES IN NET INTEREST INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
Increase (Decrease) Due to Changes in
-------------------------------------
Volume Rates Total
------ ----- -----
<S> <C> <C> <C>
Six Months ended June 30, 1999
Versus
Six Months ended June 30, 1998
- ------------------------------
Interest Income on:
Loans $(468) $(135) $(603)
Investment securities 309 46 355
Federal funds sold 115 (122) (7)
----- ----- -----
Total interest income (44) (211) (255)
----- ----- -----
Interest expense on:
Deposits 106 (154) (48)
Borrowed funds (1) (1) (2)
----- ----- -----
Total interest expense 105 (155) (50)
----- ----- -----
Net interest income $(149) $ (56) $(205)
===== ===== =====
Quarter ended June 30, 1999
Versus
Quarter ended June 30, 1998
- ---------------------------
Interest income on:
Loans $(231) $ (14) $(245)
Investment Securities 163 13 176
Federal funds sold 16 (63) (47)
----- ----- -----
Total interest income (52) (64) (116)
----- ----- -----
Interest expense on:
Deposits 33 (92) (59)
Borrowed funds -- (1) (1)
----- ----- -----
Total interest expense 33 (93) (60)
----- ----- -----
Net interest income $ (85) $ 29 $ (56)
===== ===== =====
</TABLE>
<PAGE> 10
BRUNSWICK BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
JUNE 30, 1999
The only noticeable change on the asset side of the Corporation's Balance Sheet
since December 31, 1998 is a $2,000,000 decrease in loans receivable.
On the liability side of the balance sheet, demand deposits accounts increased
by $2,500,000 while interest bearing deposits decreased by $5,300,000 which
resulted in a decrease in total deposits of approximately $2,800,000.
There was a $14,000 decrease in the allowance for credit losses which resulted
from net charge offs totaling $89,000 offset by $75,000 in credit loss
provisions. At June 30, 1999 the allowance for credit losses totaled $787,159
which represented 1.9% of total loans and 34% of loans past due 90 days or more
and nonaccrual loans.
The results of operations for the first quarter of 1999, compared to the same
period of 1998, show a decrease in income before taxes of approximately
$168,000. Two components of this decrease are a $205,000 decrease in net
interest income and a decrease in the provision for credit losses of $75,000.
The decrease in net interest income is analyzed in detail on page 9.
The $116,000 increase in non-interest expenses was partially offset by a $78,000
increase in non-interest income. The components of these changes were numerous
with nothing of an extraordinary nature to comment on.
The Corporation continues to be "Well Capitalized" which is the highest
classification a bank can receive. At June 30, 1999 our total risk-based capital
ration was 33.9% which is over four times the regulatory requirement.
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> 11
BRUNSWICK BANCORP AND SUBSIDIARIES
YEAR 2000 DISCLOSURE
JUNE 30, 1999
Year 2000 issues involve potential problems to financial institutions and other
businesses that rely on computers to assist in normal daily operations of their
business. Many computer programs and applications, which use date fields, may
cease to function normally as a result of the way these fields have been
programmed. Date sensitive software may recognize a date using 00 as the Year
1900 rather than Year 2000. This could cause a system failure, loss of files,
miscalculations or hardware failure. In turn, these problems could cause
disruptions of operations and could result in a temporary inability to process
transactions or conduct business activity.
The Corporation has implemented a Year 2000 compliance plan. The objective of
this plan is to ensure the Corporation will be Year 2000 ready prior to December
31, 1999. Management has formed a Year 2000 committee with members from all
significant areas of operations to review its systems, vendors and customers
that could be affected by the Year 2000 issue. The committee has developed an
implementation plan to rectify any issues related to processing of transactions
in the Year 2000 and beyond. As recommended by the Federal Financial
Institutions Examination Council (FFIEC) guide, the Year 2000 compliance plan
includes the following phases: Awareness, Assessment, Renovation, Validation and
Implementation. The plan is designed to identify risks, develop an action plan
and perform adequate testing and complete certification so that the
Corporation's computer systems will be Year 2000 ready.
As of June 30, 1999, the Corporation has completed all phases of its Year 2000
compliance plan in connection with the Corporation's primary operating system
and software (the "primary system"). An external third party supplier provides
the primary system, and this vendor has represented to the Corporation that its
hardware and software are Year 2000 compliant. This hardware and software have
been installed. The Corporation has completed its own Validation and
Implementation phase on the primary system. In the course of the testing, the
Corporation did not become aware of any Year 2000 problems in the primary
system. The Corporation has also completed Validation and Implementation on its
other computer operations and has received Year 2000 compliance assurance from
all non-governmental outside vendors.
<PAGE> 12
The Corporation recognizes that significant Year 2000 problems affecting third
parties could adversely affect the Corporation. The Corporation has communicated
with its significant borrowers and depositors, and with others whose core
business could be materially affected by Year 2000 failures and who have
substantial dealings with the Corporation. The Corporation has sought and
continues to seek assurances that those businesses are taking appropriate steps
to become Year 2000 compliant. In addition, the Corporation has sought
information from its non-information suppliers (i.e., utility systems and
security systems) regarding their Year 2000 readiness.
Currently, management believes that its cost to make internal data processing
operations Year 2000 compliant will not be material. The costs identified
directly with the Year 2000 compliance plan are not expected to exceed $50,000.
These costs will be funded through operating cash flows and expensed when
incurred. Costs will also be incurred for replacement of various personal
computers, software upgrades and upgraded server software. The Corporation had
planned to upgrade and replace these items, and accordingly did not accelerate
replacement due to Year 2000 compliance. These estimated costs are management's
best estimates based upon currently known information. There can be no guarantee
that actual costs incurred to become Year 2000 ready will not increase due to
additional issues which may arise internally in the future, and by failure of
third parties to become Year 2000 compliant.
The Corporation has completed a remediation contingency plan for Year 2000
compliance for its mission critical applications. The remediation contingency
plan outlines the actions to be taken if the current approach to remediating
mission critical applications does not appear to be able to deliver a Year 2000
compliant system when required. Predetermined target dates have been established
for all mission critical applications. All testing has been completed and no
problems pertaining to the Y2K have been encountered.
In addition, the Corporation has developed a business resumption contingency
plan to facilitate timely restoration of services in the event of business
disruption. This plan has been approved by the Board of Directors and validated
by an external auditing firm. The Corporation plans to review and update its
remediation contingency plan and business resumption plan as needed throughout
1999.
<PAGE> 13
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 month period ended June 30,
1999.
<PAGE> 14
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
07/19/99 /s/ Roman T. Gumina
-------- ------------------------------
Date Roman T. Gumina
President
07/19/99 /s/ Thomas Fornale
-------- ------------------------------
Date Thomas Fornale
Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 6,131,246
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 34,200,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 23,064,281
<INVESTMENTS-MARKET> 23,221,455
<LOANS> 41,925,334
<ALLOWANCE> 787,159
<TOTAL-ASSETS> 107,025,918
<DEPOSITS> 84,150,134
<SHORT-TERM> 423,500
<LIABILITIES-OTHER> 546,742
<LONG-TERM> 0
0
0
<COMMON> 1,804,532
<OTHER-SE> 20,101,010
<TOTAL-LIABILITIES-AND-EQUITY> 107,025,918
<INTEREST-LOAN> 2,119,781
<INTEREST-INVEST> 727,077
<INTEREST-OTHER> 820,194
<INTEREST-TOTAL> 3,667,052
<INTEREST-DEPOSIT> 932,149
<INTEREST-EXPENSE> 936,253
<INTEREST-INCOME-NET> 2,730,799
<LOAN-LOSSES> 75,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,200,772
<INCOME-PRETAX> 958,883
<INCOME-PRE-EXTRAORDINARY> 568,548
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 568,548
<EPS-BASIC> .63
<EPS-DILUTED> .63
<YIELD-ACTUAL> 0
<LOANS-NON> 273,552
<LOANS-PAST> 2,011,445
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 801,059
<CHARGE-OFFS> 92,065
<RECOVERIES> 3,165
<ALLOWANCE-CLOSE> 787,159
<ALLOWANCE-DOMESTIC> 787,159
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
