<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarter ended September 30, 1998 Commission file number 0-14403
BRUNSWICK BANCORP
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<CAPTION>
<S> <C>
NEW JERSEY 22-2610694
(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization Identification Number)
NEW BRUNSWICK, NEW JERSEY 08901
Address of principal executive offices) (Zip Code)
</TABLE>
(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)
<TABLE>
<S> <C>
COMMON STOCK, PAR VALUE $2.00 721,920 SHARES
(Class of Stock) (Outstanding at September 30, 1998)
</TABLE>
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
I N D E X
<TABLE>
<CAPTION>
P A G E
-------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Consolidated Balance Sheets
September 30, 1998 and December 31, 1997 1
Consolidated Statements of Income
Nine Months Ended September 30, 1998, 1997 and 1996 2
Consolidated Statements of Income
Quarters Ended September 30, 1998, 1997 and 1996 3
Consolidated Statements of Stockholders' Equity
Nine Months Ended September 30, 1998, 1997 and 1996 4
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1998, 1997 and 1996 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations 8-9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
</TABLE>
<PAGE> 3
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
<TABLE>
<CAPTION>
SEP 30 DEC 31
1998 1997
------------- -------------
<S> <C> <C>
ASSETS:
Cash and due from banks $ 6,304,201 $ 4,933,343
Federal funds sold 38,500,000 26,600,000
Securities held to maturity 9,133,031 15,120,064
Loans receivable, net 49,612,884 52,705,619
Premises and equipment 1,494,034 1,252,328
Foreclosed real estate 60,080 60,080
Other assets 1,060,029 968,815
------------- -------------
TOTAL ASSETS $ 106,164,259 $ 101,640,249
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Deposits:
Demand deposits $ 24,820,124 $ 25,177,070
NOW accounts 31,727,717 18,447,438
Savings deposits 12,193,195 12,706,999
Time deposits 15,459,973 24,426,444
------------- -------------
Total deposits 84,201,009 80,757,951
Borrowed funds 423,127 511,649
Accrued expenses and other liabilities 718,460 545,074
------------- -------------
Total liabilities 85,342,596 81,814,674
------------- -------------
Stockholders' equity:
Common stock, par value $2.00:
Authorized 3,000,000 shares;
issued 721,920 shares 1,443,840 1,443,840
Additional paid-in capital 4,284,804 4,284,804
Retained earnings 15,186,173 14,168,828
Treasury stock at cost, 327 shares (93,154) (71,897)
------------- -------------
Total stockholders' equity 20,821,663 19,825,575
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 106,164,259 $ 101,640,249
============= =============
</TABLE>
1
<PAGE> 4
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
UNAUDITED
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $4,085,065 $4,207,030 $3,791,718
Interest on investment securities:
Taxable 534,190 790,771 638,166
Exempt from Federal income tax 2,475 5,560 8,441
Interest on Federal funds sold 1,358,738 779,785 866,174
---------- ---------- ----------
Total interest income 5,980,468 5,783,146 5,304,499
---------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 1,489,110 1,472,021 1,478,535
Interest on borrowed funds 9,593 10,462 10,178
---------- ---------- ----------
Total interest expense 1,498,703 1,482,483 1,488,713
---------- ---------- ----------
Net interest income 4,481,765 4,300,663 3,815,786
Provision for credit losses 225,000 435,000 350,000
---------- ---------- ----------
Net interest income after
provision for credit losses 4,256,765 3,865,663 3,465,786
---------- ---------- ----------
NON-INTEREST INCOME:
Service fees 611,140 652,540 539,586
Other non-interest income 15,474 -- 55,824
---------- ---------- ----------
Total non-interest income 626,614 652,540 595,410
---------- ---------- ----------
NON-INTEREST EXPENSES:
Salaries and wages 1,272,494 1,228,921 1,314,008
Employee benefits 359,011 331,894 322,282
Occupancy 433,336 545,551 503,422
Furniture and equipment 169,086 145,026 136,622
Loss on foreclosed real estate -- 398,681 --
Other non-interest expenses 886,023 987,319 872,235
---------- ---------- ----------
Total non-interest expenses 3,119,950 3,637,392 3,148,569
---------- ---------- ----------
Income before income taxes 1,763,429 880,811 912,627
Income tax expense 746,084 409,359 389,935
---------- ---------- ----------
NET INCOME $1,017,345 $ 471,452 $ 522,692
========== ========== ==========
NET INCOME PER SHARE $ 1.41 $ .65 $ .72
========== ========== ==========
</TABLE>
2
<PAGE> 5
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
QUARTERS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
UNAUDITED
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $1,362,553 $1,379,179 $1,280,954
Interest on investment securities:
Taxable 163,674 271,373 201,845
Exempt from Federal income tax 557 1,605 2,604
Interest on Federal funds sold 531,499 328,432 302,853
---------- ---------- ----------
Total interest income 2,058,283 1,980,589 1,788,256
---------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 509,310 504,093 511,369
Interest on borrowed funds 3,059 3,444 3,585
---------- ---------- ----------
Total interest expense 512,369 507,537 514,954
---------- ---------- ----------
Net interest income 1,545,914 1,473,052 1,273,302
Provision for credit losses 75,000 75,000 140,000
---------- ---------- ----------
Net interest income after
provision for credit losses 1,470,914 1,398,052 1,133,302
---------- ---------- ----------
NON-INTEREST INCOME:
Service fees 196,318 226,979 189,874
Other non-interest income 4,080 -- 21,173
---------- ---------- ----------
Total non-interest income 200,398 226,979 211,047
---------- ---------- ----------
NON-INTEREST EXPENSES:
Salaries and wages 441,146 405,280 422,299
Employee benefits 109,667 104,487 98,807
Occupancy 145,323 222,770 161,792
Furniture and equipment 58,699 50,720 57,801
Loss on foreclosed real estate -- 398,681 --
Other non-interest expenses 280,394 377,574 279,998
---------- ---------- ----------
Total non-interest expenses 1,035,229 1,559,512 1,020,697
---------- ---------- ----------
Income before income taxes 636,083 65,519 323,652
Income tax expense 288,500 51,940 138,299
---------- ---------- ----------
NET INCOME $ 347,583 $ 13,579 $ 185,353
========== ========== ==========
NET INCOME PER SHARE $ .48 $ .02 $ .25
========== ========== ==========
</TABLE>
3
<PAGE> 6
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1998, 1997 AND 1996
UNAUDITED
<TABLE>
<CAPTION>
COMMON RETAINED TREASURY
STOCK SURPLUS EARNINGS STOCK TOTAL
------------ ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C>
Balance
December 31, 1995 $ 1,443,840 $ 4,284,804 $ 12,161,436 $- $ 17,890,080
Net income -- -- 522,692 -- 522,692
------------ ------------ ------------ -------- ------------
Balance
Sept 30, 1996 $ 1,443,840 $ 4,284,804 $ 12,684,128 $- $ 18,412,772
============ ============ ============ ======== ============
Balance
December 31, 1996 $ 1,443,840 $ 4,284,804 $ 12,924,286 $- $ 18,652,930
Net income -- -- 471,452 -- 471,452
Purchase of
treasury stock -- -- -- (7,521) (7,521)
------------ ------------ ------------ -------- ------------
Balance
Sept 30, 1997 $ 1,443,840 $ 4,284,804 $ 13,395,738 ($ 7,521) $ 19,116,861
============ ============ ============ ======== ============
Balance
December 31, 1997 $ 1,443,840 $ 4,284,804 $ 14,168,828 $(71,897) $ 19,825,575
Net income -- -- 1,017,345 -- 1,017,345
Purchase of
treasury stock -- -- -- (21,257) (21,257)
------------ ------------ ------------ -------- ------------
Balance
Sept 30, 1998 $ 1,443,840 $ 4,284,804 $ 15,186,173 ($93,154) $ 20,821,663
============ ============ ============ ======== ============
</TABLE>
4
<PAGE> 7
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1998, 1996 AND 1995
UNAUDITED
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,017,345 $ 471,452 $ 522,692
Adjustments to reconcile net
income to cash provided by
operating activities:
Provision for credit losses 225,000 435,000 350,000
Depreciation and amortization 102,278 104,437 86,440
Net accretion of securities (195,090) (34,642) (58,820)
discounts
Loss on sale of foreclosed real
estate -- (398,681) --
Increase (decrease) in interest
receivable and other assets (91,214) (200,366) 276,501
Increase (decrease) in interest
payable and other liabilities 173,386 96,723 39,402
------------ ------------ ------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 1,231,705 473,923 1,216,215
------------ ------------ ------------
INVESTING ACTIVITIES:
Net decrease in
Federal funds sold (11,900,000) (4,700,000) 2,900,000
Proceeds from maturities of
investment securities 13,009,840 12,000,000 7,000,000
Return of capital on invest-
ment securities 252,153 4,140,724 218,890
Purchase of investment
securities (7,079,870) (14,512,300) (6,965,000)
Net (increase) decrease in loans 2,867,735 2,132,983 (5,122,394)
Proceeds from sale of foreclosed
real estate -- 3,903,818 --
Capital acquisitions (343,984) (171,707) (256,400)
Purchase of treasury stock (21,257) (7,521) --
------------ ------------ ------------
NET CASH PROVIDED BY (USED
IN) INVESTING ACTIVITIES (3,215,383) 2,785,997 (2,224,904)
------------ ------------ ------------
FINANCING ACTIVITIES:
Net increase (decrease)
in demand deposits (356,946) (199,595) 195,978
Net increase (decrease)
in NOW accounts 13,280,279 (732,969) 1,270,594
Net decrease in savings deposits (513,804) (1,467,173) (1,265,929)
Net increase (decrease) in
time deposits (8,966,471) (2,138,010) 180,457
Net increase (decrease) in
borrowed funds (88,522) 198,059 155,373
------------ ------------ ------------
NET CASH USED BY FINANCING
ACTIVITIES 3,354,536 (4,339,688) 536,473
------------ ------------ ------------
Increase (decrease) in cash and
cash equivalents 1,370,858 (1,079,768) (472,216)
Cash & Cash equivalents, January 1 4,933,343 9,190,838 6,348,014
------------ ------------ ------------
Cash & Cash equivalents, Sept. 30 $ 6,304,201 $ 8,111,070 $ 5,875,798
============ ============ ============
</TABLE>
5
<PAGE> 8
BRUNSWICK BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
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 principles 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>
SEPT 30, 1998
BOOK VALUE MARKET VALUE
---------- ------------
<S> <C> <C>
U.S. Government Agencies $ 7,069,653 $ 7,604,519
States and political subdivisions 14,051 14,051
Other securities 2,049,327 2,066,550
---------- ----------
$ 9,133,031 $ 9,685,120
========== ==========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1997
BOOK VALUE MARKET VALUE
---------- ------------
<S> <C> <C>
U.S. Government Agencies $13,168,184 $13,630,617
States and political subdivisions 54,572 54,572
Other securities 1,897,308 1,923,330
---------- ----------
$15,120,064 $15,608,519
========== ==========
</TABLE>
6
<PAGE> 9
BRUNSWICK BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
UNAUDITED
NOTE 3
NET LOANS
The composition of net loans is as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1998 1997
---------- ----------
<S> <C> <C>
Commercial loans $17,035,053 $19,891,202
Real estate loans 32,442,379 32,467,152
Consumer loans 1,327,928 1,328,652
---------- ----------
50,805,360 53,687,006
Less:
Allowance for credit losses 1,069,514 820,254
Unearned income 122,962 161,133
---------- ----------
$49,612,884 $52,705,619
========== ==========
</TABLE>
NOTE 4
PREMISES AND EQUIPMENT
The major components of premises and equipment are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1998 1997
---------- ----------
<S> <C> <C>
Land $ 834,372 $ 537,927
Buildings 562,049 562,049
Leasehold improvements 70,137 70,137
Equipment 1,060,483 1,058,097
---------- ----------
2,527,041 2,228,210
Less accumulated depreciation
and amortization 1,033,007 975,882
---------- ----------
$ 1,494,034 $ 1,252,328
========== ==========
</TABLE>
7
<PAGE> 10
BRUNSWICK BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
SEPTEMBER 30, 1998
The most significant changes in the Corporation's Balance Sheet since December
31, 1997 are summarized as follows:
Investment securities and loans decreased by approximately $6,000,000 and
$3,100,000, respectively. The funds made available by these decreases were
invested in Federal funds which, for the most part, explains the $11,900,000
increase in Federal funds sold.
One the liability side of the balance sheet, time deposits decreased by
$9,000,000. However, NOW accounts increased by $13,300,000, and this increase
more than offset the decrease in time deposits and resulted in an increase in
total deposits of approximately $3,400,000.
Also noteworthy is an increase of approximately $249,000 in the allowance for
credit losses which resulted mainly from $225,000 in credit loss provisions. At
September 30, 1998 the allowance for credit losses represented 2.1% of total
loans and 69% of loans past due 90 days or more and nonaccrual loans.
The results of operations for the first three quarters of 1998 compared to the
same period of 1997 show an increase in income before taxes of approximately
$883,000. Two of the components of this substantial increase are a $181,000
increase in net interest income, and a decrease in the provision for credit
losses of $210,000. The increase in net interest income is analyzed in detail on
page 9.
The main reason for increased earnings is a decrease of $517,000 in non-interest
expenses which happened primarily because during 1997 a $399,000 loss resulted
from the sale of a large foreclosed property. In addition, during 1997
approximately $150,000 in expenses resulted from the complete renovation of our
branch located in downtown New Brunswick.
The Corporation's capital position continues to be one of its strong points. At
September 30, 1998 our total risk-based capital ratio was 34.5% 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.
8
<PAGE> 11
Year 2000 Issues
The 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 the 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 normal business activity.
The Company has implemented a Year 2000 compliance plan. The objective of
this plan is to ensure the company 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
(testing) and Implementation. The plan is designed to identify risks, develop
an action plan, and perform adequate testing and complete certification so that
the Company's computer systems will be Year 2000 ready.
As of September 30, 1998, the Company had substantially completed the
Awareness, Assessment and Renovation phases of its Year 2000 compliance plan in
connection with the Company'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 Company that its hardware and
software are Year 2000 compliant. This hardware and software have been
installed. The Company has started its own Validation (testing) and
Implementation phase on the primary system with a target completion date of
March 1999. The Company is also in the process of Validation (testing) and
Implementation its computer operations and obtaining Year 2000 compliance
assurances from its non-governmental outside vendors.
The Company recognizes that significant Year 2000 problems affecting third
parties could adversely affect the Company. The Company is in the process of
communicating with its significant borrowers and depositors, and with others
whose core businesses could be materially affected by Year 2000 failures and
who have substantial dealings with the Company. The Company is seeking
assurances that those businesses are taking appropriate steps to become Year
2000 compliant. In addition, the Company is seeking information from its
non-information technology suppliers (i.e., utility systems and security
systems) regarding their Year 2000 readiness.
Currently, management believes that its cost to make its 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
9
<PAGE> 12
funded through operating cash flows and expensed when incurred. Costs will also
be incurred for replacement of various computers, software upgrades and
upgraded server software. The Company 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 the failure of third parties
to fail to become Year 2000 compliant.
The Company is in the process of completing 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. If testing of the
mission critical application is not completed by the target date then
alternative actions would be taken as outlined in the remediation contingency
plan. In addition, the Company continues to review its comprehensive business
resumption plan to facilitate timely restoration of services in the event of
business disruption. The Company plans to review and updated its remediation
contingency plan and business resumption plan as needed throughout 1998 and
1999. The Company is also in the process of preparing a contingency plan
regarding its non-mission critical hardware, software, vendors and customers,
which is targeted for completion by December 31, 1998.
10
<PAGE> 13
BRUNSWICK BANCORP AND SUBSIDIARIES
ANALYSIS OF CHANGES IN NET INTEREST INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
Increase (Decrease) Due to Changes in
Volume Rates Total
------ ----- -----
Nine Months Ended September 30, 1998
Versus
Nine Months Ended September 30, 1997
- ------------------------------------
<S> <C> <C> <C>
Interest income on:
Loans ($134) $ 12 ($122)
Investment securities (202) (57) (259)
Federal funds sold 557 22 579
----- ----- -----
Total interest income 221 (23) 198
----- ----- -----
Interest expense on:
Deposits 52 (35) 17
Borrowed funds -- -- --
----- ----- -----
Total interest expense 52 (35) 17
----- ----- -----
Net interest income $ 169 $ 12 $ 181
===== ===== =====
Quarter Ended September 30, 1998
Versus
Quarter Ended September 30, 1997 Interest income on:
Loans ($ 24) $ 8 ($ 16)
Investment securities (89) (20) (109)
Federal funds sold 202 -- 202
----- ----- -----
Total interest income 89 (12) 77
----- ----- -----
Interest expense on:
Deposits 43 (38) 5
Borrowed funds (1) -- (1)
----- ----- -----
Total interest expense 42 (38) 4
----- ----- -----
Net interest income $ 47 $ 26 $ 73
===== ===== =====
</TABLE>
11
<PAGE> 14
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 nine month period ended September
30, 1998.
<PAGE> 15
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
April 1, 1999 /s/ Carmen J. Gumina
- ------------------------------ ------------------------------
Date Carmen J. Gumina
President
April 1, 1999 /s/ Thomas Fornale
- ------------------------------ ------------------------------
Date Thomas Fornale
Treasurer
