<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-14294
Greater Community Bancorp
(Exact name of small business issuer as specified in its charter)
NEW JERSEY 22-2545165
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
55 Union Boulevard, Totowa, New Jersey 07512
(Address of principal executive offices)
(973) 942-1111
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. YES X NO
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: Common stock $1.00
par value - 2,081,447 shares at August 8, 1996.
Transition Small Business Disclosure Format (check one);
Yes No X
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
INDEX
PAGE
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Balance Sheet
June 30, 1997 (unaudited) and December 31, 1996 . . . . 3
Condensed Consolidated Statements of Income
Three and Six months ended
June 30, 1997 and 1996 (unaudited). . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows
Six months ended June 30, 1997 and 1996 (unaudited). . .5
Notes to Consolidated Financial Statements(unaudited). . . 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . 8
PART II - OTHER INFORMATION
Items 1 through 6 . . . . . . . . . . . . . . . . . . . . . 16
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . 17
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1- Financial Statements
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except share data)
June 30, December 31,
1997 1996
ASSETS Unaudited
CASH AND DUE FROM BANKS-Non-interest-bearing $ 16,568 $ 11,994
FEDERAL FUNDS SOLD 2,705 6,300
Total cash and cash equivalents 19,273 18,294
DUE FROM BANKS - Interest-bearing 4,447 4,481
SECURITIES:
Available-for-sale 66,667 52,251
Held-to-maturity 38,540 37,428
105,207 89,679
LOANS 149,648 137,410
Less - Allowance for possible loan losses 2,678 2,540
Unearned income 345 283
146,625 134,587
PREMISES AND EQUIPMENT, net 2,976 3,203
OTHER REAL ESTATE OWNED 510 1,834
ACCRUED INTEREST RECEIVABLE 2,165 1,906
INTANGIBLE AND OTHER ASSETS 3,993 2,522
Total assets $285,196 $256,506
LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
Non-interest-bearing 56,548 $59,588
Interest-bearing 46,402 55,882
Savings 27,477 25,918
Time 90,413 81,854
Total deposits 220,840 223,242
ACCRUED INTEREST 1,935 1,466
OTHER LIABILITIES 1,846 1,590
REPURCHASE AGREEMENTS 6,302 4,159
FEDERAL FUNDS PURCHASED 3,700 -
REDEEMABLE SUBORDINATED DEBENTURES 4,870 4,988
GUARANTEED PREFERRED BENEFICIAL INTEREST IN THE
COMPANY'S SUBORDINATED DEBT 23,000 -
Total Liabilities 262,493 235,445
SHAREHOLDERS' EQUITY
Preferred stock, without par value:
1,000,000 shares authorized, none outstanding - -
Common Stock, par value $1 per share:
10,000,000 shares authorized, 2,081,447
and 1,891,733 shares outstanding 2,081 1,892
Additional paid-in capital 19,687 17,841
Retained earnings - 1,209
Unrealized holding gains on
securities available-for-sale 935 307
Treasury stock - (188)
Total shareholders' equity 22,703 21,061
Total liabilities and shareholders' equity 285,196 $256,506
(See notes to Condensed Consolidated Financial statements)
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
INTEREST INCOME
Loans, including fees $3,337 $3,137 $6,537 $6,165
Securities 1,451 1,362 2,885 2,716
Federal Funds sold and deposits with banks 206 108 335 249
Total interest income 4,994 4,607 9,757 9,130
INTEREST EXPENSE
Deposits 1,604 1,557 3,152 3,173
Short-term borrowings 174 189 322 342
Long-term borrowings 365 - 475 -
Total interest expense 2,143 1,746 3,949 3,515
NET INTEREST INCOME 2,851 2,861 5,808 5,615
PROVISION FOR POSSIBLE LOAN LOSSES 160 90 275 180
Net interest income after
provision for possible loan losses 2,691 2,771 5,533 5,435
OTHER INCOME 684 248 1,133 994
3,375 3,020 6,666 6,429
OTHER EXPENSES
Salaries and employee benefits 1,131 1,030 2,251 2,130
Occupancy and equipment 495 477 981 1,007
Regulatory, professional and other fees 186 209 370 413
Office expense 148 130 292 247
All other operating expenses 431 358 819 1,057
Total other expenses 2,391 2,204 4,713 4,854
Income before income taxes and
Minority interest 984 815 1,953 1,575
PROVISION FOR INCOME TAXES 358 293 728 571
Income before minority interest 626 522 1,225 1,004
MINORITY INTEREST (16) - 50 -
NET INCOME $610 $522 $1,275 $1,004
WEIGHTED AVERAGE SHARES OUTSTANDING 2,529 2,420 2,533 2,420
NET INCOME PER SHARE $0.24 $0.22 $0.49 $0.43
(See notes to Condensed Consolidated Financial Statements)
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Six Months Ended
June 30,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,275 $ 1,004
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 513 559
Accretion of discount on securities, net (16) (71)
Accretion of discount on debentures 7 (49)
Gain on sale of securities, net (50) -
Gain on sale of other real estate owned (87) -
Provision for possible loan losses 275 180
(Increase) decrease in accrued interest receivable (259) (128)
Increase in other assets (1,471) (218)
Increase (decrease) accrued expenses and other liabilities 725 (70)
Net cash provided by operating activities 912 1,207
CASH FLOWS FROM INVESTING ACTIVITIES
Available-for-sale securities -
Purchases (25,330) (8,409)
Sales 3,744 6,162
Maturities 8,008 -
Held-to-maturity securities -
Purchases (2,616) (13,771)
Maturities 1,505 10,124
Net decrease in interest-bearing deposits with banks 34 (816)
Net increase in loans (12,313) (6,836)
Purchase of premises and equipment (286) (586)
Proceeds from sale of other real estate owned 1,411 -
Net cash used in investing activities (25,843) (14,132)
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in deposit accounts (2,402) (3,563)
Increase in federal funds purchased 3,700 -
Increase in repurchase agreements 2,143 6,705
Redeemable subordinated debentures (118) -
Proceeds from sale of preferred securities 23,000 -
Dividends paid (318) (988)
Proceeds from exercise of stock options 51 29
Purchase of treasury stock (155) -
Other, net 9 5
Net cash provided by financing activities 25,910 2,188
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 979 (10,737)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 18,294 29,046
CASH AND CASH EQUIVALENTS, END OF PERIOD $19,273 $18,309
(See notes to Condensed Consolidated Financial Statements)
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In the opinion of management, these unaudited financial statements
contain all disclosures which are necessary to present fairly the
Corporation's consolidated financial position at June 30, 1997 and the
consolidated results of operations and cash flows for three and six months
ended June 30, 1997 and 1996. The financial statements include all
adjustments (consisting only of normal recurring adjustments) which in the
opinion of management are necessary in order to present fairly the financial
position and results of operations for the interim periods. Certain
information and footnote disclosures normally included in financial
statements under generally accepted accounting principles have been
condensed or omitted pursuant to the Securities and Exchange Commission
rules and regulations. These financial statements should be read in
conjunction with the annual financial statements and notes thereto included
in Form 10-KSB for the fiscal year ended December 31, 1996.
Dividend
During June 1997, the Corporation's Board of Directors declared a 10% stock
dividend followed by a cash dividend of 8 cents ($.08) per share, both of
which are payable on July 31, 1997 to shareholders of record July 15, 1997.
As a result of the declaration of the stock dividend, the number of the
Corporation's outstanding shares as of June 30, 1997 increased to 2,081,447.
The financial information in this report has been adjusted to reflect the
dividends as of June 30, 1997.
EARNINGS PER SHARE COMPUTATION
The Corporation's reported earnings per share of $0.24 and $0.22 per share
for the three-month periods ended June 30, 1997 and 1996, respectively, and
the reported earnings per share of $0.49 and $0.43 per share for the
six-month periods ended on such date, all take into consideration the
dilutive effects of the Corporation's outstanding common stock equivalents,
namely stock options and mandatory stock purchase contracts.
The dilution results from the calculation of adjustments to both the number
of weighted average shares outstanding and the Corporation's net income for
the three- and six-month periods ended June 30, 1997 and 1996.
NEW ACCOUNTING PRONOUNCEMENT
The Financial Accounting Standard Board ("FASB") has issued a Statement of
Financial Accounting Standard ("SFAS") No. 128, Earnings Per Share ("EPS"),
which is effective for financial statements issued after December 31, 1997.
Once effective, the new standard will eliminate "primary" and "fully
diluted" EPS and instead will require presentation of "basic" and "diluted
EPS" in conjunction with the disclosure of the methodology used in computing
such EPS. "Basic EPS" excludes dilution and is computed by dividing income
available to common shareholders by the weighted-average common shares
outstanding during the period. "Diluted EPS" takes into consideration the
potential dilution that could occur if securities or other contracts to
issue common stock were exercised and converted into common stock.
<PAGE>
The adoption of this new standard is not expected to have a material impact
on the disclosure of EPS. The effect upon the Corporation's of adopting
this new standard has not been determined.
GUARANTEED PREFERRED BENEFICIAL INTEREST IN THE COMPANY'S SUBORDINATED DEBT
In April 1997, the Corporation formed a wholly-owned non-banking subsidiary
GCB Capital Trust (the "Trust"). The Trust was created under the Business
Trust Act of Delaware for the sole purpose of issuing and selling Preferred
Securities and common securities and using proceeds from the sale of the
Preferred Securities and Common Securities to acquire Junior Subordinated
Debentures (the "Debentures") issued by the Corporation. Accordingly, the
Junior Subordinated Debentures will be the sole assets of the Trust and
payments under the Junior Subordinated Debentures will be the sole revenue
of the Trust. All of the Common Securities are owned by the Corporation.
The Corporation's obligation under the debentures and related documents,
taken together, constitute a full and unconditional guarantee by the
Corporation of the Trust's obligations under the preferred securities.
Although the subordinated debentures will be treated as debt of the
Corporation, they currently qualify for tier 1 capital treatment. The
securities have no maturity date and are callable by the Corporation on or
about June 1, 2002, or earlier in the event the deduction of related
interest for federal income taxes is prohibited, treatment as tier 1 capital
is no longer permitted or certain other contingencies arise. The preferred
securities must be redeemed upon maturity of the debentures in year 2027.
On May 21, 1997, the Corporation through the Trust sold 920,000 Preferred
Securities at a liquidation amount of $25 per Preferred Security for an
aggregate amount of $23,000,000. It has a distribution rate of 10% per
annum payable at the end of each calendar quarter.
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis of the Corporation's consolidated
financial condition as of June 30, 1997 and the results of operations for
the three- and six-month periods ended June 30, 1997 and 1996 should be read
in conjunction with the consolidated financial statements, including notes
thereto, included in the Corporation's latest annual report on Form 10-KSB
for the fiscal year ended December 31, 1996, and the other information
herein. The consolidated statement of condition as of June 30, 1997 and the
statements of operations and cash flows for the three and six months ended
June 30, 1997 and 1996 are unaudited but include, in the opinion of the
management, all adjustments considered necessary for a fair presentation of
such data. The term "Corporation" as used herein refers to Greater Community
Bancorp and subsidiaries, the term "Subsidiary Banks" as used herein refers
to Great Falls Bank and Bergen Commercial Bank and the term "Trust" as used
herein refers to GCB Capital Trust. Data is presented for both the
Corporation and the Subsidiaries unless otherwise noted. All dollar
figures, except for per share data, are set forth in thousands.
A. Financial Condition: June 30, 1997 and December 31, 1996
As of June 30, 1997, the Corporation's total assets were $285.2 million, an
increase of $28.7 million or 11% compared to the amount reported at December
31, 1996. This increase resulted primarily from the net proceeds of the
Corporation's issuance, during the second quarter of 1997, of $23 million
in debentures in connection with the Trust's offering of Preferred
Securities. Cash and due from banks increased by $4.6 million or 38%
whereas federal funds sold decreased by $3.6 million or 57%. The majority
of the decrease in federal funds sold was offset by increases in cash and
due from banks.
Investment Securities
Investment Securities totaled $105.2 million at June 30, 1997, an increase
of $15.5 million or 17% compared to the amount reported at December 31,
1996. The increase in investment securities is a direct result of the
proceeds from the sale of Preferred Securities by the Trust. Management
reviews the investment portfolio continually to achieve maximum yields
without having to sacrifice the high quality of the investments. Of the
total investments, 51.6% are in U.S. Government obligations, 18.7% in U.S.
Government agency obligations, 23.4% in mortgage-backed securities and the
balance in municipal and other securities.
At June 30, 1997, based on the fair market value of its available-for-sale
portfolio, the Corporation recorded the difference between the unamortized
cost and the fair market value as an unrealized gain in the amount of $935,
net of taxes, as a component of shareholders' equity. This was an increase
of $628 from the $307 amount recorded at December 31, 1996.
<PAGE>
Loan Portfolio
The Corporation's loan portfolio net of allowance for possible loan losses
at June 30, 1997 totaled $146.6 million, an increase of $12.0 million or 9%
compared to the amount reported at December 31, 1996. The increase in loans
is primarily due to increased loan demand in both Passaic and Bergen
counties.
Other Real Estate Owned
As of June 30, 1997, other real estate totaled $510, a decrease of $1,324
or 72% when compared to the amount reported at December 31, 1996. The
decrease is primarily due to the sale of three properties owned where the
Corporation recognized gains from sale of $87,000.
Deposits
Total deposits at June 30, 1997 were $220.8 million, a decrease of $2.4
million or 1% relative to the amount reported at December 31, 1996. Within
the components of total deposits, non-interest and interest-bearing demand
deposits decreased by $3.0 million or 5% and $9.4 million or 17%,
respectively. This decrease was offset by increases in savings deposits and
time deposits of $1.6 million or 6% and $8.6 million or 10%, respectively.
Of the total deposits, time deposit accounts for 41%, savings deposits
accounts for 12% and the balance of 47% in non-interests and interest-
bearing demand deposits.
Liquidity
The Corporation maintains a liquidity position which it considers adequate
to provide funds to meet loan demand or the possible outflow of deposits.
It actively manages its liquidity position under the direction of the
Subsidiary Banks' Asset and Liability Management Committees. At June 30,
1997, sources of liquidity include $19.3 million in cash and cash
equivalents, and $66.7 million in securities available-for-sale.
On May 21, 1997, the Corporation through the Trust sold 920,000 Preferred
Securities at a liquidation amount of $25 per Preferred Security for an
aggregate amount of $23,000,000. It has a distribution rate of 10% per
annum payable at the end of each calendar quarter.
The proceeds received by the Corporation from the Trust will be used for
general corporate purposes which may include branch acquisitions of other
financial institutions. Im addition, a portion of the proceeds may be
contributed through investments in or advances to the Bank subsidiaries.
Capital Adequacy and Regulatory Matters
The Corporation is subject to regulation by the Board of Governors of the
Federal Reserve System (Federal Reserve Board). The Subsidiary Banks are
subject to regulation by both the Federal Deposit Insurance Corporation
(FDIC) and the New Jersey Department of Banking (Department). Such
regulators have promulgated regulations which require the Corporation and
the Subsidiary Banks to maintain certain capital ratios. At June 30, 1997,
the Corporation and its Subsidiary Banks are "well capitalized", as defined
by appropriate regulatory authority.
<PAGE>
The following table sets forth selected regulatory capital ratios for the
Corporation and the Subsidiary Banks at June 30, 1997:
Greater Great Bergen "Well Capitalized"
Community Falls Comercial (Under FDIC
Bancorp Bank Bank Regulations)
Tier I leverage ratio 10.54% 6.87% 9.30% 5%
Tier I risk-based capital ratio 15.94% 10.96% 13.50% 6%
Tier I and Tier II risk-based
capital ratio 28.88% 12.22% 14.75% 10%
Asset Quality
The Corporation seeks to manage credit risk through diversification of its
loan portfolio and the application of policies and procedures designed to
foster sound underwriting and credit monitoring policies. The senior
lending officer is charged with monitoring asset quality, establishing
credit policies and procedures and seeking consistent applications of the
loan review procedures.
The Corporation's lending is concentrated in its local market area. Its
non-performing loans primarily were made to the Corporation's customers who
operated in northeastern New Jersey. The degree of risk inherent in all of
the Corporation's lending activities is influenced heavily by general
economic conditions in the immediate market area. Among the factors which
tend to increase or decrease portfolio risk are changes in local or regional
real estate values, income levels and energy prices. These factors, coupled
with levels of unemployment, tax rates, governmental actions and market
conditions affecting the demand for credit among qualified borrowers, are
also important determinants of the risk inherent in the Corporation's
lending.
General economic conditions in the State of New Jersey have improved over
the past year. Interest rates have increased, due in part to action by the
Federal Reserve Board. General real estate interest rates have shown an
upward trend and real estate values and employment levels are fairly stable
and in some cases have shown an upward movement.
The components of non-performing assets are delinquent loans, nonperforming
assets and renegotiated loans. Each component is discussed in greater
detail below. Non-performing assets consist of nonaccrual loans, accruing
loans past due 90 days or more delinquent, and ORE. It is the Corporation's
policy to place a loan on nonaccrual status when, in the opinion of
management, the ultimate collectibility of the principal or interest on the
loan becomes doubtful. As a general rule, a commercial loan or real estate
loan more than 90 days past due with respect to principal or interest is
classified as a nonaccrual loan. Installment loans generally are not placed
on nonaccrual status but, instead, are charged off at 90 days past due,
except where the loans are secured and foreclosure proceedings have
commenced.
Loans are considered renegotiated if, for economic or legal reasons, a
concession has been granted to the borrower related to the borrower's
financial difficulties that the creditor would not otherwise consider. The
Corporation has renegotiated certain loans in instances where a
determination was made that greater economic value will be realized under
<PAGE>
new terms than through foreclosure, liquidation, or other disposition. ORE
includes both loan collateral that has been formally repossessed.
At the time of classification as ORE, loans are reduced to the fair value
of the collateral (if less than the loan receivable) by charge-offs against
the allowance for possible loan losses. ORE is carried on the books at the
lower of cost or fair value, less estimated costs to sell.
The following table sets forth the composition of the Corporation's
nonperforming assets and related asset quality ratios as of the dates
indicated. All of such assets were domestic assets since the Corporation
had no foreign loans.
June 30, December 31,
1997 1996
Non-accruing loans $1,780 $1,033
Renegotiated loans 803 726
Total non-performing loans $2,583 $1,759
Loans past due 90 days and accruing $1,178 876
Other real estate 510 1,834
Total non-performing assets $4,271 $4,469
Asset Quality Ratios
Non-performing loans to total gross loans 1.73% 1.28%
Non-performing assets to total gross loans 2.85% 3.25%
Non-performing assets to total assets 1.63% 1.74%
Allowance for possible loan losses to
non-performing loans 103.68% 144.40%
Allowance for possible loan losses to gross
loans 1.79% 1.85%
Of the net increase in non-accruing loans of $747 for the six months ended
June 30, 1997 when compared to December 31, 1996, $566 is the addition of
one loan which is guaranteed by Small Business Administration for up to 75%
of its value and is further collaterized by a first mortgage. During the six
months ended June 30, 1997, gross interest income of $62 would have been
recorded on loans accounted for on a non-accrual basis if the loans had been
current throughout the period. No interest was included on such loans
during such period. The Corporation had no restructured loans during this
period.
Impaired Loans - In accordance with SFAS No. 114, the Corporation utilizes
the following information when measuring its allowance for possible loan
losses. A loan is considered impaired when it is probable that the
Corporation will be unable to collect all amounts due according to the
contractual terms of the loan agreement. These loans consist primarily of
non-accruing loans where situations exist which have reduce the probability
of collection in accordance with contractual terms.
<PAGE>
As of June 30, 1997 the Corporation's recorded investment in impaired loans
and the related valuation allowance calculated under SFAS No. 114 are as
follows:
Recorded Valuation
Investment Allowance
Impaired loans -
Valuation allowance required $1,614 $ 281
No valuation allowance required - -
Total impaired loans $1,614 $ 281
This valuation allowance is included in the allowance for possible loan
losses on the Corporation's consolidated balance sheet.
The average recorded investment in impaired loans for the six-month period
ended June 30, 1997 was $1,600. Interest payments received on impaired
loans are recorded as interest income unless collection of the remaining
recorded investment is doubtful in which event payments received are
recorded as reductions of principal. The Corporation recognized interest
income on impaired loans of $13 for the six-month period ended June 30,
1997.
Analysis of the Allowance For Possible Loan Losses
The allowance for possible loan losses is determined by management based
upon its evaluation of the known, as well as the inherent, risks within the
Corporation's loan portfolio, and is maintained at a level considered
adequate to provide for potential loan losses. The allowance for possible
loan losses is increased by provisions charged to expense and recoveries of
prior charge-offs, and is reduced by charge-offs. In establishing the
allowance for possible loan losses, management considers, among other
factors, previous loss experience, the performance of individual loans in
relation to contract terms, the size of particular loans, the risk
characteristics of the loan portfolio generally, the current status and
credit standing of borrowers, management's judgment as to prevailing and
anticipated real estate values, other economic conditions in the
Corporation's market, and other factors affecting credit quality.
Management believes the allowance for possible loan losses at June 30, 1997
of $2,678 or 103.68% of nonperforming loans, was adequate.
The Corporation's management continues to actively monitor the Corporation's
asset quality and to charge off loans against the allowance for possible
loan losses as it deems appropriate. Although management believes it uses
the best information available to make determinations with respect to the
allowance for possible loan losses, future adjustments may be necessary if
economic conditions differ substantially from the assumptions used in making
the initial determinations.
<PAGE>
The following table represents transactions affecting the allowance for
possible loan losses during the six-month period ended June 30, 1997.
Balance at beginning of period, December 31, 1996 $2,540
Charge-offs:
Commercial, financial and agricultural 191
Real estate--mortgage -
Installment loans to individuals 1
Credit cards and related plans 14
206
Recoveries:
Commercial, financial and agricultural 64
Real estate--mortgage 4
Installment loans to individuals -
Credit cards and related plans 1
69
Net charge-offs 137
Provision charged to operations
during the six-month period 275
Balance at end of period, June 30, 1997 $2,678
Ratio of net charge-offs during the
six-month period to average loans
outstanding during that period 0.10%
Allocation of the Allowance for Possible Loan Losses
The following table sets forth the allocation of the allowance for possible
loan losses by loan category amounts, the percent of loans in each category
to total loans in the allowance, and the percent of loans in each category
to total loans, at June 30, 1997.
Balance at June 30, 1997
applicable to:
Percent of
Loans in each
Percent of category to
Amount Allowance total loans
Commercial, financial
and agricultural $1,181 44% 52%
Real estate- construction 26 1% 4%
Real estate- mortgage 792 30% 37%
Installment loans to individuals 273 10% 7%
Unallocated 406 15% n.a.
Total $2,678 100% 100%
Management has determined from continued evaluation of the various elements
of the loan portfolio, previous charge-off experience, collateral evaluation
and borrowers' credit histories, that different risks are associated with
each loan category. Accordingly, management has assigned general reserve
percentages within each loan category, in addition to specific reserves
allocated to individual loans within each category.
<PAGE>
B. Results of Operations: Three and Six Months ended June 30, 1997 and
1996
General. The Corporation's results of operations are dependent primarily
on its net interest and dividend income, which is the difference between
interest earned on its loans and investments and the interest paid on
interest-bearing liabilities. The Corporation's net income is also affected
by the generation of noninterest income, which primarily consists of service
fees on deposit accounts and other income. Net interest income is
determined by the difference between yields earned on interest-earning
assets and rates paid on interest-bearing liabilities ("interest rate
spread") and (ii) the relative amounts of interest-earning assets and
interest-bearing liabilities. The Corporation's interest rate spread is
affected by regulatory, economic and competitive factors that influence
interest rates, loan demand and deposit flows and general levels of
nonperforming assets. In addition, net income is affected by the level of
operating expenses and establishment of loan loss reserves and ORE reserves.
The operations of the Corporation and the entire banking industry are
significantly affected by prevailing economic conditions, competition and
the monetary and fiscal policies of governmental agencies. Lending
activities are influenced by the demand for and supply of real estate,
competition among lenders, the level of interest rates and the availability
of funds. Deposit flows and costs of funds are influenced by prevailing
market rates of interest, primarily on competing investments, account
maturities and the levels of personal income and savings in the market area.
Three and Six Months Ended June 30, 1997. The Corporation earned net income
of $610 or $0.24 per share and $1,275 or $0.49 per share, for the three- and
six-month periods ended June 30, 1997, compared to $522 or $0.22 per share
and $1,004 or $0.43 per share, for the same periods in 1996.
Interest income increased by $387 and $628 for the three- and six-month
periods ended June 30, 1997 over the corresponding period in 1996. The
increases primarily due to increases in average income-yielding assets.
Other income increased by $436 for the three-month period ended June 30,
1997 over the comparable period in 1996. The majority of such increase is
directly related to increase in fee income from service charges on deposits
coupled with gain on sale of other real estate owned.
Total interest expense increased by $397 and $434 for the three- and
six-month periods ended June 30, 1997 over the corresponding period in the
prior year, primarily due to an increase in average federal funds borrowing
coupled with interest expense related to the junior subordinated debt.
Total other expenses decreased by $141 for the six-month period ended June
30, 1997 compared to the same period in the prior year primarily as a result
of management's efforts to consolidate various operational functions of the
Subsidiary Banks. Of the total decrease, $238 was attributable to decreases
in all other expenses coupled with an increase in salaries and employee
benefits of $121. Total other expenses increased by $187 for the
three-month period ended June 30, 1997 over the comparable period.
The majority of this increase is related to the increase in salaries
and employee benefits.
<PAGE>
The provision for possible loan losses for the three- and six-month periods
ended June 30, 1997 was $160 and $275, respectively. This represents
increases of $70 and $95 compared to the same periods in the prior year.
Management increased the provisions primarily as a result of the increased
loan portfolio.
Some Specific Factors Affecting Future Results of Operations
Although future movement of interest rates cannot be predicted with
certainty, the interest rate sensitivity of the Corporation's assets and
liabilities are such that a decline in interest rates during the next few
months would have a favorable impact on the Corporation's results of
operations. However, because overall future performance is dependent on
many other factors, past performance is not necessarily an indication of
future results and there can be no guarantee regarding future overall
results of operations.
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
The Corporation and its subsidiaries are parties in the ordinary course
of business to litigation involving collection matters, contract claims
and other miscellaneous causes of action arising from its business.
Management does not consider that any such proceedings depart from usual
routine litigation and in its judgement, neither the Corporation's
consolidated financial position nor its results of operations will be
affected materially by any present proceedings.
Item 2 - Changes in Securities
None.
Item 3 - Defaults Upon Senior Securities
None.
Item 4 - Submission of Matters to a Vote of Security Holders
See form 10-QSB for quarter ended March 31, 1997 regarding the 1997
Annual Meeting of Stockholders held on April 15, 1997.
Item 5 - Other information
None.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits. None.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
quarter ended June 30, 1997.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
GREATER COMMUNITY BANCORP
(Registrant)
Date: August 8, 1997 By:/s/ Naqi A. Naqvi
Naqi A. Naqvi, Treasurer
(Duly Authorized Officer and
Principal Financial Officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 16568
<INT-BEARING-DEPOSITS> 4447
<FED-FUNDS-SOLD> 2705
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 66667
<INVESTMENTS-CARRYING> 38540
<INVESTMENTS-MARKET> 38048
<LOANS> 149303
<ALLOWANCE> (2678)
<TOTAL-ASSETS> 285196
<DEPOSITS> 220840
<SHORT-TERM> 10002
<LIABILITIES-OTHER> 3781
<LONG-TERM> 27870
<COMMON> 2081
0
0
<OTHER-SE> 19687
<TOTAL-LIABILITIES-AND-EQUITY> 285196
<INTEREST-LOAN> 6537
<INTEREST-INVEST> 2885
<INTEREST-OTHER> 335
<INTEREST-TOTAL> 9757
<INTEREST-DEPOSIT> 3152
<INTEREST-EXPENSE> 3949
<INTEREST-INCOME-NET> 5808
<LOAN-LOSSES> 275
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4713
<INCOME-PRETAX> 1953
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1275
<EPS-PRIMARY> 0.49
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 1780
<LOANS-PAST> 1178
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2540
<CHARGE-OFFS> 206
<RECOVERIES> 69
<ALLOWANCE-CLOSE> 2678
<ALLOWANCE-DOMESTIC> 2678
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 406
</TABLE>
