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 March 31, 1998
[ ] 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 - 2,643,231 shares at April 14, 1998.
Transition Small Business Disclosure Format (check one);
Yes No X
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
Form 10-QSB
INDEX
PAGE
PART I - FINANCIAL INFORMATION
Item 1-Financial Statements
Condensed Consolidated Balance Sheet
March 31, 1998 and December 31, 1997 (Unaudited) . . . . . . 2
Condensed Consolidated Statements of Income
Three Months ended March 31, 1998
and 1997 (unaudited) . . . . . . .3
Condensed Consolidated Statements of Comprehensive Income
Three Months ended March 31, 1998
and 1997 (unaudited) . . . . . . .4
Condensed Consolidated Statements of Cash Flows
Three Months ended March 31, 1998 and 1997 (unaudited) . . . . 5
Notes to Condensed Consolidated Financial Statements (unaudited). 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . .7
Item 3 - Quantitative and Qualitative Changes Regarding Market Risk . .14
PART II - OTHER INFORMATION
Items 1 through 6.........................................................15
Signatures...................................................................16
1
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1- Financial Statements
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except share data)
(Unaudited)
<TABLE>
<S> <C> <C>
March 31, December 31,
1998 1997
ASSETS
CASH AND DUE FROM BANKS-Non-interest-bearing $ 19,255 $ 12,735
FEDERAL FUNDS SOLD 16,575 10,110
-------- --------
Total cash and cash equivalents 35,830 22,845
-------- --------
DUE FROM BANKS - Interest-bearing 2,663 2,362
-------- --------
SECURITIES:
Available-for-sale, at fair value 99,890 91,251
Held-to-maturity, at amortized cost 33,359 35,525
-------- --------
133,249 126,776
-------- --------
LOANS 171,551 161,249
Less - Allowance for possible loan losses 2,871 2,731
Unearned income 459 393
-------- --------
Net loans 168,221 158,125
PREMISES AND EQUIPMENT, net 5,432 5,439
-------- --------
OTHER REAL ESTATE 258 373
-------- --------
ACCRUED INTEREST RECEIVABLE 2,058 2,149
-------- --------
INTANGIBLE AND OTHER ASSETS 4,442 3,916
-------- --------
Total assets $352,153 $321,985
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
Non-interest-bearing $ 73,274 $ 72,521
Interest-bearing 49,209 45,010
Savings 29,807 27,503
Time 133,298 112,521
-------- --------
Total deposits 285,588 257,555
ACCRUED INTEREST PAYABLE 2,893 2,053
OTHER LIABILITIES 2,894 2,975
REPURCHASE AGREEMENTS 7,133 6,338
REDEEMABLE SUBORDINATED DEBENTURES 803 803
GUARANTEED PREFERRED BENEFICIAL INTEREST
IN THE COMPANY'S SUBORDINATED DEBT 23,000 23,000
-------- --------
Total Liabilities 322,311 292,724
-------- --------
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, 2,643,231
and 2,647,016 shares issued 2,643 2,647
Additional paid-in capital 25,038 25,138
Retained earnings (accumulated deficit) 116 (391)
Unrealized holding gain on securities
available-for-sale 2,045 1,867
-------- --------
Total shareholders' equity 29,842 29,261
-------- --------
Total liabilities and
shareholders' equity $352,153 $321,985
======== ========
(See notes to Condensed Consolidated Financial Statements)
</TABLE>
2
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share data)
(Unaudited)
<TABLE>
Three Months Ended
March 31,
1998 1997
<S> <C> <C>
INTEREST INCOME
Loans, including fees $ 3,788 $ 3,200
Investment securities 1,967 1,435
Federal Funds sold and deposits with banks 136 129
------- -------
Total interest income 5,891 4,764
------- -------
INTEREST EXPENSE
Deposits 2,156 1,549
Short-term borrowings 66 148
Long-Term borrowings 593 109
------- -------
Total interest expense 2,815 1,806
------- -------
NET INTEREST INCOME 3,076 2,958
PROVISION FOR POSSIBLE LOAN LOSSES 120 115
------- -------
Net interest income after
provision for possible loan losses 2,956 2,843
OTHER INCOME 918 515
------- -------
OTHER EXPENSES
Salaries and employee benefits 1,339 1,120
Occupancy and equipment 584 487
Regulatory, professional and other fees 173 184
Office expenses 134 144
All other operating expenses 460 388
------- -------
Total other expenses 2,690 2,323
------- -------
Income before income taxes 1,184 1,035
PROVISION FOR INCOME TAXES 413 370
------- -------
NET INCOME 771 665
======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING - Basic 2,643 2,066
======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING - Diluted 2,735 2,438
======= =======
NET INCOME PER SHARE - Basic $0.29 $0.32
======= =======
NET INCOME PER SHARE - Diluted $0.28 $0.30
======= =======
</TABLE>
(See notes to Condensed Consolidated Financial Statements)
3
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in thousands, except per share data)
(Unaudited)
<TABLE>
Three Months Ended
March 31,
1998 1997
<S> <C> <C>
NET INCOME $ 771 $ 665
Other comprehensive income, net of tax
Unrealized gains on securities
Unrealized gains arising in the period 178 251
Reclassification adjustment:
Gain included in net income (62) (6)
-------- --------
Other comprehensive income 116 245
-------- -------
Comprehensive income $ 887 $ 910
-------- -------
</TABLE>
(See notes to Condensed Consolidated Financial Statements)
4
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
Three Months Ended
March 31
1998 1997
------- ------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 771 $ 665
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 288 251
Accretion of discount on securities, net - (37)
Accretion of discount on debentures _ 3
Provision for possible loan losses 120 115
Gain on sale of investment securities (154) (10)
Decrease in accrued interest receivable 91 27
(Increase) decrease in other assets (526) 44
Increase in accrued expenses
and other liabilities 759 479
-------- -------
Net cash provided by operating activities 1,349 1,537
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Available-for-sale securities:
Purchases (21,920) (8,985)
Sales 112 1,963
Calls or Maturities 13,347 4,154
Held-to-maturity securities:
Purchases - (2,058)
Maturities 2,166 -
Net (increase)decrease in interest-bearing
deposits with banks (301) 22
Net increase in loans (10,096) (6,564)
Capital expenditure (254) (71)
Decrease in other real estate 115 184
---------- --------
Net cash used in investing activities (16,831) (11,355)
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposit accounts 28,033 (13)
Increase in repurchase agreements 795 9,464
Redeemable subordinated debentures - (97)
Dividends paid (264) (152)
Proceeds from exercise of stock options 18 -
Purchase of treasury stock (122) (155)
Other, net 7 30
-------- ------
Net cash provided by financing activities 28,467 9,128
-------- ------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 12,985 (690)
-------- -------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 22,845 18,294
-------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $35,830 $17,604
======== ========
</TABLE>
(See notes to Condensed Consolidated Financial Statements)
5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In the opinion of management, these unaudited condensed financial statements
contain all disclosures which are necessary to present fairly the Corporation's
consolidated financial position at March 31, 1998 and the consolidated results
of operations and cash flows for three months ended March 31, 1998 and 1997. The
financial statements include all adjustments (consisting solely 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, 1997.
DIVIDEND
During March, 1997, the Corporation's Board of Directors declared a cash
dividend of $.10 per share payable on April 30, 1998 to shareholders of record
April 15, 1998. The financial information in this report has been adjusted to
reflect the dividends payable as of March 31, 1998.
EARNINGS PER SHARE COMPUTATION
The Corporation's reported diluted earnings per share of $0.28 and $0.30 per
share for the three-month periods ended March 31, 1998 and 1997, respectively,
both take into consideration the dilutive effects of the Corporation's
outstanding common stock equivalents, namely stock options and and (for 1997
only) mandatory stock options ("Equity Contracts"). Prior period per share
amounts has been restated for adaption of SFAS 128.
6
<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 March 31, 1998 and results of operations for the
three-month periods ended March 31, 1998 and 1997 should be read in conjunction
with the Condensed Consolidated Financial Statements and related Notes thereto
included in the Corporation's latest Annual Report on Form 10- KSB and the other
information herein. The information as of March 31, 1998 and for the three-month
periods ended March 31, 1998 and 1997 is derived from unaudited financial data
but, in the opinion of management of the Corporation, reflects all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation of the financial condition and results of operations at those dates
and for those periods. The term "Corporation" as used herein refers to Greater
Community Bancorp and subsidiaries and the term "Subsidiary Banks" as used
herein refers to Great Falls Bank ("GFB)and Bergen Commercial Bank ("BCB").
Unless otherwise indicated, amounts indicated are in thousands, except per share
data.
A. Financial Condition: March 31, 1998 and December 31, 1997
At March 31, 1998, the Corporation's total assets were $352.2 million, an
increase of $30.2 million or 9% compared to the amount reported at December 31,
1997. Investment securities increased by $6.5 million or 5% and net loans
increased by $10.1 million or 6%.
Such increases were funded by an increase of $28.0 million or 11% in total
deposits. Cash and cash equivalents increased by $13.0 million or 57%.
Investment Securities
Investment securities totaled $133.2 million at March 31, 1998, an increase of
$6.5 million or 5% compared to the amount reported at December 31, 1997. Within
the investment securities portfolio, the majority of the increase occurred in
mortgage-backed securities. Management reviews the investment portfolio
continually to achieve maximum yields without having to sacrifice the quality of
the investments. Of the total at March 31, 1998, 61% of the investments are in
U.S. Government obligations, 31% in mortgage backed securities and the balance
in municipal and other equity securities.
Under the requirements of Statement of Financial Accounting Standard No. 115,
effective January 1, 1994 the Corporation segregated its investment portfolio
into held-to-maturity and available-for-sale. At March 31, 1998, 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 $2.0 million net of taxes, as a component of
shareholders' equity. This was an increase of $178 from the $1.9 amount recorded
at December 31, 1997.
Loan Portfolio
The Corporation's loan portfolio net of allowance for possible loan losses at
March 31, 1998 totaled $168.2 million, an increase of $10.1 million or 6%,
compared to the amount reported at December 31, 1997. The increase is primarily
due to increased loan demand for both Subsidiary Banks.
7
<PAGE>
Deposits
Total deposits at March 31, 1998 were $285.6 million, an increase of $28.0
million or 11%, compared to the amount reported at December 31, 1997. Of the
total increase, time deposits increased by $20.8 million primarily as a result
of deposit promotions, savings deposits increased by $2.3 million, and
interest-bearing demand deposits increased by $4.2 million. Of the total
deposits, time deposits accounts for 47%, non-interest-bearing deposits accounts
for 26%, interest-bearing demand deposits accounts for 17%, and savings deposits
accounts for 10%.
Liquidity
Liquidity measures the Corporation's ability to provide sufficient cash flows
for current and future financial obligations on a timely basis. The Corporation
maintains a liquidity position which it considers adequate to provide funds to
meet loan demand or the possible outflow of deposits. At March 31, 1998, sources
of liquidity include $35.8 million in cash and cash equivalents, and $99.9
million in investment securities available for sale.
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 and Insurance (Department). Such regulators
have promulgated risk-based capital guidelines which require the Corporation and
the Subsidiary Banks to maintain certain minimum capital as a percentage of
their assets and certain off-balance sheet items adjusted for predefined credit
risk factors (risk-adjusted assets).
The following table sets forth selected regulatory capital ratios for the
Corporation and the Subsidiary Banks and the required minimum regulatory ratios
at March 31, 1998:
<TABLE>
To Be Well
For Capital Capitalized under
Adequacy Prompt Corrective
Actual Purposes Action Provision
<S> <C> <C> <C> <C> <C> <C>
Amount Ratio Amount Ratio Amount Ratio
Total capital (to risk weighted assets)
Greater Community Bancorp $ 53,075 24.46% $ 17,359 8.00% $ - -
Great Falls Bank 15,064 11.74% 10,265 8.00% 12,831 10.00%
Bergen Commercial Bank 8,493 13.70% 4,959 8.00% 6,199 10.00%
Tier 1 Capital (to risk weighted assets)
Greater Community Bancorp 36,483 16.81% 8,682 4.00% - -
Great Falls Bank 13,454 10.48% 5,136 4.00% 7,704 6.00%
Bergen Commercial Bank 7,718 12.45% 2,480 4.00% 3,720 6.00%
Tier 1 Capital (to average assets)
Greater Community Bancorp 36,483 11.64% 12,537 4.00% - -
Great Falls Bank 13,454 6.59% 8,166 4.00% 10,208 5.00%
Bergen Commercial Bank 7,718 7.77% 3,973 4.00% 4,967 5.00%
</TABLE>
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. Over the last several years
management has devoted increased resources to its lending
8
<PAGE>
department to remediate problem assets and improve loan review procedures. The
senior lending officers of the Subsidiary Banks are charged with monitoring
asset quality, establishing credit policies and procedures and seeking
consistent applications of these 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 few years. Interest rates have been fairly stable. The real estate market,
real estate values and employment levels are fairly stable and in some cases
have shown an upward movement.
The components of nonperforming assets are delinquent loans, nonperforming
assets and renegotiated loans. Each component is discussed in greater detail
below. Nonperforming 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 new terms than through
foreclosure, liquidation, or other disposition. ORE includes both loan
collateral that has been formally repossessed and collateral that is in the
Corporation's possession and under its control without legal transfer of title.
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. Subsequent valuation
adjustments to the fair value of the collateral are charged or credited to
current operations.
9
<PAGE>
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.
<TABLE>
March 31, December 31,
1998 1997
<S> <C> <C>
Non-accruing loans $1,681 $ 1,741
Renegotiated loans 432 521
------- -------
Total non-performing loans $2,113 $ 2,262
------- -------
Loans past due 90 days and accruing $ 12 135
Other real estate 258 373
------- -------
Total non-performing assets $ 2,383 $ 2,770
======= =======
Asset Quality Ratios
Non-performing loans to total gross loans 1.23% 1.40%
Non-performing assets to total gross loans 1.39% 1.71%
Non-performing assets to total assets .68% .86%
Allowance for possible loan losses to
non-performing loans 135.87% 120.73%
</TABLE>
Non-accruing loans decreased by $60 for the three months ended March 31, 1998
when compared to December 31, 1997, primarily due to such loans being brought up
to current status. Renegotiated loans decreased by $89 for the same period,
primarily due to a reclassification of a non-accrual loan. During the three
months ended March 31, 1998, gross interest income of $36 would have been
recorded on loans accounted for on a nonaccrual basis if the loans had been
current throughout the 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 bank will be unable to
collect all amounts due according to the contractual terms of the loan
agreement. These loans consist primarily of non-accrual loans but may include
performing loans to the extent that situations arise which would reduce the
probability of collection in accordance with contractual terms. As of March 31,
1998 the Corporation's recorded investment in impaired loans and the related
valuation allowance calculated under SFAS No.
114 are as follows:
<TABLE>
Recorded Valuation
Investment Allowance
<S> <C> <C>
Impaired loans -
Valuation allowance required $1,781 $ 257
No valuation allowance required - -
------ -----
Total impaired loans $1,781 $ 257
====== =====
</TABLE>
This valuation allowance is included in the allowance for possible loan losses
on the Corporation's statement of condition.
The average recorded investment in impaired loans for the three-month period
ended March 31, 1998 was $1.6 million.
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 $11,000 for the three-month
period ended March 31, 1998.
10
<PAGE>
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 March 31, 1998 of $2.9
million or 136% 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.
11
<PAGE>
At March 31, 1998, the allowance for possible loan losses increased by $140 over
the amount recorded at December 31, 1997. The following table represents
transactions affecting the allowance for possible loan losses during the
three-month period ended March 31, 1998.
<TABLE>
<S> <C>
Balance at beginning of period, December 31, 1997 $2,731
Charge-offs:
Commercial, financial and agricultural -
Real estate--mortgage -
Installment loans to individuals 9
Credit cards and related plans 5
------
14
Recoveries:
Commercial, financial and agricultural 25
Real estate--mortgage 6
Installment loans to individuals -
Credit cards and related plans 3
------
34
Net Recoveries 20
Provision charged to operations
during the three-month period 120
------
Balance at end of period, March 31, 1998 $2,871
======
Ratio of net recoveries during the
three-month period to average loans
outstanding during that period .01%
</TABLE>
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 percentage of loans in each category to total
loans, at March 31, 1998.
Balance at March 31, 1998 applicable to:
<TABLE>
Percentage of
Loans in each
Percentage category to
Amount of Allowance total loans
<S> <C> <C> <C>
Commercial $1,086 38% 56%
Real estate construction 53 2% 4%
Real estate--mortgage 937 33% 33%
Installment loans to individuals 297 10% 7%
Unallocated 498 17% -
------ ---- ----
Total $2,871 100% 100%
====== ==== ====
</TABLE>
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.
12
<PAGE>
B. Results of Operations: Three-Months ended March 31, 1998
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
non-interest income, which primarily consists of service fees on deposit
accounts and other income. Net interest income is determined by (i) 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 non-performing 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 Months Ended March 31, 1998. The Corporation earned net income of $771 or
$0.29 per share basic and $0.28 per share diluted for the three months ended
March 31, 1998, compared to $665 or $0.32 per share basic and $0.30 per share
diluted for the same period in 1997.
Interest income increased by $1,127 or 24% for the three months ended March 31,
1998 relative to the comparable period in 1997. The increase is attributable
primarily to the increase in average income-yielding assets. Other income
increased by $403 or 78% in the first quarter of 1998 compared to the same
period in 1997. The majority of such increase is attributable to the increase in
sales and commission fees from trading activities.
Total interest expense increased by $1,009 during the first three months of 1998
relative to the same period in 1997. The majority of such increase is related to
the increase in average rate-related liabilities. Total other expenses increased
by $367 during the first three months of 1998 compared to the same period in
1997. The majority of such increase is attributable to the increase in salaries
and employee benefits.
The provision for possible loan losses for the three months ended March 31, 1998
was $120,000 compared to $115,000 during the first three months of the prior
year. Management increased the provision primarily as a result of the increased
loan portfolio.
13
<PAGE>
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.
ITEM 3 - Quantitative and Qualitative Changes Regarding Market Risk
There has been no material changes in Corporation's assessment of its
sensitivity to market risk since its presentation in 1997 Annual Report to
Shareholders in Form 10-KSB filed with Securities and Exchange Commission.
14
<PAGE>
GREAT FALLS 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 their 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 - Default Upon Senior Securities
None.
Item 4 - Submission of Matters to a Vote of Security Holders The Corporation's
annual meeting of stockholders (the "1998 Annual Meeting") was held on April 21,
1998. The following actions were taken at the 1998 Annual Meeting with respect
to election of directors. In accordance with the nominations described in the
Corporation's Proxy Statement dated March 13, 1998 (the "1998 Proxy Statement"),
previously filed with the Commission, all three of the nominees, Anthony M.
Bruno, Jr., George E. Irwin and Alfred R. Urbano, were elected as directors for
three-year terms expiring in 2001 and until the election and qualification of
their respective successors.
The voting was as follows:
Name of Nominee Votes for Votes Against Votes Withheld
--------------- --------- ------------- --------------
Anthony M. Bruno, Jr. 1,888,919 - 5,510
George E. Irwin 1,884,222 - 10,207
Alfred R. Urbano 1,889,145 - 5,284
The names of the other Directors of the Corporation whose terms of office
as Director continued after the 1998 Annual Meeting (and the year in
which their respective terms expire) are as follows: C. Mark Campbell
(1999); Joseph A. Lobosco (1999); John L. Soldoveri (1999); Charles J.
Volpe (1999); Marino A. Bramante (2000); Robert J. Conklin (2000); and
William T. Ferguson (2000).
Item 5 - Other information
None.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibit is filed with this Report.
Exhibit No. Description
27 Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
quarter ended March 31, 1998.
15
<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: May 13, 1998 By:\Naqi A. Naqvi\
Naqi A. Naqvi, Treasurer
(Duly Authorized Officer and
Principal Financial Officer)
16
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
EXHIBIT 27
FINANCIAL DATA SCHEDULE
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 19255
<INT-BEARING-DEPOSITS> 2663
<FED-FUNDS-SOLD> 16575
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 99890
<INVESTMENTS-CARRYING> 33359
<INVESTMENTS-MARKET> 35017
<LOANS> 171092
<ALLOWANCE> (2871)
<TOTAL-ASSETS> 352153
<DEPOSITS> 285588
<SHORT-TERM> 7936
<LIABILITIES-OTHER> 5787
<LONG-TERM> 23000
<COMMON> 2643
0
0
<OTHER-SE> 25154
<TOTAL-LIABILITIES-AND-EQUITY> 352153
<INTEREST-LOAN> 3788
<INTEREST-INVEST> 1967
<INTEREST-OTHER> 136
<INTEREST-TOTAL> 5891
<INTEREST-DEPOSIT> 2156
<INTEREST-EXPENSE> 659
<INTEREST-INCOME-NET> 3076
<LOAN-LOSSES> 120
<SECURITIES-GAINS> 154
<EXPENSE-OTHER> 2690
<INCOME-PRETAX> 1184
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 771
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.28
<YIELD-ACTUAL> 0
<LOANS-NON> 2113
<LOANS-PAST> 12
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2731
<CHARGE-OFFS> 14
<RECOVERIES> 34
<ALLOWANCE-CLOSE> 2871
<ALLOWANCE-DOMESTIC> 2871
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 498
</TABLE>
