U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(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, 2000
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-14294
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Greater Community Bancorp
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(Exact name of Registrant as specified in its charter)
NEW JERSEY 22-2545165
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
55 Union Boulevard, Totowa, New Jersey 07512
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(Address of principal executive offices)
(973) 942-1111
(Registrant's telephone number)
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 and Exchange
Act of 1934 during the preceding 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
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: Common stock $0.50 par
value - 6,313,406 shares at August 11, 2000.
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
INDEX
PAGE
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheet at
June 30, 2000 (Unaudited) and December 31, 1999................ 3
Consolidated Statements of Income (Unaudited)
Three and Six months ended
June 30, 2000 and 1999 .........................................4
Consolidated Statements of Changes in Shareholders'
Equity and Comprehensive Income (Unaudited)
Six Months ended June 30, 2000 and 1999.........................5
Consolidated Statements of Cash Flows (Unaudited)
Six months ended June 30, 2000 and 1999.........................6
Notes to Consolidated Financial Statements(unaudited)..............8
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.........................9
Item 3 - Quantitative and Qualitative Changes Regarding Market Risk. . . 17
PART II - OTHER INFORMATION
Items 1 through 6.......................................................18
Signatures.................................................................20
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1- Financial Statements
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands, except share data)
<TABLE>
June 30, December 31,
2000 1999
---------- -------
<S> <C> <C>
ASSETS (Unaudited)
CASH AND DUE FROM BANKS-Non-interest-bearing $ 20,523 $ 16,850
FEDERAL FUNDS SOLD 7,475 2,350
-------- --------
Total cash and cash equivalents 27,998 19,200
DUE FROM BANKS - Interest-bearing 9,127 10,675
SECURITIES:
Available-for-sale, at fair value 137,889 142,236
Held-to-maturity, at amortized cost
(Fair values $3,924 and $8,506) 4,338 8,955
-------- ---------
142,227 151,191
LOANS 361,257 346,935
Less - Allowance for possible loan losses 5,452 4,953
Unearned income 1,616 1,419
-------- ---------
Net loans 354,189 340,563
PREMISES AND EQUIPMENT, net 7,192 7,840
ACCRUED INTEREST RECEIVABLE 4,064 3,825
BANK OWNED LIFE INSURANCE 10,961 10,690
INTANGIBLE ASSETS 12,740 13,128
OTHER ASSETS 11,022 10,341
-------- ---------
Total assets $579,520 $567,453
======== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
Non-interest-bearing $108,487 $ 93,968
Interest-bearing 82,841 70,356
Savings 56,943 60,635
Time Deposits less than $100 185,374 198,523
Time Deposits $100 and over 42,308 37,152
-------- --------
Total deposits 475,953 460,634
FHLB ADVANCES 25,000 25,000
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE 8,745 16,403
ACCRUED INTEREST PAYABLE 4,895 3,022
OTHER LIABILITIES 5,775 3,992
GUARANTEED PREFERRED BENEFICIAL INTEREST
IN THE COMPANY'S SUBORDINATED DEBT 23,000 23,000
-------- ---------
Total Liabilities 543,368 532,051
-------- ---------
SHAREHOLDERS' EQUITY
Common Stock, par value $0.50 per share:
20,000,000 shares authorized, 6,326,150
and 6,031,994 shares outstanding 3,163 3,016
Additional paid-in capital 34,242 31,891
Retained earnings 382 1,636
Accumulated other comprehensive income (loss) (1,635) (1,141)
--------- ---------
Total shareholders' equity 36,152 35,402
--------- ---------
Total liabilities and shareholders' equity $579,520 $567,453
========= =========
</TABLE>
(See notes to Condensed Consolidated Financial statements)
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)
<TABLE>
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
<S> <C> <C> <C> <C>
2000 1999 2000 1999
---- ---- ---- ----
INTEREST INCOME
Loans, including fees $7,633 $6,747 $15,082 $11,053
Securities 2,333 2,169 4,705 3,627
Federal Funds sold and deposits with banks 354 272 679 579
------- ------ ------- -------
Total interest income 10,320 9,188 20,466 15,259
------- ------ ------- -------
INTEREST EXPENSE
Deposits 4,004 3,738 7,910 5,617
Short-term borrowings 550 371 1,134 617
Long-term borrowings 575 575 1,150 1,150
------ ------ ------- -------
Total interest expense 5,129 4,684 10,194 7,384
------ ------ ------- -------
NET INTEREST INCOME 5,191 4,504 10,272 7,875
PROVISION FOR POSSIBLE LOAN LOSSES 417 448 573 559
------ ------ ------ -------
Net interest income after
provision for possible loan losses 4,774 4,056 9,699 7,316
OTHER INCOME
Service charges on deposit accounts 485 516 960 976
Other commissions and fees 272 308 682 684
Gain on sale of securities (38) 1,793 (28) 1,993
Gain on sale of assets 517 - 517 -
All other income 629 429 1,133 776
-------- ------ -------- ------
1,865 3,046 3,264 4,429
OTHER EXPENSES
Salaries and employee benefits 2,333 2,904 4,636 4,466
Occupancy and equipment 812 760 1,658 1,360
Regulatory, professional and other fees 392 532 692 770
Computer services 107 97 209 171
Amortization of intangible assets 195 193 389 220
Office expense 240 208 488 384
All other operating expenses 716 841 1,355 1,406
-------- ------ -------- ------
Total other expenses 4,795 5,535 9,427 8,777
-------- ------ -------- ------
Income before income taxes 1,844 1,567 3,536 2,968
-------- ------ -------- ------
PROVISION FOR INCOME TAXES 701 550 1,337 1,065
-------- ------ -------- ------
NET INCOME $1,143 $ 1,017 $2,199 $ 1,903
======== ======= ======== =======
WEIGHTED AVERAGE SHARES OUTSTANDING - Basic 6,329 6,143 6,332 6,015
======== ====== ======== =======
WEIGHTED AVERAGE SHARES OUTSTANDING - Diluted 6,444 5,385 6,453 6,261
======== ====== ======== =======
NET INCOME PER SHARE - Basic $ 0.18 $ 0.17 $ 0.35 $ 0.32
======== ====== ======== =======
NET INCOME PER SHARE - Diluted $ 0.18 $ 0.16 $ 0.34 $ 0.30
======== ====== ======== =======
</TABLE>
(See notes to Condensed Consolidated Financial Statements)
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY AND COMPREHENSIVE INCOME
(in thousands, Unaudited)
<TABLE>
Six Months ended June 30, 2000
Accumulated
Additional Other Total
Common Paid in Retained Comprehensive Shareholders' Comprehensive
Stock Capital Earnings Loss Equity Income
----- ------- -------- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance January 1, 2000 $3,016 $31,891 $1,636 ($1,141) $35,402 -
Net Income 2,199 2,199 $ 2,199
5% stock dividend 151 2,401 (2,555) (3)
Exercise of stock options 5 68 73
Issuance of common
stock for dividend
reinvestment plan 14 208 222
Cash dividends (898) (898)
Other comprehensive income, net
of reclassification, taxes and
adjustments (494) (494) (494)
-------
Total comprehensive income $1,705
-------
Retirement of treasury stock
(23) (326) (349)
------- -------- -------- ---------- --------
Balance, June 30, 2000 $3,163 $34,242 $382 $(1,635) $36,152
-------- --------- ------- --------- -------
Six Months ended June 30, 1999
Accumulated
Additional Other Total
Common Paid in Retained Comprehensive Shareholders' Comprehensive
Stock Capital Earnings Income Equity Income
----- ------- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance January 1, 1999 $2,665 $25,460 $1,932 $2,252 $32,309 -
Net Income 1,903 1,903 1,903
Exercise of stock options 9 98 107
Issuance of common stock 200 3,640 3,840
Cash dividends (737) (737)
Other comprehensive income, net
of reclassification, taxes and
adjustments (1,700) (1,700) (1,700)
-------
Total comprehensive income $203
-------
Retirement of treasury stock
(4) (77) (81)
------- -------- -------- --------- -------
Balance, June 30, 1999 $2,870 $29,121 $3,098 $552 $35,641
-------- --------- - ------ - ------ -------
</TABLE>
(See notes to Consolidated Financial Statements)
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
Six Months Ended
June 30,
2000 1999
------- -----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,199 $ 1,903
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,106 821
Accretion of discount on securities, net (28) (69)
Gain on sale of securities, net (28) (1,975)
Gain on sale of assets 517
Gain on sale of other real estate owned - (18)
Provision for possible loan losses 573 559
(Increase) decrease in accrued interest receivable (239) (159)
Increase in other assets (952) (3,073)
(decrease) Increase in accrued expenses
and other liabilities 3,656 (1,902)
-------- --------
Net cash (used in) provided by operating activities 6,804 (3,913)
-------- ------
CASH FLOWS FROM INVESTING ACTIVITIES
Available-for-sale securities -
Purchases (12,061) (21,920)
Sales 359 14,779
Maturities and principal paydowns 15,520 23,001
Held-to-maturity securities -
Purchases - (684)
Maturities 4,617 6,399
Net decrease (increase) in interest-bearing deposits
with banks 1,548 4,224
Net increase in loans (14,624) (8,781)
Capital expenditure (70) (867)
Decrease in other real estate - 199
Cash paid in purchase transaction, First Savings Bank - (23,000)
-------- --------
Net cash used in investing activities (4,711) (6,650)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in deposit accounts 15,319 (15,812)
Increase in federal funds purchased - 8,400
(Decrease) Increase in repurchase agreements (7,658) 2,103
Dividends paid (898) (737)
Proceeds from exercise of stock options 73 107
Proceeds from issuance of common stock 222 3,840
Purchase of treasury stock (349) (81)
Other, net (4) (7)
-------- --------
Net cash (used in) provided by financing activities 6,705 (2,187)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS 8,798 (12,750)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 19,200 23,640
-------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $27,998 $10,890
======== =======
</TABLE>
(See notes to Consolidated Financial Statements)
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In the opinion of management, these unaudited condensed financial statements
contain all disclosures which are necessary to present fairly the Company's
consolidated financial position at June 30, 2000, the consolidated results of
operations for three and six months ended June 30, 2000 and 1999 and cash flows
for six months ended June 30, 2000 and 1999. The financial statements reflect
all adjustments (consisting solely of normal recurring adjustments) which in the
opinion of management are necessary in order to present fairly the financial
position and results of operations for the interim periods. Certain information
and footnote disclosure normally included in financial statements under
generally accepted accounting principles have been condensed or omitted pursuant
to the Securities and Exchange Commission rules and regulations. These financial
statements should be read in conjunction with the annual financial statements
and notes thereto included in Form 10-K for the fiscal year ended December 31,
1999.
Dividend
During June 2000, the Company's Board of Directors declared a cash dividend of
7.5 cents ($.075) per share, payable on July 31, 2000 to shareholders of record
on July 14, 2000. The financial information in this report has been adjusted to
reflect the dividend as of June 30, 2000.
On April 21, 2000, the Company's Board of Directors declared a 5% stock dividend
on the Company's common stock. The record date of the dividend was July 14, 2000
and the issue date was July 31, 2000. Accordingly, on July 31, 2000, the Company
issued 301,083 shares of common stock. As a result of the stock dividend, the
Company increased its outstanding common shares to 6,326,150 at July 31, 2000.
The financial information in this Form 10-Q has been adjusted to reflect the 5%
stock dividend.
EARNINGS PER SHARE COMPUTATION
The Company's reported diluted earnings per share for the six-month and
three-month periods ended June 30, 2000 and 1999, respectively, both take into
consideration the dilutive effects of the Company's outstanding common stock
equivalents, namely stock options. Prior period per share amounts have been
restated to reflect adoption of SFAS 128.
<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 Company's consolidated financial
condition as of June 30, 2000 and the results of operations for the three- and
six-month periods ended June 30, 2000 and 1999 should be read in conjunction
with the consolidated financial statements, including notes thereto, included in
the Company's latest annual report on Form 10-K for the fiscal year ended
December 31, 1999, and the other information herein. The consolidated statement
of condition as of June 30, 2000 and the statements of operations and cash flows
for the six months ended June 30, 2000 and 1999 are unaudited but include, in
the opinion of the management, all adjustments considered necessary for a fair
presentation of such data. As used herein, the term "Company" refers to Greater
Community Bancorp and subsidiaries, the term "Subsidiary Banks" refers to Great
Falls Bank (GFB), Bergen Commercial Bank (BCB) and Rock Community Bank (RCB) and
the term "Trust" refers to GCB Capital Trust. Unless otherwise indicated, data
is presented for the Company and its Subsidiaries in the aggregate. Unless
otherwise indicated, all dollar figures in the tables below, except for per
share data, are set forth in thousands.
PURPOSE OF DISCUSSION AND ANALYSIS
The purpose of this analysis is to provide you with information relevant to
understanding and assessing the Company's financial condition and results of
operations for the three and six months ended June 30, 2000. In order to
appreciate this analysis more fully you are encouraged to review the
consolidated financial statements and statistical data presented in this report
and in the MD&A section of the Company's Form 10-K for the year ended December
31, 1999.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Form 10-Q, both in this MD&A section and elsewhere, includes
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are not historical facts. They
include expressions about management's confidence and strategies and its
expectations about new and existing programs and products, relationships,
opportunities, technology and market conditions. These statements may be
identified by an asterisk (*) or such forward-looking terminology as "expect",
"look", "believe", "anticipate", "may", "will" or similar statements or
variations of such terms. Such forward-looking statements involve certain risks
and uncertainties. These include, but are not limited to, the ability of the
Company's Subsidiary Banks to generate deposits and loans and attract qualified
employees, the direction of interest rates, continued levels of loan quality and
origination volume, continued relationships with major customers including
sources for loans, as well as the effects of economic conditions, legal and
regulatory barriers and structure, and competition. Actual results may differ
materially from such forward-looking statements. The Company assumes no
obligation for updating any such forward-looking statement at any time.
<PAGE>
Business Overview
The Company is registered with the Federal Reserve Board as a bank holding
company. Its primary business is banking, which it conducts in northern New
Jersey through its three wholly owned New Jersey Subsidiary Banks.
The Company is a diversified financial services company operating retail
banking, securities brokerage, and equipment leasing businesses that provide
products and services in the Company's primary geographic markets in the
northern counties of New Jersey. Through Highland Capital Corp., one of the
Company's wholly owned nonbank subsidiaries, the Company is also engaged in the
business of leasing equipment to small and mid-size businesses in New Jersey and
contiguous states. The Company also has a wholly owned nonbank subsidiary,
Greater Community Financial, L.L.C., which engages in the business of securities
broker-dealer.
Financial services providers as of late are challenged by intense competition,
changing customer demands, increased pricing pressures and the ongoing impact of
deregulation. This is more so for traditional loan and deposit services due to
continuous competitive pressures as both banks and non-banks compete for
customers with a broad array of banking, investments and capital market
products.
The Company has made an effort to meet these challenges by providing highly
focused personalized customer service, which provides a basis for differential
in today's environment where banks and other financial service providers target
the same customer. To leverage new technology, the Company responded with the
formation of e-commerce services through the World Wide Web. As a result, an
Internet banking product for retail customers was introduced in mid-1999. The
Company launched a cash management product through Internet banking for its
commercial customers in the beginning of 2000.
EARNINGS SUMMARY
Net income for the first six months of 2000 was $2.2 million or $0.34 per
diluted share, a 16.0% increase over $1.9 million or $0.30 per diluted share
earned in the first six months of 1999.
Net Income for the second quarter of 2000 was $1.1 million or $0.18 per diluted
share, a 12.4% increase over $1.0 million or $0.16 per diluted share earned in
the second quarter of 1999.
Cash earnings (earnings before amortization of intangible assets) per diluted
share were $0.40 and $0.21 for the six- and three- month periods ended June 30,
2000, respectively, compared to $0.34 and $0.19 per share in the same periods of
1999.
The increase in net income for the six-month period primarily reflects higher
net interest income partially offset by reduced other income, higher salaries
and employee benefits, occupancy and equipment expense and increase in
provisions for income taxes.
The increase in net income for the three-month period primarily reflects higher
net interest income, offset by reduced other income (primarily gain
<PAGE>
on sale of investment securities) coupled with higher occupancy and equipment
expense and office expenses and higher provisions for income taxes.
Net Interest Income
Six-Month Comparison: Net interest income is the largest source of the Company's
operating income. Net interest income (before income tax effect) for the six
months ended June 30, 2000 increased by $2.4 million (30.4%) to $10.3 million
from $7.9 million for the six months ended June 30, 1999. Interest income from
loans increased 36.5% to $15.1 million, while interest paid on deposits
increased 38% to $10.2 million. These increases result primarily from the
purchase of First Savings on April 1, 1999 and loan growth.
Three Month Comparison: Net interest income for the three months ended June 30,
2000 increased by $687,000 (15.3%) to $5.2 million compared to the three months
ended June 30, 1999. The most important components of the increase were an
increase of $886,000 (13.1%) in net interest from loans, to $7.6 million, only
partially offset by an increase of $266,000 (7.1%) in interest paid on deposits,
to $4.0 million. The increase in net interest income is primarily attributable
to loan growth.
Other Income
Non-interest income continues to represent a considerable source of income for
the Company. Excluding the gain (loss) on sale of securities in 1999, total
non-interest income increased $856,000 (35.1%) to $3.3 million for the six
months ended June 30, 2000, compared to the same period in 1999. The increase
for the second quarter of 2000 was $650,000 (51.9%), to $1.8 million, compared
to the second quarter of 1999. Those increases are primarily attributable to the
purchase of First Savings coupled with income from sale of deposits and property
and equipment.
During the second quarter 2000, the Company decided to dispose of one of BCB's
branches. It realized income from sale of deposits in the amount of $354,000
coupled with gain on the sale of property, furniture and fixtures in the amount
of $162,000.
Non-Interest Expense
Total other expenses increased by $650,000 (7.4%) to $9.4 million, for the six
months ended June 30, 2000 compared to the same period in 1999. In contrast,
total other expenses decreased by $740,000 (13.4%) to $4.8 million for the three
months ended June 30, 2000 compared to the same period in 1999. Excluding the
one time expenses incurred relative to the acquisition of First Savings in 1999
in the amount of $1.1 million, total other expenses increased by $360,000 and
$1.8 million for the three and six months ended June 30, 2000.
The largest component of other expenses, salaries and employee benefits,
increased by $429,000 (23.0%) to $2.3 million, and by $1.2 million (34%) to $4.6
million (excluding $1.1 million in one-time expenses in 1999), for the three
months and six months ended June 30, 2000, respectively, over the comparable
1999 periods.
The second largest component of other expenses, occupancy and equipment expense,
<PAGE>
also rose, by $52,000 (6.8%) and $298,000 (22.0%) for the three months and six
months ended June 30, 2000, respectively, over the comparable 1999 periods. The
majority of such increases are related to the general growth of the Company.
Amortization of intangible assets increased by $169,000 (76.8%) for the six
months ended June 30, 2000. The increase reflects the amortization of goodwill
resulting from the purchase of First Savings. Such amortization commenced at the
beginning of the second quarter of 1999 at the rate of $168,000 per quarter and
will continue for 20 years.
All other operating expenses for the second quarter of 2000 decreased by
$125,000 compared to the second quarter of 1999. Other operating expenses for
the six months ended June 30, 2000 were $51,000 lower than the first six months
of 1999. The decreases in other expenses are in part due to First Savings post
acquisition efforts to consolidate expenses.
Provision for Possible Loan Losses
The provision for possible loan losses for the six months ended June 30, 2000
increased slightly, whereas for the three month ended June 30, 2000 decreased
slightly, relative to the same periods of 1999. Not including a one-time
provision in the amount of $290,000 recorded in the first six months of 1999
relative to the acquisition of First Savings, such expenses increased by
$304,000, primarily due to the increase in total loans resulting from the
purchase of First Savings and the overall growth in loans.
Provision for Income Taxes
The provision for income taxes for the six and three months ended June 30, 2000
was $1.3 million and $701,000, a 38% effective tax rate, compared to $1.1
million and $550,000, a 35% effective tax rate for the same periods in 1999.
The increase in the effective tax rate for the three- and six- month periods is
attributable to the increase in non-deductible amortization expense on
intangible assets partially offset by the increase in tax advantageous
bank-owned life insurance income.
<PAGE>
FINANCIAL CONDITION
ASSETS
Between December 31, 1999 and June 30, 2000 total assets increased by $12.1
million to $579.5 million. The increase is primarily attributable to the growth
of the Company, particularly in loans and cash and cash equivalents, partially
offset by a decrease in securities.
Loans -- Asset Quality and Allowance for Possible Loan Losses
Gross loans increased from December 31, 1999 to June 30, 2000 by $14.3 million
to $361.3 million. Such increase resulted primarily from internal growth.
The following table reflects the composition of the gross loan portfolio as of
June 30, 2000 and December 31, 1999.
June 30, 2000 December 31,
1999
Loans secured by one- to - four-family
residential properties $152,380 $ 154,822
Loans secured by nonresidential properties 147,324 140,200
Loans to individuals 10,093 9,405
Commercial loans 35,192 30,702
Construction loans 15,866 10,024
Other loans 402 1,782
-------- ---------
Total gross loans $361,257 $346,935
======== ========
Nonperforming Assets
Nonperforming assets include nonaccrual loans and other real estate owned
(OREO). At June 30, 2000, total nonperforming assets totaled $3.1 million (.86%
of total gross loans), increased from $3.0 million (.86% of total gross loans)
at December 31, 1999. Nonaccrual loans at June 30, 2000 were $1.8 million or
0.50% of total loans, as compared to $1.7 million or 0.48% of total loans at
December 31, 1999. Loans past due 90 days or more and still accruing at June 30,
2000 decreased to $177,000 compared to $248,000 at December 31, 1999.
OREO was $256,000 at June 30, 2000 compared to $467,000 at December 31, 1999, a
decrease of $211,000, primarily as a result of sale of the same.
<PAGE>
The following table sets forth the composition of the Company's non-performing
assets and related asset quality ratios as of the dates indicated. All of such
assets were domestic assets since the Company had no foreign loans.
June 30, December 31,
2000 1999
------------ ------------
Nonaccruing loans $1,818 $1,678
Renegotiated loans 859 606
------ ------
Total nonperforming loans 2,677 2,284
------ ------
Loans past due 90 days and accruing 177 248
Other real estate 256 467
------ ------
Total nonperforming assets $3,110 $2,999
====== ======
Asset Quality Ratios
Nonperforming loans to total gross loans 0.74% .66%
Nonperforming assets to total gross loans .86% .86%
Nonperforming assets to total assets 0.54% .53%
Allowance for possible loan losses to
nonperforming loans 203.66% 216.86%
During the six months ended June 30, 2000, gross interest income of $29,000
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 Company utilizes the
following information when measuring its allowance for possible loan losses. A
loan is considered impaired when it is probable that the Company will be unable
to collect all amounts due according to the contractual terms of the loan
agreement. These loans consist primarily of nonaccruing loans where situations
exist which have reduced the probability of collection in accordance with
contractual terms.
As of June 30, 2000 the Company's recorded investment in impaired loans and the
related valuation allowance calculated under SFAS No. 114 are as follows:
June 30, December 31,
2000 1999
--------- -------
Impaired loans -
Recorded investment $ 1,355 $ 1,232
Valuation allowance $ 331 $ 186
This valuation allowance is included in the allowance for possible loan losses
on the Company's consolidated balance sheet.
The average recorded investment in impaired loans for the six-month period ended
June 30, 2000 was $1.6 million compared to $419,000 at December 31, 1999.
Interest payments received on impaired loans are recorded as interest income
<PAGE>
unless collection of the remaining recorded investment is doubtful in which
event payments received are recorded as reductions of principal. The Company
recognized interest income on impaired loans of $59,000 for the six-month period
ended June 30, 2000.
Analysis of the Allowance for Possible Loan Losses
Between December 31, 1999 and June 30, 2000, the allowance for possible loan
losses increased by $499,000 (10.0%) to $5.5 million, which constituted 1.51% of
gross loans on June 30, 2000 compared to 1.43% at December 31, 1999. The
provision for possible loan losses added $573,000 for the six-month period,
while the net chargeoffs were $74,000. Management believes the allowance for
possible loan losses at June 30, 2000 of $5.5 million or 203.66% of
nonperforming assets, is adequate.
The following table represents transactions affecting the allowance for possible
loan losses during the six-month periods ended June 30, 2000 and 1999.
2000 1999
Balance at beginning of period, January 1, $4,953 $3,525
Charge-offs:
Commercial, financial and agricultural 14 -
Real estate--mortgage 25 -
Installment loans to individuals 44 13
Credit cards and related plans 9 34
------- ------
92 47
Recoveries:
Commercial, financial and agricultural 6 2
Real estate--mortgage 0 13
Installment loans to individuals 3 1
Credit cards and related plans 9 1
------ ------
18 17
------- ------
Net charge-offs 74 30
Provision charged to operations
during the six-month period 573 111
------- ------
Balance at end of period, June 30, $5,452 $3,606
======= ======
Ratio of net charge-offs during the
six-month period to average loans
outstanding during that period .02% .01%
Investment Securities
Securities decreased by a net amount of $8.9 million (6%) from December 31, 1999
to June 30, 2000. The majority of such decrease resulted from either maturities
or principal paydowns. Of the total decrease, securities available for sale
decreased by $4.3 million and securities held to maturity decreased by $4.6
million.
Cash
Cash and cash equivalents increased by $8.8 million (45.8%) to $28.0 million
<PAGE>
between December 31, 1999 and June 30, 2000. Approximately $3.7 million of such
increase is attributable to cash and due from banks, while federal funds sold
increased by $5.1 million (218%). Such increases were a primarily due to
proceeds from maturities and principal paydowns of investment securities.
Intangible Assets
Intangible assets at June 30, 2000 totaled $12.7 million, the majority of which
represents the unamortized portion of the goodwill intangible asset arising from
the acquisition of First Savings. The total premium was $13.3 million, which is
being amortized at the rate of $168,000 per quarter over a 20-year period.
LIABILITIES
Between December 31, 1999 and June 30, 2000, total liabilities increased by
$11.4 million to $543.4 million. The increase is primarily attributable to an
increase in total deposits, accrued interest and other liabilities coupled with
a decrease in securities sold under agreements to repurchase. The increase
reflects continued growth of the Subsidiary Banks.
Deposits
Total deposits increased by $15.3 million to $476.0 million. Such increase is
primarily attributable to the internal growth in deposits. Of the total
increase, non-interest bearing and interest bearing deposits increased by $14.5
million and $12.5 million, respectively, more than offsetting decreases in
savings and time deposits of $3.7 million and $ 8.0 million, respectively.
CAPITAL ADEQUACY, REGULATORY CAPITAL RATIOS AND DIVIDENDS
The Company 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 Company 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).
Total shareholders' equity of $36.1 million at June 30, 2000 was 6.2% of total
assets, a moderate increase compared with $35.4 million at December 31, 1999.
For purposes of computing regulatory capital of the Company, which includes the
Company and the Subsidiary Banks, governmental regulations require that the
goodwill intangible asset be ignored. The Company's and the Subsidiary Banks'
regulatory capital ratios decreased at June 30, 2000 compared to the end of
1999. Despite the decreases the Company and the Subsidiary Banks remain well
capitalized for regulatory purposes and management believes present capital is
adequate to support contemplated future internal growth.
<PAGE>
The following table sets forth selected regulatory capital ratios for the
Company and the Subsidiary Banks and the required minimum regulatory ratios at
June 30, 2000:
<TABLE>
To Be Well
For Capital Capitalized Under
Adequacy under Corrective
Actual Purposes Actio Provision
Amount Ratio Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
Total capital (to risk weighted assets)
Greater Community Bancorp $ 52,585 13.33% $ 31,559 8.00% $ - -
Great Falls Bank 27,970 11.34% 19,731 8.00% 24,665 10.00%
Bergen Commercial Bank 11,106 10.16% 8,745 8.00% 7,297 10.00%
Rock Community Bank 4,747 40.61% 935 8.00% 1,169 10.00%
Tier 1 Capital (to risk weighted assets)
Greater Community Bancorp 37,543 9.52% 15,774 4.00% - -
Great Falls Bank 24,877 10.09% 9,862 4.00% 14,793 6.00%
Bergen Commercial Bank 9,764 8.93% 4,374 4.00% 6,560 6.00%
Rock Community Bank 4,627 39.58% 468 4.00% 701 6.00%
Tier 1 Capital (to average assets)
Greater Community Bancorp 37,543 6.44% 23,318 4.00% - -
Great Falls Bank 24,877 6.56% 15,169 4.00% 18,961 5.00%
Bergen Commercial Bank 9,764 6.27% 6,229 4.00% 7.786 5.00%
Rock Community Bank 4,627 18.92% 978 4.00% 1,223 5.00%
</TABLE>
During the last three quarters of 1999 and the first quarter of 2000 the Company
declared cash dividends at the rate of $0.07 per share, or an annual rate of
$0.28 per share. During the second quarter of 2000 the Company increased the
declared quarterly dividend by 7% to $0.075 per share, or an annual dividend
rate of $0.30 per share. The Company's payment of a 5% stock dividend during the
second quarter of 2000 had the effect of further increasing the annual dividend
rate by 5%. The Company's Board of Directors continues to believe that cash
dividends are an important component of shareholder value and that at its
current level of performance and capital, the Company expects to continue its
current dividend policy of a quarterly cash dividends to its shareholders.
Some Specific Factors Affecting Future Results of Operations
Although future movements of interest rates cannot be predicted with certainty,
the interest rate sensitivity of the Company's assets and liabilities are such
that a decline in interest rates during the next few months would have a
favorable impact on the Company'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.
With the acquisition and consolidation of First Savings Bank of Little Falls,
the Company expects to continue to improve its results of operations from core
banking activities and earnings per share in future reporting periods.
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
There has been no material change in the Company's assessment of its sensitivity
to market risk since its presentation in the 1999 Annual Report to Shareholders
on Form 10-K filed with the Securities and Exchange Commission.
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
The Company 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 Company'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 Item 4, Part II, of Form 10-Q for quarter ended March 31, 2000, with
respect to the annual Meeting of Stockholders held on April 18, 2000.
Item 5 - Other information
None.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are
filed with this Report.
Exhibit No. Description
3.1 Restated Certificate of Incorporation
of the Company (incorporated by
reference to Exhibit 3.4 to Form
10-QSB for the quarter ended June 30,
1998, filed August 14, 1998).
3.2 Bylaws of the Company as amended and
restated effective December 16, 1997
(incorporated by reference to Exhibit 3
to Form 10-KSB for the year ended
December 31, 1997, filed
March 23, 1998).
4.1 Junior Subordinated Indenture
between the Company and Bankers
Trust Company as Trustee, dated May
1997 (incorporated by reference to
Exhibit 4.1 of Exhibits to Form
S-2/A Registration Statement filed
by GCB Capital Trust and Greater
Community Bancorp under the
Securities Act of 1933, Registration
Nos. 333-26453-01, 333-26453, filed
May 9, 1997).
4.2 Form of Junior Subordinated
Debenture Certificates for junior
subordinated debentures due May,
2007 (incorporated by reference to
Exhibit 4.2 of Exhibits to Form
S-2/A Registration Statement filed
by GCB Capital Trust and Greater
Community Bancorp under the
Securities Act of 1933, Registration
Nos. 333-26453-01, 333-26453, filed
May 9, 1997).
4.4 Amended and Restated Trust among
Greater Community Bancorp as
Depositor, Bankers Trust Company as
Property Trustee, and Bankers Trust
(Delaware) as Delaware Trustee,
dated May 1997 (incorporated by
reference to Exhibit 4.4 of Exhibits
on Form S-2/A Registration Statement
filed by GCB Capital Trust and
Greater Community Bancorp under the
Securities Act of 1933, Registration
Nos. 333-26453-01, 333-26453, filed
May 9, 1997).
4.6 Guarantee Agreement between Greater
Community Bancorp (as Guarantor) and
Bankers Trust Company (as Trustee)
dated May 1997 (incorporated by
reference to Exhibit 4.6 of Exhibits
to Form S-2/A Registration Statement
filed by GCB Capital Trust and
Greater Community Bancorp under the
Securities Act of 1933, Registration
Nos. 333-26453-01, 333-26453, filed
May 9, 1997).
10.1 Employment Agreement of George E.
Irwin dated July 31, 1998
(incorporated by reference to
Exhibit 10.1 to Form 10-KSB for the
year ended December 31, 1998, filed
March 17, 1999).
10.2 Employment Agreement of C. Mark
Campbell dated July 31, 1998
(incorporated by reference to
Exhibit 10.2 to Form 10-KSB for the
year ended December 31, 1998, filed
March 17, 1999).
10.3 Employment Agreement of Erwin D.
Knauer dated July 1, 1999
(incorporated by reference to
Exhibit 10.3 to Form 10-Q for
quarter ended September 30, 1999,
filed November 15, 1999.
10.4 Executive Supplemental Retirement
Income Agreement for George E. Irwin
dated as of January 1, 1999 among
Great Falls Bank, George E. Irwin
and Greater Community Bancorp (as
guarantor) (incorporated by
reference to Exhibit 10.4 to Form
10-K for the year ended December 31,
1999), filed March 28, 2000).
10.5 Executive Supplemental Retirement
Income Agreement for C. Mark
Campbell dated as of January 1, 1999
among Bergen Commercial Bank, C.
Mark Campbell and Greater Community
Bancorp (as guarantor) (incorporated
by reference to Exhibit 10.5 to Form
10-K for the year ended December 31,
1999 filed March 28, 2000).
27 Financial Data Schedule
(b) Reports on Form 8-K.
--------------------
On April 11, 2000, the Company filed a Form 8-K with the
Securities and Exchange Commission reporting the appointment
of William Olb as Senior Vice President and Senior Loan
Officer of Great Falls Bank.
On April 21, 2000, the Company filed a Form 8-K with the
Securities and Exchange Commission reporting the first
quarter earnings and the declaration of a 5% stock dividend
on the Company's common stock.
On July 7, 2000, the Company filed a Form 8-K with the
Securities and Exchange Commission reporting the following
events:
The appointment of Michael W. Mulligan as
President and CEO of the Company's full
service brokerage subsidiary, Greater
Community Financial, L.L.C.
The declaration of a quarterly cash dividend
of $.075 per common share payable on July
31, 2000 to shareholders of record on July
14, 2000.
The appointment of Kevin Bohichic as
e-commerce manager overseeing the Company's
PC banking department.
The Board of Directors approval to purchase
upto 600,000 shares of the Company's
outstanding common stock over the next 24
months.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
GREATER COMMUNITY BANCORP
(Registrant)
Date: August 14, 2000 By:
----------------
Naqi A. Naqvi, Treasurer & CFO
(Duly Authorized Officer and
Principal Financial Officer)
