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 September 30, 2000
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OR
[ ] 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
--------------------------------- ---------------
(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, including area code)
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 - 6,313,596 shares at November 3, 2000.
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
INDEX
PAGE
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheet at
September 30, 2000 (Unaudited) and December 31, 1999............. 3
Consolidated Statements of Income (Unaudited)
Three and Nine months ended
September 30, 2000 and 1999 ......................................4
Consolidated Statements of Changes in Shareholders'
Equity and Comprehensive Income (Unaudited)
Nine Months ended September 30, 2000 and 1999.....................5
Consolidated Statements of Cash Flows (Unaudited)
Nine months ended September 30, 2000 and 1999.....................6
Notes to Consolidated Financial Statements(unaudited)................7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations...........................8
Item 3 - Quantitative and Qualitative Disclosures about Market Risk..16
PART II - OTHER INFORMATION
Items 1 through 6.........................................................17
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>
September 30, December 31,
2000 1999
---------- -------
<S> <C> <C>
ASSETS (Unaudited)
CASH AND DUE FROM BANKS-Non-interest-bearing $ 16,141 $ 16,850
FEDERAL FUNDS SOLD 9,980 2,350
-------- --------
Total cash and cash equivalents 26,121 19,200
DUE FROM BANKS - Interest-bearing 7,718 10,675
SECURITIES
Available-for-sale, at fair value 138,192 142,236
Held-to-maturity, at amortized cost
(Fair values $3,482 and $8,506) 3,740 8,955
-------- ---------
141,932 151,191
LOANS 363,988 346,935
Less - Allowance for possible loan losses 5,672 4,953
Unearned income 1,752 1,419
-------- ---------
Net loans 356,564 340,563
PREMISES AND EQUIPMENT, net 6,868 7,840
ACCRUED INTEREST RECEIVABLE 4,102 3,825
BANK OWNED LIFE INSURANCE 11,091 10,690
INTANGIBLE ASSETS 12,545 13,128
OTHER ASSETS 10,532 10,341
-------- ---------
Total assets $577,473 $567,453
======== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS
Non-interest-bearing $ 98,907 $ 93,968
Interest-bearing 80,761 70,356
Savings 55,164 60,635
Time Deposits less than $100 156,464 198,523
Time Deposits $100 and over 46,384 37,152
-------- --------
Total deposits 437,680 460,634
FHLB ADVANCES 35,000 25,000
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE 33,640 16,403
ACCRUED INTEREST PAYABLE 3,699 3,022
OTHER LIABILITIES 6,679 3,992
GUARANTEED PREFERRED BENEFICIAL INTEREST
IN THE COMPANY'S SUBORDINATED DEBT 23,000 23,000
-------- ---------
Total Liabilities 539,698 532,051
-------- ---------
SHAREHOLDERS' EQUITY
Common Stock, par value $0.50 per share:
20,000,000 shares authorized, 6,309,904
and 6,031,994 shares outstanding 3,155 3,016
Additional paid-in capital 34,115 31,891
Retained earnings 1,126 1,636
Accumulated other comprehensive income (loss) (621) (1,141)
--------- ---------
Total shareholders' equity 37,775 35,402
--------- --------
Total liabilities and shareholders' equity $577,473 $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 Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans, including fees $7,888 $6,960 $22,970 $18,013
Securities 2,351 2,172 7,056 5,799
Federal Funds sold and deposits with banks 350 389 1,029 968
------- ------ ------- -------
Total interest income 10,589 9,521 31,055 24,780
------- ------ ------- -------
INTEREST EXPENSE
Deposits 4,039 3,937 11,949 9,554
Short-term borrowings 736 336 1,870 953
Long-term borrowings 575 575 1,725 1,725
------ ------ ------- -------
Total interest expense 5,350 4,848 15,544 12,232
------ ------ ------- -------
NET INTEREST INCOME 5,239 4,673 15,511 12,548
PROVISION FOR POSSIBLE LOAN LOSSES 213 194 786 753
------ ------ ------- ------
Net interest income after
provision for possible loan losses 5,026 4,479 14,725 11,795
OTHER INCOME
Service charges on deposit accounts 523 526 1,483 1,502
Other commissions and fees 212 270 894 954
Gain on sale of securities 57 103 29 2,096
Gain on sale of assets - - 517 -
All other income 577 506 1,710 1,282
-------- ------ ------- ------
1,369 1,405 4,633 5,834
OTHER EXPENSES
Salaries and employee benefits 2,304 2,015 6,940 6,481
Occupancy and equipment 770 803 2,428 2,163
Regulatory, professional and other fees 503 391 1,195 1,161
Computer services 90 104 299 275
Amortization of intangible assets 194 194 583 414
Office expense 246 211 734 595
All other operating expenses 402 357 1,756 1,763
-------- ------ -------- ------
Total other expenses 4,509 4,075 13,935 12,852
-------- ------ -------- ------
Income before income taxes 1,886 1,809 5,423 4,777
-------- ------ ------- ------
PROVISION FOR INCOME TAXES 673 756 2,010 1,821
-------- ------ ------- ------
NET INCOME $1,213 $ 1,053 $3,413 $ 2,956
------ ------- ------- -------
WEIGHTED AVERAGE SHARES OUTSTANDING - Basic 6,316 6,326 6,327 6,130
------- ------- ------- -------
WEIGHTED AVERAGE SHARES OUTSTANDING - Diluted 6,445 6,552 6,436 6,359
------- ------- ---------------------
NET INCOME PER SHARE - Basic $ 0.19 $ 0.16 $ 0.54 $ 0.48
------- ------- ------- -------------
NET INCOME PER SHARE - Diluted $ 0.19 $ 0.16 $ 0.53 $ 0.46
------- ------- ------- -------------
</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>
Nine Months ended September 30, 2000
Accumulated
Additional Other Total
Common Paid-in Retained Comprehensive Shareholders' Comprehensive
Stock Capital Earnings Income (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 3,413 3,413 $ 3,413
5% stock dividend 151 2,401 (2,555) (3)
Exercise of stock options 6 76 82
Issuance of common
Stock for dividend
reinvestment plan 22 328 350
Cash dividends (1,368) (1,368)
Other comprehensive income, net
of reclassification, taxes and
adjustments 520 520 520
------
Total comprehensive income $3,933
------
Retirement of treasury stock
(40) (581) (621)
------- -------- -------- --------- -------
Balance, September 30, 2000 $3,155 $34,115 $ 1,126 $(621) $37,775
-------- --------- -------- --------- -------
Nine Months ended September 30, 1999
Accumulated
Additional Other Total
Common Paid-in Retained Comprehensive Shareholders' Comprehensive
Stock Capital Earnings Income (Loss) Equity Income
----- ------- -------- ------------- ------ ------
Balance January 1, 1999 $2,665 $25,460 $1,932 $2,252 $32,309 -
Net Income 2,956 2,956 $ 2,956
5% stock dividend 143 2,740 (2,887) (4)
Exercise of stock options 9 98 107
Issuance of common stock 195 3,556 3,751
Issuance of common
Stock for dividend
Reinvestment plan 9 189 198
Cash dividends (1,159) (1,159)
Other comprehensive income, net
of reclassification, taxes and
adjustments (2,320) (2,320) (2,320)
-------
Total comprehensive income $636
-------
Retirement of treasury stock
(11) (233) (244)
------- -------- -------- --------- ---------
Balance, September 30, 1999 $3,010 $31,810 $842 $(68) $35,594
-------- --------- ------- --------- -------
</TABLE>
(See notes to Consolidated Financial Statements)
<PAGE>
GREATER COMMUNITY BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
Nine Months Ended
September 30,
2000 1999
------- -----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 3,413 $ 2,956
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,745 1,325
Accretion of discount on securities, net (49) (83)
Gain on sale of securities, net (29) (2,096)
Gain on sale of assets (517)
Gain on sale of other real estate owned - (18)
Provision for possible loan losses 786 753
Increase in accrued interest receivable (277) (382)
Increase in other assets (592) (6,020)
Increase in accrued expenses
and other liabilities 3,364 1,217
-------- ------
Net cash provided (used in) by operating activities 7,844 (2,348)
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Available-for-sale securities -
Purchases (16,017) (29,334)
Sales 1,496 15,137
Maturities and principal paydowns 19,401 29,426
Held-to-maturity securities -
Purchases - (684)
Maturities 5,215 8,709
Net decrease in interest-bearing deposits
with banks 2,957 1,968
Net increase in loans (16,001) (16,157)
Capital expenditure (700) (1,024)
Decrease in other real estate - 1,722
Cash paid in purchase transaction, First Savings Bank - (23,000)
-------- --------
Net cash used in investing activities (3,649) (13,237)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in deposit accounts (22,954) 10,083
Increase in FHLB advances 10,000 -
Increase in repurchase agreements 17,237 8,650
Dividends paid (1,368) (1,159)
Proceeds from exercise of stock options 82 -
Proceeds from issuance of common stock 350 4,056
Purchase of treasury stock (621) (244)
Net cash (used in) provided by financing activities 2,726 21,386
-------- ------
NET DECREASE IN CASH AND CASH EQUIVALENTS 6,921 5,801
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 19,200 23,640
-------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $26,121 $29,441
======== =======
</TABLE>
(See notes to Consolidated Financial Statements)
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In the opinion of management, these unaudited condensed financial statements
contain all disclosures which are necessary to present fairly the Company's
consolidated financial position at September 30, 2000, the consolidated results
of operations for three and nine months ended September 30, 2000 and 1999 and
cash flows for nine months ended September 30, 2000 and 1999. The financial
statements reflect all adjustments (consisting solely of normal recurring
adjustments) which in the opinion of management are necessary in order to
present fairly the financial position and results of operations for the interim
periods. Certain information and footnote disclosure normally included in
financial statements under generally accepted accounting principles have been
condensed or omitted pursuant to the Securities and Exchange Commission rules
and regulations. These financial statements should be read in conjunction with
the annual financial statements and notes thereto included in Form 10-K for the
fiscal year ended December 31, 1999.
Dividend
On April 21, 2000, the Company's Board of Directors declared a 5% stock dividend
on the Company's common stock. The record date of the dividend was July 14, 2000
and the issue date was July 31, 2000. Accordingly, on July 31, 2000, the Company
issued 301,083 shares of common stock. As a result of the stock dividend, the
Company increased its outstanding common shares to 6,326,150 at July 31, 2000.
The financial information in this Form 10-Q has been adjusted to reflect the 5%
stock dividend.
During September 2000, the Company's Board of Directors declared a cash dividend
of 7.5 cents ($.075) per share, payable on October 31, 2000 to shareholders of
record on October 13, 2000.
EARNINGS PER SHARE COMPUTATION
The Company's reported diluted earnings per share for the three-month and
nine-month periods ended September 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.
In June 2000, SFAS No. 138 Accounting for Certain Derivative Instruments and
Certain Hedging Activities an amendment of FASB Statement No. 133 was issued.
SFAS No. 138 amends SFAS No. 133 for the following items: normal purchases and
normal sales exception, hedging the benchmark interest rate, hedging recognized
foreign currency-denominated debt instruments and hedging with intercompany
derivatives. On October 1, 2000, the Company has adopted the provisions of SFAS
No. 133, as amended by SFAS No. 137 and SFAS No. 138 and these statements did
not have a material affect on the Company's financial position or results of
operations.
<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 September 30, 2000 and the results of operations for the three-
and nine-month periods ended September 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 September 30, 2000 and the statements of operations
and cash flows for the nine months ended September 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 nine months ended September 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 businesses 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 nine months of 2000 was $3.4 million or $0.53 per
diluted share, a 15.4% increase over $3.0 million or $0.46 per diluted share
earned in the first nine months of 1999.
Net Income for the third quarter of 2000 was $1.2 million or $0.19 per diluted
share, a 15.2% increase over $1.1 million or $0.16 per diluted share earned in
the third quarter of 1999.
Cash earnings (earnings before amortization of intangible assets) per diluted
share were $0.62 and $0.22 for the nine- and three- month periods ended
September 30, 2000, respectively, compared to $0.53 and $0.19 per diluted share
in the same periods of 1999.
<PAGE>
The increase in net income for the nine-month period primarily reflects higher
net interest income partially offset by reduced other income (primarily reduced
gain on sale of securities) and higher salaries and employee benefits, occupancy
and equipment expense and 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 reduced
commissions and fees) coupled with increased total other expenses (primarily
salaries and employee benefits and regulatory and professional fees).
Net Interest Income
Nine-Month Comparison: Net interest income is the largest source of the
Company's operating income. Net interest income (before income tax effect) for
the nine months ended September 30, 2000 increased by $3.0 million (23.6%) to
$15.5 million from $12.5 million for the nine months ended September 30, 1999.
Interest income from loans increased 27.5% to $23.0 million, while interest paid
on deposits and borrowings increased 27.1% to $15.5 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 September
30, 2000 increased by $566,000 (12.1%) to $5.2 million compared to the three
months ended September 30, 1999. The most important components of the increase
was an increase of $928,000 (13.3%) in net interest from loans, to $7.9 million,
partially offset by an increase of $400,000 (119.0%) in interest paid on short
term borrowings. 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 $2.1 million gain (loss) on sale of securities in
1999 and $29,000 gain in 2000, total non-interest income increased $866,000
(23.2%) to $4.6 million for the nine months ended September 30, 2000, compared
to the same period in 1999. This increase is primarily attributable to the
purchase of First Savings coupled with income from sale of deposits and property
and equipment.
During the second quarter of 2000, the Company decided to dispose of one of
BCB's branches. It realized gain 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 $163,000.
In the third quarter of 2000, other income had a moderate decrease compared to
the third quarter of 1999.
Non-Interest Expense
Total other expenses increased by $1.1 million (8.4%) to $13.9 million, for the
nine months ended September 30, 2000 compared to the same period in 1999. In the
third quarter of 2000, total other expenses increased by $434,000 (10.7%) to
$4.5 million compared to the same period in 1999.
The largest component of other expenses, salaries and employee benefits,
increased by $289,000 (14.3%) to $2.3 million, and by $1.6 million (28.9%) to
$6.9 million (excluding $1.1 million in one-time expenses in 1999), for the
three months and nine months ended September 30, 2000, respectively, over the
comparable 1999 periods. The increase in such expense is a result of First
Savings as well as the growth of the Company.
<PAGE>
The second largest component of other expenses, occupancy and equipment expense
decreased by $33,000 (4.1%) and increased by $265,000 (12.3%) for the three
months and nine months ended September 30, 2000, respectively, over the
comparable 1999 periods. The majority of the increase for the first nine months
of 2000 is related to the general growth of the Company.
Amortization of intangible assets increased by $169,000 (40.8%) for the nine
months ended September 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 third quarter of 2000 increased by $45,000
compared to the third quarter of 1999. Other operating expenses for the nine
months ended September 30, 2000 were almost unchanged compared to the first nine
months of 1999.
Provision for Possible Loan Losses
The provision for possible loan losses for both the nine and three months ended
September 30, 2000 increased slightly, relative to the same periods of 1999, not
including a one-time provision in the amount of $290,000 recorded in the first
nine months of 1999 relative to the acquisition of First Savings. Excluding such
one-time charge the provision would have increased by $323,000, 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 nine months ended September 30, 2000 was
$2.0 million, a 37% effective tax rate, compared to $1.8 million, a 38%
effective tax rate, for the same period in 1999.
The reduction in the effective tax rate is attributable to the increase in tax
advantageous bank-owned life insurance income partially offset by the increase
in non-deductible amortization expense on intangible assets partially offset by
<PAGE>
FINANCIAL CONDITION
ASSETS
Between December 31, 1999 and September 30, 2000 total assets increased by $10.0
million to $577.5 million. The 1.8% 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 September 30, 2000 by $17.1
million (4.9%) to $364.0 million. Such increase resulted primarily from internal
growth.
The following table reflects the composition of the gross loan portfolio as of
September 30, 2000 and December 31, 1999.
September 30, December 31,
2000 1999
----- ----
Loans secured by one- to - four-family
Residential properties $147,830 $ 154,822
Loans secured by nonresidential properties 156,801 140,200
Loans to individuals 9,533 9,405
Commercial loans 36,489 30,702
Construction loans 12,161 10,024
Other loans 1,174 1,782
------- -------
Total gross loans $363,988 $346,935
======== ========
Nonperforming Assets
Nonperforming assets include nonaccrual loans and other real estate owned
(OREO). At September 30, 2000, total nonperforming assets totaled $3.0 million
(0.82% of total gross loans), unchanged from December 31, 1999. Nonaccruing
loans at September 30, 2000 were $1.4 million or 0.39% 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 September 30, 2000 increased to
$462,000 from $248,000 at December 31, 1999.
OREO was $256,000 at September 30, 2000 compared to $467,000 at December 31,
1999, a decrease of $211,000, primarily as a result of sales.
<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.
September 30, December 31,
2000 1999
------------- --------
Nonaccruing loans $1,432 $1,678
Renegotiated loans 850 606
------ ------
Total nonperforming loans 2,282 2,284
------ ------
Loans past due 90 days and accruing 462 248
Other real estate 256 467
------ ------
Total nonperforming assets $3,000 $2,999
====== ======
Asset Quality Ratios
Nonperforming loans to total gross loans 0.63% .66%
Nonperforming assets to total gross loans 0.82% .86%
Nonperforming assets to total assets 0.52% .53%
Allowance for possible loan losses to
nonperforming loans 248.55% 216.86%
During the nine months ended September 30, 2000, gross interest income of
$55,000 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 September 30, 2000 the Company's recorded investment in impaired loans and
the related valuation allowance calculated under SFAS No. 114 are as follows:
September 30, December 31,
2000 1999
------------ -------
Impaired loans -
Recorded investment $ 1,542 $ 1,232
Valuation allowance $ 299 $ 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 nine-month period
ended September 30, 2000 was $1.6 million compared to $419,000 at December 31,
1999.
<PAGE>
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 Company
recognized interest income on impaired loans of $73,000 for the nine-month
period ended September 30, 2000.
Analysis of the Allowance for Possible Loan Losses
Between December 31, 1999 and September 30, 2000, the allowance for possible
loan losses increased by $719,000 (14.5%) to $5.7 million, which constituted
1.56% of gross loans on September 30, 2000 compared to 1.43% at December 31,
1999. The provision for possible loan losses added $786,000 for the nine-month
period, while the net chargeoffs were $67,000. Management believes the allowance
for possible loan losses at September 30, 2000 of $5.7 million or 189.06% of
nonperforming assets, is adequate.
The following table represents transactions affecting the allowance for possible
loan losses during the nine-month periods ended September 30, 2000 and 1999.
2000 1999
Balance at beginning of period, January 1, $4,953 $3,525
Charge-offs:
Commercial, financial and agricultural 43 95
Real estate--mortgage 25 -
Installment loans to individuals 45 38
Credit cards and related plans 33 54
------- ------
146 187
Recoveries:
Commercial, financial and agricultural 13 47
Real estate--mortgage 50 61
Installment loans to individuals 6 2
Credit cards and related plans 10 10
------- ------
79 120
------- ------
Net charge-offs (67) (67)
Provision charged to operations
during the nine-month period 786 753
Adjustments - 624
------- ------
Balance at end of period, September 30, $5,672 $4,835
======= ======
Ratio of net charge-offs during the
nine-month period to average loans
outstanding during that period .02% .02%
Investment Securities
Securities decreased by a net amount of $9.3 million (6%) from December 31, 1999
to September 30, 2000. The majority of such decrease resulted from either
maturities or principal paydowns. Of the total decrease, securities available
for sale decreased by $4.0 million and securities held to maturity decreased by
$5.2 million.
<PAGE>
Cash
Cash and cash equivalents increased by $6.9 million (36.0%) to $26.1 million
between December 31, 1999 and September 30, 2000. Cash and due from banks,
decreased by $709,000 while federal funds sold increased by $7.6 million
(324.7%). The increase in federal funds sold was primarily due to proceeds from
maturities and principal paydowns of investment securities.
Intangible Assets
Intangible assets at September 30, 2000 totaled $12.5 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 September 30, 2000, total liabilities increased by
$7.6 million (1.4%) to $539.7 million. The increase is primarily attributable to
increases in FHLB advances of $10.0 million and securities sold under agreements
to repurchase of $17.2 million and federal funds purchased, offset by a $23.0
million decrease in total deposits.
Deposits
Total deposits decreased by $23.0 million to $437.7 million. The decrease is a
direct result of time deposit roll-off due to maturities. Of the total decrease,
time deposits and savings deposits decreased by $32.8 million and $5.5 million,
respectively, while non-interest bearing and interest bearing deposits increased
by $4.9 million and $10.4 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 $37.8 million at September 30, 2000 was 6.5% of
total assets, a moderate increase compared with $35.4 million or 6.2% of total
assets 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 September 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
September 30, 2000.
<TABLE>
To Be Well Capitalized
under Prompt
For Capital Adequacy Corrective Action
Actual Purposes Provision
Amount Ratio Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
Total capital (to risk weighted assets)
Greater Community Bancorp $ 53,470 14.51% $ 29,479 8.00% $ - -
Great Falls Bank 28,188 11.37% 19,838 8.00% 24,797 10.00%
Bergen Commercial Bank 11,575 10.60% 8,733 8.00% 10,916 10.00%
Rock Community Bank 4,765 36.56% 1,043 8.00% 1,304 10.00%
Tier 1 Capital (to risk weighted assets)
Greater Community Bancorp 38,650 10.49% 14,739 4.00% - -
Great Falls Bank 25,077 10.11% 9,919 4.00% 14,878 6.00%
Bergen Commercial Bank 10,210 9.35% 4,366 4.00% 6,550 6.00%
Rock Community Bank 4,625 35.48% 521 4.00% 782 6.00%
Tier 1 Capital (to average assets)
Greater Community Bancorp 38,650 6.74% 22,941 4.00% - -
Great Falls Bank 25,077 6.73% 14,900 4.00% 18,624 5.00%
Bergen Commercial Bank 10,210 6.79% 6,017 4.00% 7,521 5.00%
Rock Community Bank 4,625 20.90% 885 4.00% 1,107 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 and third quarters 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 will be able
to continue its current dividend policy of a quarterly cash dividends to its
shareholders. However, continuation of this policy will depend on future
financial performance.
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.
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 and Use of Proceeds
None.
Item 3 - Defaults Upon Senior Securities
None.
Item 4 - Submission of Matters to a Vote of Security Holders
None.
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).
<PAGE>
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 14, 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).
<PAGE>
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 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: November 14, 2000 By:\Naqi A. Naqvi
------------------
Naqi A. Naqvi, Treasurer & CFO
(Duly Authorized Officer and
Principal Financial Officer)
