FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended September 30, 1996
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Commission file number 0-17839
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Central Jersey Financial Corporation
------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-2977019
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
591 Cranbury Road
East Brunswick, New Jersey 08816
--------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(908) 254-6600
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Registrant's telephone number, including area code
Not Applicable
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Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter periods
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No ___
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock, No Par Value--2,790,686 shares as of October 31, 1996
This Form 10-Q is comprised of a total of 13 pages.
The exhibit index is located on page 11.
<PAGE>
CENTRAL JERSEY FINANCIAL CORPORATION
AND SUBSIDIARY
CONTENTS
--------
Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Statements of Financial Condition as of
September 30, 1996 and March 31, 1996 1
Consolidated Statements of Operations for each
of the three-month and six-month periods ended
September 30, 1996 and 1995 2
Consolidated Statements of Cash Flows for each of the
six-month periods ended September 30, 1996 and 1995 3
Notes to Consolidated Financial Statements 4-5
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 6-8
PART II OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes In Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
<PAGE>
CENTRAL JERSEY FINANCIAL CORPORATION
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
September 30, March 31,
1996 1996
------------- ---------
Assets Unaudited
---------
<S> <C> <C>
Cash and due from depository institutions $ 9,586,924 $ 8,804,911
Investment securities; available for sale 8,133,528 8,266,858
Investment securities; portfolio 33,354,946 18,501,517
Mortgage-backed securities; portfolio 188,710,120 191,530,667
Loans held for sale 2,666,434 2,231,803
Loans receivable, net 204,793,239 220,109,248
Interest receivable on loans, net 1,437,977 1,506,442
Real estate held for development and resale, net 402,125 507,490
Real estate acquired in settlement of loans, net 110,464 26,674
Investment in capital stock of Federal Home Loan Bank of
New York 3,560,600 3,560,600
Premises and equipment, net 5,248,313 5,363,567
Excess of cost over fair value of net assets acquired 3,609,787 3,791,467
Other assets 2,857,618 4,070,726
----------- -----------
Total assets $ 464,472,075 $468,271,970
=========== ===========
Liabilities and stockholders' equity
Deposits $377,617,782 $386,569,400
Other borrowed funds 25,900,000 22,500,000
Advances from borrowers for taxes and insurance 1,539,474 1,542,477
Accrued income taxes and other liabilities 3,270,464 2,048,126
----------- -----------
Total liabilities 408,327,720 412,660,003
----------- -----------
Serial preferred stock: authorized, 15,000,000 shares for
issuance in series; issued and outstanding, none -- --
Common stock: no par value; authorized, 25,000,000
shares; issued and outstanding 2,790,686 and 2,668,269,
respectively 2,790,686 2,668,269
Paid-in capital 19,392,862 18,510,912
Retained earnings - substantially restricted 33,895,504 34,319,114
Net unrealized gain on securities available for sale 65,303 113,672
----------- -----------
Total stockholders' equity 56,144,355 55,611,967
----------- -----------
Total liabilities and stockholders' equity $ 464,472,075 $ 468,271,970
=========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
CENTRAL JERSEY FINANCIAL CORPORATION
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
---------------------------------------------------------
(Unaudited) 1996 1995 1996 1995
----------- ---- ---- ---- ----
Interest income
<S> <C> <C> <C> <C>
Interest on loans receivable $ 4,324,029 $ 4,898,003 $ 8,01,185 $9,920,006
Interest on mortgage-backed securities 3,229,956 2,889,148 6,564,457 5,411,715
Interest on investment securities 704,154 454,191 1,200,938 908,536
Interest on deposits in other banks 19,567 16,489 37,282 30,503
--------- --------- ---------- ----------
Total interest income 8,277,706 8,257,831 16,603,862 --
--------- --------- ---------- ----------
16,270,760
Interest expense
Interest on deposits 3,911,211 4,126,604 7,836,004 8,055,773
Interest on long-term debt -- 11,782 -- 197,543
Interest on other borrowed funds 309,437 325,833 593,907 557,985
--------- --------- ---------- ----------
Total interest expense 4,220,648 4,464,219 8,429,911 8,811,301
--------- --------- ---------- ----------
Net interest income 4,057,058 3,793,612 8,173,951 7,459,459
Provision for loan losses 50,000 100,000 100,000 150,000
----------- --------- --------- ------------
Net interest income after provision for loan losses 4,007,058 3,693,612 8,073,951 7,309,459
----------- ---------- ---------- -----------
Non-interest income (loss)
Fee income 244,205 249,614 492,217 493,098
Income on investment in Federal Home Loan Bank 58,176 66,617 113,506 132,50992
Gain on sales of loans, net 107,678 109,094 228,896 208,426
Loss from real estate operations (29,217) (45,872) (92,172) (88,343)
Other -- 71,215 1,193 71,215
-------- --------
Total non-interest income 380,842 450,668 743,640 816,905
--------- --------- -------- --------
Non-interest expenses
Salaries 922,576 891,170 1,840,927 1,771,015
Employee Benefits 173,875 174,852 381,152 363,715
Data processing fees and equipment costs 218,617 219,674 423,812 440,721
Federal deposit insurance 220,738 206,203 442,267 407,787
Special federal deposit insurance assessment 2,356,105 -- 2,356,105 --
Net occupancy 128,763 138,414 248,474 244,667
Amortization of excess costs over fair value of net assets
acquired 90,840 90,840 181,680 181,680
Advertising 13,945 31,745 28,269 86,585
Other 383,921 302,677 1,006,224 656,165
--------- --------- ---------- ----------
Total non-interest expenses 4,509,380 2,055,575 6,908,910 4,152,335
--------- --------- ---------- ----------
Income (loss) before income taxes (121,480) 2,088,705 1,908,681 3,974,029
Income tax expense (benefit) (36,545) 750,549 803,783 1,425,244
--------- --------- ---------- ----------
Net income (loss) $ (84,935) $1,338,156 $1,104,898 $2,548,785
========= ========= ========= =========
Per share amounts:
Earnings (loss) per common share and common share
equivalent - assuming no dilution $(0.03) $0.60 $0.40 $1.19
Earnings (loss) per common share - assuming full dilution
$(0.03) $0.49 $0.40 $0.98
Average shares outstanding:
Assuming no dilution 2,770,670 2,217,247 2,769,269 2,138,437
Assuming full dilution 2,770,670 2,752,308 2,776,943 2,734,541
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
<PAGE>
CENTRAL JERSEY FINANCIAL CORPORATION
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended
September 30,
(Unaudited) 1996 1995
----------- ---- ----
Cash flows from:
Operating activities
<S> <C> <C>
Net income $ 1,189,833 $ 1,210,629
Adjustments to reconcile net income to net cash
provided by operating activities
Provision for losses on loans and real estate, including
real estate acquired in settlement of loans 65,000 50,000
Accretion of discounts on loans acquired in business combination -- (51,809)
Amortization of premiums, discounts and deferred fees 97,082 91,655
Amortization of excess cost over fair value of net assets acquired 98,840 90,840
Depreciation of premises and equipment 69,720 78,208
Loans originated for sale (9,270,765) (6,254,672)
Proceeds from sales of loans held for sale 9,379,961 6,047,986
Net gain on the sale of loans (121,218) (99,332)
Net decrease in interest receivable and other assets 90,356 430,531
Net increase in other liabilities 1,329,118 879,168
---------- ----------
Net cash provided by operating activities 2,919,927 2,473,204
---------- ----------
Investing activities
Net increase in interest-bearing deposits in other banks -- (21,000)
Purchase of investment securities: available for sale (11) --
Purchase of investment securities: portfolio (5,000,000) (4,998,437)
Maturities of investment securities: portfolio 20,105 50,000
Purchases of mortgage-backed securities: portfolio (13,017,958) (26,619,227)
Maturities of mortgage-backed securities: portfolio 11,910,481 4,398,900
Loans originated, less principal collected 6,260,668 5,029,788
Decrease in real estate held for development and resale 135,000 144,000
Proceeds from sales of real estate acquired in settlement of loans 40,500 --
Purchases of premises and equipment, net (2,958) (56,390)
---------- ----------
Net cash provided by (used by) investing activities 345,827 (22,072,366)
------------ ---------
Financing activities
Net increase (decrease) in deposits (1,013,040) 22,757,328
Net increase (decrease) in other borrowed funds 300,000 (2,600,000)
Net increase in advances from borrowers 6,762 22,748
Cash dividends paid on common stock (747,115) (196,415)
------------ ---------
Net cash provided by (used by) financing activities (1,453,393) 19,983,661
------------ ---------
Increase in cash and cash equivalents 1,812,361 384,499
Cash and cash equivalents at beginning of year 8,804,911 7,693,873
------------ ---------
Cash and cash equivalents at end of period $ 10,617,272 $ 8,078,372
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
CENTRAL JERSEY FINANCIAL CORPORATION
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows Six Months Ended
September 30,
(Unaudited) 1996 1995
----------- ---------- ---------
Cash flows from:
Operating activities
<S> <C> <C>
Net income $1,104,898 $2,548,785
Adjustments to reconcile net income to net cash
provided by operating activities
Provision for losses on loans and real estate, including
real estate acquired in settlement of loans 117,119 161,613
Accretion of discounts on loans acquired in business combination -- (103,618)
Amortization of premiums, discounts and deferred fees 217,238 191,781
Amortization of excess cost over fair value of net assets acquired 181,680 181,680
Depreciation of premises and equipment 131,356 207,816
Loans originated for sale (16,501,105) (12,730,018)
Proceeds from sales of loans held for sale 16,295,370 12,455,216
Net gain on the sale of loans (228,896) (208,426)
Net (increase) decrease in interest receivable and other assets 1,285,305 (520,720)
Net increase in other liabilities 1,222,338 89,530
---------------- -------------
Net cash provided by operating activities 3,825,303 2,273,633
---------------- -------------
Investing activities
Sales of investment securities: available for sale 902 --
Purchase of investment securities: portfolio (15,000,000) (4,998,437)
Maturities of investment securities: portfolio 117,914 50,000
Purchases of mortgage-backed securities: portfolio (19,622,112) (40,789,228)
Murities of mortgage-backed securitites: portfolio 22,248,473 12,476,684
Loans originated, less principal collected 14,988,848 10,729,461
Decrease in real estate held for development and resale 90,365 310,000
Proceeds from sales of real estate acquired in settlement of loans 264,191 452,084
Purchases of premises and equipment, net (16,102) (65,935)
-------------- -----------
Net cash provided by (used by) investing activities 3,072,479 (21,835,371)
-------------- ------------
Financing activities
Net increase (decrease) in deposits (8,951,618) 18,496,846
Net increase in other borrowed funds 3,400,000 2,500,000
Net decease in advances from borrowers (40,010) (61,193)
Cash dividends paid on common stock (1,528,508) (516,606)
Options exercised 1,004,367 --
--------------- ----------------
Net cash provided by (used by) financing activities (6,115,769) 20,419,047
-------------- -------------
Increase in cash and cash equivalents 782,013 857,309
Cash and cash equivalents at beginning of year 8,804,911 7,693,873
------------- -------------
Cash and cash equivalents at end of period $ 9,586,924 $ 8,551,182
============= =============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
CENTRAL JERSEY FINANCIAL CORPORATION
Notes To Consolidated Financial Statements
1. Central Jersey Financial Corporation (the "Corporation") is a thrift
holding company having one subsidiary, Central Jersey Savings Bank,
SLA ("CJSB"). CJSB is a state chartered savings and loan association.
2. In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting principally
of normal accruals) necessary for a fair presentation of the
Corporation's consolidated financial condition, results of operations
and cash flows for all periods presented herein.
3. The unaudited consolidated results of operations for each of the
periods presented in this Form 10-Q are not necessarily indicative of
the results to be expected for the full year.
4. The financial statements as presented, herein, should be read in
conjunction with the notes to the consolidated financial statements
included in the Corporation's Annual Report on Form 10-K for the year
ended March 31, 1996.
5. Loans receivable
<TABLE>
<CAPTION>
September 30, March 31,
1996 1996
------------- ---------
First mortgage real estate loans
<S> <C> <C>
Conventional........................... $146,156,712 $154,636,304
Commercial............................. 26,369,657 29,496,029
Construction and land.................. 9,740,917 11,505,329
FHA insured and VA guaranteed.......... 6,360,800 7,005,926
----------- -----------
188,628,086 202,643,588
Home equity loans.............................. 26,241,706 27,509,954
Other consumer loans........................... 673,280 792,676
Other commercial loans......................... 259,688 276,206
----------- -----------
215,802,760 231,222,424
Less:
Loans in process....................... 7,549,339 7,569,129
Deferred loan fees..................... 478,657 594,936
Net premium on loans purchased......... (32,653) (82,368)
----------- -----------
207,807,417 223,140,727
Allowance for loan losses.............. 3,014,178 3,031,479
----------- -----------
$204,793,239 $220,109,248
=========== ===========
</TABLE>
- ------------------------
Included in loans receivable at September 30, 1996 and March 31, 1996 are loans
amounting to $5,928,000 and $7,782,000, respectively, on which the accrual of
interest has been suspended.
-4-
<PAGE>
Notes to Consolidated Financial Statements, continued
- -----------------------------------------------------
6. Earnings per share were computed by dividing net income by the
weighted average number of common shares and common share equivalents
outstanding during the respective periods. Stock options are
considered common stock equivalents and were included in the
calculation of the average number of common shares outstanding using
the treasury stock method. Fully diluted earnings per share,
primarily related to shares issuable in connection with the
convertible subordinated debentures for the 1995 period, were
computed using the if converted method.
7. The Corporation exchanged mortgage loans for the properties
underlying the mortgages amounting to $431,000 and $97,000,
respectively, during each of the six-month periods ended September
30, 1996 and 1995. The value of the properties at the time of
exchange was $354,000 and $86,000, respectively, for each of the
six-month periods ended September 30, 1996 and 1995, and were
recorded as Real Estate Acquired in Settlement of Loans. The
differences between loan balances and the value of the underlying
properties were charged to allowances provided for such losses.
Cash paid during each of the six-month periods ended September 30,
1996 and 1995 for interest on deposits and borrowed funds were
$8,434,000 and $8,801,000, respectively. Cash payments made for
federal and state income taxes during the six months ended September
30, 1996 and 1995 amounted to $2,410,000 and $1,762,000,
respectively.
8. The Corporation, as previously announced, entered into a definitive
merger agreement (the "Agreement") with Summit Bancorp ("Summit"), on
May 22, 1996. The Agreement provides for Summit to acquire the
Corporation in a tax-free exchange of stock. On November 6, 1996, the
Corporation's shareholders overwhelmingly approved the merger of the
Corporation with Summit. It is expected that the merger will be
completed before the end of 1996.
9. The results for the three-month and six-month periods ended September
30, 1996 include a charge for the Federal Deposit Insurance
Corporation ("FDIC") special assessment amounting to $2,356,000 on a
pretax basis. The after tax charge of $1,508,000 amounted to $0.54
per share on both primary and fully diluted bases for the three-month
and six-month periods ended September 30, 1996. The special
assessment resulted from the recently enacted federal law providing
for the recapitalization of the FDIC Savings Association Insurance
Fund ("SAIF"), whereby a one-time charge of approximately 66 basis
points is being assessed on deposits held by SAIF institutions at
March 31, 1995.
-5-
<PAGE>
CENTRAL JERSEY FINANCIAL CORPORATION
Management's Discussion and Analysis Of Results
Of Operations And Financial Condition
Overview
- --------
Results for the three months ended September 30, 1996 amounted to a loss
of $84,935, while the six months ended September 30, 1996 resulted in net income
of $1,104,898. The results for the three-month and six-month periods ended
September 30, 1996 included a charge for the Federal Deposit Insurance
Corporation ("FDIC") special assessment amounting to $2,356,105 on a pretax
basis ($1,508,000 after taxes). The special assessment resulted from the
recently enacted federal law providing for the recapitalization of the FDIC
Savings Association Insurance Fund ("SAIF"), whereby a one-time charge of
approximately 66 basis points is being assessed on deposits held by SAIF
institutions at March 31, 1995.
Net Interest Income
- -------------------
The principal component of the Corporation's income is net interest
income, the difference between interest received on interest-earning assets,
primarily loans, mortgage-backed securities ("MBS") and investments, and the
interest expense paid on interest-bearing liabilities, primarily deposits and
borrowings. Net interest income depends upon the volume of interest-earning
assets and interest-bearing liabilities and the interest rate earned or paid on
them.
Net interest income for the three months ended September 30, 1996
increased $263,446, from $3,793,612 for the three months ended September 30,
1995 to $4,057,058 for the comparable 1996 period. The increase in net interest
income was primarily the result of the decrease in interest expense of $243,571,
from $4,464,219 for the three months ended September 30, 1995 to $4,220,648 for
the same period in 1996.
Net interest income for the six months ended September 30, 1996 compared
with 1995 increased $714,492, from $7,459,459 for the six months ended September
30, 1995 to $8,173,951 for the comparable 1996 period. The increase in net
interest income between the six-month periods was the result of the increase in
interest income of $333,102 and the decrease in interest expense of $381,390.
Interest income increased from $16,270,760 for the six months ended September
30, 1995 to $16,603,862 in 1996, while interest expense decreased from
$8,811,301 to $8,429,911 over the same period.
Interest on loans receivable, the largest component of interest income,
for the three-month and six-month periods ended September 30, 1996 decreased
$573,974 and $1,118,821, respectively, from the comparable 1995 periods.
Interest on loans receivable decreased from $4,898,003 for the three months
ended September 30, 1995 to $4,324,029 for the comparable 1996 period and from
$9,920,006 for the six months ended September 30, 1995 to $8,801,185 for the
comparable 1996 period. The average balance of loans receivable decreased
$26,876,182, from $241,539,972 for the three months ended September 30, 1995 to
$214,663,790 for the comparable 1996 period. The average balance of loans
receivable decreased $25,816,155, from $244,049,525 for the six months ended
September 30, 1995 to $218,233,370 for the comparable 1996 period. Most loans
currently being originated by the Corporation are being sold without recourse
and with servicing released. The policy of selling most loans being originated
will probably result in further reducing the balance of loans receivable in
future periods. The average interest rate earned on loans decreased over the
three-month and six-month periods by approximately 5 basis points and 6 basis
points, respectively. The average interest rate earned on loans decreased from
8.11 percent for the three months ended September 30, 1995 to 8.06 percent for
the comparable 1996 period and from 8.13 percent for the six months ended
September 30, 1995 to 8.07 percent for the comparable 1996 period.
-6-
<PAGE>
Net Interest Income, continued
- ------------------------------
Interest on MBS for the three months ended September 30, 1996 increased
$340,808 from the comparable 1995 period, from $2,889,148 in 1995 to $3,229,956
in 1996. Interest on MBS for the six months ended September 30, 1996 increased
$1,152,742 from the comparable 1995 period, from $5,411,715 in 1995 to
$6,564,457 in 1996. The average balance of MBS increased $20,564,825, from
$170,065,900 for the three months ended September 30, 1995 to $190,630,725 for
the comparable 1996 period. The average balance of MBS has increased
$29,244,905, from $161,685,801 for the six months ended September 30, 1995 to
$190,930,706 for the comparable 1996 period. The Corporation is acquiring
adjustable-rate MBS and fixed-rate MBS with contractual lives of ten years or
less. The average rate earned on MBS has decreased between the three-month
periods by approximately 2 basis points, and between the six-month periods by 19
basis points. The average rate earned on MBS decreased from 6.80 percent for the
three months ended September 30, 1995 to 6.78 percent for the comparable 1996
period and increased from 6.69 percent for the six months ended September 30,
1995 to 6.88 percent for the comparable 1996 period.
Interest on investment securities for the three-month and six-month
periods ended September 30, 1996 increased $249,963 and $292,402, respectively,
from the comparable 1995 periods. Interest on investment securities increased
from $454,191 for the three months ended September 30, 1995 to $704,154 for the
comparable 1996 period and from $908,536 for the six months ended September 30,
1995 to $1,200,938 for the comparable 1996 period. The average balance of
investment securities increased $10,860,200, from $25,601,097 for the three
months ended September 30, 1995 to $36,461,297 for the comparable 1996 period.
The average balance of investment securities increased $9,211,632, from
$23,961,281 for the six months ended September 30, 1995 to $33,172,913 for the
comparable 1996 period. The average rate earned on investment securities for the
three-month period ended September 30, 1996 increased 62 basis points, from the
comparable 1995 period from 7.10 percent in 1995 to 7.72 percent in 1996. The
average rate earned on investment securities for the six months ended September
30, 1996 decreased 34 basis points from the comparable 1995 period, from 7.58
percent in 1995 to 7.24 percent in 1996.
Interest on deposits for the three-month period ended September 30, 1996
decreased $215,393 from $4,126,604 for the three months ended September 30, 1995
to $3,911,211 for the comparable 1996 period. The average balance of deposits
decreased $253,146, from $381,840,217 for the three months ended September 30,
1995 to $381,587,071 for the comparable 1996 period. The average interest rate
paid on deposits decreased 22 basis points from, 4.32 percent for the three
months ended September 30, 1995 to 4.10 percent for the comparable 1996 period.
For the six-month period ended September 30, 1996, interest on deposits
decreased $219,769, from $8,055,773 for the six months ended September 30, 1995
to $7,836,004 for the comparable 1996 period. The average cost of deposits for
the six month period ended September 30, 1996 decreased 21 basis points from the
comparable 1995 period. The average cost of deposits decreased from 4.30 percent
for the six months ended September 30, 1995 to 4.09 percent for the comparable
1996 period. The average balance of deposits for the six-month period ended
September 30, 1996 increased $8,283,326, from the comparable 1995 period. The
average balance of deposits increased from $374,964,521 for the six months ended
September 30, 1995 to $383,247,847 for the comparable 1996 period.
Interest expense on long-term debt decreased $197,543 for the six months
ended September 30, 1996 compared with the same period in 1995. The decrease was
the result of converting all of the Convertible Subordinated Debentures into
common stock of the Corporation in September 1995.
Interest expense on other borrowed funds for the three-month and
six-month periods ended September 30, 1996 decreased $16,396 and increased
$35,922, respectively, from the comparable 1995 periods. Interest expense on
other borrowed funds decreased from $325,833 for the three months ended
September 30, 1995 to $309,437 for the comparable 1996 period and increased from
$557,985 for the six months ended September 30, 1995 to $593,907 for the
comparable 1996 period. The average balance of other borrowed funds for the
three months ended September 30, 1996 amounted to $22,595,652 compared with
$21,561,957 for the same period in 1995, an increase of $1,033,695. The average
interest rate paid on other borrowed funds for the three months ended September
30, 1996 decreased 56 basis points from the comparable period in 1995, from 6.04
percent in 1995 to 5.48 percent in 1996. For the six months ended September 30,
1996, the average balance of other borrowed funds increased $3,534,426 from the
-7-
<PAGE>
Net Interest Income, continued
- ------------------------------
comparable 1995 period. The average balance of borrowed funds increased from
$18,209,290 in 1995 to $21,743,716 in 1996. The average interest rate paid on
other borrowed funds for the six months ended September 30, 1996 decreased 67
basis points from the comparable 1995 period, from 6.13 percent in 1995 to 5.46
percent in 1996.
Non-Interest Income
- -------------------
Non-interest income decreased $69,826 and $73,265, respectively, for the
three-month and six-month periods ended September 30, 1996 compared with the
same 1995 periods. Non-interest income decreased from $450,668 for the three
months ended September 30, 1995 to $380,842 for the comparable 1996 period and
from $816,905 for the six months ended September 30, 1995 to $743,640 for the
comparable 1996 period.
The decreases were generally the result of gains recorded from the
disposition of two parcels of land adjacent to certain of the Corporation's
facilities during the three months ended September 30, 1995.
Non-Interest Expense
- ---------------------
Non-interest expenses for the three-month and six-month periods ended
September 30, 1996 increased $2,453,805 and $2,756,575, respectively, from the
comparable 1995 periods. Non-interest expenses increased from $2,055,575 for the
three months ended September 30, 1995 to $4,509,380 for the comparable 1996
period and from $4,152,335 for the six months ended September 30, 1995 to
$6,908,910 for the comparable 1996 period. The increases were primarily the
result of the Federal Deposit Insurance Corporation special assessment,
discussed more fully in the accompanying notes to consolidated financial
statements. In addition, other non-interest expenses include costs incurred in
connection with the proposed merger of the Corporation with Summit Bancorp which
amounted to approximately $270,000 for the six months ended September 30, 1996.
Substantial additional merger related costs will be incurred prior to closing
the merger, projected for the fourth quarter of calendar 1996.
Financial Condition
- -------------------
There were no significant changes in the Corporation's consolidated
financial position between September 30, 1996 and March 31, 1996. The
Corporation remains well capitalized. CJSB's regulatory capital at September 30,
1996 exceeded the current capital requirements established by the Office of
Thrift Supervision.
-8-
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
The Corporation is involved in various legal proceedings which
arise out of the general operations of its business. These
lawsuits primarily involve claims to enforce liens on real and
personal property, condemnation proceedings on real property
and other matters incidental to the Corporation's business.
The Corporation does not believe that the resolution of these
lawsuits would have a material adverse effect on its financial
condition or results of operations.
Item 2. Changes in Securities
---------------------
Not applicable
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable
Item 5. Other Information
-----------------
Not applicable
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibit 11 - Statement Re: Computation of Per Share
Earnings
-9-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTRAL JERSEY FINANCIAL CORPORATION
------------------------------------
(Registrant)
Date November 13, 1996 /s/ John J. Doherty
----------------- -------------------
John J. Doherty
Vice President, Principal Financial
Officer, and Duly Authorized Signatory
-10-
EXHIBIT 11
<PAGE>
Exhibit 11 - Statement RE: Computation of Earnings Per Share
<TABLE>
<CAPTION>
Three Months Ended September 30, Six Months Ended September 30,
-------------------------------- ------------------------------
1996 1995 1996 1995
---- ---- ---- ----
Primary EPS
<S> <C> <C> <C> <C>
Average shares outstanding 2,698,873 2,140,174 2,685,757 2,064,732
Net effect of dilutive stock options: based
on the treasury stock method using the
average market price 71,797 77,073 83,512 73,705
--------- --------- --------- ---------
Totals 2,770,670 2,217,247 2,769,269 2,138,437
========= ========= ========= =========
Net income (loss) $ (84,935) $ 1,338,156 $ 1,104,898 $ 2,548,785
========= ========= ========= =========
Earnings (loss) per share assuming no
dilution $ (0.03) $ 0.60 $ 0.40 $ 1.19
========= ========= ========= =========
Fully Diluted EPS
Average shares outstanding 2,698,873 2,140,174 2,685,757 2,064,732
Net effect of dilutive stock options: based
on the treasury stock method using the
greater of the quarter-end market price or 71,797 83,845 91,186 82,821
the average market price
Assumed conversion of 7.00% convertible
subordinated debentures -- 528,289 -- 586,988
--------- --------- --------- ---------
Totals 2,770,670 2,752,308 2,776,943 2,734,541
========= ========= ========= =========
Net income (loss) $(84,935) $1,338,156 $1,104,898 $2,548,785
Add interest on convertible subordinated
debentures, net of federal income tax effect -- 7,776 -- 130,378
--------- --------- --------- ---------
Net income (loss), as adjusted $ (84,935) $ 1,345,932 $ 1,104,898 $ 2,679,163
========= ========= ========= =========
Earnings (loss) per share assuming full
dilution $ (0.03) $ 0.49 $ 0.40 $ 0.98
========= ========= ========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 9,587
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 8,134
<INVESTMENTS-CARRYING> 8,035
<INVESTMENTS-MARKET> 8,134
<LOANS> 207,807
<ALLOWANCE> 3,014
<TOTAL-ASSETS> 464,472
<DEPOSITS> 377,618
<SHORT-TERM> 25,900
<LIABILITIES-OTHER> 4,810
<LONG-TERM> 0
0
0
<COMMON> 2,791
<OTHER-SE> 53,353
<TOTAL-LIABILITIES-AND-EQUITY> 464,472
<INTEREST-LOAN> 4,324
<INTEREST-INVEST> 704
<INTEREST-OTHER> 3,250
<INTEREST-TOTAL> 8,278
<INTEREST-DEPOSIT> 3,911
<INTEREST-EXPENSE> 4,221
<INTEREST-INCOME-NET> 4,057
<LOAN-LOSSES> 50
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,509
<INCOME-PRETAX> (121)
<INCOME-PRE-EXTRAORDINARY> (121)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (85)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
<YIELD-ACTUAL> 7.47
<LOANS-NON> 5,928
<LOANS-PAST> 5,928
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 359
<ALLOWANCE-OPEN> 3,031
<CHARGE-OFFS> 114
<RECOVERIES> 21
<ALLOWANCE-CLOSE> 3,014
<ALLOWANCE-DOMESTIC> 3,014
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
