SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 -------------------- Quarter Ended March 31, 2003 Commission file number 0-14403 BRUNSWICK BANCORP ------------------------------------------------------------------------ (Exact Name of Registrant as Specified in its Charter) -------------------- NEW JERSEY 22-2610694 - ------------------------------- ------------------------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) NEW BRUNSWICK, NEW JERSEY 08901 - -------------------------------------- ------------ (Address of Principal Executive Office) (Zip Code) (732) 247-5800 ------------------------------------------------------------------------ (Registrant's Telephone Number Including Area Code) NOT APPLICABLE --------------------------------------------------------------------------- (Former Name, Former Address and Former Fiscal Year If Changed Since Last Report) COMMON STOCK, NO PAR VALUE 2,094,875 SHARES - ----------------------------- ------------------------------- (Class of Stock) (Outstanding at March 31, 2003) -------------------- 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 report), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] BRUNSWICK BANCORP AND SUBSIDIARIES INDEX PAGE ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets March 31, 2003 and December 31, 2002 1 Consolidated Statements of Income Three Months Ended March 31, 2003, 2002 and 2001 2 Consolidated Statements of Stockholders' Equity Three Months Ended March 31, 2003, 2002 and 2001 3 Consolidated Statements of Cash Flows Three Months Ended March 31, 2003, 2002 and 2001 4 Notes to Consolidated Financial Statements 5-6 Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operation 7-8 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 9 Signatures 10 Certification of Quarterly Report 11 Page 1 BRUNSWICK BANCORP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS UNAUDITED March 31 December 31 2003 2002 -------------- ----------------- ASSETS: Cash and due from banks $ 9,056,418 $ 8,629,080 Federal funds sold 17,000,000 25,000,000 -------------- ----------------- Total cash and cash equivalents 26,056,418 33,629,080 Securities held to maturity 19,936,768 27,919,222 Loans receivable, net 63,332,518 58,519,930 Premises and equipment 1,213,649 1,204,755 Accrued interest receivable 583,102 809,817 Other assets 671,459 624,030 -------------- ----------------- TOTAL ASSETS $ 111,793,914 $ 122,706,834 -------------- ----------------- LIABILITIES AND STOCKHOLDERS' EQUITY: Liabilities: Deposits: Non-interest bearing $ 30,694,000 $ 32,931,180 Interest bearing 51,658,828 60,389,845 -------------- ----------------- Total deposits 82,352,828 93,321,025 Borrowed funds 113,805 610,615 Accrued interest payable 108,244 112,904 Other liabilities 587,260 373,580 -------------- ----------------- Total liabilities 83,162,137 94,418,124 -------------- ----------------- Stockholders' equity Common stock, no par value Authorized 10,000,000 shares; Issued and outstanding 2,094,532 shares at March 31, 2003 and December 31, 2002 4,189,750 4,189,750 Additional paid-in capital 2,592,694 2,592,694 Retained earnings 22,732,227 22,415,485 Deferred stock compensation (786,275) (812,600) Treasury stock at cost, 10,553 shares (96,619) (96,619) -------------- ----------------- Total stockholders' equity 28,631,777 28,288,710 -------------- ----------------- TOTAL LIABILITIES AND STOCKHODER' EQUITY $ 111,793,914 $ 122,706,834 -------------- ----------------- Page 2 BRUNSWICK BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 2003, 2002 AND 2001 UNAUDITED 2003 2002 2001 INTEREST INCOME: ---------- ---------- ---------- Interest and fees on loans receivable $1,333,746 $1,400,409 $1,430,056 Interest on investments 336,919 509,732 501,619 Interest on Federal funds sold 53,034 54,606 265,543 ---------- ---------- ---------- Total interest income 1,723,699 1,964,747 2,197,218 ---------- ---------- ---------- INTEREST EXPENSE: Interest on deposits 143,416 197,502 459,684 Interest on borrowed funds 525 1,313 3,753 ---------- ---------- ---------- Total interest expense 143,941 198,815 463,437 ---------- ---------- ---------- Net interest income 1,579,758 1,765,932 1,733,781 Provision for credit losses 75,000 50,000 ---- ---------- ---------- ---------- Net interest income after provision for credit losses 1,504,758 1,715,932 1,733,781 ---------- ---------- ---------- NON-INTEREST INCOME: Service fees 217,732 206,496 219,203 Other non-interest income 6,630 14,534 17,540 ---------- ---------- ---------- Total non-interest income 224,362 221,030 236,743 ---------- ---------- ---------- NON-INTEREST EXPENSES Salaries and wages 451,471 467,012 466,240 Employee benefits 194,353 195,169 167,707 Occupancy 190,581 173,962 178,836 Furniture and equipment 41,364 45,413 53,239 Other non-interest expenses 261,309 335,161 347,279 ---------- ---------- ---------- Total non-interest expenses 1,139,078 1,216,717 1,213,301 ---------- ---------- ---------- Income before income tax expense 590,042 720,245 757,223 Income tax expense 273,300 317,000 302,100 ---------- ---------- ---------- NET INCOME $ 316,742 $ 403,245 $ 455,123 ---------- ---------- ---------- NET INCOME PER SHARE $ 0.15 $ 0.19 $ 0.22 ---------- ---------- ---------- Page 3 BRUNSWICK BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY THREE MONTHS ENDED MARCH 31, 2003, 2002 AND 2001 UNAUDITED DEFERRED STOCK COMMON RETAINED COMPEN- TREASURY STOCK SURPLUS EARNINGS SATION STOCK TOTAL ----------- ----------- ----------- ----------- ----------- ----------- Balance, December 31, 2000 $ 3,729,064 $ 2,621,380 $18,647,756 $ (580,400) $ (91,774) $24,326,026 Net income ---- ---- 455,123 ---- ---- 455,123 Deferred stock compensation 80,000 420,000 ---- (500,000) ---- ---- Amortization of deferred stock compensation ---- ---- ---- 15,525 ---- 15,525 ----------- ----------- ----------- ----------- ----------- ----------- Balance, March 31, 2001 $ 3,809,064 $ 3,041,380 $19,102,879 $(1,064,875) $ (91,774) $24,796,674 ----------- ----------- ----------- ----------- ----------- ----------- Balance, December 31, 2001 $ 3,809,064 $ 2,973,380 $20,473,038 $ (917,900) $ (91,774) $26,245,808 Net income ---- ---- 403,245 ---- ---- 403,245 Amortization of deferred stock compensation ---- ---- ---- 26,325 ---- 26,325 ----------- ----------- ----------- ----------- ----------- ----------- Balance, March 31, 2002 $ 3,809,064 $ 2,973,380 $20,876,283 $ (891,575) $ (91,774) $26,675,378 ----------- ----------- ----------- ----------- ----------- ----------- Balance, December 31, 2002 $ 4,189,750 $ 2,592,694 $22,415,485 $ (812,600) $ (96,619) $28,288,710 Net income ---- ---- 316,742 ---- ---- 316,742 Amortization of deferred stock compensation ---- ---- ---- 26,325 ---- 26,325 ----------- ----------- ----------- ----------- ----------- ----------- Balance, March 31, 2003 $ 4,189,750 $ 2,592,694 $22,732,227 $ (786,275) $ (96,619) $28,631,777 ----------- ----------- ----------- ----------- ----------- ----------- Page 4 BRUNSWICK BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2003, 2002 AND 2001 UNAUDITED 2003 2002 2001 ------------ ------------ ------------ OPERATING ACTIVITIES: Net income $ 316,742 $ 403,245 $ 455,123 Adjustments to reconcile net income to cash provided by operating activities: Provision for credit losses 75,000 50,000 ---- Depreciation and amortization 31,690 33,376 48,512 Net accretion of securities discounts (32,259) (27,679) (10,495) Amortization of deferred stock compensation 26,325 26,325 ---- (Increase) decrease in other assets 179,286 2,927 80,244 Increase (decrease) in other liabilities 209,020 369,608 455,874 ------------ ------------ ------------ Net cash provided (used) by operating activities 805,804 857,802 1,029,258 ------------ ------------ ------------ INVESTING ACTIVITIES: Maturities of securities 13,000,000 11,000,000 6,000,000 Principal repayments on securities 14,713 22,353 5,953 Purchases of securities (5,000,000) (10,984,326) (11,000,000) Net (increase) decrease in loans receivable (4,887,588) (848,805) (105,372) Acquisitions of premises and equipment (40,584) ---- (3,990) Proceeds from sale of premises ---- 10,363 ---- ------------ ------------ ------------ Net cash provided (used) by investing activities 3,086,541 (800,415) (5,103,409) ------------ ------------ ------------ FINANCING ACTIVITIES: Net increase (decrease) in non-interest bearing deposits (2,237,180) (515,609) 1,782,923 Net increase (decrease) in interest bearing deposits (8,731,017) 4,040,358 (7,751,844) Net increase (decrease) in borrowed funds (496,810) (144,827) (286,250) ------------ ------------ ------------ Net cash provided (used) by financing activities (11,465,007) 3,379,922 (6,255,171) ------------ ------------ ------------ Increase (decrease) in cash and cash equivalents (7,572,662) 3,437,309 (10,329,322) Cash and cash equivalents at January 1 33,629,080 15,064,753 39,271,870 ------------ ------------ ------------ Cash and cash equivalents at March 31 $ 26,056,418 $ 18,502,062 $ 28,942,548 ------------ ------------ ------------ Page 5 BRUNSWICK BANCORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information, and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. The information presented includes all normal and recurring adjustments concidered necessary for a fair presentation of the interim period results. NOTE 2 SECURITIES HELD TO MATURITY The following is a comparative summary of the book values and estimated market values of securities held to maturity: MARCH 31, 2003 BOOK MARKET VALUE VALUE ----------------- ----------------- U.S. Government and agency securities $ 17,986,768 $ 18,469,377 Other securities 1,950,000 1,950,000 ----------------- ----------------- $ 19,936,768 $ 20,419,377 ----------------- ----------------- DECEMBER 31, 2002 BOOK MARKET VALUE VALUE ----------------- ----------------- U.S. Government and agency securities $ 25,969,222 $ 26,536,242 Other securities 1,950,000 1,950,000 ----------------- ----------------- $ 27,919,222 $ 28,486,242 ----------------- ----------------- Page 6 BRUNSWICK BANCORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 NET LOANS RECEIVABLE The composition of net loans receivabe is as follows: MARCH 31 DECEMBER 31 2003 2002 ------------- ----------- Commercial loans $ 33,674,672 $31,362,179 Real estate loans 29,976,407 27,397,939 Cosumer loans 671,735 681,175 ------------- ----------- 64,322,814 59,441,293 Less: Allowance for credit losses 875,168 800,000 Unearned income 115,128 121,363 ------------- ----------- $ 63,332,518 $58,519,930 ------------- ----------- NOTE 4 PREMISES AND EQUIPMENT The major components of premises and equipment are as follows: MARCH 31 DECEMBER 31 2003 2002 ------------- ----------- Land $ 516,927 $ 516,927 Bank premises 785,083 744,499 Leasehold improvements 183,023 183,023 Furniture and equipment 1,189,920 1,189,920 ------------- ----------- 2,674,953 2,634,369 Less accumulated depreciation and amortization 1,461,304 1,429,614 ------------- ----------- $ 1,213,649 $ 1,204,755 ------------- ----------- Page 7 BRUNSWICK BANCORP AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS MARCH 31, 2003 There were some significant changes in the Corporation's Balance Sheet since December 31, 2002. The most noticeable was a $11,000,000 decrease in total assets which logically resulted from a similar decrease in deposits. The decrease in available funding mostly affected Federal funds sold which decreased by $8,000,000. Due to maturing investments, securities decreased by $7,600,000 while there was a $4,800,000 increase in net loans. The allowance for credit losses increased by approximately $75,000, which was almost entirely due to credit loss provisions. At March 31, 2003 the allowance for credit losses totaled $875,168 which represented 30% of all past due and nonaccrual loans. Mostly due to the current year's earnings, stockholders' equity increased by approximately $343,000 and the Corporation continues to be classified as "Well Capitalized". At March 31, 2003 our risk-based capital ratio was 43.1% which is over five times the regulatory requirement. The results of operations for the first quarter of 2003, compared to the same period of 2002, show a decrease in income before taxes of approximately $130,000 which was mainly the result of a decrease in net interest income. Although there were volume increases in interest sensitive assets and liabilities, declining interest rates brought about decreases in interest income and expense of $241,000 and $55,000, respectively. The resulting $186,000 decrease in net interest income is analyzed in detail on page 8. Credit loss provisions during the current period exceeded last year's provisions during the same period by $25,000. There was very little change in non-interest income while non-interest expenses decreased by approximately $78,000. In Management's opinion, the Corporation's liquidity position is strong, based on its high level of core deposits, the stability of its other funding sources and the support provided by its capital base. Page 8 BRUNSWICK BANCORP AND SUBSIDIARIES ANALYSIS OF CHANGES IN NET INTEREST INCOME Increase (Decrease) Due to Changes in ------------------------------------- Volume Rates Total -------- -------- -------- Three Months Ended March 31, 2003 Versus Three Months Ended March 31, 2002 Interest income on: Loans receivable $ 151 $ (217) $ (66) Securities held to maturity (135) (38) (173) Federal funds sold 22 (24) (2) -------- -------- -------- Total interest income 38 (279) (241) -------- -------- -------- Interest expense on: Deposits 5 (59) (54) Borrowed funds --- (1) (1) -------- -------- -------- Total interest expense 5 (60) (55) -------- -------- -------- Net interest income $ 33 $ (219) $ (186) -------- -------- -------- Page 9 BRUNSWICK BANCORP AND SUBSIDIARIES PART II - OTHER INFORMATION ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K The Corporation filed no Form 8-K during the three months ended March 31, 2003. Page 10 BRUNSWICK BANCORP AND SUBSIDIARIES 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 duly authorized. BRUNSWICK BANCORP AND SUBSIDIARIES 04/11/03 Roman T. Gumina - --------------- -------------------------- Date Roman T. Gumina, President 04/11/03 Thomas Fornale - --------------- -------------------------- Date Thomas Fornale, Treasurer Page 11 CERTIFICATION OF QUARTERLY REPORT I, Carmen J. Gumina, Chief Executive Officer, and I, Thomas Fornale, Chief Financial Officer, Certify that: 1. We have reviewed this quarterly report on Form 10-Q of Brunswick Bancorp: 2. Based on our knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on our knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and we are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date") and c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and we have disclosed, based on our most recent evaluation, to the registrant's auditor and the audit committee of the registrant's board of directors: a) all significant deficiencies in the design of operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have have identified for the registrant's auditors any material weakness in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and we have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including corrective actions with regard to significant deficiencies and material weaknesses. Date: 4/11/03 /s/ Carmen J. Gumina -------------------------- Carmen J. Gumina Chief Executive Officer Date: 4/11/03 /s/ Thomas Fornale -------------------------- Thomas Fornale Chief Financial Officer