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 September 30, 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 Setember 30, 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 September 30, 2003 and December 31, 2002 1 Consolidated Statements of Income Nine Months Ended September 30, 2003, 2002 and 2001 2 Consolidated Statements of Income Quarters Ended September 30, 2003, 2002 and 2001 3 Consolidated Statements of Stockholders' Equity Nine Months Ended September 30, 2003, 2002 and 2001 4 Consolidated Statements of Cash Flows Nine Months Ended September 30, 2003, 2002 and 2001 5 Notes to Consolidated Financial Statements 6-7 Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operation 8-9 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 10 Signatures 11 302 Certification: CEO 12 302 Certification: CFO 13 906 Certification: CEO 14 906 Certification: CFO 15 Page 1 BRUNSWICK BANCORP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS UNAUDITED September 30 December 31 2003 2002 ------------ ------------ ASSETS: Cash and due from banks $ 28,472,767 $ 8,629,080 Federal funds sold 9,000,000 25,000,000 ------------ ------------ Total cash and cash equivalents 37,472,767 33,629,080 Securities held to maturity 24,621,784 27,919,222 Loans receivable, net 62,403,747 58,519,930 Premises and equipment 798,991 1,204,755 Accrued interest receivable 598,388 809,817 Other assets 566,720 624,030 ------------ ------------ TOTAL ASSETS $126,462,397 $122,706,834 ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY: Liabilities: Deposits: Non-interest bearing $ 35,036,255 $ 32,931,180 Interest bearing 61,444,893 60,389,845 ------------ ------------ Total deposits 96,481,148 93,321,025 Borrowed funds 85,255 610,615 Accrued Interest payable 136,329 112,904 Other liabilities 370,620 373,580 ------------ ------------ Total liabilities 97,073,352 94,418,124 ------------ ------------ Stockholders' equity Common stock, no par value Authorized 10,000,000 shares Issued and outstanding 2,094,875 shares at September 30, 2003 and December 31, 2002 4,189,750 4,189,750 Additional paid-in capital 2,592,694 2,592,694 Retained earnings 23,356,269 22,415,485 Deferred stock compensation (733,625) (812,600) Treasury stock at cost, 1,753 and 10,553 shares (16,043) (96,619) ------------ ------------ Total stockholders' equity 29,389,045 28,288,710 ------------ ------------ TOTAL LIABILITIES AND STOCKHODER' EQUITY $126,462,397 $122,706,834 ------------ ------------ Page 2 BRUNSWICK BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME NINE MONTHS ENDED SEPTEMBER 30, 2003, 2002 AND 2001 UNAUDITED 2003 2002 2001 ----------- ----------- ----------- INTEREST INCOME: Interest and fees on loans receivable $ 3,939,511 $ 4,088,429 $ 4,154,751 Interest on investments 813,721 1,489,319 1,466,711 Interest on Federal funds sold 138,446 198,960 698,003 Interest on deposits with banks 89,852 ---- ---- ----------- ----------- ----------- Total interest income 4,981,530 5,776,708 6,319,465 ----------- ----------- ----------- INTEREST EXPENSE: Interest on deposits 409,512 549,081 1,194,503 Interest on borrowed funds 1,350 3,160 7,572 ----------- ----------- ----------- Total interest expense 410,862 552,241 1,202,075 ----------- ----------- ----------- Net interest income 4,570,668 5,224,467 5,117,390 Provision for credit losses 225,000 175,000 28,000 ----------- ----------- ----------- Net interest income after provision for credit losses 4,345,668 5,049,467 5,089,390 ----------- ----------- ----------- NON-INTEREST INCOME: Service fees 691,984 694,881 674,863 Other non-interest income 50,217 23,049 44,074 ----------- ----------- ----------- Total non-interest income 742,201 717,930 718,937 ----------- ----------- ----------- NON-INTEREST EXPENSES Salaries and wages 1,386,491 1,379,107 1,453,278 Employee benefits 554,103 538,971 533,402 Occupancy 550,818 540,859 542,794 Furniture and equipment 134,402 147,134 166,474 Other non-interest expenses 765,934 890,892 934,874 ----------- ----------- ----------- Total non-interest expenses 3,391,748 3,496,963 3,630,822 ----------- ----------- ----------- Income before income tax expense 1,696,121 2,270,434 2,177,505 Income tax expense 755,337 1,000,750 895,450 ----------- ----------- ----------- NET INCOME $ 940,784 $ 1,269,684 $ 1,282,055 ----------- ----------- ----------- NET INCOME PER SHARE $ 0.45 $ 0.61 $ 0.67 ----------- ----------- ----------- Page 3 BRUNSWICK BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME QUARTERS ENDED SEPTEMBER 30, 2003, 2002 AND 2001 UNAUDITED 2003 2002 2001 ------------ ------------ ------------ INTEREST INCOME: Interest and fees on loans receivable $ 1,319,812 $ 1,324,241 $ 1,356,676 Interest on investments 218,822 458,189 457,425 Interest on Federal funds sold 28,184 91,149 200,511 Interest on deposits with banks 63,550 ---- ---- ------------ ------------ ------------ Total interest income 1,630,368 1,873,579 2,014,612 ------------ ------------ ------------ INTEREST EXPENSE: Interest on deposits 110,773 175,942 327,087 Interest on borrowed funds 561 1,240 1,740 ------------ ------------ ------------ Total interest expense 111,334 177,182 328,827 ------------ ------------ ------------ Net interest income 1,519,034 1,696,397 1,685,785 Provision for credit losses 75,000 100,000 21,000 ------------ ------------ ------------ Net interest income after provision for credit losses 1,444,034 1,596,397 1,664,785 ------------ ------------ ------------ NON-INTEREST INCOME: Service fees 233,185 253,130 212,253 Other non-interest income 35,297 5,095 20,940 ------------ ------------ ------------ Total non-interest income 268,482 258,225 233,193 ------------ ------------ ------------ NON-INTEREST EXPENSES Salaries and wages 470,263 443,338 495,199 Employee benefits 184,630 171,745 181,180 Occupancy 176,067 188,361 184,824 Furniture and equipment 43,480 51,567 46,659 Other non-interest expenses 230,247 281,061 274,304 ------------ ------------ ------------ Total non-interest expenses 1,104,687 1,136,072 1,182,166 ------------ ------------ ------------ Income before income tax expense 607,829 718,550 715,812 Income tax expense 257,047 333,410 314,800 ------------ ------------ ------------ NET INCOME $ 350,782 $ 385,140 $ 401,012 ------------ ------------ ------------ NET INCOME PER SHARE $ 0.17 $ 0.18 $ 0.19 ------------ ------------ ------------ Page 4 BRUNSWICK BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY NINE MONTHS ENDED SEPTEMBER 30, 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 ---- ---- 1,282,055 ---- ---- 1,282,055 Deferred stock compensation 80,000 352,000 ---- (432,000) ---- ---- Amortization of deferred stock compensation ---- ---- ---- 71,575 ---- 71,575 ---------------- -------------- -------------- ------------ -------------- ------------ Balance, September 30, 2001 $ 3,809,064 $ 2,973,380 $ 19,929,811 $ (940,825) $ (91,774) $ 25,679,656 ---------------- -------------- -------------- ------------ -------------- ------------ Balance, December 31, 2001 $ 3,809,064 $ 2,973,380 $ 20,473,038 $ (917,900) $ (91,774) $ 26,245,808 Net income ---- ---- 1,269,684 ---- ---- 1,269,684 Stock dividend 380,686 (380,686) (1,543) ---- ---- (1,543) Amortization of deferred stock compensation ---- ---- ---- 78,975 ---- 78,975 Purchase of treasury stock ---- ---- ---- ---- (4,845) (4,845) ---------------- -------------- -------------- ------------ -------------- ------------ Balance, September 30, 2002 $ 4,189,750 $ 2,592,694 $ 21,741,179 $ (838,925) $ (96,619) $ 27,588,079 ---------------- -------------- -------------- ------------ -------------- ------------ Balance, December 31, 2002 $ 4,189,750 $ 2,592,694 $ 22,415,485 $ (812,600) $ (96,619) $ 28,288,710 Net income ---- ---- 940,784 ---- ---- 940,784 Amortization of deferred stock compensation ---- ---- ---- 78,975 ---- 78,975 Stock options excercised ---- ---- ---- ---- 80,576 80,576 ---------------- -------------- -------------- ------------ -------------- ------------ Balance, September 30, 2003 $ 4,189,750 $ 2,592,694 $ 23,356,269 $ (733,625) $ (16,043) $ 29,389,045 ---------------- -------------- -------------- ------------ -------------- ------------ Page 5 BRUNSWICK BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2003, 2002 AND 2001 UNAUDITED 2003 2002 2001 --------------- ---------------- --------------- OPERATING ACTIVITIES: Net income $ 940,784 $ 1,269,684 $ 1,282,055 Adjustments to reconcile net income to cash provided by operating activities: Provision for credit losses 225,000 175,000 28,000 Depreciation and amortization 91,868 99,037 142,305 Net accretion of securities discounts (70,326) (83,282) (63,365) Amortization of deferred stock compensation 78,975 78,975 71,575 (Increase) decrease in other assets 268,739 298,964 351,298 Increase (decrease) in other liabilities 20,465 166,287 284,106 --------------- ---------------- --------------- Net cash provided (used) by operating activities 1,555,505 2,004,665 2,095,974 --------------- ---------------- --------------- INVESTING ACTIVITIES: Maturities of securities 18,150,000 16,000,000 9,000,000 Principal repayments on securities 42,764 67,304 49,739 Purchases of securities (14,825,000) (10,984,326) (11,000,000) Net (increase) decrease in loans receivable (4,108,817) (2,587,428) (719,927) Acquisitions of premises and equipment (40,584) (59,419) (160,225) Proceeds from sales of premises and equipment 354,480 10,363 890,845 --------------- ---------------- --------------- Net cash provided (used) by investing activities (427,157) 2,446,494 (1,939,568) --------------- ---------------- --------------- FINANCING ACTIVITIES: Cash paid in lieu of fractional shares ---- (1,543) ---- Purchase of treasury stock ---- (4,845) ---- Stock options excercised 80,576 ---- ---- Net increase (decrease) in non-interest bearing deposits 2,105,075 1,689,720 557,087 Net increase (decrease) in interest bearing deposits 1,055,048 13,282,863 (3,252,651) Net increase (decrease) in borrowed funds (525,360) (163,712) 115,578 --------------- ---------------- --------------- Net cash provided (used) by financing activities 2,715,339 14,802,483 (2,579,986) --------------- ---------------- --------------- Increase (decrease) in cash and cash equivalents 3,843,687 19,253,642 (2,423,580) Cash and cash equivalents at January 1 33,629,080 15,064,753 39,271,870 --------------- ---------------- --------------- Cash and cash equivalents at September 30 $ 37,472,767 $ 34,318,395 $ 36,848,290 --------------- ---------------- --------------- Page 6 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 considered 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: SEPTEMBER 30, 2003 BOOK MARKET VALUE VALUE --------------------- ------------------- U.S. Government and agency securities $ 22,571,784 $ 22,841,829 Other securities 2,050,000 2,050,000 --------------------- ------------------- $ 24,621,784 $ 24,891,829 --------------------- ------------------- 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 7 BRUNSWICK BANCORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 NET LOANS RECEIVABLE The composition of net loans receivable is as follows: SEPTEMBER 30 DECEMBER 31 2003 2002 -------------------- ------------------- Commercial loans $ 36,724,635 $ 31,362,179 Real estate loans 26,009,324 27,397,939 Cosumer loans 816,405 681,175 -------------------- ------------------- 63,550,364 59,441,293 Less: Allowance for credit losses 1,046,164 800,000 Unearned income 100,453 121,363 -------------------- ------------------- $ 62,403,747 $ 58,519,930 -------------------- ------------------- NOTE 4 PREMISES AND EQUIPMENT The major components of premises and equipment are as follows: SEPTEMBER 30 DECEMBER 31 2003 2002 ------------------- ----------------- Land $ 240,705 $ 516,927 Bank premises 706,826 744,499 Leasehold improvements 183,023 183,023 Furniture and equipment 1,189,920 1,189,920 ------------------- ----------------- 2,320,474 2,634,369 Less accumulated depreciation and amortization 1,521,483 1,429,614 ------------------- ----------------- $ 798,991 $ 1,204,755 ------------------- ----------------- Page 8 BRUNSWICK BANCORP AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS SEPTEMBER 30, 2003 There were some significant changes in the Corporation's Balance Sheet since December 31, 2002. The most noticeable were a $19,800,000 increase in cash and cash due from banks and a decrease in federal funds sold of $16,000,000. Cash and due from banks increased by approximately $19,800,000 mainly because of an interest bearing balance of $16,000,000 in an account recently opened in a corespondent bank. The funding was provided by the aforementioned $16,000,000 decrease in federal funds sold. Additionally, there was an increase in loans of $3,900,000, securities decreased by $3,300,000 and total assets increased by approximately $3,800,000. The allowance for credit losses increased by $246,000, which was due to credit loss provisions $225,000 and recoveries totaling $21,000. At September 30, 2003 the allowance for credit losses totaled $1,046,164 which represented 36% of all loans that were past due or in nonaccrual. Mostly due to the current year's earnings, stockholders' equity increased by approximately $1,100,000 and the Corporation continues to be classified as "Well Capitalized". At September 30, 2003 our risk-based capital ratio was 42.8% which is over five times the regulatory requirement. The results of operations for the first three quarters of 2003, compared to the same period of 2002, show a decrease in income before taxes of approximately $514,000 which was mainly the result of a decrease in net interest income. Declining interest rates brought about decreases in interest income and expense of $795,000 and $141,000, respectively. The resulting $654,000 decrease in net interest income is analyzed in detail on page 9. Credit loss provisions during the current period exceeded last year's provisions during the same period by $50,000. There was very little change in non-interest income while non-interest expenses decreased by approximately $105,000. 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 9 BRUNSWICK BANCORP AND SUBSIDIARIES ANALYSIS OF CHANGES IN NET INTEREST INCOME Increase (Decrease) Due to Changes in ------------------------------------- Volume Rates Total ------ ----- ------ Nine Months Ended September 30, 2003 Versus Nine Months Ended September 30, 2002 Interest income on: Loans receivable $ 198 $(346) $(148) Securities held to maturity (576) (99) (675) Short term investments 48 (19) 29 ----- ----- ----- Total interest income (330) (464) (794) ----- ----- ----- Interest expense on: Deposits 9 (148) (139) Borrowed funds (1) --- (1) ----- ----- ----- Total interest expense 8 (148) (140) ----- ----- ----- Net interest income $(338) $(316) $(654) ----- ----- ----- Quarter Ended September 30, 2003 Versus Quarter Ended September 30, 2002 ----- Interest income on: Loans receivable $ 82 $ (87) $ (5) Securities held to maturity (215) (24) (239) Short term investments (49) (48) 1 ----- ----- ----- Total interest income (84) (159) (243) ----- ----- ----- Interest expense on: Deposits 2 (67) (65) Borrowed funds --- --- --- ----- ----- ----- Total interest expense 2 (67) (65) ----- ----- ----- Net interest income $ (86) $ (92) $(178) ----- ----- ----- Page 10 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 September 30, 2003. Page 11 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 SUBSIDIARIES 10/23/03 /s/ Carmen J. Gumina - ------------- ------------------------------------------ Date Carmen J. Gumina, President & CEO 10/23/03 /s/ Thomas Fornale - ------------- ------------------------------------------ Date Thomas Fornale, Treasurer