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 June 30, 2006 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 2,589,696 SHARES
(Class of Stock) (Outstanding at June 30, 2006)
----------
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes No X
----- -----
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
June 30, 2006 and December 31, 2005 1
Consolidated Statements of Income
Six Months Ended June 30, 2006, 2005 and 2004 2
Consolidated Statements of Income
Quarters Ended June 30, 2006, 2005 and 2004 3
Consolidated Statements of Stockholders' Equity
Six Months Ended June 30, 2006, 2005 and 2004 4
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2006, 2005 and 2004 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
June 30 December 31
2006 2005
------------ ------------
ASSETS:
Cash and due from banks $ 5,358,886 $ 13,392,617
Federal funds sold 33,161,973 42,000,000
------------ ------------
Total cash and cash equivalents 38,520,859 55,392,617
Securities held to maturity 37,355,000 36,855,000
Loans receivable, net 65,543,198 65,805,907
Premises and equipment 1,117,452 938,952
Accrued interest receivable 690,943 636,594
Other assets 858,384 552,949
------------ ------------
TOTAL ASSETS $144,085,836 $160,182,019
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Deposits:
Non-interest bearing $ 35,867,406 $ 35,294,900
Interest bearing 72,227,333 89,147,733
------------ ------------
Total deposits 108,094,739 124,442,633
Borrowed funds 112,757 274,379
Accrued interest payable 146,913 97,508
Other liabilities 480,891 116,426
------------ ------------
Total liabilities 108,835,300 124,930,946
------------ ------------
Stockholders' equity
Common stock, no par value
Authorized 10,000,000 shares;
Issued and outstanding, 2,589,696 shares
at June 30, 2006 and December 31, 2005 5,179,392 5,179,392
Additional paid-in capital 3,045,771 3,045,771
Retained earnings 28,331,444 27,522,610
Deferred stock compensation -444,050 -496,700
Treasury stock at cost, 71,955 shares at
June 30, 2006 and 0 shares at December 31, 2005 -862,021 --
------------ ------------
Total stockholders' equity 35,250,536 35,251,073
------------ ------------
TOTAL LIABILITIES AND STOCKHODER' EQUITY $144,085,836 $160,182,019
------------ ------------
Page 2
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 2006, 2005 AND 2004
UNAUDITED
2006 2005 2004
---------- ---------- ----------
INTEREST INCOME:
Interest and fees on loans receivable $2,473,934 $2,440,978 $2,370,761
Interest on investments 733,350 742,819 680,285
Interest on Federal funds sold 590,374 305,044 81,929
Interest on deposits with banks -- -- 3,952
---------- ---------- ----------
Total interest income 3,797,658 3,488,841 3,136,927
---------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 242,291 177,677 155,051
Interest on borrowed funds 1,875 1,465 858
---------- ---------- ----------
Total interest expense 244,166 179,142 155,909
---------- ---------- ----------
Net interest income 3,553,492 3,309,699 2,981,018
Provision for credit losses 90,000 90,000 90,000
---------- ---------- ----------
Net interest income after provision
for credit losses 3,463,492 3,219,699 2,891,018
---------- ---------- ----------
NON-INTEREST INCOME:
Service fees 415,213 451,907 475,798
Other non-interest income 17,920 19,215 14,290
---------- ---------- ----------
Total non-interest income 433,133 471,122 490,088
---------- ---------- ----------
NON-INTEREST EXPENSES
Salaries and wages 906,876 984,047 909,441
Employee benefits 411,642 375,372 404,200
Occupancy 460,742 454,093 382,892
Furniture and equipment 73,066 104,649 93,197
Other non-interest expenses 633,515 598,218 529,982
---------- ---------- ----------
Total non-interest expenses 2,485,841 2,516,379 2,319,712
---------- ---------- ----------
Income before income tax expense 1,410,784 1,174,442 1,061,394
Income tax expense 601,950 522,958 408,999
---------- ---------- ----------
NET INCOME $ 808,834 $ 651,484 $ 652,395
---------- ---------- ----------
NET INCOME PER SHARE:
Basic earnings per share $ 0.32 $ 0.26 $ 0.26
---------- ---------- ----------
Diluted earnings per share $ 0.32 $ 0.25 $ 0.25
---------- ---------- ----------
Average shares outstanding-basic 2,532,052 2,539,991 2,509,623
---------- ---------- ----------
Average shares outstsnding-diluted 2,532,052 2,600,649 2,608,223
---------- ---------- ----------
Page 3
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
QUARTERS ENDED JUNE 30, 2006, 2005 AND 2004
UNAUDITED
2006 2005 2004
---------- ---------- ----------
INTEREST INCOME:
Interest and fees on loans receivable $1,242,611 $1,233,613 $1,173,354
Interest on investments 367,689 369,520 350,318
Interest on Federal funds sold 379,202 201,692 52,724
---------- ---------- ----------
Total interest income 1,989,502 1,804,825 1,576,396
---------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 125,427 94,172 78,399
Interest on borrowed funds 361 710 375
---------- ---------- ----------
Total interest expense 125,788 94,882 78,774
---------- ---------- ----------
Net interest income 1,863,714 1,709,943 1,497,622
Provision for credit losses 45,000 45,000 45,000
---------- ---------- ----------
Net interest income after provision
for credit losses 1,818,714 1,664,943 1,452,622
---------- ---------- ----------
NON-INTEREST INCOME:
Service fees 221,961 221,158 241,635
Other non-interest income 9,145 8,755 7,140
---------- ---------- ----------
Total non-interest income 231,106 229,913 248,775
---------- ---------- ----------
NON-INTEREST EXPENSES
Salaries and wages 426,676 503,065 454,130
Employee benefits 201,456 169,340 184,466
Occupancy 222,893 221,813 180,878
Furniture and equipment 35,499 55,617 51,861
Other non-interest expenses 336,606 328,914 270,515
---------- ---------- ----------
Total non-interest expenses 1,223,130 1,278,749 1,141,850
---------- ---------- ----------
Income before income tax expense 826,690 616,107 559,547
Income tax expense 365,950 250,870 173,999
---------- ---------- ----------
NET INCOME $ 460,740 $ 365,237 $ 385,548
---------- ---------- ----------
NET INCOME PER SHARE:
Basic earnings per share $ 0.18 $ 0.14 $ 0.15
---------- ---------- ----------
Diluted earnigs per share $ 0.18 $ 0.14 $ 0.15
---------- ---------- ----------
Average shares outstanding-basic 2,532,052 2,539,991 2,509,603
---------- ---------- ----------
Average shares outstanding-diluted 2,532,052 2,600,649 2,608,223
---------- ---------- ----------
Page 4
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 2006, 2005 AND 2004
UNAUDITED
DEFERRED
STOCK
COMMON RETAINED COMPEN- TREASURY
STOCK SURPLUS EARNINGS SATION STOCK TOTAL
---------- ---------- ----------- --------- --------- -----------
Balance, December 31, 2003 $4,223,444 $2,712,139 $24,254,899 $-707,300 $ -- $30,483,182
Net income -- -- 652,395 -- -- 652,395
Amortization of deferred
stock compensation -- -- -- 52,650 -- 52,650
Proceeds from issuance of
stock-stock option plan 101,800 360,881 -- -- -- 462,681
---------- ---------- ----------- --------- --------- -----------
Balance, June 30, 2004 $4,325,244 $3,073,020 $24,907,294 $-654,650 $ -- $31,650,908
---------- ---------- ----------- --------- --------- -----------
Balance, December 31, 2004 $4,369,494 $3,437,550 $25,759,478 $-602,000 $-146,107 $32,818,415
Net income -- -- 651,484 -- -- 651,484
Issuance of stock-stock split 728,608 -728,608 -- -- --
Amortization of deferred
stock compensation -- -- -- 52,650 -- 52,650
Proceeds from issuance of
stock-stock option plan 7,918 22,923 -- -- 146,107 176,948
Tax benefit from stock
option plan -- 23,586 -- -- -- 23,586
---------- ---------- ----------- --------- --------- -----------
Balance, June 30, 2005 $5,106,020 $2,755,451 $26,410,962 $-549,350 $ -- $33,723,083
---------- ---------- ----------- --------- --------- -----------
Balance, December 31, 2005 $5,179,392 $3,045,771 $27,522,610 $-496,700 $ -- $35,251,073
Net income -- -- 808,834 -- -- 808,834
Amortization of deferred
stock compensation -- -- -- 52,650 -- 52,650
Purchase of treasury stock -- -- -- -- -862,021 -862,021
---------- ---------- ----------- --------- --------- -----------
Balance, June 30, 2006 $5,179,392 $3,045,771 $28,331,444 $-444,050 $-862,021 $35,250,536
---------- ---------- ----------- --------- --------- -----------
Page 5
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2006, 2005 AND 2004
UNAUDITED
2006 2005 2004
------------ ----------- ------------
OPERATING ACTIVITIES:
Net income $ 808,834 $ 651,484 $ 652,395
Adjustments to reconcile net income to cash
provided by operating activities:
Provision for credit losses 90,000 90,000 90,000
Depreciation and amortization 67,120 77,483 62,013
Net accretion of securities discounts -- -- -10,048
Amortization of deferred stock compensation 52,650 52,650 52,650
Tax benefit from stock option plan -- 23,586 --
Net change in:
Accrued interest receivable -54,349 -36,339 -109,782
Accrued interest payable 49,405 63,765 26,442
Other assets -305,435 620,119 -109,479
Other liabilities 364,465 693,668 102,671
------------ ----------- ------------
Net cash provided by operating activities 1,072,690 2,236,416 756,862
------------ ----------- ------------
INVESTING ACTIVITIES:
Maturities of investment securities -- 250,000 28,700,000
Principal repayments on investment securities -- -- 91,094
Purchases of investment securities -500,000 -3,000,000 -37,010,000
Net change in loans receivable 172,709 -2,367,994 -520,494
Acquisitions of premises and equipment -245,620 -57,264 -183,673
------------ ----------- ------------
Net cash provided by (used in)
investing activities -572,911 -5,175,258 -8,923,073
------------ ----------- ------------
FINANCING ACTIVITIES:
Purchase of treasury stock -862,021 -- --
Proceeds from issuance of stock-stock
option plan -- 176,948 462,681
Net increase (decrease) in non-interest
bearing deposits 572,506 8,314,180 2,299,922
Net increase (decrease) in interest
bearing deposits -16,920,400 -5,275,587 5,536,573
Net increase (decrease) in borrowed funds -161,622 102,896 -408,491
------------ ----------- ------------
Net cash provided by (used in )
financing activities -17,371,537 3,318,437 7,890,685
------------ ----------- ------------
Net increase (decrease) in cash and
cash equivalents -16,871,758 379,595 -275,526
Cash and cash equivalents at January 1 55,392,617 26,904,689 25,842,265
------------ ----------- ------------
Cash and cash equivalents at June 30 $ 38,520,859 $27,284,284 $ 25,566,739
------------ ----------- ------------
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
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:
JUNE 30, 2006
-------------------------
BOOK MARKET
VALUE VALUE
----------- -----------
U.S. Government and agency securities $29,105,000 $27,977,348
Other securities 8,250,000 8,017,500
----------- -----------
$37,355,000 $35,994,848
----------- -----------
DECEMBER 31, 2005
-------------------------
BOOK MARKET
VALUE VALUE
----------- -----------
U.S. Government and agency securities $29,105,000 $28,253,939
Other securities 7,750,000 7,208,700
----------- -----------
$36,855,000 $35,462,639
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Page 7
BRUNSWICK BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3
NET LOANS RECEIVABLE
The composition of net loans receivabe is as follows:
JUNE 30 DECEMBER 31
2006 2005
-------------------------
Commercial loans $46,441,693 $45,202,526
Real estate loans 19,038,965 20,603,021
Cosumer loans 1,022,867 889,684
----------- -----------
66,503,525 66,695,231
Less:
Allowance for credit losses 889,306 800,000
Unearned income 71,021 89,324
----------- -----------
$65,543,198 $65,805,907
----------- -----------
NOTE 4
PREMISES AND EQUIPMENT
The major components of premises and equipment are as follows:
JUNE 30 DECEMBER 31
2006 2005
---------- -----------
Land $ 300,705 $ 300,705
Bank premises 646,826 646,826
Leasehold improvements 232,594 232,594
Furniture and equipment 1,657,245 1,450,044
---------- ----------
2,837,370 2,630,169
Less accumulated depreciation
and amortization 1,719,918 1,691,217
---------- ----------
$1,117,452 $ 938,952
---------- ----------
Page 8
BRUNSWICK BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
JUNE 30, 2006
The most notable changes in the Corporation's Balance Sheet since December 31,
2005 are a decrease in cash and cash equivalents of $16,900,000 and a related
decrease in deposits of $16,300,000. These substantial changes occurred because
at the end of 2005 there was an unusually high increase in public funds deposits
most of which were withdrawn during early 2006.
The allowance for credit losses increased by approximately $89,000. This was
mainly due to credit loss provisions. At June 30, 2006 the allowance for credit
losses totaled $889,306 while all loans that were past due or in nonaccrual
status totaled only $886,280.
The main reason that there was no noticeable change in stockholders' equity is
that the addition of year to date net income totaling $808,834 was offset by the
purchase of 71,955 shares of treasury stock costing $862,021. For additional
information, refer to the Consolidated Statements of Stockholders' Equity on
page 3. The Corporation continues to be classified as "Well Capitalized". At
June 30, 2006 our risk-based capital ratio was 42% which is over five times the
regulatory requirement.
The results of operations for the first half of 2006, compared to the same
period of 2005, show an increase in income before taxes of approximately
$236,000.
The main reason for this increase is an increase in net interest income of
$244,000 which resulted mostly from higher interest rates. The increase in net
interest income is analyzed in detail on page 9.
Finally, there were slight decreases in non-interest income and non-interest
expenses of $38,000 and $31,000, respectively. Neither of these changes is
considered large enough to be commented upon.
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
------- ----- -----
Six Months Ended June 30, 2006
Versus
Six Months Ended June 30, 2005
Interest income on:
Loans receivable $-31 $ 64 $ 33
Securities held to maturity -3 -7 -10
Short term investment 26 260 286
---- ---- ----
Total interest income -8 317 309
---- ---- ----
Interest expense on:
Deposits -12 76 64
Borrowed funds 0 1 1
---- ---- ----
Total interest expense -12 77 65
---- ---- ----
Net interest income $ 4 $240 $244
---- ---- ----
Quarter Ended June 30, 2006
Versus
Quarter Ended June 30, 2005
Interest income on:
Loans receivable $ 17 $ -8 $ 9
Securities held to maturity -1 0 -1
Short term investment 158 19 177
---- ---- ----
Total interest income 174 11 185
---- ---- ----
Interest expense on:
Deposits 37 -6 31
Borrowed funds 0 0 0
---- ---- ----
Total interest expense 37 -6 31
---- ---- ----
Net interest income $137 $ 17 $154
---- ---- ----
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 June 30, 2006.
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
07/25/06 /s/ Roman T. Gumina
Date -------------------------------
Roman T. Gumina, CEO
07/25/06 /s/ Thomas Fornale
Date -------------------------------
Thomas Fornale, Treasurer