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, 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 September 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
September 30, 2006 and December 31, 2005 1
Consolidated Statements of Income
Nine Months Ended September 30, 2006, 2005 and 2004 2
Consolidated Statements of Income
Quarters Ended September 30, 2006, 2005 and 2004 3
Consolidated Statements of Stockholders' Equity
Nine Months Ended September 30, 2006, 2005 and 2004 4
Consolidated Statements of Cash Flows
Nine Months Ended September 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
September 30 December 31
2006 2005
------------ ------------
ASSETS:
Cash and due from banks $ 6,933,686 $ 13,392,617
Federal funds sold 4,643,568 42,000,000
------------ ------------
Total cash and cash equivalents 11,577,254 55,392,617
Securities held to maturity 37,355,000 36,855,000
Loans receivable, net 72,817,408 65,805,907
Premises and equipment 1,130,922 938,952
Accrued interest receivable 596,942 636,594
Other assets 848,082 552,949
------------ ------------
TOTAL ASSETS $124,325,608 $160,182,019
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Deposits:
Non-interest bearing $ 37,842,528 $ 35,294,900
Interest bearing 49,737,269 89,147,733
------------ ------------
Total deposits 87,579,797 124,442,633
Borrowed funds 288,508 274,379
Accrued interest payable 138,613 97,508
Other liabilities 526,776 116,426
------------ ------------
Total liabilities 88,533,694 124,930,946
------------ ------------
Stockholders' equity
Common stock, no par value
Authorized 10,000,000 shares
Issued and outstanding 2,589,696 shares
at September 30, 2006 and December 31, 2005 5,179,392 5,179,392
Additional paid-in capital 3,045,771 3,045,771
Retained earnings 28,846,497 27,522,610
Deferred stock compensation -417,725 -496,700
Treasury stock at cost, 71,955 shares at September
30, 2006 and 0 shares at December 31, 2005 -862,021 --
------------ ------------
Total stockholders' equity 35,791,914 35,251,073
------------ ------------
TOTAL LIABILITIES AND STOCKHODER' EQUITY $124,325,608 $160,182,019
------------ ------------
Page 2
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2006, 2005 AND 2004
UNAUDITED
2006 2005 2004
---------- ---------- ----------
INTEREST INCOME:
Interest and fees on loans receivable $3,805,224 $3,724,886 $3,609,612
Interest on investments 1,101,036 1,095,307 1,048,512
Interest on Federal funds sold 829,698 435,850 141,407
Interest on deposits with banks -- -- 3,952
---------- ---------- ----------
Total interest income 5,735,958 5,256,043 4,803,483
---------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 370,464 309,687 233,601
Interest on borrowed funds 1,875 2,567 1,232
---------- ---------- ----------
Total interest expense 372,339 312,254 234,833
---------- ---------- ----------
Net interest income 5,363,619 4,943,789 4,568,650
Provision for credit losses 135,000 135,000 135,000
---------- ---------- ----------
Net interest income after provision
for credit losses 5,228,619 4,808,789 4,433,650
---------- ---------- ----------
NON-INTEREST INCOME:
Service fees 592,338 650,026 686,938
Other non-interest income 26,350 27,300 20,440
---------- ---------- ----------
Total non-interest income 618,688 677,326 707,378
---------- ---------- ----------
NON-INTEREST EXPENSES
Salaries and wages 1,328,110 1,494,785 1,385,238
Employee benefits 569,384 555,604 582,983
Occupancy 690,533 681,325 607,224
Furniture and equipment 111,327 144,606 133,364
Other non-interest expenses 900,420 876,143 801,564
---------- ---------- ----------
Total non-interest expenses 3,599,774 3,752,463 3,510,373
---------- ---------- ----------
Income before income tax expense 2,247,533 1,733,652 1,630,655
Income tax expense 923,646 638,804 689,629
---------- ---------- ----------
NET INCOME $1,323,887 $1,094,848 $ 941,026
---------- ---------- ----------
NET INCOME PER SHARE:
Basic earnings per share $ 0.52 $ 0.43 $ 0.37
---------- ---------- ----------
Diluted earnings per share $ 0.52 $ 0.42 $ 0.36
---------- ---------- ----------
Average shares outstanding-basic 2,527,230 2,548,046 2,509,603
---------- ---------- ----------
Average shares outstanding-diluted 2,527,230 2,587,206 2,608,223
---------- ---------- ----------
Page 3
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
QUARTERS ENDED SEPTEMBER 30, 2006, 2005 AND 2004
UNAUDITED
2006 2005 2004
---------- ---------- ----------
INTEREST INCOME:
Interest and fees on loans receivable $1,331,290 $1,283,908 $1,238,851
Interest on investments 367,686 352,488 368,227
Interest on Federal funds sold 239,324 130,806 59,478
---------- ---------- ----------
Total interest income 1,938,300 1,767,202 1,666,556
---------- ---------- ----------
INTEREST EXPENSE:
Interest on deposits 128,173 132,010 78,550
Interest on borrowed funds -- 1,102 374
---------- ---------- ----------
Total interest expense 128,173 133,112 78,924
---------- ---------- ----------
Net interest income 1,810,127 1,634,090 1,587,632
Provision for credit losses 45,000 45,000 45,000
---------- ---------- ----------
Net interest income after provision
for credit losses 1,765,127 1,589,090 1,542,632
---------- ---------- ----------
NON-INTEREST INCOME:
Service fees 177,125 198,119 211,140
Other non-interest income 8,430 8,085 6,150
---------- ---------- ----------
Total non-interest income 185,555 206,204 217,290
---------- ---------- ----------
NON-INTEREST EXPENSES
Salaries and wages 421,234 510,738 475,797
Employee benefits 157,742 180,232 178,783
Occupancy 229,791 227,232 224,332
Furniture and equipment 38,261 39,957 40,167
Other non-interest expenses 266,905 277,925 271,582
---------- ---------- ----------
Total non-interest expenses 1,113,933 1,236,084 1,190,661
---------- ---------- ----------
Income before income tax expense 836,749 559,210 569,261
Income tax expense 321,696 115,846 280,630
---------- ---------- ----------
NET INCOME $ 515,053 $ 443,364 $ 288,631
---------- ---------- ----------
NET INCOME PER SHARE:
Basic earnings per share $ 0.20 $ 0.17 $ 0.12
---------- ---------- ----------
Diluted earnings per share $ 0.20 $ 0.17 $ 0.11
---------- ---------- ----------
Average shares outstanding-basic 2,527,230 2,548,046 2,509,603
---------- ---------- ----------
Average shares outstanding-diluted 2,527,230 2,587,206 2,608,223
---------- ---------- ----------
Page 4
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 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 -- -- 941,026 -- -- 941,026
Amortization of deferred
stock compensation -- -- -- 78,975 -- 78,975
Proceeds from issuance of
stock-stock option plan 114,650 406,434 -- -- -- 521,084
---------- ---------- ----------- --------- --------- -----------
Balance, September 30, 2004 $4,338,094 $3,118,573 $25,195,925 $-628,325 $ -- $32,024,267
---------- ---------- ----------- --------- --------- -----------
Balance, December 31, 2004 $4,369,494 $3,437,550 $25,759,478 $-602,000 $-146,107 $32,818,415
Net income -- -- 1,094,848 -- -- 1,094,848
Issuance of stock-stock split 728,608 -728,608 -- -- -- --
Amortization of deferred
stock compensation -- -- -- 78,975 -- 78,975
Proceeds from issuance of
stock-stock option plan 81,290 235,335 -- -- 146,107 462,732
Tax benefit from stock
option plan -- 23,586 -- -- -- 23,586
---------- ---------- ----------- --------- --------- -----------
Balance, September 30, 2005 $5,179,392 $2,967,863 $26,854,326 $-523,025 $ -- $34,478,556
---------- ---------- ----------- --------- --------- -----------
Balance, December 31, 2005 $5,179,392 $3,045,771 $27,522,610 $-496,700 $ -- $35,251,073
Net income -- -- 1,323,887 -- -- 1,323,887
Amortization of deferred
stock compensation -- -- -- 78,975 -- 78,975
Purchase of treasury stock -- -- -- -- -862,021 -862,021
---------- ---------- ----------- --------- --------- -----------
Balance, September 30, 2006 $5,179,392 $3,045,771 $28,846,497 $-417,725 $-862,021 $35,791,914
---------- ---------- ----------- --------- --------- -----------
Page 5
BRUNSWICK BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2006, 2005 AND 2004
UNAUDITED
2006 2005 2004
------------ ------------ ------------
OPERATING ACTIVITIES:
Net income $ 1,323,887 $ 1,094,848 $ 941,026
Adjustments to reconcile net income to cash
provided by operating activities:
Provision for credit losses 135,000 135,000 135,000
Depreciation and amortization 102,566 111,277 96,794
Net accretion of securities discounts -- -- -10,048
Tax benefit from stock option plan -- 23,586 --
Amortization of deferred stock compensation 78,975 78,975 78,975
Net change in:
Accrued interest receivable 39,652 206,615 9,141
Accrued interest payable 41,105 64,013 38,058
Other assets -295,133 563,767 -108,440
Other liabilities 410,350 204,121 184,485
------------ ------------ ------------
Net cash provided by operating activities 1,836,402 2,482,202 1,364,991
------------ ------------ ------------
INVESTING ACTIVITIES:
Maturities of investment securities -- 650,000 42,410,000
Principal repayments on investment securities -- -- 91,094
Purchases of investment securities -500,000 -3,000,000 -49,615,000
Net change in loans receivable -7,146,501 -1,983,834 -537,523
Acquisitions of premises and equipment -294,536 -57,264 -293,387
------------ ------------ ------------
Net cash provided by (used in)
investing activities -7,941,037 -4,391,098 -7,944,816
------------ ------------ ------------
FINANCING ACTIVITIES:
Purchase of treasury stock -862,021 -- --
Proceeds from issuance of stock-stock
option plan -- 462,732 521,084
Net increase (decrease) in non-interest
bearing deposits 2,547,628 6,136,202 2,857,115
Net increase (decrease) in interest
bearing deposits -39,410,464 -11,245,962 1,689,130
Net increase (decrease) in borrowed funds 14,129 80,415 -412,824
------------ ------------ ------------
Net cash provided by (used in)
financing activities -37,710,728 -4,566,613 4,654,505
------------ ------------ ------------
Increase (decrease) in cash and
cash equivalents -43,815,363 -6,475,509 -1,925,320
Cash and cash equivalents at January 1 55,392,617 28,904,689 25,842,265
------------ ------------ ------------
Cash and cash equivalents at September 30 $ 11,577,254 $ 22,429,180 $ 23,916,945
------------ ------------ ------------
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:
SEPTEMBER 30, 2006
-------------------------
BOOK MARKET
VALUE VALUE
----------- -----------
U.S. Government and agency securities $29,105,000 $28,430,400
Other securities 8,250,000 8,146,250
----------- -----------
$37,355,000 $36,576,650
----------- -----------
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:
SEPTEMBER 30 DECEMBER 31
2006 2005
------------ -----------
Commercial loans $48,130,935 $45,202,526
Real estate loans 24,739,174 20,603,021
Consumer loans 957,909 889,684
----------- -----------
73,828,018 66,695,231
Less:
Allowance for credit losses 934,201 800,000
Unearned income 76,409 89,324
----------- -----------
$72,817,408 $65,805,907
----------- -----------
NOTE 4
PREMISES AND EQUIPMENT
The major components of premises and equipment are as follows:
SEPTEMBER 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 1,114,106 1,450,044
---------- ----------
2,294,231 2,630,169
Less accumulated depreciation
and amortization 1,163,309 1,691,217
---------- ----------
$1,130,922 $ 938,952
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Page 8
BRUNSWICK BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
SEPTEMBER 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 $43,800,000 and a related
decrease in deposits of $36,900,000. 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. Also noteworthy is a $7,000,000
increase in loans thanks to the efforts of the Corporation's loan officers.
The allowance for credit losses increased by approximately $134,000. This was
due to credit loss provisions. At September 30, 2006 the allowance for credit
losses totaled $934,201 while all loans that were ninety days past due or in
nonaccrual status totaled only $439,789.
The main reason that there was only a modest increase of $541,000 in
stockholders' equity is that the addition of year to date net income totaling
$1,323,887 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 4. The Corporation continues to be classified as
"Well Capitalized". At September 30, 2006 our risk-based capital ratio was 42%,
which is over five times the regulatory requirement.
The results of operations for the first three quarters of 2006, compared to the
same period of 2005, show an increase in income before taxes of approximately
$514,000.
The main reasons for this increase are an increase in net interest income of
$420,000 and a decrease in non-interest expenses of $153,000. The increase in
net interest income, which resulted mostly from higher interest rates, is
analyzed in detail on page 9.
Finally, there was a slight decreases in non-interest income of $59,000 which is
not 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
------ ----- -----
Nine Months Ended September 30, 2006
Versus
Nine Months Ended September 30, 2005
Interest income on:
Loans receivable $ 26 $ 54 $ 80
Securities held to maturity 1 5 6
Short term investments 48 346 394
---- ---- ----
Total interest income 75 405 480
---- ---- ----
Interest expense on:
Deposits -4 64 60
Borrowed funds 0 0 0
---- ---- ----
Total interest expense -4 64 60
---- ---- ----
Net interest income $ 79 $341 $420
---- ---- ----
Quarter Ended September 30, 2006
Versus
Quarter Ended September 30, 2005
Interest income on:
Loans receivable $ 73 $-26 $ 47
Securities held to maturity 4 12 16
Short term investments 23 85 108
---- ---- ----
Total interest income 100 71 171
---- ---- ----
Interest expense on:
Deposits 5 -9 -4
Borrowed funds -1 0 -1
---- ---- ----
Total interest expense 4 -9 -5
---- --- ----
Net interest income $ 96 $ 80 $176
---- ---- ----
Page 10
BRUNSWICK BANCORP AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
The Corporation filed one Form 8-K (incorporated by reference) dated July 6,
2006 during the three months ended September 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
November 6, 06 /s/ Roman T. Gumina
Date ----------------------------------------
Roman T. Gumina, President & CEO
November 6, 06 /s/ Thomas Fornale
Date ----------------------------------------
Thomas Fornale, Treasurer