Brunswick Bancorp (“Brunswick” or “the Company") (OTC: “BRBW”), the holding company for Brunswick Bank and Trust (“the Bank”), today reported its financial results for the quarterly and full year periods ended December 31, 2022.

Financial Highlights:

• Total assets increased 4.97% to $390.7 million from December 31, 2021;
• Loan portfolio increased 13.49% to $313.8 million from December 31, 2021;
• Deposits increased 1.68% to $282.3 million from December 31, 2021;
• Net income per share increased to $1.32 per diluted share for the twelve months ended December 31, 2022, up 12.82% compared to $1.17 per diluted share in the prior year period;
• Net income increased 14.42% to $3.853 million for the year ended December 31, 2022 compared to the same period a year ago;

“In 2022, we continued to implement our strategic initiatives, which resulted in increases in assets, loans and deposits, and most importantly, earnings and earnings per share. As we entered the fourth quarter, we began to see some headwinds from elevated inflation and increases in market rates of interest engineered by the Federal Reserve to slow the rate of inflation. Despite that, we had a strong fourth quarter, with net interest income comparable to the year ago period. The main drivers of our fourth quarter performance were an increase in our provision and a reduction on our gain on sale of loans, partially offset by our reduction in our non-interest expense as management has continued its focus on managing expenses,” said Nicholas A. Frungillo, Jr., President and Chief Executive Officer of the Company and the Bank. “The value of our franchise was recognized by the market, which led to our recently announced transaction with Mid Penn Bancorp.”

Financial Summary for the Twelve Months ending December 31, 2022

At December 31, 2022, the Company had total assets of $390.7 million, an increase of $18.5 million or 4.97% over the December 31, 2021 balance of $372.2 million. The growth was mainly driven by new loan demand as a result of management’s increased business development efforts. Cash and due from banks was $18.8 million at December 31, 2022, a decrease of $16.4 million or 46.51% from $35.1 million at December 31 last year as cash and due from banks were used to fund new loan origination. The loan portfolio grew to $313.8 million at December 31, 2022 compared to December 31, 2021, an increase of $37.3 million or 13.49%. New loan originations were $93.5 million for the twelve months ending December 31, 2022, while loan payoffs/amortizations totaled $56.2 million, including $6.0 in PPP loans forgiven or paid off. PPP loans outstanding at December 31, 2022 were $7 thousand compared to $6.6 million a year ago. Securities decreased to $41.5 million, down $600 thousand or 1.42% from the balance at December 31, 2021 of $42.1 million.

All loans that were previously granted payment deferrals during the pandemic have returned to regularly scheduled principal and interest payments.

As previously reported, the Bank’s OREO balance consisted of a single property that was under contract of sale scheduled to close by December 2023, subject to certain contingencies. On July 1, 2022, the buyer purchased the property at a reduced purchase price and all contingencies were waived. Management believed it prudent to dispose of the property despite the reduced value in order to remove all of the uncertainties, contingencies and potential impacts due to the contingent nature of the sale agreement. With the property closing 18 months early, the Bank will reinvest the sale proceeds into earning assets, such as loans. The Bank recorded a $252 thousand pretax loss in its fiscal third quarter related to the sale.

Deposits were $282.3 million at December 31, 2022, an increase of $4.7 million or 1.68% from the December 31, 2021 balance of $277.6 million, due to marketing and business development efforts. FHLB borrowings increased to $60.7 million at December 31, 2022 from the December 31, 2021 balance of $41.7 million.

The provision for loan losses was $315 thousand for the twelve months ended December 31, 2022 as compared $310 thousand for the same period a year ago. Management is actively monitoring the Bank’s loan portfolio in light of the continued economic uncertainty related to the COVID-19 pandemic and the current economic environment and may increase provisions for loan losses in the future. Stockholders’ equity decreased by $250 thousand to $44.3 million at December 31, 2022 as a result of earnings retention net of the change of unrealized losses and the $341 special dividend paid in February 2022. The Bank meets all criteria to be considered “Well Capitalized”.

The Bank’s Net Interest Margin was 3.81% for the twelve months ended December 31, 2022 compared to 3.62% for the same period a year ago. The Bank’s cost of deposits increased to 0.75% at December 31, 2022 from 0.58% from the same period a year ago. The Bank’s yield on interest earning assets increased to 4.46% for the twelve months ended December 31, 2022 from 4.09% for the same period a year ago. The changes in the Bank’s yield on interest earning assets, cost of funds and net interest margin were due to the current interest rate environment.

Net interest income was $13.158 million for the twelve months ended December 31, 2022, an increase of $1.384 million, or 11.75%, from $11.774 million for the comparable period of 2021. Loan income grew to $14.356 million for the twelve months ended December 31, 2022, an increase of $1.577 million, or 12.34%, from $12.779 million for the same period a year ago. The increase was partially due to one-time recoveries of $302 thousand in non-accrual income in 2022, while the prior year showed a one-time gain of $75 thousand from recovery of non-accrual income, along with higher outstanding loan balances. PPP fees were $174 thousand for the twelve months ending December 31, 2022 compared to $532 thousand for the same period a year ago. Interest expense was $2.191 million for the twelve months ended December 31, 2022, an increase of $674 thousand, or 44.42%, when compared to $1.517 million for the twelve months ended December 31, 2021 due to prevailing higher rates.

Total other income was $1.059 million for the twelve months ended December 31, 2022, a decrease of $664 thousand compared to the same period a year ago, as there was a one-time loss recorded of $252 thousand on the sale of OREO in 2022 and a one-time gain recorded of $453 thousand on gain on sale of SBA loans in 2021, with no comparable gains in 2022.

Total non-interest expenses were $8.637 million, an increase of $161 thousand or 1.90%, for the twelve months ended December 31, 2022, when compared to $8.476 million for the same period last year. Salaries increased by $373 thousand, or 7.86%, for the twelve months ended December 31, 2022 compared to the same period last year due to increased salaries and employee benefits needed to retain employees in a competitive market. Occupancy expenses declined to $556 thousand, a reduction of $40 thousand from the twelve months ended December 31, 2021, due to previously implemented branch purchases reducing leasing expense. Other expenses decreased by $165 thousand to $2.800 million for the twelve months ended December 31, 2022 when compared to $2.965 million for the same period a year ago primarily due to shareholder activist costs in the prior period.

The provision for loan losses was $315 thousand for the twelve months ended December 31, 2022 as compared $310 thousand for the same period a year ago. Management is actively monitoring the Bank’s loan portfolio in light of the continued economic uncertainty related to the COVID-19 pandemic, inflation and a rising interest rate environment and may increase provisions for loan losses in the future.

Net income was $3.853 million, or $1.32 per diluted share, for the twelve months ended December 31, 2022, an increase of $486 thousand, or 14.426%, compared to $3.367 million, or $1.17 per diluted share for the same period a year ago.

Financial Summary for the Three Months ended December 31, 2022

Net interest income was $3.277 million for the three months ended December 31, 2022, a decrease of $15 thousand from $3.292 million for the same period a year ago. Loan income was $3.958 million for the three months ending December 31, 2022, an increase of $461 thousand, or 13.19%, from $3.496 million for the same period a year ago due to higher outstanding balances. Interest expense was $966 thousand for the three months ended December 31, 2022, an increase of $615 thousand, or 175.42%, when compared to $351 thousand for the same period a year ago, as higher interest rates on borrowings and deposits have prevailed.

Total other income was $332 thousand for the three months ended December 31, 2022, a decrease of $419 thousand, or 55.83%, when compared to $751 thousand for the same period a year ago. During the prior period, the Company realized a $453 thousand gain on sale of SBA loans, with no comparable gains in the 2022 period. Service fees on deposit accounts increased to $217 thousand, a $30 thousand or 16.36% increase, for the three months ended December 31, 2022, compared to $186 thousand for the same period a year ago.

Total non-interest expenses were $2.023 million for the three months ended December 31, 2022, a decrease of $251 thousand, or 11.05%, when compared to $2.274 million for the same period a year ago. Salaries and benefits decreased by $73 thousand to $1.166 million for the three months ended December 31, 2022 compared to $1.239 million for the same period a year ago. Occupancy expenses remained relatively unchanged at $128 thousand compared to $125 thousand the same period a year ago. Other expenses decreased by $177 thousand to $690 thousand for the three months ended December 31, 2022 when compared to $866 thousand for the same period last year due to $174 thousand in expenses incurred in the prior period related to shareholder activist costs.

The provision for loan losses for the three months ended December 31, 2022 was $155 thousand compared to no provision expense in the comparable period a year ago. Management believes the allowance is adequate based on the inherent risk associated with the loan portfolio, will continue to actively monitor the Bank’s loan portfolio in light of the continued economic uncertainty and may increase provisions for loan losses in the future.

Net income was $1.055 million or $0.36 per diluted share for the three months ended December 31, 2022, compared to $1.238 million, or $0.43 per diluted share for the same period a year ago, a decrease of $182 thousand or 14.72%. Income before income taxes and provision for loan losses was $1.586 million, a decrease of $183 thousand, or 10.34%, over the same period a year ago.

Merger Announcement

On December 20, 2022, Brunswick Bancorp announced it had entered into a definitive merger agreement to be acquired by Mid Penn Bancorp, Harrisburg Pa. A second quarter 2023 closing is anticipated. The merger is subject to customary shareholder and regulatory approvals.

Forward-Looking Statements

In addition to historical information, this news release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “will,” “should,” “may,” “view,” “opportunity,” “potential,” or similar expressions or expressions of confidence. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to: changes in interest rates, general economic conditions, levels of unemployment in the Bank’s lending area, real estate market values in the Bank’s lending area, future natural disasters and increases to flood insurance premiums, the level of prepayments on loans and mortgage-backed securities, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company’s market area, accounting principles and guidelines, and the impact of the Covid 19 pandemic on the Company, the Bank and its customers. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

About Brunswick Bancorp

Brunswick Bancorp is the holding company for Brunswick Bank & Trust, a New Jersey chartered commercial bank which serves central New Jersey through its New Brunswick main office and four additional branch offices.

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