SOURCE: Cape Bancorp, Inc.

Cape Bancorp, Inc.

October 21, 2009 21:02 ET

Cape Bancorp, Inc. Reports Third Quarter 2009 Results

CAPE MAY COURT HOUSE, NJ--(Marketwire - October 21, 2009) - Cape Bancorp, Inc. ("Cape Bancorp" or the "Company") (NASDAQ: CBNJ), the parent company of Cape Bank, announces its operating results for the quarter ended September 30, 2009. The release does not compare operating results for the nine month period ended September 30, 2009 and 2008 due to the Company's acquisition of Boardwalk Bancorp, Inc. and its wholly owned subsidiary, Boardwalk Bank, which occurred on January 31, 2008.

For the quarter ended September 30, 2009, Cape Bancorp reported a net loss of $19.1 million, or $1.55 per share, compared to net income of $103,000 or $0.01 per share reported for the quarter ended June 30, 2009. The following is a recap of certain significant income and expense events that occurred during the third quarter: gains on sales of investments of $595,000; loan loss provision of $9.8 million; an other-than-temporary-impairment (OTTI) charge related to the CDO investment portfolio of $799,000 and income tax expense of $12.6 million primarily related to the establishment of a deferred tax asset allowance. The net loss year-to-date was $19.1 million, or $1.55 per share.

At September 30, 2009, Cape Bancorp's total assets decreased to $1.067 billion from $1.111 billion at June 30, 2009, a decrease of $44 million or 3.96%. Total assets decreased $23.5 million or 2.15% from December 31, 2008.

At September 30, 2009, Cape Bancorp's total net loans decreased to $789.6 million at September 30, 2009, from $800.3 million at June 30, 2009, a decrease of $10.7 million or 1.34%. The decline reflects a decrease in commercial loans of $7.0 million, a decrease in mortgage loans of $2.1 million and an increase in the allowance for loan losses of $1.7 million offset partially by an increase in consumer loans of $112,000. Net loans have increased $5.7 million or 0.73% since December 31, 2008.

Delinquent loans increased $777,000 to $37.1 million or 4.6% of total gross loans at September 30, 2009 from $36.3 million, or 4.5% of total gross loans at June 30, 2009. Total delinquent loans by portfolio at September 30, 2009 were comprised of $30.1 million of commercial mortgage and commercial business loans, $5.5 million of residential mortgage loans and $1.5 million of consumer loans. Delinquent loan balances by number of days delinquent were: 31 to 59 days -- $2.3 million; 60 to 89 days -- $3.8 million; and 90 days and greater -- $31.0 million. Additionally, at September 30, 2009, Cape Bancorp had $5.3 million of loans that were performing in accordance with their repayment terms but on which the Company was not accruing interest because of deterioration in the financial condition of the borrower. These are ten secured commercial loans represented by six borrowers, one of whom has five loans totaling $4.5 million, and each of the remaining five borrowers has one loan within a range of $50,000 to $233,000.

At September 30, 2009, the Company had $34.5 million in non-performing loans or 4.29% of total gross loans, an increase of $4.8 million from $29.7 million or 3.65% at June 30, 2009. Total non-performing loans by portfolio were comprised of $31.8 million of commercial loans, $2.4 million of mortgage loans and $195,000 of consumer loans. Additionally, the Company had $1.8 million of loans that were 90 days or more delinquent and still accruing (9 residential mortgage loans for $1.6 million and 1 consumer loan for $250,000). These loans are both well secured and in the process of collection. Of the commercial non-performing loans $4.8 million (17 loans or 15%) were secured by residential, duplex and multi-family related loans, $3.7 million (9 loans or 12%) were secured by land and building lot related loans, $1.3 million (5 loans or 4%) were secured by retail store related loans, $6.3 million (12 loans or 20%) were secured by restaurant related loans, $2.1 million (2 loans or 6%) were secured by marina related loans, $1.7 million (2 loans or 6%) were secured by auto dealership related loans, $2.9 million ( 6 loans or 9%) were secured by B&B and hotel related loans and $9.0 million (19 loans or 28%) were secured by commercial building and equipment related loans. The three largest relationships in this category of non-performing loans are $4.5 million, $2.8 million, and $2.4 million.

At September 30, 2009, Cape Bancorp's allowance for loan losses increased to $13.8 million from $12.1 million at June 30, 2009, an increase of $1.7 million or 14.05%. The allowance for loan loss ratio increased to 1.71% of gross loans at September 30, 2009 from 1.49% of gross loans at June 30, 2009. The allowance for loan losses to non-performing loan coverage ratio decreased to 37.98% at September 30, 2009 from 40.70% at June 30, 2009. Charge-offs during the quarter ended September 30, 2009 were $8.1 million. A significant portion ($6.6 million) of the charge-offs for the quarter stem from two credit relationships. The first of these is a $9.8 million commercial relationship for which the Company is taking a $5.3 million charge, and the second relationship is a $2.1 million loan for which the Company is taking a $1.3 million charge prompted by the collapse of a state funded purchase of the real estate project. Each of these loans had been considered performing credits at June 30, 2009. Charge-offs were $2.1 million for the quarter ended June 30, 2009. Loan loss recoveries totaled $8,000 for the quarter ended September 30, 2009, compared to $392,000 in recoveries for the quarter ended June 30, 2009.

Other Real Estate Owned (OREO) decreased to $508,000 at September 30, 2009 from $1.4 million at June 30, 2009 as two OREO properties were sold during the third quarter with a recorded loss of $122,000. The current OREO balance of $508,000 is comprised of four properties: one commercial real estate property, one single family house, and two vacant lots.

Cape Bancorp's total investment securities portfolio decreased to $156.5 million at September 30, 2009, from $170.9 million at June 30, 2009, a decrease of $14.4 million or 8.4%. At September 30, 2009, the cost basis of the collateralized debt obligation (CDO) portion of the investment portfolio securities was $13.3 million with a fair market value of $1.6 million. For the quarter ended September 30, 2009 Cape Bancorp recognized a credit related OTTI charge of $799,000 on the CDO portion of the investment portfolio. On a year-to-date basis, a credit related OTTI charge of $4.8 million has been recognized by the Company.

At September 30, 2009, Cape Bancorp's total deposits increased to $763.4 million from $744.6 million at June 30, 2009, an increase of $18.8 million or 2.52%. The increase consists of the following: core deposit accounts (interest bearing and non-interest bearing checking accounts, MMDA and savings accounts) increased $12.6 million, brokered deposits increased $18.4 million, Certificate of Deposit Account Registry Service (CDARS) deposits increased $1.8 million and internal accounts increased by $668,000, offset by decreases in certificates of deposits of $14.7 million. The decreases in certificates of deposits resulted directly from deposit repricing strategies. Total deposits increased $52.3 million or 7.35% from December 31, 2008.

At September 30, 2009, Cape Bancorp's total borrowings decreased to $173.5 million from $217.0 million at June 30, 2009, a decrease of $43.5 million or 20.05%.

An annual goodwill impairment analysis was completed during the September 30 quarter which resulted in no impairment of the $22.6 million goodwill as of September 30, 2009. Goodwill will continue to be reviewed on a periodic basis.

Cape Bancorp's total equity decreased to $124.7 million at September 30, 2009 from $143.0 million at June 30, 2009, a decrease of $18.3 million or 12.8%. The decrease in equity was attributable to the net loss of $19.1 million partially offset by a decrease in accumulated other comprehensive loss, net of tax of $779,000. This loss is not expected to impact Cape Bank's well capitalized status for regulatory purposes.

Michael D. Devlin, President and Chief Executive Officer of Cape Bancorp and Cape Bank, provided the following statement:

"As we noted in our pre-announcement, in large part, the loan losses taken in the third quarter were related to two commercial credits. And, while delinquent loans are at a high level, the third quarter ratio was in line with the prior quarter perhaps an indication of some stabilization.

A substantial component of the loss was the result of a reduction to the Company's deferred tax assets. It should be noted that under certain circumstances this allowance can be reversed, which would offset future income tax expense.

Finally, in spite of the loss there were also some favorable developments. Core deposits grew which allowed for the run off of more costly CDs, and net interest margin remained stable at 3.52% from the second quarter to the third quarter.

We recognize that the local market is still feeling the impact of the weak gaming industry. Many of our commercial customers have just completed the peak of their fiscal year and it remains to be seen whether they have sufficient financial resources to hold them until the start of the next summer season. "

SELECTED FINANCIAL DATA (unaudited)

                            Cape Bancorp Inc.

                                               Three Months Ended
                                      ------------------------------------
                       YTD 2009       September 30, 2009   June 30, 2009
                   -----------------  -----------------  -----------------
                        (dollars in thousands, except per share data)
Statements of
 Income Data:
Interest income    $          41,344  $          13,409  $          13,992
Interest expense              14,768              4,487              5,074
                   -----------------  -----------------  -----------------
   Net interest
    income                    26,576              8,922              8,918
Provision for loan
 losses                       12,374              9,765              1,864
                   -----------------  -----------------  -----------------
   Net interest
    income after
    provision for
    loan losses               14,202               (843)             7,054
Non-interest
 income                           24                888               (431)
Non-interest
 expense                      21,346              6,609              6,653
                   -----------------  -----------------  -----------------
Income (loss)
 before income
 taxes                        (7,120)            (6,564)               (30)
Income tax expense
 (benefit)                    12,011             12,571               (133)
                   -----------------  -----------------  -----------------
Net income (loss)  $         (19,131) $         (19,135) $             103
                   =================  =================  =================

Earnings (loss)
 per share(1)      $           (1.55) $           (1.55) $            0.01
                   =================  =================  =================
Average shares
 outstanding              12,307,455         12,317,638         12,307,619
                   =================  =================  =================
Shares issued                                13,313,521         13,313,521
                                      =================  =================

Statements of
 Condition Data
 (Period End):
Investments                           $         156,455  $         170,879
Loans, net of
 allowance                                      789,622            800,284
Allowance for loan
 losses                                          13,778             12,081
Total assets                                  1,067,239          1,110,614
Total deposits                                  763,420            744,568
Total borrowings                                173,532            217,034
Total equity                                    124,681            142,989

Statements of
 Condition Data
 (Average
 Balance):
Total
 interest-earning
 assets            $       1,008,623  $       1,004,220  $       1,016,597
Total
 interest-bearing
 liabilities                 883,305            872,223            891,071

Operating Ratios:
ROAA                           -2.32%             -6.98%              0.04%
ROAE                          -17.84%            -52.87%              0.29%
Yield on Earning
 Assets                         5.48%              5.30%              5.52%
Cost of Interest
 Bearing
 Liabilities                    2.24%              2.04%              2.28%
Net interest
 margin                         3.52%              3.52%              3.52%
Efficiency ratio(2)            66.49%             66.00%             64.03%
Equity to assets
 (end of period)                                  11.68%             12.87%
Tangible
 equity/tangible
 assets                                            9.72%             11.01%
Non-performing
 loans to total
 gross loans                                       4.29%              3.65%
Allowance for loan
 losses to
 non-performing
 loans                                            39.94%             40.70%
Allowance for loan
 losses to total
 gross loans                                       1.71%              1.49%
Book value                            $            9.37  $           10.74
Tangible book
 value                                $            7.62  $            8.99
Stock price                           $            7.68  $            8.63
Price to book
 value                                            81.96%             80.35%
Price to tangible
 book value                                      100.79%             96.00%



                                     Three Months Ended
                   -------------------------------------------------------
                     March 31, 2009   December 31, 2008  September 30, 2008
                   -----------------  -----------------  -----------------
                        (dollars in thousands, except per share data)
Statements of
 Income Data:
Interest income    $          13,943  $          14,471  $          15,154
Interest expense               5,207              5,664              6,084
                   -----------------  -----------------  -----------------
   Net interest
    income                     8,736              8,807              9,070
Provision for loan
 losses                          745              6,860              1,309
                   -----------------  -----------------  -----------------
   Net interest
    income after
    provision for
    loan losses                7,991              1,947              7,761
Non-interest
 income                         (433)           (11,997)              (870)
Non-interest
 expense                       8,084             38,251              6,722
                   -----------------  -----------------  -----------------
Income (loss)
 before income
 taxes                          (526)           (48,301)               169
Income tax expense
 (benefit)                      (427)            (6,125)              (424)
                   -----------------  -----------------  -----------------
Net income (loss)  $             (99) $         (42,176) $             593
                   =================  =================  =================

Earnings (loss)
 per share(1)      $           (0.01) $           (3.43) $            0.05
                   =================  =================  =================
Average shares
 outstanding              12,296,879         12,285,267         12,273,615
                   =================  =================  =================
Shares issued             13,313,521         13,313,521         13,313,521
                   =================  =================  =================

Statements of
 Condition Data
 (Period End):
Investments        $         175,129  $         163,480  $         180,144
Loans, net of
 allowance                   794,226            783,869            778,683
Allowance for loan
 losses                       11,924             11,240              9,949
Total assets               1,105,710          1,090,735          1,128,259
Total deposits               790,346            711,130            730,276
Total borrowings             168,058            234,484            212,863
Total equity                 141,223            140,725            177,682

Statements of
 Condition Data
 (Average
 Balance):
Total
 interest-earning
 assets            $       1,003,138  $       1,014,972  $         999,269
Total
 interest-bearing
 liabilities                 886,779            880,005            871,014

Operating Ratios:
ROAA                           -0.04%            -14.94%              0.21%
ROAE                           -0.28%            -96.08%              1.30%
Yield on Earning
 Assets                         5.64%              5.78%              6.03%
Cost of Interest
 Bearing
 Liabilities                    2.38%              2.56%              2.78%
Net interest
 margin                         3.53%              3.52%              3.61%
Efficiency ratio(2)            69.23%            382.55%             64.55%
Equity to assets
 (end of period)               12.77%             12.90%             15.75%
Tangible
 equity/tangible
 assets                        10.89%             10.99%             11.40%
Non-performing
 loans to total
 gross loans                    3.73%              2.65%              2.83%
Allowance for loan
 losses to
 non-performing
 loans                         39.67%             53.39%             44.62%
Allowance for loan
 losses to total
 gross loans                    1.48%              1.41%              1.26%
Book value         $           10.61  $           10.57  $           13.35
Tangible book
 value             $            8.86  $            8.81  $            9.18
Stock price        $            7.03  $            9.25  $            9.15
Price to book
 value                         66.26%             87.51%             68.54%
Price to tangible
 book value                    79.35%            104.99%             99.67%



(1) Earnings Per Share calculations use average outstanding shares which
    include earned ESOP shares.

(2) excludes a $1.234 million severence payout to Cape Bancorp's former CEO
    2009 1st QTR, & 2009 YTD


DELINQUENCY TABLE (unaudited)



Period Ending:                                   9/30/2009
                                    Balances    % total loans   # Loans
31-59                                2,277,136          0.28%           19
60-89                                3,765,938          0.47%           21
90+                                 31,031,782          3.86%           85
Non-Accrual Other                    5,297,987          0.66%           15
                                  ============  ============  ============
Total Delinquency:                  42,372,843          5.27%          140
                                  ------------                ------------
Total Loans Total:                               803,399,926
                                  ----------------------------------------


Days                                  CML            IL            ML
31-59                                  986,732       635,924       654,480
60-89                                2,497,843       377,240       890,856
90+                                 26,582,247       444,947     4,004,587
Non-Accrual Other*                   5,297,987             -             -
                                  ============  ============  ============
Total Delinquency by Type           35,364,809     1,458,110     5,549,924
Total Loans by Type                508,307,575    48,565,587   246,526,764
% of Total Loans in Type                  6.96%         3.00%         2.25%
Total Delinquency                                 42,372,843
                                  ----------------------------------------


Period Ending:                                   6/30/2009
                                    Balances    % total loans   # Loans
31-59                                3,486,966          0.43%           19
60-89                                3,176,706          0.39%           14
90+                                 29,683,837          3.65%           78
Non-Accrual Other
                                  ============  ============  ============
Total Delinquency:                  36,347,509          4.47%          111
                                  ------------                ------------
Total Loans Total:                               812,365,080
                                  ----------------------------------------


Days                                  CML            IL            ML
31-59                                1,562,501       374,051     1,550,414
60-89                                2,309,086       124,912       742,708
90+                                 25,368,451       467,005     3,848,381
Non-Accrual Other*
                                  ============  ============  ============
Total Delinquency by Type           29,240,039       965,968     6,141,502
Total Loans by Type                515,327,026    48,453,407   248,584,647
% of Total Loans in Type                  5.67%         1.99%         2.47%
Total Delinquency                                 36,347,509
                                  ----------------------------------------


Period Ending:                                   3/31/2009
                                    Balances    % total loans   # Loans
31-59                                3,603,350          0.45%           27
60-89                                3,474,655          0.43%           23
90+                                 30,061,971          3.73%           76
Non-Accrual Other
                                  ============  ============  ============
Total Delinquency:                  37,139,975          4.61%          126
                                  ------------                ------------
Total Loans Total:                               806,150,079
                                  ----------------------------------------


Days                                  CML            IL            ML
31-59                                1,940,622       575,557     1,087,170
60-89                                2,054,939       215,322     1,204,394
90+                                 26,167,509       391,111     3,503,351
Non-Accrual Other*
                                  ============  ============  ============
Total Delinquency by Type           30,163,070     1,181,990     5,794,915
Total Loans by Type                517,746,676    48,034,272   240,369,131
% of Total Loans in Type                  5.83%         2.46%         2.41%
Total Delinquency                                 37,139,975
                                  ----------------------------------------


Period Ending:                                   12/31/2008
                                    Balances    % total loans   # Loans
31-59                                5,938,319          0.75%           47
60-89                                6,277,807          0.79%            9
90+                                 21,047,651          2.65%           60
Non-Accrual Other
                                  ============  ============  ============
Total Delinquency:                  33,263,777          4.18%          116
                                  ------------                ------------
Total Loans Total:                               795,109,112
                                  ----------------------------------------


Days                                  CML            IL            ML
31-59                                2,642,290       514,190     2,781,839
60-89                                6,050,199       122,274       105,334
90+                                 18,895,917       338,547     1,813,187
Non-Accrual Other*
                                  ============  ============  ============
Total Delinquency by Type           27,588,406       975,011     4,700,360
Total Loans by Type                510,965,814    48,350,426   235,792,872
% of Total Loans in Type                  5.40%         2.02%         1.99%
Total Delinquency                                 33,263,777
                                  ----------------------------------------

Forward-Looking Statements

This press release discusses primarily historical information. However, certain statements contained herein are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks, as described in our SEC filings, and uncertainties, including, but not limited to, those related to the economic environment, particularly in the market areas in which the Company operated, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity.

The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake and specifically declines any obligation to publicly release the results 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.

Further information on factors that could affect Cape Bancorp's financial results can be found in the Cape Bancorp's Form 10-K for the Year Ended December 31, 2008, which was filed by Cape Bancorp with the Securities and Exchange Commission on March 16, 2009.

Contact Information

  • For further information, contact:

    Michael D. Devlin
    Chief Executive Officer

    Guy Hackney
    Chief Financial Officer

    Cape Bancorp:
    (609) 465-5600