SOURCE: Cape Bancorp, Inc.

Cape Bancorp, Inc.

July 25, 2012 16:36 ET

Cape Bancorp, Inc. Reports Second Quarter 2012 Results

CAPE MAY COURT HOUSE, NJ--(Marketwire - Jul 25, 2012) - Cape Bancorp, Inc. ("Cape Bancorp" or the "Company") (NASDAQ: CBNJ), the parent company of Cape Bank, announces its operating results for the quarter and six months ended June 30, 2012.

For the quarter ended June 30, 2012, Cape Bancorp reported net income of $1.0 million, or $.08 per common and fully diluted share, and $2.6 million, or $.21 per common and fully diluted share for the six months ended June 30, 2012. This compares to net income of $617,000, or $.05 per common and fully diluted share for the second quarter of 2011, and $8.9 million, or $.72 per common share and $.71 per fully diluted share for the six months ended June 30, 2011. The six months ended June 30, 2011 included the reversal of $7.7 million, or $0.62 per share, of the deferred tax valuation allowance.

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

"Great strides were made during the most recent quarter at Cape Bank. Credit quality metrics showed improvement with non-performing loans declining to 3.26% of total loans. More broadly, non-performing assets fell below 3% of total assets even as total assets declined. The delinquency ratio hit its lowest level since the inception of Cape Bank in January, 2008. Finally, OREO has benefitted from credits finally exiting foreclosure and we have worked to move these to sale promptly. So far in 2012 we have disposed of 11 properties in the amount of $4.2 million.

"We also took the opportunity to extinguish some borrowings with the FHLB of NY which will result in improved funding costs. This is a valuable development since there is continued pressure to reduce loan rates in today's market. The net interest margin for the quarter was a respectable 3.73%.

"As credit problems continued to lessen in significance, progress was also being made in more traditional banking targets. Solid loan activity resulted in an increase in total loans and pipelines for both commercial and residential mortgages that project favorable levels of closings in the coming months. In addition, core deposits continued to grow, up $18 million from year-end and over $44 million from a year ago. This growth has come despite the fact that the bank has ended free checking.

"While troubled credits showed positive movement, they still had negative fallout during the quarter with a high level of expenses for both troubled loans and OREO. These expenses along with the significant prepayment penalties on the FHLB of NY borrowings generated headwinds for earnings. Despite this, net income for the quarter was $1.0 million, bringing year-to-date net income to $2.6 million.

"The seasonal businesses appear to be enjoying a solid summer and our efforts to expand our lending footprint in Burlington and Camden counties have proven to be effective. The positive momentum begun in late 2011 appears to be continuing while improving the performance and prospects for Cape Bank."

The following are significant factors which contributed to the operating results of the comparative quarters and year-to-date:

  • The Company initiated steps to restructure the balance sheet by extinguishing $20.0 million of fixed rate term borrowings with an average rate of 3.44% in June, incurring a prepayment penalty of $921,000. The Company also sold $37.9 million in investment securities, which were yielding 1.41%. This restructuring will be accretive to net interest income through the first quarter of 2014. Net interest income is projected to increase by $508,000 and the net interest margin will benefit by 14 basis points annually.

  • Net gains on sales of investment securities totaled $774,000 and $962,000 for the three and six months ended June 30, 2012, respectively, compared to no net gains and $148,000 for the three and six months ended June 30, 2011, respectively.

  • The second quarter of 2012 included a gain on the sale of bank premises of $425,000 compared to the initial $1.8 million gain recorded in the second quarter of 2011. The gain resulted from vacating leased space in the second quarter of 2012 which accelerated the recognition of a portion of the deferred gain.

  • Included in the second quarter of 2012 was a $325,000 gain on the sale of the Company's merchant card business.

  • The net interest margin was 3.73% for the quarter ended June 30, 2012, a decrease of 1 basis point from the quarter ended March 31, 2012 and an increase of 18 basis points from the quarter ended June 30, 2011. The net interest margin was 3.73% for the six months ended June 30, 2012, an increase of 6 basis points from 3.67% for the six month period ended June 30, 2011.

  • The loan loss provision for the second quarter of 2012 totaled $1.2 million compared to $673,000 for the quarter ended March 31, 2012 and $3.9 million for the quarter ended June 30, 2011. Loan charge-offs for the second quarter of 2012 totaled $962,000 compared to $1.0 million for the quarter ended March 31, 2012 and $3.6 million for the quarter ended June 30, 2011. The loan loss provision totaled $1.8 million for the six months ended June 30, 2012 compared to $6.3 million for the six months ended June 30, 2011. Loan charge-offs for the six months ended June 30, 2012 were significantly lower and totaled $2.0 million compared to loan charge-offs of $5.6 million for the six month period ended June 30, 2011.

  • Loan related expenses (real estate taxes, insurance, legal and other) totaled $506,000 for the second quarter ended June 30, 2012 compared to $431,000 for the same period in 2011 and $677,000 for the first quarter ended March 31, 2012. For the six months ended June 30, 2012, loan related expenses totaled $1.2 million compared to $717,000 for the same period in 2011.

  • Other Real Estate Owned (OREO) expenses were $567,000 for the second quarter ended June 30, 2012 compared to $319,000 for the first quarter of 2012 and $157,000 for the second quarter ended June 30, 2011. Included in these expenses were write-downs totaling $318,000 in the second quarter of 2012, $94,000 in the first quarter of 2012 and $30,000 in the second quarter of 2011. For the six months ended June 30, 2012, these expenses were $886,000 compared to $262,000 for the six months ended June 30, 2011. Included in these expenses were write-downs totaling $412,000 for the six months ended June 30, 2012 compared to $77,000 for the six months ended June 30, 2011.

Cape Bancorp's total assets at June 30, 2012 totaled $1.048 billion, a decrease of $22.8 million from the December 31, 2011 level of $1.071 billion.

Total net loans increased $5.2 million to $721.5 million at June 30, 2012, from $716.3 million at December 31, 2011. This change is the result of an increase in commercial loan activity within all three counties that comprise our market area, and resulted in an increase of $11.6 million. This increase was partially offset by a decrease in mortgage loans of $5.0 million resulting from early pay-offs and the Bank selling approximately 40% of originations made during the six month period in an effort to manage interest rate risk. Consumer loans declined $1.5 million. The allowance for loan losses totaled 1.73% of gross loans and 52.92% of non-performing loans at June 30, 2012.

At June 30, 2012, the Company had $23.9 million in non-performing loans or 3.26% of total gross loans, a decrease from 3.77% of total gross loans at December 31, 2011, and 5.99% at June 30, 2011. Included in non-performing loans are troubled debt restructurings totaling $835,000 at June 30, 2012 and $405,000 at December 31, 2011, respectively.

Other real estate owned decreased $1.6 million from $8.4 million at December 31, 2011 to $6.8 million at June 30, 2012, and consisted at June 30, 2012 of eleven commercial properties and thirty-five residential properties (including twenty-seven building lots). During the quarter ended June 30, 2012, the Company added two commercial properties and twenty-seven residential properties (building lots) to OREO with aggregate carrying values of $341,000 and $1.9 million, respectively. In addition, five commercial OREO properties and one residential OREO property with aggregate carrying values totaling $3.1 million were sold during the quarter ended June 30, 2012 with recognized net losses of $337,000. For the six months ended June 30, 2012, the Company sold three residential OREO properties and eight commercial OREO properties with aggregate carrying values totaling $4.6 million with recognized net losses totaling $300,000.

At June 30, 2012, Cape Bancorp's core deposits totaled $498.5 million which represented an increase of $18.0 million from December 31, 2011. Certificates of deposit totaled $286.1 million, a decline of $3.0 million from December 31, 2011. At June 30, 2012, deposits totaled $789.9 million compared to $774.4 million at December 31, 2011.

Cape Bancorp's total equity increased to $148.2 million at June 30, 2012 from $145.7 million at December 31, 2011, an increase of $2.5 million, or 1.74%. Tangible equity to tangible assets increased to 12.23% at June 30, 2012 compared to 11.72% at December 31, 2011. Cape Bank's regulatory capital ratios for Tier I Leverage Ratio, Tier I Risk-Based Capital and Total Risk-Based Capital are 9.71%, 13.13% and 14.39%, respectively, all of which exceed well capitalized status.

 
 
SELECTED FINANCIAL DATA
(unaudited)
 
Cape Bancorp, Inc.
 
                               
    Six Months Ended     Three Months Ended  
    June 30, 2012     June 30, 2011     June 30, 2012     March 31, 2012     June 30, 2011  
       
Statements of Income Data:                              
Interest income   $ 22,224     $ 23,603     $ 10,935     $ 11,289     $ 11,491  
Interest expense     4,690       5,947       2,221       2,469       2,921  
  Net interest income     17,534       17,656       8,714       8,820       8,570  
Provision for loan losses     1,841       6,311       1,168       673       3,911  
  Net interest income after provision for loan losses     15,693       11,345       7,546       8,147       4,659  
Non-interest income     4,235       4,407       2,630       1,605       3,151  
Non-interest expense     16,104       14,157       8,674       7,430       7,039  
Income before income taxes     3,824       1,595       1,502       2,322       771  
Income tax expense (benefit)     1,261       (7,266 )     477       784       154  
Net income   $ 2,563     $ 8,861     $ 1,025     $ 1,538     $ 617  
                                         
Basic Earnings per share1   $ 0.21     $ 0.72     $ 0.08     $ 0.12     $ 0.05  
Basic Average shares outstanding     12,421,292       12,388,490       12,426,617       12,426,966       12,394,089  
Diluted Earnings per share1   $ 0.21     $ 0.71     $ 0.08     $ 0.12     $ 0.05  
Diluted Average shares outstanding     12,423,049       12,397,409       12,428,458       12,428,640       12,409,282  
Shares outstanding     13,313,011       13,313,521       13,313,011       13,314,111       13,313,521  
                                         
Statements of Condition Data (Period End):                                        
Investments   $ 161,459     $ 171,664     $ 161,459     $ 184,156     $ 171,664  
Loans, net of allowance   $ 721,491     $ 755,348     $ 721,491     $ 717,556     $ 755,348  
Allowance for loan losses   $ 12,669     $ 13,332     $ 12,669     $ 12,361     $ 13,332  
Total assets   $ 1,048,310     $ 1,067,751     $ 1,048,310     $ 1,059,036     $ 1,067,751  
Total deposits   $ 789,918     $ 782,529     $ 789,918     $ 764,697     $ 782,529  
Total borrowings   $ 104,016     $ 134,040     $ 104,016     $ 139,717     $ 134,040  
Total equity   $ 148,250     $ 144,495     $ 148,250     $ 147,639     $ 144,495  
                                         
Statements of Condition Data (Average Balance):                                        
Total interest-earning assets   $ 944,178     $ 971,437     $ 940,795     $ 947,561     $ 967,937  
Total interest-bearing liabilities   $ 825,829     $ 847,648     $ 820,083     $ 831,576     $ 840,311  
                                         
Operating Ratios:                                        
ROAA     0.48 %     1.67 %     0.39 %     0.58 %     0.23 %
ROAE     3.47 %     12.83 %     2.76 %     4.18 %     1.73 %
Yield on Earning Assets     4.73 %     4.90 %     4.67 %     4.79 %     4.76 %
Cost of Interest Bearing Liabilities     1.14 %     1.41 %     1.09 %     1.19 %     1.39 %
Net interest margin     3.73 %     3.67 %     3.73 %     3.74 %     3.55 %
Efficiency ratio     72.13 %     69.37 %     72.39 %     71.87 %     70.41 %
                                         
Capital Ratios:                                        
Tier 1 Leverage Ratio     9.71 %     9.92 %     9.71 %     9.48 %     9.92 %
Tier 1 Risk-Based Capital Ratio     13.13 %     12.87 %     13.13 %     12.86 %     12.87 %
Total Risk-Based Capital Ratio     14.39 %     14.12 %     14.39 %     14.11 %     14.12 %
Tangible equity/tangible assets     12.23 %     11.63 %     12.23 %     12.04 %     11.63 %
Book value   $ 11.14     $ 10.85     $ 11.14     $ 11.09     $ 10.85  
Tangible book value   $ 9.42     $ 9.13     $ 9.42     $ 9.37     $ 9.13  
Stock price   $ 8.31     $ 10.00     $ 8.31     $ 7.98     $ 10.00  
Price to book value     74.62 %     92.17 %     74.62 %     71.96 %     92.17 %
Price to tangible book value     88.25 %     109.53 %     88.25 %     85.17 %     109.53 %
                                         
Quality Ratios:                                        
Non-performing loans to total gross loans     3.26 %     5.99 %     3.26 %     3.57 %     5.99 %
Non-performing assets to total assets     2.97 %     4.82 %     2.97 %     3.25 %     4.82 %
Texas ratio     22.53 %     38.16 %     22.53 %     25.09 %     38.16 %
Allowance for loan losses to non-performing loans     52.92 %     28.97 %     52.92 %     47.39 %     28.97 %
Allowance for loan losses to total gross loans     1.73 %     1.73 %     1.73 %     1.69 %     1.73 %
Net charge-offs to average loans     0.50 %     1.41 %     0.47 %     0.53 %     1.86 %
 
1 Earnings Per Share calculations use average outstanding shares which include earned ESOP shares.
 
 
 
DELINQUENCY TABLE
(unaudited)
       
    Delinquency Summary  
Period Ending   6/30/2012     12/31/2011     6/30/2011  
Days   Balances   % total loans   # Loans     Balances   % total loans   # Loans     Balances   % total loans   # Loans  
31-59   $ 1,180,101     0.16 %   13     $ 2,111,666     0.29 %   17     $ 3,163,545     0.41 %   16  
60-89     1,261,433     0.17 %   6       2,130,969     0.29 %   8       3,380,703     0.44 %   14  
90+     23,363,747     3.18 %   86       26,407,001     3.62 %   98       33,947,994     4.42 %   106  
Total Delinquency     25,805,281     3.51 %   105       30,649,636     4.20 %   123       40,492,242     5.27 %   136  
Non-Accrual Other*     576,272     0.08 %   5       1,041,958     0.14 %   4       12,072,612     1.57 %   11  
Total Delinquency and Non-Accrual   $ 26,381,553     3.59 %   110     $ 31,691,594     4.35 %   127     $ 52,564,854     6.84 %   147  
Total Loans         $ 734,159,099                 $ 728,994,167                 $ 768,680,375        
                                                             
Days   CML   IL   ML     CML   IL   ML     CML   IL   ML  
31-59   $ 133,360   $ 231,083   $ 815,659     $ -   $ 279,338   $ 1,832,328     $ 2,148,616   $ 365,034   $ 649,896  
60-89     572,902     33,675     654,856       1,362,864     94,675     673,430       2,639,722     196,712     544,270  
90+     17,500,139     771,191     5,092,416       21,047,586     683,227     4,676,188       29,179,792     476,037     4,292,163  
Total Delinquency     18,206,401     1,035,949     6,562,931       22,410,450     1,057,240     7,181,946       33,968,130     1,037,783     5,486,329  
Non-Accrual Other*     576,272     -     -       1,041,958     -     -       12,072,612     -     -  
Total Delinquency and Non-Accrual by Type   $ 18,782,673   $ 1,035,949   $ 6,562,931     $ 23,452,408   $ 1,057,240   $ 7,181,946     $ 46,040,742   $ 1,037,783   $ 5,486,329  
Total Loans by Type   $ 439,112,044   $ 46,885,758   $ 248,161,298     $ 427,483,454   $ 48,346,112   $ 253,164,601     $ 462,675,081   $ 48,199,752   $ 257,805,542  
% of Total Loans in Type     4.28 %   2.21 %   2.64 %     5.49 %   2.19 %   2.84 %     9.95 %   2.15 %   2.13 %
Total Delinquency and Non-Accrual         $ 26,381,553     3.59 %         $ 31,691,594     4.35 %         $ 52,564,854     6.84 %
 
*Non-Accrual Other means loans that are less than 90 days past due, that are classified by management as non-performing.
NOTE: Excluded from the table above are $1.6 million of commercial loans classified as Loans Held for Sale all of which are over 90 days delinquent.
 
 

For further information contact Michael D. Devlin, President and Chief Executive Officer or Guy Hackney, Chief Financial Officer, Cape Bancorp: (609) 465-5600.

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 filings listed below with the Securities and Exchange Commission.

SEC Form Reported Period Date filed with SEC
10K Year ended December 31, 2011 March 14, 2012
10K Quarter ended March 31, 2012 May 1, 2012

Contact Information

  • Michael D. Devlin
    President and Chief Executive Officer
    Guy Hackney
    Chief Financial Officer
    Cape Bancorp
    (609) 465-5600