SOURCE: First Morris Bank & Trust

February 07, 2007 15:44 ET

First Morris Bank and Trust Reports 2006 Fourth Quarter and Full Year Results

MORRISTOWN, NJ -- (MARKET WIRE) -- February 7, 2007 -- First Morris Bank and Trust (OTCBB: FMJE) reported today its results for the fourth quarter and twelve months ended December 31, 2006. Fourth quarter net income equaled $447 thousand or $0.14 per share, including substantial merger-related charges totaling $303 thousand, or $196 thousand, net of tax, compared with $868 thousand or $0.30 per share earned in the fourth quarter of 2005. On an adjusted basis, net income for the quarter ended December 31, 2006 equaled $643 thousand or $0.21 per share.

For the twelve months ended December 31, 2006, net income, which includes the impact of a balance sheet restructure initiative executed in the second quarter of 2006 and the merger-related charges, equaled $1.80 million or $0.58 per share. This compares to net income of $3.60 million, or $1.25 per share for the twelve months ended December 31, 2005. Excluding the impact of the investment portfolio restructuring and the merger-related charges, the Company would have reported net income of $2.75 million, or $0.88 per share, for the twelve months ended December 31, 2006. The results for the quarter and period ended December 31, 2006, include the 250,000 new shares issued in connection with the stock offering that closed in January 2006.

As previously reported, First Morris initiated a balance sheet restructuring in the second quarter of 2006. As part of the restructuring, the Company sold $34 million of investment securities yielding an average of 3.50 percent. The sale resulted in a pretax loss of $1.012 million, or $672 thousand, net of tax.

On October 16, 2006, the Company announced the signing of a definitive agreement under which First Morris will merge into The Provident Bank, a subsidiary of Provident Financial Services, Inc. Under the agreement, First Morris stockholders will receive a combination of stock and cash, subject to election, valued at $39.75 per share or approximately $124.1 million.

Separately, the Wealth Management Services group continued to see growth in assets under management. As of December 31, 2006, total assets under management reached $141.1 million compared to $126.8 million at September 30, 2006 and $98.5 million at December 31, 2005.

INTEREST INCOME AND EXPENSE:

Net interest income for the fourth quarter of 2006 was $3.63 million, versus $3.95 million earned in the same quarter of 2005 and $3.84 million reported for the third quarter of 2006. The net interest margin averaged 2.69 percent for the fourth quarter of 2006, below the 2.88 percent reported for the third quarter of 2006 and down from the 2.98 percent reported for the fourth quarter of 2005.

The tax-equivalent yield on earning assets increased 52 basis points to 5.72 percent in the fourth quarter of 2006, from 5.20 percent in the same quarter last year. The cost of interest-bearing liabilities increased 90 basis points to 3.49 percent for the quarter compared to 2.59 percent reported for the same quarter in 2005. These changes are consistent with the increase in general market interest rates but on a lagged basis, the re-pricing of deposits in a rising rate environment and a less profitable deposit mix resulting from deposit migration into higher cost money market and time accounts, which is expected to continue.

NON-INTEREST INCOME:

Non-interest income totaled $662 thousand for the fourth quarter of 2006, representing an increase of 3.1 percent compared to the fourth quarter of 2005. The increase was attributed solely to additional fee income from the Wealth Management Services division.

NON-INTEREST EXPENSE:

Non-interest expense for the fourth quarter of 2006 equaled $3.55 million, an increase of 4.9 percent from the fourth quarter of 2005. The majority of the increase was attributed to increased costs for computer processing related to the outsourcing of check processing, merger-related accounting and legal costs, offset by reduced spending for marketing and advertising.

For the fourth quarter 2006, the efficiency ratio, defined as non-interest expense divided by non-interest income, adjusted for security losses, plus tax-equivalent net interest income, equaled 79.8 percent compared to 71.3 percent for the fourth quarter 2005, as a result of higher total operating expenses and a lower level of net interest income.

FINANCIAL CONDITION:

At December 31, 2006, total assets equaled $585 million, largely unchanged from the $581 million in total assets reported at December 31, 2005. Total loans outstanding were $337 million, up $13 million, or 4.01 percent from September 30, 2006, and up $32 million, or 10.5 percent from December 31, 2005.

Total investment securities equaled $199 million, representing a decrease of $41 million compared to $240 million at December 31, 2005, largely due to the sale of securities during the first half of 2006 and the need to provide funding for loan growth.

ASSET QUALITY:

The Company reported an increase in non-performing assets to $2.2 million at December 31, 2006 compared to $1.0 million at December 31, 2005. The allowance for loan losses totaled $2.8 million and represented 0.84 percent of total loans outstanding at December 31, 2006, compared to $3.1 million and 1.03 percent, respectively at December 31, 2005.

DEPOSITS:

Total deposits stood at $527 million at December 31, 2006, representing an increase of $16 million from the $511 million in total deposits at September 30, 2006, and an increase of $3 million compared to December 31, 2005.

STOCKHOLDER EQUITY:

Stockholder equity equaled $42 million at December 31, 2006 and book value per common share was $13.44. At December 31, 2006, the leverage capital ratio was 7.42 percent, while the Tier I and total risk-based capital ratios were 11.61 percent and 12.37 percent, respectively.

All per share amounts have been adjusted to reflect the 2 for 1 stock split paid October 17, 2005 and the 10 percent stock dividend paid March 11, 2005.


First Morris Bank & Trust
Selected Consolidated Financial Data
(Amounts in thousands, except share data)

                                                 12/31/2006    12/31/2005
BALANCE SHEET:                                  ------------  ------------
Assets                                           $   584,506   $   580,932
Deposits                                             526,833       524,157
Loans                                                337,076       305,113
Investment securities                                198,715       240,472
Shareholders' equity                                  41,958        34,903
Allowance for loan losses                             (2,823)       (3,130)
Trust assets under management (market value)         141,441        98,538

INCOME STATMENT - QUARTER TO DATE:
Net income before taxes                          $       743   $     1,213
Federal and state income tax provision                   296           345
                                                ------------  ------------
Net income                                       $       447   $       868
                                                ============  ============
Earnings per share                               $      0.14   $      0.30
Return on average assets                                0.30%         0.59%
Return on average common equity                         4.28          9.92
Efficiency ratio (excluding security gain/loss)        79.83         71.34

INCOME STATEMENT - YEAR TO DATE:
Net income before taxes                          $     2,775   $     5,219
Federal and state income tax provision                   978         1,619
                                                ------------  ------------
Net income                                       $     1,797   $     3,600
                                                ============  ============
Earnings per share                               $      0.58   $      1.25
Return on average assets                                0.31%         0.62%
Return on average common equity                         4.49          9.10
Efficiency ratio (excluding security gain/loss)        75.91         70.69

SHARE DATA:
Closing price per share                          $     39.00   $     24.00
Book value per share                             $     13.44   $     12.15
Average shares outstanding (QTD)                   3,121,774     2,871,774

CAPITAL ADEQUACY:
Total equity to total assets                            7.12%         5.97%
Tier I capital to average assets (leverage)             7.42          6.27
Tier I capital to risk-adjusted assets                 11.61         10.66
Total risk-based capital                               12.37         11.58



First Morris Bank & Trust
Consolidated Statements of Condition
(Unaudited)

(in thousands, except share data)
                                                ------------  ------------
Assets:                                           12/31/06      12/31/05
                                                ------------  ------------
Cash and due from banks                          $    13,656   $    10,420
Federal funds sold and money markets                  10,310         2,317
                                                ------------  ------------
  Total cash and cash equivalents                $    23,966   $    12,737

Investment securities held to maturity           $         -   $   125,843
Investment securities available for sale             198,715       114,629
                                                ------------  ------------
  Total investment securities                    $   198,715   $   240,472

Loans                                            $   337,076   $   305,113
Allowance for loan losses                             (2,823)       (3,130)
                                                ------------  ------------
    Total net loans                              $   334,253   $   301,983
                                                ------------  ------------

  Premises and equipment                         $    22,819   $    20,923
  Accrued interest receivable                          2,834         2,940
  Other assets                                         1,919         1,877
                                                ------------  ------------
Total assets                                     $   584,506   $   580,932
                                                ============  ============

Liabilities and shareholders' equity:

 Demand and NOW                                  $   215,645   $   222,328
 Savings & MMDA                                      149,769       164,420
 Time, under $100,000                                104,570        86,454
 Time, $100,000 and over                              56,849        50,955
                                                ------------  ------------
    Total deposits                               $   526,833   $   524,157

  Borrowed funds                                 $    14,350   $    20,579
  Accrued expenses and other liab                      1,365         1,293
                                                ------------  ------------
 Total liabilities                               $   542,548   $   546,029

Shareholders' equity:
  Common stock, par value $3.33                  $    10,396   $     9,563
  Treasury stock, at cost                               (479)         (479)
  Additional paid-in capital                          22,770        18,716
  Retained earnings                                   10,722         8,925
  Accumulated other comprehensive (loss)              (1,451)       (1,822)
                                                ------------  ------------
  Total shareholders' equity                     $    41,958   $    34,903
                                                ------------  ------------
Total liabilities & shareholders' equity         $   584,506   $   580,932
                                                ============  ============

Share data at period end:
  Authorized                                       3,919,620     3,919,620
  Issued                                           3,121,774     2,871,774
  Treasury                                            24,868        24,868



First Morris Bank & Trust
Consolidated Statements of Income
(Unaudited)

(In thousands, except per share data)
                                                ------------  ------------
                                                  12/31/06      12/31/05
FOR THE THREE MONTHS ENDED:                     ------------  ------------
Interest Income:
Interest and fees on loans                       $     5,353   $     4,666
Interest and fees on investments                       2,268         2,320
Interest and fees on fed funds and money
 markets                                                 181            35
                                                ------------  ------------
    Total Interest Income                        $     7,802   $     7,021
                                                ------------  ------------

Interest Expense:
Interest on savings, NOW and time deposits       $     3,455   $     2,499
Interest on time deposits, $100,000 and over             573           375
Interest on borrowed funds                               146           194
                                                ------------  ------------
    Total Interest Expense                       $     4,174   $     3,068
                                                ------------  ------------

Net interest income                              $     3,628   $     3,953
Provision for loan losses                                  -             -
Net Interest Income after provision             ------------  ------------
 for loan losses                                 $     3,628   $     3,953
                                                ------------  ------------

Other Income
  Service charges-deposits                       $       307   $       330
  Gain/(Loss) on the sale of securities                  (17)            -
  Other income                                           372           312
                                                ------------  ------------
   Noninterest Income                            $       662   $       642
                                                ------------  ------------

Other operating expenses
Salaries and employee benefits                   $     1,770   $     1,891
Occupancy, net                                           287           260
Furniture and equipment                                  250           258
Computer processing                                      330           198
Marketing and advertising                                 73           212
Other expense                                            837           563
                                                ------------  ------------
  Total Operating Expenses                       $     3,547   $     3,382
                                                ------------  ------------

Income/(Loss) before taxes                       $       743   $     1,213
Provision for federal and state income taxes             296           345
                                                ------------  ------------
Net Income/(Loss)                                $       447   $       868
                                                ============  ============

Earnings per share                                      0.14          0.30
Weighted average shares outstanding                3,121,774     2,871,774



First Morris Bank & Trust
Consolidated Statements of Income
(Unaudited)

(In thousands, except per share data)
                                                ------------  ------------
                                                  12/31/06      12/31/05
FOR THE YEAR ENDED:                             ------------  ------------
Interest Income:
Interest and fees on loans                       $    20,480   $    16,757
Interest and fees on investments                       9,213         9,299
Interest and fees on fed funds and money
 markets                                                 330           119
                                                ------------  ------------
    Total Interest Income                        $    30,023   $    26,175
                                                ------------  ------------

Interest Expense:
Interest on savings, NOW and time deposits       $    11,861   $     7,835
Interest on time deposits, $100,000 and over           2,077         1,222
Interest on borrowed funds                               811           692
                                                ------------  ------------
    Total Interest Expense                       $    14,749   $     9,749
                                                ------------  ------------

Net interest income                              $    15,274   $    16,426
Provision for loan losses                                  -             -
Net Interest Income after provision             ------------  ------------
 for loan losses                                 $    15,274   $    16,426
                                                ------------  ------------

Other Income
  Service charges-deposits                       $     1,233   $     1,075
  Gain/(Loss) on the sale of securities               (1,127)           (1)
  Other income                                         1,431         1,271
                                                ------------  ------------
   Noninterest Income                            $     1,537   $     2,345
                                                ------------  ------------

Other operating expenses
Salaries and employee benefits                   $     7,366   $     7,276
Occupancy, net                                         1,114         1,015
Furniture and equipment                                1,060         1,012
Computer processing                                    1,198           828
Marketing and advertising                                795         1,088
Other expense                                          2,503         2,333
                                                ------------  ------------
  Total Operating Expenses                       $    14,036   $    13,552
                                                ------------  ------------

Income/(Loss) before taxes                       $     2,775   $     5,219
Provision for federal and state income taxes             978         1,619
                                                ------------  ------------
Net Income/(Loss)                                $     1,797   $     3,600
                                                ============  ============

Earnings per share                                      0.58          1.25
Weighted average shares outstanding                3,121,774     2,871,774



First Morris Bank & Trust
Consolidated Average Balance Sheet
(Tax-equivalent basis, dollars in thousands)


                                      THREE MONTHS ENDED
                    ------------------------------------------------------
                             12/31/06                    12/31/05
                    --------------------------  --------------------------
                     Average             Rate/   Average             Rate/
                     Balance   Interest  Yield   Balance   Interest  Yield
                    ---------  --------  -----  ---------  --------  -----
ASSETS
Interest-earning
 assets
Fed funds sold      $  11,992       157   5.12% $   1,729        19   4.30%
Money market funds      1,904        24   4.93%     1,765        15   3.32%
Investments
Taxable investment
 securities           170,079     1,946   4.58%   210,735     2,006   3.81%
Tax-exempt investment
 securities            33,854       458   5.41%    34,432       461   5.36%
                    ---------  --------  -----  ---------  --------  -----
Total investments     203,933     2,404   4.72%   245,167     2,467   4.03%
                    ---------  --------  -----  ---------  --------  -----
Total loans           328,693     5,353   6.37%   300,149     4,666   6.17%
                    ---------  --------  -----  ---------  --------  -----
Total interest-
 earning assets       546,522     7,938   5.72%   548,810     7,167   5.20%
Non-interest
 earning assets        38,861                      35,702
Allowance for loan
 losses                (3,044)                     (3,136)
                    ---------                   ---------
  Total average
   assets           $ 582,339                   $ 581,376
                    ---------                   ---------

LIABILITIES
Interest-bearing
 liabilities
NOW, savings, MMDA
 and time less
 than $100K         $ 400,714     3,455   3.42% $ 405,504     2,499   2.44%
Time deposits $100K
 and over              57,243       573   3.97%    42,054       375   3.54%
                    ---------  --------  -----  ---------  --------  -----
Total interest-
 bearing deposits     457,957     4,028   3.49%   447,558     2,874   2.55%
                    ---------  --------  -----  ---------  --------  -----
Total borrowed funds   17,033       146   3.43%    23,082       194   3.36%
                    ---------  --------  -----  ---------  --------  -----
Total interest-
 bearing liabilities  474,990     4,174   3.49%   470,640     3,068   2.59%
                    ---------  --------  -----  ---------  --------  -----
Noninterest-bearing
 liabilities            1,416                       1,681
Demand deposits        64,494                      74,341
Shareholders' equity   41,439                      34,715
  Total average
   liabilities
   and shareholders'---------                   ---------
   equity           $ 582,339                   $ 581,376
                    ---------                   ---------
Net interest income            --------                    --------
 (tax equivalent)              $  3,764                    $  4,099
                               --------                    --------
 Tax equivalent
  adjustment                       (136)                       (146)
                               --------                    --------
Net interest income            $  3,628                    $  3,953
Net interest spread                       2.23%                       2.61%
                                         -----                       -----
Net interest margin                       2.69%                       2.98%
                                         -----                       -----

Contact Information

  • CONTACT:

    First Morris Bank & Trust:
    William Keefe
    EVP / CFO
    (973) 656-2171
    Email Contact