SOURCE: New Jersey Community Bank

April 30, 2014 17:35 ET

# New Jersey Community Bank Reports First Quarter 2014 Results

FREEHOLD, NJ--(Marketwired - Apr 30, 2014) - New Jersey Community Bank (OTCQB: NJCB) (the "Bank") reported net loss of $8 thousand for the three months ended March 31, 2014, compared with a net income of$90 thousand, or $0.05 per common share, for the same period in the prior year. The earnings for the quarter were negatively impacted due to increased levels of non-accruing loans, which in turn affected the interest income on loans. Net interest margin decreased 16 basis points year over year largely due to a decline of 23 basis points in yield of interest-earning assets. Robert D. O'Donnell, Chairman and CEO, commented that, "The Bank has experienced growing pains, it is no secret that the asset quality and the loan administration issues facing us over the last several months required a continued attention to address these issues. In response to this dilemma, the path chosen by management was not the "quick-fix" but a sustained strategy to identify and repair. I have witnessed our staff respond to these challenges by working harder and smarter at every level in our institution to responsibly produce the results that will ultimately allow us to make our way out of these issues." Balance Sheet Summary At March 31, 2014, total assets were$139.7 million, a decline of $4.8 million from December 31, 2013. Total cash and cash equivalents declined$4.5 million compared to year end 2013, offsetting a similar decline in total deposits. Due from banks -- time deposits decreased $1.7 million offset by increases in investment securities of$394 thousand and loans receivable of $786 thousand compared to year end 2013. Total deposits decreased$4.8 million compared to the levels at year end 2013. Majority of the decrease resulted from the maturing time deposits which were paid off utilizing the excess levels of cash and cash equivalents during the first quarter of 2014. During the quarter, non-interest bearing deposits declined $1.4 million while savings, NOW and money market deposits declined$188 thousand compared to year end 2013.

Shareholders' equity totaled $14.3 million at March 31, 2014, increasing moderately from year-end 2013. The Bank's capital ratios remain strong and exceed the regulatory requirements to be deemed a well capitalized financial institution. Results of Operations For the quarter ended March 31, 2014, net interest income totaled$1.1 million, decreasing marginally over the same period in the prior year. At March 31, 2014, net interest margin was 3.40%, a decrease of 16 basis points compared to the same period a year ago resulting from continued low levels of interest rates. At March 31, 2014, yield on average earning assets declined 23 basis points to 4.16% while the cost of interest-bearing deposits declined 7 basis points to 0.90%, compared to the same period in the prior year primarily due to low interest rates.

The provision for loan loss was $60 thousand for the first quarter 2014, an increase of$25 thousand compared to a year-ago quarter. The allowance for loan loss at period-end was $1.7 million, or 1.76% of total loans. The asset quality deteriorated during the quarter that resulted in increasing the provision for loan loss for the quarter, the current level of the allowance for loan loss is considered to be adequate. Non-interest income increased$45 thousand to $131 thousand for the quarter ended March 31, 2014, compared with$86 thousand for the same quarter in the prior year. Majority of such increase is directly related to the increase in loan fees as well as fees and service charges on deposit accounts and all other income.

Non-interest expense totaled $1.2 million for the quarter ended March 31, 2014, an increase of$159 thousand, from a year-ago quarter. Of the total increase in non-interest expense, salaries and employee benefits increased $59 thousand as a result of increases in staff compensation and health costs. The professional fees and federal insurance assessment each increased$31 thousand due to increase in cost of professional services utilized by the Bank and the changes in insurance assessment rates. Occupancy and equipment expense increased $27 thousand as a result of increases in lease rentals and routine building maintenance. About the Bank New Jersey Community Bank is a state-chartered commercial bank headquartered in Freehold, New Jersey. The Bank opened for business in July 2008 and operates three full-service banking offices in the central New Jersey counties of Monmouth and Middlesex. The Bank provides traditional commercial and retail banking services to small businesses and consumers. For additional information about New Jersey Community Bank, please visit www.njcbk.com or call 732-431-2265. Forward-Looking Statements This release contains forward-looking statements relating to present or future trends or factors affecting the banking industry, and specifically the financial condition and results of operations, including without limitation, statements relating to the earnings outlook of the Bank, as well as its operations, markets and products. Actual results could differ materially from those indicated. Among the important factors that could cause results to differ materially are interest rate changes, change in economic climate, which could materially impact credit quality trends and the ability to generate loans, changes in the mix of the Bank's business, competitive pressures, changes in accounting, tax or regulatory practices or requirements, resolution of tax reviews, and those risk factors detailed in the Bank's periodic reports. The Bank undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release.  New Jersey Community Bank Selected Financial Highlights (unaudited) As of or for the Quarters Ended (in thousands, except per share and percentage data) 3/31/2014 12/31/2013 9/30/2013 6/30/2013 3/31/2013 Summary of Operations: Interest income$ 1,367 $1,187$ 1,456 $1,436$ 1,409 Interest expense 251 244 223 228 267 Net interest income 1,116 943 1,233 1,208 1,142 Provision for loan and lease loss 60 660 105 55 35 Net interest income after provision for loan loss 1,056 283 1,128 1,153 1,107 Non-interest income 132 117 128 118 86 Non-interest expense 1,190 3,057 1,041 1,071 1,031 Income before income tax expense (3 ) (2,657 ) 215 200 162 Income tax expense 5 (1,085 ) 93 87 72 Net income $(8 )$ (1,573 ) $122$ 113 $90 Per Common Share(1): Basic$ (0.00 ) $(0.82 )$ 0.06 $0.06$ 0.05 Diluted (0.00 ) (0.82 ) 0.06 0.06 0.05 Book value per share 7.51 7.44 8.29 8.29 8.31 Average shares outstanding 1,908 1,908 1,908 1,908 1,908 Average diluted shares outstanding 1,908 1,908 1,908 1,908 1,908 Selected Financial Ratios: Return on average assets -0.02 % -4.48 % 0.37 % 0.35 % 0.26 % Return on average common equity -0.22 % -39.72 % 3.09 % 2.82 % 2.27 % Average equity to average assets 10.15 % 11.28 % 11.93 % 12.33 % 11.65 % Risk-based capital: Total risk-based capital ratio 13.17 % 13.62 % 15.67 % 16.10 % 16.20 % Tier 1 risk-based capital ratio 11.92 % 12.36 % 14.42 % 14.87 % 15.00 % Tier 1 leverage capital ratio 9.43 % 9.76 % 11.86 % 12.06 % 11.38 % Financial Condition: Total assets $139,670$ 144,503 $135,546$ 130,877 $130,946 Loans, net of unearned income 95,720 94,934 92,978 91,515 90,736 Deposits 123,123 127,940 119,125 114,675 114,614 Shareholder's equity 14,330 14,193 15,813 15,810 15,848  (1) Data have been restated to give effect to the 5% stock dividend declared and paid in 2013.  New Jersey Community Bank Statements of Financial Condition (dollars in thousands, except share data) March 31, December 31, 2014 2013 Assets (unaudited) Cash and due from banks - non-interest bearing$ 2,037 $1,927 Federal funds sold and interest-bearing deposits with banks 10,104 14,710 Total Cash and Cash Equivalents 12,141 16,637 Due from banks - time deposits 6,126 7,867 Investment Securities: Available-for-sale 14,741 14,644 Held-to-maturity 3,463 3,166 Total Investment Securities 18,204 17,810 Loans Receivable, net of unearned fees 95,720 94,934 Less: Allowance for loan losses (1,689 ) (1,982 ) Net Loans 94,031 92,952 Premises and equipment, net 2,263 2,254 Accrued interest receivable 331 338 Bank-owned life insurance 3,603 3,579 Deferred tax assets 2,007 2,251 Other assets 964 815 Total Assets$ 139,670 $144,503 Liabilities and Shareholders' Equity Liabilities Deposits: Non-interest bearing$ 11,896 $13,270 Savings, NOW and money market 43,328 43,140 Time deposits$100M and over 50,984 53,601 Time deposits, other 16,915 17,929 Total Deposits 123,123 127,940 Accrued interest payable 5 5 Other liabilities 2,212 2,365 Total Liabilities 125,341 130,310 Shareholders' Equity Common stock, $2 par value; authorized 10,000,000 shares; issued and outstanding 1,908,445 shares, respectively 3,817 3,817 Surplus 13,797 13,772 Accumulated Deficit (3,041 ) (3,033 ) Accumulated other comprehensive income (loss) (243 ) (363 ) Total Shareholders' Equity 14,330 14,193 Total Liabilities and Shareholders' Equity$ 139,670 $144,503  New Jersey Community Bank Statements of Operations (dollars in thousands, except per share data)(unaudited) Three Month Ended March 31, 2014 2013 Interest Income Loans receivable, including fees$ 1,254 $1,324 Investment securities 96 64 Federal funds sold and interest-bearing deposits with banks 7 9 Due from banks - interest bearing 10 12 Total Interest Income 1,367 1,409 Interest Expense Deposits 251 267 Net Interest Income before Provision for Loan Loss 1,116 1,142 Provision for Loan Loss 60 35 Net Interest Income after Provision for Loan Loss 1,056 1,107 Non-Interest Income Fees and service charges on deposit accounts 75 59 Loan fee income 20 3 All other income 37 24 Total Non-Interest Income 131 86 Non-Interest Expense Salaries and employee benefits 652 593 Occupancy and equipment 212 185 Data processing services 47 43 Professional and other fees 117 86 Advertising and promotion 5 6 Federal insurance assessment 60 29 Other operating expenses 97 89 Total Non-Interest Expenses 1,190 1,031 Income Before Income Tax Expense (3 ) 162 Income tax expense 5 72 Net Income$ (8 ) $90 Income per share: Basic and diluted$ (0.00 ) $0.05 Weighted average number of common shares outstanding Basic and diluted 1,908 1,908  New Jersey Community Bank Analysis of Average Balance Sheet and Net Interest Income (unaudited) For the Three Months Ended March 31, 2014 March 31, 2013 Average Average Average Average Balance Interest Rate Balance Interest Rate Interest Earning Assets: Loans$ 95,630 $1,253 5.32 %$ 91,315 $1,324 5.88 % Investment securities 17,795 96 2.16 % 13,991 64 1.83 % Federal funds sold and interest-bearing deposits with banks 12,804 7 0.22 % 16,485 9 0.22 % Due from banks - time deposits 6,879 10 0.61 % 8,155 12 0.60 % Total interest-earning assets 133,108 1,367 4.16 % 129,946 1,408 4.39 % Allowance for loan loss (1,848 ) (1,214 ) Cash and due from banks - non-interest bearing 1,450 1,305 All other assets 8,128 5,485 Total assets$ 140,838 $135,522 Interest Bearing Liabilities: Deposits: Savings, NOW and money market$ 43,235 49 0.46 % $42,201 54 0.52 % Time deposits$100M and over 52,299 149 1.15 % 50,629 145 1.16 % Time deposits, other 17,410 54 1.25 % 18,434 68 1.50 % Total interest-bearing deposits 112,944 252 0.90 % 111,264 267 0.97 % Demand 12,262 7,985 Other liabilities 1,337 482 Total liabilities 126,543 119,731 Stockholders' equity 14,293 15,791 Total liabilities & stockholders' equity $140,836$ 135,522 Net interest income $1,115$ 1,142 Average interest rate spread 3.26 % 3.42 % Net interest margin 3.40 % 3.56 %