SOURCE: New Jersey Community Bank

New Jersey Community Bank

March 08, 2017 12:01 ET

New Jersey Community Bank Reports Fourth Quarter and Full Year Results for 2016

FREEHOLD, NJ--(Marketwired - Mar 8, 2017) - New Jersey Community Bank (OTC PINK: NJCB) (the "Bank") reported a net loss of $361 thousand, or ($0.19) per common share for the three months ended December 31, 2016, compared to a net loss of $2.2 million, or ($1.16) per common share in the fourth quarter of 2015. For the year ended December 31, 2016, the Bank reported net loss of $1.6 million, or ($0.85) per common share compared with a net loss of $2.8 million, or ($1.46) per common share for the year 2015. The losses for the year and the fourth quarter 2016 were negatively impacted largely due to declining yields on earning assets and in part due to one-time expenses associated with professional services associated with complying with the regulatory Consent Orders as well as legal expenses. Without such one-time expenses, the Bank would have reported a loss of $800 thousand for the year 2016.

William H. Placke, Chairman, President and CEO commented, "While we are very gratified at the lifting at mid-year 2016 of the regulatory Consent Orders which we previously reported, we are encouraged since that time with the decline of monthly operating losses attributable mainly to the reduction in one-time expenses and the steady improvement of our consumer and commercial pipeline. We continue to invest in personnel, product development and technology to support our growth objectives."

Over the past two years, management's attention was focused on maintaining sound underwriting standards, monitoring certain concentrations of commercial real estate loans, improving asset quality and credit metrics. In 2017, management will continue to focus on these elements while attempting to grow the loan portfolio. Management will explore opportunities to improve non-interest income and seek out additional efficiencies within its operations to return the Bank to profitability.

Annual Meeting Date

The Board of Directors voted that the Annual Meeting of Shareholders shall be held on April 20, 2017 at the American Hotel in Freehold, New Jersey at 9:30 am. The record date of March 10, 2017 was established for the determination of the shareholders entitled to notice of, and to vote at, the annual meeting.

Balance Sheet Summary
At December 31, 2016, total assets were $105.2 million, a decrease of $5.9 million from December 31, 2015. Total cash and cash equivalents and due from banks-time deposits decreased $4.4 million and $1.8 million, respectively, compared to year-end 2015. Total investment securities decreased $3.2 million from year-end 2015, resulting from the calls of certain available-for-sale investment securities. Total loans receivable increased $4.1 million compared to year-end 2015. The resulting liquidity from the above noted decreases was used to fund the loan growth and meet the outflow of deposits.

Total deposits decreased $4.3 million compared to the levels at year end 2015. Of the total decrease, non-interest bearing deposits decreased $2.2 million and savings, NOW and money market deposits combined decreased $10.3 million, majority of which was offset by $8.2 million increase in total time deposits. The decline in total deposits resulted from the general outflow of deposits, in part, due to the closure of one of the bank's branches in Cranbury, NJ.

Shareholders' equity totaled $10.1 million at December 31, 2016, decreasing $1.6 million from year-end 2015, due to the reported net loss. The Bank's capital ratios remain strong and exceed the regulatory requirements to be deemed a well-capitalized financial institution.

Results of Operations

Fourth Quarter 2016
For the quarter ended December 31, 2016, net interest income totaled $752 thousand, decreasing $123 thousand over the same period in the prior year. The decrease in net interest income was largely a result of declining average loans receivables which impacted the interest income on loans. Interest expense on interest bearing deposits increased moderately due to an increase in average cost of deposits.

The Bank did not record any provision for loan losses during the fourth quarter 2016 and 2015, primarily due to sufficient reserves in allowance for loan loss. The allowance for loan losses at period-end was $1.6 million, or 2.09% of total loans. Asset quality continues to be monitored and management estimates the current level of the allowance for loan losses to be adequate.

Non-interest income totaled $59 thousand for the quarter ended December 31, 2016, a decrease of $25 thousand when compared with the same quarter in the prior year. The decrease in non-interest income was the result of a $19 thousand decline in all other income and $9 thousand decline in fees and service charges on deposit accounts slightly offsetting an increase in loan fees income during the fourth quarter.

Non-interest expense totaled $1.2 million for the quarter ended December 31, 2016, a decrease of $84 thousand from the year-ago same quarter. The decrease in non-interest expense was largely related to decreases in salaries and employee benefits, occupancy and equipment and federal insurance assessment, in part offset by an increase in professional and other fees.

Income tax expense was negligible for the fourth quarter 2016 compared to the fourth quarter 2015 as a result of $1.9 million in valuation allowance recorded against the deferred tax assets since the net operating loss carryback claims have been exhausted.

Full Year 2016
For the full year ended December 31, 2016, net interest income totaled $3.1 million, decreasing $716 thousand over the full prior year. The decrease in net interest income was primarily due to a decline in total interest income resulting from decreases of $10 million in average loans outstanding and $6.2 million in average investment securities, offset by $118 thousand reduction in interest paid on deposits resulting primarily from declining average balances in interest bearing deposits. For the year, average interest earning assets and average interest bearing liabilities declined $20.0 million and $18.5 million, respectively. The yield on interest earning assets declined 4 basis points while the yield on interest bearing deposits increased 5 basis points, year over year. Net interest margin for the year declined 7 basis points to 3.18% over prior year.

The Bank did not record any provision for loan losses during 2016, compared to $710 thousand for the year 2015. The provision for loan loss in the year 2015 was impacted by increased levels of classified loans during the year 2015, as management was addressing the problem credits.

Non-interest income totaled $289 thousand for the year 2016, reflecting a decrease of $50 thousand over the full year 2015, primarily resulting from decreases in fees on deposit accounts and all other income offset by gain on sale of other real estate owned.

Non-interest expense totaled $5.0 million for the full year 2016, an increase of $324 thousand over prior full year, all of which was related to the consulting costs associated with the compliance of the regulatory Consent Order and in part related to legal expenses. Salaries and benefits expense and occupancy and equipment expense declined $95 thousand and $45 thousand, respectively, largely due to the closure of the Cranbury branch location in July 2016. FDIC insurance assessment declined $132 thousand year over year primarily due to a reduction in premium for such insurance. All other operating expenses declined $57 thousand due to management efforts in curtailing operating expenses. Professional and other fees for the year 2016 totaled $1.3 million, an increase of $632 thousand when compared to the prior year. The increase was largely attributable to complying with the regulatory Consent Orders and legal expenses. Excluding the one-time expenses of approximately $800 thousand, professional fees would have totaled $500 thousand, or total non-interest expense would have been $4.2 million, or $500 thousand below last year.

Income tax expense for the year 2016 was negligible when compared to the year 2015. In 2015, although the Bank reported a pretax loss for the year, it had to record an income tax expense of $1.5 million for the year, primarily due to management's decision to provide for the valuation allowance against its deferred tax assets. Please refer to the discussion about the fourth quarter 2015 results for details on the valuation allowance.

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 and Subsidiary      
Selected Consolidated Financial Highlights        
(unaudited)          
    As of or for the Quarters Ended
(in thousands, except per share and percentage data)   12/31/2016   9/30/2016   6/30/2016   3/31/2016   12/31/2015
                                         
Summary of Operations:                                        
  Interest income   $ 939     $ 935     $ 932     $ 995     $ 1,060  
  Interest expense     187       186       170       168       185  
    Net interest income     752       749       762       827       875  
  Provision for loan loss     -       -       -       -       -  
    Net interest income after provision for loan loss     752       749       762       827       875  
  Non-interest income     59       60       107       63       84  
  Non-interest expense     1,170       1,207       1,449       1,173       1,254  
    Loss before income tax expense (benefit)     (359 )     (398 )     (580 )     (283 )     (295 )
  Income tax expense (benefit)     2       -       -       -       1,919  
    Net loss   $ (361 )   $ (398 )   $ (580 )   $ (283 )   $ (2,214 )
                                         
Per Common Share:                                        
      Basic   $ (0.19 )   $ (0.21 )   $ (0.30 )   $ (0.15 )   $ (1.16 )
      Diluted     (0.19 )     (0.21 )     (0.30 )     (0.15 )     (1.16 )
  Book value per share     5.30       5.54       5.75       6.05       6.17  
    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     -1.44 %     -1.53 %     -2.25 %     -1.07 %     -7.39 %
  Return on average common equity     -13.85 %     -14.78 %     -20.49 %     -9.66 %     -63.57 %
  Average equity to average assets     10.40 %     10.37 %     10.99 %     11.05 %     11.62 %
  Risk-based capital:                                        
    Total risk-based capital ratio     14.08 %     14.96 %     15.23 %     15.91 %     15.21 %
    Common equity tier 1 risk-based capital ratio     12.83 %     13.70 %     13.98 %     14.65 %     13.95 %
    Tier 1 risk-based capital ratio     12.83 %     13.70 %     13.98 %     14.65 %     13.95 %
    Tier 1 leverage capital ratio     10.16 %     10.15 %     10.67 %     10.84 %     9.84 %
                                         
Financial Condition:                                        
  Total assets   $ 105,163     $ 101,890     $ 103,279     $ 102,844     $ 111,078  
  Loans, net of unearned income     76,796       71,514       71,343       68,759       72,674  
  Deposits     94,538       90,900       91,795       90,892       98,819  
  Shareholder's equity     10,115       10,571       10,967       11,535       11,770  
                                         
                                         
 
New Jersey Community Bank and Subsidiary    
Consolidated Statements of Financial Condition    
(dollars in thousands, except share data)    
         
   
At Year End December 31,
    2016   2015
Assets                
  Cash and due from banks - non-interest bearing   $ 1,531     $ 1,615  
  Federal funds sold and interest-bearing deposits with banks     5,415       9,736  
      Total Cash and Cash Equivalents     6,946       11,351  
  Due from banks - time deposits     4,175       6,027  
  Investment Securities:                
    Available-for-sale, at fair value     6,152       9,069  
    Held-to-maturity (fair value of $6,263 and $6,633, respectively)     6,255       6,537  
      Total Investment Securities     12,407       15,606  
  Loans Receivable, net of unearned fees     76,796       72,674  
    Less: Allowance for loan losses     (1,608 )     (1,569 )
      Net Loans     75,188       71,105  
  Premises and equipment, net     1,941       2,128  
  Accrued interest receivable     260       276  
  Bank-owned life insurance     3,868       3,774  
  Deferred tax assets, net     43       17  
  Other assets     335       794  
      Total Assets   $ 105,163     $ 111,078  
                 
Liabilities and Shareholders' Equity                
                 
Liabilities                
  Deposits:                
    Non-interest bearing   $ 12,917     $ 15,155  
    Savings, NOW and money market     28,570       38,808  
    Time deposits $250M and over     7,731       6,713  
    Time deposits, other     45,320       38,143  
      Total Deposits     94,538       98,819  
                   
  Accrued interest payable     10       9  
  Other liabilities     500       480  
      Total Liabilities     95,048       99,308  
                 
Shareholders' Equity                
  Common stock, $2 par value; authorized 10,000,000 shares; issued and outstanding 1,908,445 at December 31, 2016 and 2015, respectively     3,817       3,817  
  Surplus     13,866       13,861  
  Accumulated Deficit     (7,505 )     (5,883 )
  Accumulated other comprehensive loss     (63 )     (25 )
    Total Shareholders' Equity     10,115       11,770  
    Total Liabilities and Shareholders' Equity   $ 105,163     $ 111,078  
                 
                 
 
New Jersey Community Bank and Subsidiary      
Consolidated Statements of Operations        
(dollars in thousands, except per share data)(unaudited)        
    Three Months Ended   Year Ended
    December 31,   December 31,
    2016   2015   2016   2015
Interest Income                                
  Loans receivable, including fees   $ 852     $ 954     $ 3,433     $ 4,188  
  Investment securities     66       84       264       366  
  Federal funds sold and interest-bearing deposits with banks     6       9       44       26  
  Due from banks - interest bearing     15       13       60       55  
    Total Interest Income     939       1,060       3,801       4,635  
Interest Expense                                
  Deposits     187       185       711       829  
    Net Interest Income before Provision for Loan Loss     752       875       3,090       3,806  
Provision for Loan Loss     -       -       -       710  
    Net Interest Income after Provision for Loan Loss     752       875       3,090       3,096  
Non-Interest Income                                
  Fees and service charges on deposit accounts     21       30       90       162  
  Loan fee income     6       2       11       12  
  Income from bank owned life insurance     23       24       93       96  
  Gain on sale of other real estate owned     -       -       53       (52 )
  All other income     9       28       42       69  
    Total Non-Interest Income     59       84       289       287  
Non-Interest Expense                                
  Salaries and employee benefits     507       572       2,216       2,311  
  Occupancy and equipment     160       178       716       761  
  Data processing services     60       62       242       211  
  Professional and other fees     340       282       1,290       678  
  Advertising and promotion     6       3       18       8  
  Federal insurance assessment     (4 )     62       134       266  
  Other operating expenses     101       95       383       388  
    Total Non-Interest Expenses     1,170       1,254       4,999       4,623  
    Loss Before Income Taxes     (359 )     (295 )     (1,620 )     (1,240 )
  Income tax expense (benefit)     2       1,919       2       1,542  
Net Loss   $ (361 )   $ (2,214 )   $ (1,622 )   $ (2,782 )
Loss per share:                                
  Basic and diluted   $ (0.19 )   $ (1.16 )   $ (0.85 )   $ (1.46 )
Weighted average number of common shares outstanding                                
  Basic and diluted     1,908       1,908       1,908       1,908  
                                 
                                 
 
New Jersey Community Bank and Subsidiary
Analysis of Consolidated Average Balance Sheet and Net Interest Income
(unaudited)
    For the Three Months Ended
    December 31, 2016   December 31, 2015
    Average       Average   Average       Average
    Balance   Interest   Rate   Balance   Interest   Rate
Interest Earning Assets:                                        
  Loans   $ 72,533     $ 852   4.67 %   $ 74,788     $ 954   5.06 %
  Investment securities     11,947       66   2.19 %     16,132       84   2.08 %
  Federal funds sold and interest-bearing deposits with banks     4,947       6   0.52 %     13,821       9   0.26 %
  Due from banks - time deposits     4,659       15   1.25 %     6,336       13   0.83 %
    Total interest-earning assets     94,086       939   3.97 %     111,077       1,060   3.79 %
Allowance for loan loss     (1,608 )                 (1,921 )            
Cash and due from banks - non-interest bearing     1,311                   1,798              
All other assets     6,379                   8,946              
    Total assets   $ 100,168                 $ 119,900              
                                         
Interest Bearing Liabilities:                                        
  Deposits:                                        
    Savings, NOW and money market   $ 27,664       25   0.36 %   $ 42,761       34   0.32 %
    Time deposits under $100M     12,516       36   1.14 %     12,091       35   1.15 %
    Time deposits $100M and over     39,334       126   1.27 %     36,780       116   1.25 %
      Total interest-bearing deposits     79,515       187   0.94 %     91,632       185   0.80 %
Demand     9,820                   13,862              
Other liabilities     415                   474              
      Total liabilities     89,751                   105,968              
                                         
  Stockholders' equity     10,418                   13,932              
      Total liabilities & stockholders' equity   $ 100,168                 $ 119,900              
Net interest income           $ 752                 $ 875      
                                         
Average interest rate spread                 3.03 %                 2.99 %
                                         
Net interest margin                 3.18 %                 3.12 %
                                         
                                         
 
New Jersey Community Bank and Subsidiary
Analysis of Consolidated Average Balance Sheet and Net Interest Income
(unaudited)
    For the Year Ended
    December 31, 2016   December 31, 2015
    Average       Average   Average       Average
    Balance   Interest   Rate   Balance   Interest   Rate
Interest Earning Assets:                                        
  Loans   $ 70,685     $ 3,433   4.86 %   $ 80,649     $ 4,188   5.19 %
  Investment securities     11,797       264   2.24 %     18,044       366   2.03 %
  Federal funds sold and interest bearing deposits with banks     9,111       44   0.49 %     11,183       26   0.23 %
  Due from banks - interest bearing     5,322       60   1.13 %     7,059       55   0.78 %
    Total interest-earning assets     96,916       3,801   3.92 %     116,935       4,635   3.96 %
Allowance for loan loss     (1,584 )                 (1,671 )            
Cash and due from banks - non-interest bearing     1,416                   1,680              
All other assets     7,283                   9,045              
    Total assets   $ 104,030                 $ 125,989              
                                         
Interest Bearing Liabilities:                                        
  Deposits:                                        
    Savings, NOW and money market   $ 31,047       105   0.34 %   $ 47,699       225   0.47 %
    Time deposits under $100M     12,130       138   1.14 %     12,221       135   1.10 %
    Time deposits $100M and over     36,512       469   1.28 %     38,281       469   1.23 %
      Total deposits     79,688       712   0.89 %     98,201       829   0.84 %
                                         
Demand     12,132                   12,963              
Other liabilities     1,155                   476              
      Total liabilities     92,976                   111,640              
                                         
Stockholders' equity     11,055                   14,349              
      Total liabilities & stockholders' equity   $ 104,030                 $ 125,989              
Net interest income           $ 3,090                 $ 3,806      
                                         
Average interest rate spread                 3.03 %                 3.12 %
                                         
Net interest margin                 3.18 %                 3.25 %
                                         
                                         

Contact Information

  • Contacts at New Jersey Community Bank:

    William H. Placke
    Chairman, President and CEO
    bplacke@njcbk.com

    Naqi A. Naqvi
    Executive Vice President & CFO
    nnaqvi@njcbk.com