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	%