New Jersey Community Bank Reports Second Quarter 2015 Results; Management Changes

FREEHOLD, NJ--(Marketwired - Aug 18, 2015) - New Jersey Community Bank (OTCQB: NJCB) (the "Bank") reported a net loss of $41 thousand, or ($0.02) per common share for the three months ended June 30, 2015, compared to earnings of $51 thousand, or $0.03 per common share in the second quarter of 2014. For the first six months of 2015, the Bank reported net loss of $87 thousand, or ($0.05) per common share compared with net income of $42 thousand, or $0.02 per common share for the same period in the prior year. The earnings for first six months and the second quarter 2014 were positively impacted by a reversal of $500 thousand in litigation expense recorded at year-end 2013, as the Bank reached a settlement ending the legal proceeding.

The results for the quarter were negatively impacted by a decline in interest income on loans as a result of a decrease in total loans, coupled with a decline in fee income on deposit accounts. The decline in interest income was largely offset by decreases in interest expense on deposits and provision for loan loss. Net interest margin declined 9 basis points year over year primarily due to a decline in yield on earning assets resulting from the reduction in interest income on loans.

Management continues to focus on reducing certain concentrations of commercial real estate loans while attempting to increase the commercial and industrial loans segment. In addition, management is taking steps to repair the classified assets in an effort to improve asset quality and credit metrics. While management is focused on making certain enhancements to its infrastructure, including those related to its online banking capability, it continues to seek out additional efficiencies within its operations.

Balance Sheet Summary
At June 30, 2015, total assets were $132.1 million, an increase of $10.0 million from December 31, 2014. Total cash and cash equivalents and due from banks-time deposits increased $9.6 million and $1.7 million, respectively, compared to year end 2014, primarily as a result of increase in total deposits. Total investment securities increased $3.3 million from year-end 2014, as management tries to seek avenues to improve interest income while utilizing excess liquidity. Total loans receivable decreased $4.2 million compared to year end 2014, reflecting principal payoffs exceeding new loan originations, as the Bank continues to focus on resolving existing credit issues.

Total deposits increased $10.1 million compared to the levels at year end 2014. Of the total increase, non-interest bearing deposits increased $5.6 million and savings, NOW and money market deposits combined increased $5.2 million, partially offset by $0.7 million decline in total time deposits resulting from maturing time deposits which were not renewed.

Shareholders' equity totaled $14.4 million at June 30, 2015, decreasing moderately from year-end 2014 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
For the quarter ended June 30, 2015, net interest income totaled $1.0 million, decreasing $106 thousand over the same period in the prior year. The decrease in net interest income was a direct result of declining average loans receivables which impacted the interest income on loans. Net interest margin decreased 9 basis points to 3.27% for the quarter ended June 30, 2015, over the comparable quarter in 2014. Average yield on earning assets was 4.12%, decreasing 13 basis points over the prior year and average rate on paying liabilities was 0.85%, a moderate decline over the comparable quarter in the prior year.

The Bank did not record any provision for loan loss during the second quarter 2015 primarily due to declining balances in the loan portfolio. Compared to the second quarter 2014, the provision for loan loss decreased $275 thousand. The allowance for loan loss at period-end was $1.6 million, or 1.94% of total loans. Asset quality continues to be monitored and management estimates the current level of allowance for loan loss to be adequate.

Non-interest income totaled $86 thousand for the quarter ended June 30, 2015, a decline of $33 thousand compared with the same quarter in the prior year resulting from decreased levels of fees and service charges on deposit accounts.

Non-interest expense totaled $1.2 million for the quarter ended June 30, 2015, an increase of $299 thousand from the year-ago same quarter. The increase in non-interest expense was directly related to the reversal of $500 thousand in a litigation expense recorded in the second quarter of 2014 related to a judgment that was subsequently settled at a cost lower than the accrued expense. Had it not been for this one-time adjustment to the operating expenses in 2014, non-interest expenses would have decreased $200 thousand year over year.

Salaries and employee benefits decreased $44 thousand due to a reduction in executive level compensation. Data processing costs decreased $36 thousand quarter over quarter as a result of onetime expenses associated with the installation of a new core processing system in 2014. Professional and other fees decreased $84 thousand, in part due to consulting services utilized by the Bank in connection with complying with the Consent Order among the Bank, the FDIC and the NJ Department of Banking and Insurance during 2014. All other expenses increased $468 thousand primarily due to absence of a non-recurring litigation cost reversal of $500 thousand recorded during the second quarter of 2014.

The Bank also announced that Mr. Robert D. O'Donnell is no longer serving as Chairman of the Board of the Bank. Mr. William H. Placke, President and CEO, has been named Chairman as the Bank continues its previously announced search for a new President and CEO. Mr. O'Donnell remains on the Board of Directors of the Bank.

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)				6/30/2015				3/31/2015				12/31/2014				9/30/2014				6/30/2014
Summary of Operations:
	Interest income			$	1,238			$	1,219			$	1,218			$	1,339			$	1,372
	Interest expense				216				211				207				230				244
		Net interest income			1,022				1,008				1,011				1,109				1,128
	Provision for loan and lease loss				-				15				263				30				275
		Net interest income after provision for loan loss			1,022				993				748				1,079				853
	Non-interest income				86				80				78				92				119
	Non-interest expense				1,175				1,149				1,052				1,141				876
		Income before income tax expense			(67	)			(76	)			(226	)			30				96
	Income tax expense				(26	)			(30	)			(103	)			18				45
		Net income		$	(41	)		$	(46	)		$	(123	)		$	12			$	51
Per Common Share:
		Basic		$	(0.02	)		$	(0.02	)		$	(0.06	)		$	0.01			$	0.03
		Diluted			(0.02	)			(0.02	)			(0.06	)			0.01				0.03
	Book value per share				7.56				7.62				7.60				7.63				7.61
		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				-0.13	%			-0.15	%			-0.39	%			0.04	%			0.15	%
	Return on average common equity				-1.13	%			-1.26	%			-3.35	%			0.33	%			1.42	%
	Average equity to average assets				11.21	%			11.53	%			11.72	%			11.03	%			10.34	%
	Risk-based capital:
		Total risk-based capital ratio			14.51	%			14.51	%			14.45	%			14.41	%			13.41	%
		Tier 1 risk-based capital ratio			13.25	%			13.26	%			13.19	%			13.16	%			12.16	%
		Tier 1 leverage capital ratio			10.20	%			10.48	%			10.54	%			10.15	%			9.61	%
Financial Condition:
	Total assets			$	132,065			$	129,317			$	122,018			$	128,171			$	138,555
	Loans, net of unearned income				81,914				83,058				86,111				86,472				94,166
	Deposits				117,205				114,293				107,088				113,192				123,698
	Shareholder's equity				14,420				14,543				14,495				14,554				14,511

New Jersey Community Bank
Statements of Financial Condition
(dollars in thousands, except share data)
							June 30,				December 31,
							2015				2014
Assets							(unaudited)
		Cash and due from banks - non-interest bearing					$	3,873			$	1,107
		Federal funds sold and interest-bearing deposits with banks						11,598				4,728
					Total Cash and Cash Equivalents			15,471				5,835
		Due from banks - time deposits						7,316				5,577
		Investment Securities:
			Available-for-sale					13,459				13,680
			Held-to-maturity					6,555				3,043
					Total Investment Securities			20,014				16,723
		Loans Receivable, net of unearned fees						81,914				86,111
				Less: Allowance for loan losses				(1,591	)			(1,576	)
					Net Loans			80,323				84,535
		Premises and equipment, net						2,238				2,361
		Accrued interest receivable						295				277
		Bank-owned life insurance						3,726				3,678
		Deferred tax assets						1,540				1,589
		Other assets						1,142				1,443
					Total Assets		$	132,065			$	122,018
Liabilities and Shareholders' Equity
	Liabilities
		Deposits:
			Non-interest bearing				$	16,281			$	10,670
			Savings, NOW and money market					50,199				45,028
			Time deposits $100M and over					38,454				38,750
			Time deposits, other					12,271				12,640
					Total Deposits			117,205				107,088
		Accrued interest payable						13				10
		Other liabilities						427				425
					Total Liabilities			117,645				107,523
	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						13,858				13,854
		Accumulated Deficit						(3,188	)			(3,101	)
		Accumulated other comprehensive loss						(67	)			(75	)
					Total Shareholders' Equity			14,420				14,495
					Total Liabilities and Shareholders' Equity		$	132,065			$	122,018

New Jersey Community Bank
Statements of Operations
(dollars in thousands, except per share data)(unaudited)
					Three Months Ended								For the Year Ended
					June 30,								June 30,
					2015				2014				2015				2014
Interest Income
	Loans receivable, including fees				$	1,121			$	1,259			$	2,228			$	2,512
	Investment securities					97				98				185				194
	Federal funds sold and interest-bearing deposits with banks					5				6				28				13
	Due from banks - interest bearing					15				9				9				21
			Total Interest Income			1,238				1,372				2,450				2,740
Interest Expense
	Deposits					216				244				427				495
			Net Interest Income before Provision for Loan Loss			1,022				1,128				2,023				2,245
Provision for Loan Loss						-				275				15				335
			Net Interest Income after Provision for Loan Loss			1,022				853				2,008				1,910
Non-Interest Income
	Fees and service charges on deposit accounts					46				77				86				152
	Loan fee income					2				4				16				23
	Income from bank owned life insurance					24				25				48				50
	All other income					14				13				24				24
			Total Non-Interest Income			86				119				174				249
Non-Interest Expense
	Salaries and employee benefits					593				637				1,172				1,290
	Occupancy and equipment					190				188				396				401
	Data processing services					56				92				110				139
	Professional and other fees					161				245				271				371
	Advertising and promotion					2				3				3				8
	Federal insurance assessment					69				75				135				135
	Other operating expenses					104				(364	)			237				(277	)
			Total Non-Interest Expenses			1,175				876				2,324				2,067
			Loss Before Income Tax Benefit			(67	)			96				(142	)			92
	Income tax benefit					(26	)			45				(55	)			50
Net Loss					$	(41	)		$	51			$	(87	)		$	42
Loss per share:
	Basic and diluted				$	(0.02	)		$	0.03			$	(0.05	)		$	0.02
Weighted average number of common shares outstanding
	Basic and diluted					1,908				1,908				1,908				1,908

New Jersey Community Bank
Analysis of Average Balance Sheet and Net Interest Income
(unaudited)
					For the Three Months Ended
					June 30, 2015										June 30, 2014
					Average							Average			Average							Average
					Balance				Interest			Rate			Balance				Interest			Rate
Interest Earning Assets:
	Loans				$	83,424			$	1,121		5.39	%		$	94,793			$	1,259		5.33	%
	Investment securities					19,389				97		2.00	%			18,278				98		2.14	%
	Federal funds sold and interest-bearing deposits with banks					9,658				5		0.21	%			10,457				6		0.23	%
	Due from banks - time deposits					7,995				15		0.75	%			5,929				9		0.61	%
			Total interest-earning assets			120,466				1,238		4.12	%			129,457				1,372		4.25	%
Allowance for loan loss						(1,591	)									(1,551	)
Cash and due from banks - non-interest bearing						1,528										2,148
All other assets						9,039										9,126
			Total assets		$	129,442									$	139,180
Interest Bearing Liabilities:
	Deposits:
		Savings, NOW and money market			$	50,493				65		0.52	%		$	44,723				51		0.46	%
		Time deposits $100M and over				38,870				118		1.22	%			50,972				147		1.16	%
		Time deposits, other				12,230				33		1.08	%			15,572				46		1.18	%
			Total interest-bearing deposits			101,593				216		0.85	%			111,267				244		0.88	%
Demand						12,872										11,923
Other liabilities						463										1,598
			Total liabilities			114,928										124,788
	Stockholders' equity					14,514										14,392
			Total liabilities & stockholders' equity		$	129,442									$	139,180
Net interest income									$	1,022									$	1,128
Average interest rate spread												3.27	%									3.37	%
Net interest margin												3.40	%									3.49	%