SOURCE: New Jersey Community Bank

New Jersey Community Bank

August 18, 2015 12:15 ET

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 %
                                         

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