New Jersey Community Bank Reports Second Quarter 2016 Results

FREEHOLD, NJ--(Marketwired - Aug 4, 2016) - New Jersey Community Bank (OTCQB: NJCB) (the "Bank") reported a net loss of $580 thousand, or ($0.30) per common share for the three months ended June 30, 2016, compared to a net loss of $41 thousand, or ($0.02) per common share in the second quarter of 2015. For the first six months of 2016, the Bank reported net loss of $863 thousand, or ($0.45) per common share compared with a net loss of $87 thousand, or ($0.05) per common share for the same period in the prior year. The losses for first six months and the second quarter 2016 were negatively impacted by higher level of consulting expense associated with complying with the Consent Orders among the Bank, the FDIC and the NJ Department of Banking and Insurance during 2016.

The results for the quarter were further negatively impacted by a decline in interest income on loans as a result of a decrease in total loans, coupled with increased non-interest expenses. Net interest margin during the second quarter 2016, declined 26 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's focus remains on maintaining sound underwriting standards, monitoring certain concentrations of commercial real estate loans, continuing to improve asset quality and credit metrics while attempting to grow other segments of the loan portfolio. Simultaneously, management continuous to seek out additional efficiencies within its operations to return the Bank to profitability.

Balance Sheet Summary
At June 30, 2016, total assets were $103.3 million, a decrease of $7.8 million from December 31, 2015. Total cash and cash equivalents and due from banks-time deposits decreased $610 thousand and $258 thousand, respectively, compared to year end 2015, largely as a result of decrease in overnight federal funds sold. Total investment securities decreased $5.0 million from year-end 2015, resulting from the calls of certain available-for-sale investment securities. Total loans receivable decreased $1.3 million compared to year end 2015, reflecting principal payoffs exceeding new loan originations, as the Bank continues to focus on resolving existing credit issues.

Total deposits decreased $7.0 million compared to the levels at year end 2015. Of the total decrease, non-interest bearing deposits decreased $2.5 million and savings, NOW and money market deposits combined decreased $8.1 million, partially offset by $3.6 million increase in total time deposits. The decline in total deposits resulted from the general outflow of deposits and, in part, due to the anticipated closure of one of the bank's branch in Cranbury, NJ.

Shareholders' equity totaled $11.0 million at June 30, 2016, decreasing $804 thousand 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
For the quarter ended June 30, 2016, net interest income totaled $752 thousand, decreasing $270 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 26 basis points to 3.14% for the quarter ended June 30, 2016, over the comparable quarter in 2015. Average yield on earning assets was 3.85%, decreasing 27 basis points over the prior year and average rate on paying liabilities was 0.87%, 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 2016 or 2015, primarily due to declining balances in the loan portfolio coupled with slight improvement in asset quality. The allowance for loan loss at period-end was $1.6 million, or 2.20% 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 $116 thousand for the quarter ended June 30, 2016, an increase of $30 thousand compared with the same quarter in the prior year. The increase in non-interest income was the direct result of $53 thousand in gain on sale of other real estate owned recorded during the second quarter 2016, in part offset by decreased levels of fees and service charges on deposit accounts.

Non-interest expense totaled $1.4 million for the quarter ended June 30, 2016, an increase of $273 thousand from the year-ago same quarter. The increase in non-interest expense was directly related to the consulting expenses associated with satisfying the requirements of the FDIC Consent Orders. Salaries and employee benefits decreased $23 thousand due to a reduction in executive level compensation. Professional and other fees, which includes consulting costs, increased $300 thousand, due to consulting services utilized by the Bank in connection with complying with the Consent Orders among the Bank, the FDIC and the NJ Department of Banking and Insurance during the first six months of 2016. All other expenses combined decreased moderately compared with the second quarter of 2015.

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)				6/30/2016				3/31/2016				12/31/2015				9/30/2015				6/30/2015
Summary of Operations:
	Interest income			$	921			$	995			$	1,060			$	1,118			$	1,238
	Interest expense				169				168				185				217				216
		Net interest income			752				827				875				901				1,022
	Provision for loan loss				-				-				-				695				-
		Net interest income after provision for loan loss			740				827				875				206				1,022
	Non-interest income				128				63				84				88				86
	Non-interest expense				1,448				1,173				1,254				1,097				1,175
		Loss before income tax expense (benefit)			(580	)			(283	)			(295	)			(803	)			(67	)
	Income tax expense (benefit)				-				-				1,919				(322	)			(26	)
		Net loss		$	(580	)		$	(283	)		$	(2,214	)		$	(481	)		$	(41	)
Per Common Share:
		Basic		$	(0.30	)		$	(0.15	)		$	(1.16	)		$	(0.25	)		$	(0.02	)
		Diluted			(0.30	)			(0.15	)			(1.16	)			(0.25	)			(0.02	)
	Book value per share				5.75				6.05				6.17				7.35				7.56
	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				-2.25	%			-1.07	%			-7.39	%			-1.50	%			-0.13	%
	Return on average common equity				-20.49	%			-9.66	%			-63.57	%			-13.35	%			-1.13	%
	Average equity to average assets				10.99	%			11.05	%			11.62	%			11.21	%			11.21	%
	Risk-based capital:
		Total risk-based capital ratio			15.23	%			15.91	%			15.21	%			15.20	%			14.62	%
		Common equity tier 1 risk-based capital ratio			13.98	%			14.65	%			13.95	%			-				-
		Tier 1 risk-based capital ratio			13.98	%			14.65	%			13.95	%			13.92	%			13.26	%
		Tier 1 leverage capital ratio			10.67	%			10.84	%			9.84	%			9.83	%			10.20	%
Financial Condition:
	Total assets			$	103,279			$	102,844			$	111,078			$	126,250			$	132,065
	Loans, net of unearned income				71,343				68,759				72,674				77,092				81,914
	Deposits				91,795				90,892				98,819				111,779				117,205
	Shareholder's equity				10,967				11,535				11,770				14,021				14,420

New Jersey Community Bank
Statements of Financial Condition
(dollars in thousands, except share data)
						June 30,				December 31,
						2016				2015
Assets						(unaudited)
	Cash and due from banks - non-interest bearing					$	1,785			$	1,615
	Federal funds sold and interest-bearing deposits with banks						8,956				9,736
			Total Cash and Cash Equivalents				10,741				11,351
	Due from banks - time deposits						5,769				6,027
	Investment Securities:
		Available-for-sale					4,326				9,069
		Held-to-maturity					6,270				6,537
			Total Investment Securities				10,596				15,606
	Loans Receivable, net of unearned fees						71,343				72,674
		Less: Allowance for loan losses					(1,569	)			(1,569	)
			Net Loans				69,774				71,105
	Premises and equipment, net						2,020				2,128
	Accrued interest receivable						250				276
	Bank-owned life insurance						3,821				3,774
	Deferred tax assets						-				17
	Other assets						308				794
				Total Assets		$	103,279			$	111,078
Liabilities and Shareholders' Equity
	Liabilities
		Deposits:
			Non-interest bearing			$	12,651			$	15,155
			Savings, NOW and money market				30,655				38,808
			Time deposits $250M and over				7,490				6,713
			Time deposits, other				40,999				38,143
				Total Deposits			91,795				98,819
		Accrued interest payable					9				9
		Other liabilities					508				480
				Total Liabilities			92,312				99,308
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						13,864				13,861
	Accumulated Deficit						(6,746	)			(5,883	)
	Accumulated other comprehensive income (loss)						32				(25	)
				Total Shareholders' Equity			10,967				11,770
				Total Liabilities and Shareholders' Equity		$	103,279			$	111,078

New Jersey Community Bank
Statements of Operations
(dollars in thousands, except per share data)(unaudited)
				Three Months Ended								Six Months Ended
				June 30,								June 30,
				2016				2015				2016				2015
Interest Income
	Loans receivable, including fees			$	831			$	1,121			$	1,714			$	2,228
	Investment securities				62				97				136				185
	Federal funds sold and interest-bearing deposits with banks				12				5				25				28
	Due from banks - interest bearing				16				15				29				9
		Total Interest Income			921				1,238				1,904				2,450
Interest Expense
	Deposits				169				216				337				427
		Net Interest Income before Provision for Loan Loss			752				1,022				1,567				2,023
Provision for Loan Loss					-				-				-				15
		Net Interest Income after Provision for Loan Loss			752				1,022				1,567				2,008
Non-Interest Income
	Fees and service charges on deposit accounts				23				46				46				86
	Loan fee income				3				2				22				16
	Income from bank owned life insurance				24				24				47				48
	Gain on sale of other real estate owned				53				-				53				-
	All other income				13				14				23				24
		Total Non-Interest Income			116				86				191				174
Non-Interest Expense
	Salaries and employee benefits				570				593				1,176				1,172
	Occupancy and equipment				199				190				387				396
	Data processing services				62				56				122				110
	Professional and other fees				461				161				623				271
	Advertising and promotion				6				2				9				3
	Federal insurance assessment				54				69				110				135
	Other operating expenses				96				104				194				237
		Total Non-Interest Expenses			1,448				1,175				2,621				2,324
		Loss Before Income Taxes			(580	)			(67	)			(863	)			(142	)
	Income tax expense (benefit)				-				(26	)			-				(55	)
Net Loss				$	(580	)		$	(41	)		$	(863	)		$	(87	)
Loss per share:
	Basic and diluted			$	(0.30	)		$	(0.02	)		$	(0.45	)		$	(0.05	)
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, 2016										June 30, 2015
					Average							Average			Average							Average
					Balance				Interest			Rate			Balance				Interest			Rate
Interest Earning Assets:
	Loans				$	69,060			$	831		4.84	%		$	83,424			$	1,121		5.39	%
	Investment securities					11,189				62		2.23	%			19,389				97		2.00	%
	Federal funds sold and interest-bearing deposits with banks					10,360				12		0.48	%			9,658				5		0.21	%
	Due from banks - time deposits					5,608				16		1.12	%			7,995				15		0.75	%
			Total interest-earning assets			96,217				921		3.85	%			120,466				1,238		4.12	%
Allowance for loan loss						(1,569	)									(1,591	)
Cash and due from banks - non-interest bearing						1,497										1,528
All other assets						6,869										9,039
			Total assets		$	103,014									$	129,442
Interest Bearing Liabilities:
	Deposits:
		Savings, NOW and money market			$	31,932				26		0.33	%		$	50,493				65		0.52	%
		Time deposits				45,930				143		1.25	%			51,100				151		1.19	%
			Total interest-bearing deposits			77,862				169		0.87	%			101,593				216		0.85	%
Demand						13,432										12,872
Other liabilities						401										463
			Total liabilities			91,694										114,928
	Stockholders' equity					11,319										14,514
			Total liabilities & stockholders' equity		$	103,014									$	129,442
Net interest income									$	752									$	1,022
Average interest rate spread												2.98	%									3.27	%
Net interest margin												3.14	%									3.40	%