SOURCE: New Jersey Community Bank

New Jersey Community Bank

August 04, 2016 17:33 ET

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 %
                                         
                                         

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