New Jersey Community Bank Reports Third Quarter 2016 Results

FREEHOLD, NJ--(Marketwired - Nov 17, 2016) -  New Jersey Community Bank (OTCQB: NJCB) (the "Bank") reported a net loss of $398 thousand, or ($0.21) per common share for the three months ended September 30, 2016, compared to a net loss of $481 thousand, or ($0.25) per common share in the third quarter of 2015. For the nine months ended September 30, 2016, the Bank reported net loss of $1.3 million, or ($0.66) per common share compared with a net loss of $568 thousand, or ($0.30) per common share for the same period in the prior year. The losses for first nine months and the third quarter 2016 were negatively impacted by higher level of consulting expense associated with complying with the regulatory Consent Orders as well as legal expenses.

During the third quarter, the FDIC and the NJ Department of Banking lifted both the Consent Orders dated March 24, 2014 and July 30, 2015, for satisfactorily complying with the requirements of the Orders. Mr. William H. Placke, Chairman, President and CEO commented, "We are very pleased that the Consent Orders have been lifted, as it suggests the progress we have made in strengthening the core elements of our bank. It was a result of untiring efforts on the part of our Board of Directors, management and the staff of the Bank. We can now focus our attention on building our customer base of the Bank and returning it to profitability while continuing to maintain safe and sound banking practices."

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 September 30, 2016, total assets were $101.9 million, a decrease of $9.2 million from December 31, 2015. Total cash and cash equivalents and due from banks-time deposits decreased $1.9 million and $1.1 million, respectively, compared to year end 2015, largely as a result of decreases in overnight federal funds sold and maturity of the time deposits. Total investment securities decreased $4.2 million from year-end 2015, resulting from the calls of certain available-for-sale investment securities. Total loans receivable decreased $1.2 million compared to year end 2015, reflecting principal payoffs exceeding new loan originations, as the Bank continues to focus on resolving existing credit issues. The resulting liquidity from the above noted decreases was used to meet the outflow of deposits.

Total deposits decreased $8.0 million compared to the levels at year end 2015. Of the total decrease, non-interest bearing deposits decreased $4.4 million and savings, NOW and money market deposits combined decreased $11.5 million, partially offset by $7.9 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 $10.6 million at September 30, 2016, decreasing $1.2 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
For the quarter ended September 30, 2016, net interest income totaled $749 thousand, decreasing $152 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. The net interest margin decreased 5 basis points to 3.05% for the quarter ended September 30, 2016, over the comparable quarter in 2015. Average yield on earning assets was 3.80% and average rate on interest-bearing deposits was 0.93%, a moderate increase in margin over the comparable quarter in the prior year.

The Bank did not record any provision for loan losses during the third quarter 2016, primarily due to declining balances in the loan portfolio coupled with a slight improvement in asset quality. Comparatively, in the third quarter of 2015, the Bank recorded $695 thousand in provision of loan losses as a result of a loan write-off coupled with additional reserves required for certain then existing problem credits. The allowance for loan losses at period-end was $1.6 million, or 2.25% 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 $60 thousand for the quarter ended September 30, 2016, a decrease of $28 thousand when compared with the same quarter in the prior year. The decrease in non-interest income was the direct result of a $24 thousand decline in fees and service charges on deposit accounts during the third quarter 2016.

Non-interest expense totaled $1.2 million for the quarter ended September 30, 2016, an increase of $110 thousand from the year-ago same quarter. The increase in non-interest expense was largely related to the consulting expenses associated with satisfying the requirements of the FDIC Consent Orders. Salaries and employee benefits decreased $34 thousand due to a reduction in staff. Professional and other fees, which includes consulting costs, increased $203 thousand, due to consulting services utilized by the Bank in connection with complying with the regulatory Consent Orders and legal expenses during the first nine months of 2016. The FDIC insurance assessment decreased $41 thousand year over year as result of a reduction in the premium for such insurance. All other expenses combined decreased moderately compared with the third 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)				9/30/2016				6/30/2016				3/31/2016				12/31/2015				9/30/2015
Summary of Operations:
	Interest income			$	935			$	921			$	995			$	1,060			$	1,118
	Interest expense				186				169				168				185				217
		Net interest income			749				752				827				875				901
	Provision for loan loss				-				-				-				-				695
		Net interest income after provision for loan loss			749				752				827				875				206
	Non-interest income				60				116				63				84				88
	Non-interest expense				1,207				1,448				1,173				1,254				1,097
		Loss before income tax expense (benefit)			(398	)			(580	)			(283	)			(295	)			(803	)
	Income tax expense (benefit)				-				-				-				1,919				(322	)
		Net loss		$	(398	)		$	(580	)		$	(283	)		$	(2,214	)		$	(481	)
Per Common Share:
		Basic		$	(0.21	)		$	(0.30	)		$	(0.15	)		$	(1.16	)		$	(0.25	)
		Diluted			(0.21	)			(0.30	)			(0.15	)			(1.16	)			(0.25	)
	Book value per share				5.54				5.75				6.05				6.17				7.35
	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				-1.53	%			-2.25	%			-1.07	%			-7.39	%			-1.50	%
	Return on average common equity				-14.78	%			-20.49	%			-9.66	%			-63.57	%			-13.35	%
	Average equity to average assets				10.37	%			10.99	%			11.05	%			11.62	%			11.21	%
	Risk-based capital:
		Total risk-based capital ratio			14.96	%			15.23	%			15.91	%			15.21	%			15.20	%
		Common equity tier 1 risk-based capital ratio			13.70	%			13.98	%			14.65	%			13.95	%			-
		Tier 1 risk-based capital ratio			13.70	%			13.98	%			14.65	%			13.95	%			13.92	%
		Tier 1 leverage capital ratio			10.15	%			10.67	%			10.84	%			9.84	%			9.83	%
Financial Condition:
	Total assets			$	101,890			$	103,279			$	102,844			$	111,078			$	126,250
	Loans, net of unearned income				71,514				71,343				68,759				72,674				77,092
	Deposits				90,900				91,795				90,892				98,819				111,779
	Shareholder's equity				10,571				10,967				11,535				11,770				14,021

New Jersey Community Bank
Statements of Financial Condition
(dollars in thousands, except share data)
						September 30,				December 31,
						2016				2015
Assets						(unaudited)
	Cash and due from banks - non-interest bearing					$	876			$	1,615
	Federal funds sold and interest-bearing deposits with banks						8,530				9,736
				Total Cash and Cash Equivalents			9,406				11,351
	Due from banks - time deposits						4,922				6,027
	Investment Securities:
		Available-for-sale					5,073				9,069
		Held-to-maturity					6,262				6,537
				Total Investment Securities			11,335				15,606
	Loans Receivable, net of unearned fees						71,514				72,674
			Less: Allowance for loan losses				(1,608	)			(1,569	)
				Net Loans			69,906				71,105
	Premises and equipment, net						1,977				2,128
	Accrued interest receivable						237				276
	Bank-owned life insurance						3,845				3,774
	Deferred tax assets						-				17
	Other assets						262				794
			Total Assets			$	101,890			$	111,078
Liabilities and Shareholders' Equity
	Liabilities
		Deposits:
			Non-interest bearing			$	10,800			$	15,155
			Savings, NOW and money market				27,314				38,808
			Time deposits $250M and over				9,511				6,713
			Time deposits, other				43,275				38,143
				Total Deposits			90,900				98,819
		Accrued interest payable					9				9
		Other liabilities					410				480
				Total Liabilities			91,319				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						13,865				13,861
	Accumulated Deficit						(7,144	)			(5,883	)
	Accumulated other comprehensive income (loss)						33				(25	)
				Total Shareholders' Equity			10,571				11,770
				Total Liabilities and Shareholders' Equity		$	101,890			$	111,078

New Jersey Community Bank
Statements of Operations
(dollars in thousands, except per share data)(unaudited)
				Three Months Ended								Nine Month Ended
				September 30,								September 30,
				2016				2015				2016				2015
Interest Income
	Loans receivable, including fees			$	849			$	999			$	2,580			$	3,234
	Investment securities				58				98				194				283
	Federal funds sold and interest-bearing deposits with banks				12				8				39				42
	Due from banks - interest bearing				16				13				45				18
		Total Interest Income			935				1,118				2,858				3,577
Interest Expense
	Deposits				186				217				525				644
		Net Interest Income before Provision for Loan Loss			749				901				2,333				2,933
Provision for Loan Loss					-				695				-				710
		Net Interest Income after Provision for Loan Loss			749				206				2,333				2,223
Non-Interest Income
	Fees and service charges on deposit accounts				23				47				69				132
	Loan fee income				-				3				4				11
	Income from bank owned life insurance				24				24				71				72
	Gain on sale of other real estate owned				-				-				53				-
	All other income				13				14				37				39
		Total Non-Interest Income			60				88				234				254
Non-Interest Expense
	Salaries and employee benefits				533				567				1,709				1,739
	Occupancy and equipment				169				186				556				582
	Data processing services				60				38				182				148
	Professional and other fees				328				125				950				397
	Advertising and promotion				3				2				12				5
	Federal insurance assessment				28				69				138				204
	Other operating expenses				86				110				281				347
		Total Non-Interest Expenses			1,207				1,097				3,828				3,422
		Loss Before Income Taxes			(398	)			(803	)			(1,261	)			(945	)
	Income tax expense (benefit)				-				(322	)			-				(377	)
Net Loss				$	(398	)		$	(481	)		$	(1,261	)		$	(568	)
Loss per share:
	Basic and diluted			$	(0.21	)		$	(0.25	)		$	(0.66	)		$	(0.30	)
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
					September 30, 2016										September 30, 2015
					Average							Average			Average							Average
					Balance				Interest			Rate			Balance				Interest			Rate
Interest Earning Assets:
	Loans				$	71,635			$	849		4.71	%		$	79,365			$	999		4.99	%
	Investment securities					10,577				58		2.20	%			19,396				98		2.02	%
	Federal funds sold and interest-bearing deposits with banks					10,293				12		0.48	%			13,845				8		0.23	%
	Due from banks - time deposits					5,334				16		1.21	%			6,872				13		0.75	%
		Total interest-earning assets				97,839				935		3.80	%			119,478				1,118		3.72	%
Allowance for loan loss						(1,590	)									(1,586	)
Cash and due from banks - non-interest bearing						1,323										1,709
All other assets						6,314										8,872
		Total assets			$	103,886									$	128,473
Interest Bearing Liabilities:
	Deposits:
		Savings, NOW and money market			$	28,664				26		0.36	%		$	49,006				65		0.53	%
		Time deposits				51,516				160		1.24	%			50,519				152		1.19	%
			Total interest-bearing deposits			80,180				186		0.93	%			99,525				217		0.86	%
Demand						12,456										14,074
Other liabilities						480										467
			Total liabilities			93,115										114,066
Stockholders' equity						10,771										14,407
			Total liabilities & stockholders' equity		$	103,886									$	128,473
Net interest income									$	749									$	901
Average interest rate spread												2.87	%									2.86	%
Net interest margin												3.05	%									3.00	%