SOURCE: New Jersey Community Bank

New Jersey Community Bank

November 17, 2016 12:48 ET

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 %
                                         

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