New Jersey Community Bank Reports Third Quarter 2016 Results
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E-mailFREEHOLD, NJ -- (Marketwired) -- 11/17/16 -- 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 December
30, 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%
======= =======
Contacts at New Jersey Community Bank: William H. Placke President and CEO [email protected] Naqi A. Naqvi Executive Vice President & CFO [email protected]
Source: New Jersey Community Bank
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