Bancorp of New Jersey Reports 2019 Second Quarter Financial Results

FORT LEE, N.J., Aug. 07, 2019 (GLOBE NEWSWIRE) -- Bancorp of New Jersey, Inc. (NYSE American:  BKJ) (the “Company”), holding company for Bank of New Jersey (the “Bank”), today reported financial results for its second quarter and six months ended June 30, 2019. Net income for the second quarter of 2019 was $1.34 million, or $0.18 per diluted share, compared to net income of $1.19 million, or $0.16 per diluted share, for the second quarter of 2018. For the year to date period, net income increased by $372,000, or 14.7% over the prior year, to $2.91 million, or $0.40 per diluted share, compared to earnings of $2.53 million, or $0.35 per diluted share, for the first six months of 2018.

Total loans were $782.3 million at June 30, 2019, up $16.4 million from the December 31, 2018 balance of $765.9 million. Total deposits were $762.0 million at June 30, 2019, up $25.3 million from the December 31, 2018 balance of $736.7 million. Net interest margin was 2.92% at the end of the second quarter compared to 2.96% at the end of the first quarter of 2019.

Nancy E. Graves, Bancorp of New Jersey’s President and Chief Executive Officer, stated, “Our year to date results reflect our continued focus on organic growth. Commercial loan activity remains solid. Core deposits grew $44.7 million, primarily in CDs, with less reliance on lower cost municipal deposits, which declined $19.4 million since year-end 2018.  Cost of total deposits increased this quarter to 1.49% from 1.42% the previous quarter. Consistent with last quarter, deposit pressure remained a challenge in Bergen County, which was reflected in the increase in interest expense as we obtain and retain deposits.”

The following tables show information regarding the growth in our loan and deposit portfolios (in thousands):

	At the Period Ended
	June 30, 2019					December 31, 2018
Loan Composition
Commercial Real Estate	$	657,842				$	640,627
Residential Mortgages		55,210					58,281
Commercial and Industrial		25,912					24,852
Home Equity		43,084					41,833
Consumer		296					326
Total Loans		782,344					765,919
Deferred Loan Fees and Costs, net		(850		)			(937		)
Allowance for Loan Losses		(8,530		)			(8,393		)
Net Loans	$	772,964				$	756,589
Deposit Composition
Noninterest-Bearing Demand Deposits	$	113,279				$	118,489
Savings and Interest-Bearing Transaction Accounts		278,743					298,108
Time Deposits $250 and under		249,215					213,855
Time Deposits over $250		120,764					106,250
Total Deposits	$	762,001				$	736,702

Three and Six Months Ended June 30, 2019 Financial Review

Net Interest Income
For the three months ended June 30, 2019, net interest income decreased by $88,000 or 1.4% versus the same period last year. For the six months ended June 30, 2019, net interest income decreased by $397,000 or 3.0% versus the same period last year. 

Total interest income increased by $1.0 million or 11.7% for the three months ended June 30, 2019 as compared to the corresponding period last year. During the six months ended June 30, 2019, interest income increased by $1.7 million or 9.8% versus the same period last year. This increase in interest income was primarily due to loan growth.

Total interest expense increased by $1.1 million in the second quarter of 2019 to $3.3 million compared to $2.2 million in the prior year period. During the six months ended June 30, 2019, interest expense increased by $2.1 million versus the same period last year. The increase in interest expense was due to an increase in deposit balances and higher interest rates on deposits and borrowed funds as obtaining and retaining deposits remain extremely competitive.

Provision for Loan Losses
The Company recognized a provision for loan losses of $140,000 for both the three and six months ended June 30, 2019 compared to a provision for loan losses of $325,000 and $650,000 for the three and six months ended June 30, 2018, respectively. The allowance for loan losses to total loans was 1.09% as of June 30, 2019.

Non-Interest Expense
Non-interest expense was $4.7 million during the second quarter of 2019 and 2018, while non-interest expense was $9.2 million for the six months ended June 30, 2019 compared to $9.4 million for the same period in 2018, a decrease of $171,000 or 1.8%. The decrease is a result of the Company’s continued focus on efficiencies.

Income Tax Expense
The income tax accrual for the three months ended June 30, 2019 was $329,000 compared to $361,000 for the same period in 2018. The income tax accrual for the six months ended June 30, 2019 was $760,000 compared to $796,000 for the same period in 2018. As the New Jersey Division of Taxation is still reviewing certain provisions of the recent changes in New Jersey tax laws, the Company is accruing for its 2019 New Jersey income tax expense at a rate similar to that applicable in 2018, until such time as the New Jersey Division of Taxation comes to a conclusion on these provisions.

Net Income
Net income for the second quarter of 2019 was $1.34 million compared to net income of $1.19 million for the second quarter of 2018, an increase of $155,000 or 13.0%.  Net income for the six months ended June 30, 2019 was $2.91 million compared to net income of $2.53 million for the same period in 2018, an increase of $372,000 or 14.7%.

Financial Condition
Total assets increased by $41.0 million, or 4.6%, from $883.7 million at December 31, 2018 to $924.7 million at June 30, 2019, reflecting an increase in cash and cash equivalents, loans receivable and other assets related to the recording of a right of use asset due to the adoption of Accounting Standards Update 2016-02 – Leases, as of January 1, 2019.

Total cash and cash equivalents increased from $64.5 million at December 31, 2018 to $86.2 million at June 30, 2019, an increase of $21.7 million. The change in cash is mainly due to an increase in deposit account balances and the maturity of certain securities.

Along with new deposits to the Bank, the Company has been experiencing customers transferring funds from noninterest bearing and lower interest-bearing accounts to higher interest-bearing accounts. The Bank has sought to increase its core deposits while reducing its reliance on potentially volatile municipal deposits and their effects of seasonal fluctuations related to real estate tax inflows and payments.

Borrowed funds decreased slightly to $51.2 million as of June 30, 2019 from $51.7 million at December 31, 2018.

At June 30, 2019, the Bank maintained capital ratios that were in excess of regulatory standards for well capitalized institutions. The Company’s and Bank’s Tier 1 capital to average assets ratio was 10.42%, each of their common equity Tier 1 capital and Tier 1 capital to risk weighted assets were 11.43% and their total capital to risk weighted assets ratio was 12.48%.

Loan Quality
At June 30, 2019 the Bank had non-accrual loans of $9.5 million. Included in this total are $3.9 million in Troubled Debt Restructured Loans (“TDRs”). At year-end 2018, non-accrual loans totaled $9.4 million, of which $4.5 million were TDRs. Accruing loans delinquent greater than 30 days were $6.5 million as of June 30, 2019, compared to $5.3 million at December 31, 2018. Of the $6.5 million in delinquent loans at June 30, 2019, two loans totaling $1.4 million reached maturity and were in the process of extension or renewal.

About the Company
Founded in 2006, Bancorp of New Jersey, Inc. is the holding company for Bank of New Jersey, which provides traditional commercial and consumer banking products and services. The Bank’s corporate office is in Englewood Cliffs and the Bank currently operates out of 9 branch offices located in Fort Lee, Hackensack, Haworth, Englewood Cliffs, Englewood, Cliffside Park, and Woodcliff Lake. For more information about Bank of New Jersey and its products and services, please visit http://www.bonj.net or call 201-720-3201. If you would like to receive future Bancorp of New Jersey announcements electronically, please email us at shareholder@bonj.net.

Forward-Looking Statements This press release and other statements made from time to time by Bancorp of New Jersey’s management contain express and implied statements relating to our future financial condition, results of operations, credit quality, corporate objectives, and other financial and business matters, which are considered forward-looking statements. These forward-looking statements are necessarily speculative and speak only as of the date made, and are subject to numerous assumptions, risks and uncertainties, all of which may change over time. Actual results could differ materially from those expected or implied by such forward-looking statements. Risks and uncertainties which could cause our actual results to differ materially and adversely from such forward-looking statements are included in our Annual Report on Form 10-K under Item 1a – Risk Factors and in the description of our business under Item 1. Any statements made that are not historical facts should be considered to be forward-looking statements. You should not place undue reliance on any forward-looking statements. We undertake no obligation to update forward-looking statements or to make any public announcement when we consider forward-looking statements to no longer be accurate, whether as a result of new information of future events, except as may be required by applicable law or regulation.

Investor Relations Counsel: The Equity Group Inc. Fred Buonocore, CFA   212-836-9607

BANCORP OF NEW JERSEY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for per share data)

		For the Three Months Ended June 30,
		2019			2018
INTEREST INCOME
Loans, including fees		$	9,089		$	8,179
Securities			179			233
Federal funds sold and other			419			261
TOTAL INTEREST INCOME			9,687			8,673
INTEREST EXPENSE
Savings and interest bearing transaction accounts			918			464
Time deposits			2,031			1,609
Borrowed funds			350			123
TOTAL INTEREST EXPENSE			3,299			2,196
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES			6,388			6,477
Provision for loan losses			140			325
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES			6,248			6,152
NON-INTEREST INCOME
Fees and service charges			143			110
TOTAL NON-INTEREST INCOME			143			110
NON-INTEREST EXPENSE
Salaries and employee benefits			2,416			2,372
Occupancy and equipment expense			909			828
FDIC premiums and related expenses			105			148
Legal fees			275			219
Other real estate owned expenses			22			2
Professional fees			203			245
Data processing			281			205
Other expenses			507			692
TOTAL NON-INTEREST EXPENSE			4,718			4,711
Income before provision for income taxes			1,673			1,551
Income tax expense			329			361
Net income		$	1,344		$	1,190
PER SHARE OF COMMON STOCK
Basic		$	0.18		$	0.16
Diluted		$	0.18		$	0.16

BANCORP OF NEW JERSEY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for per share data)

		For the Six Months Ended June 30,
		2019			2018
INTEREST INCOME
Loans, including fees		$	17,845		$	16,327
Securities			386			469
Federal funds sold and other			832			568
TOTAL INTEREST INCOME			19,063			17,364
INTEREST EXPENSE
Savings and interest bearing transaction accounts			1,798			881
Time deposits			3,774			3,123
Borrowed funds			700			172
TOTAL INTEREST EXPENSE			6,272			4,176
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES			12,791			13,188
Provision for loan losses			140			650
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES			12,651			12,538
NON-INTEREST INCOME
Fees and service charges			257			205
TOTAL NON-INTEREST INCOME			257			205
NON-INTEREST EXPENSE
Salaries and employee benefits			4,870			4,787
Occupancy and equipment expense			1,818			1,695
FDIC premiums and related expenses			233			306
Legal fees			350			357
Other real estate owned expenses			25			9
Professional fees			437			493
Data processing			568			538
Other expenses			942			1,229
TOTAL NON-INTEREST EXPENSE			9,243			9,414
Income before provision for income taxes			3,665			3,329
Income tax expense			760			796
Net income		$	2,905		$	2,533
PER SHARE OF COMMON STOCK
Basic		$	0.40		$	0.35
Diluted		$	0.40		$	0.35

BANCORP OF NEW JERSEY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except for per share data)

		June 30, 2019				December 31, 2018
Assets
Cash and due from banks		$	2,636			$	3,541
Interest bearing deposits			80,273				59,024
Federal funds sold			3,315				1,977
Total cash and cash equivalents			86,224				64,542
Interest bearing time deposits			500				500
Securities available for sale			27,572				32,293
Securities held to maturity (fair value $0 and $5,852 at June 30, 2019 and December 31, 2018, respectively)			-				5,852
Restricted investment in bank stock, at cost			3,155				3,239
Loans receivable			782,344				765,919
Deferred loan fees and costs, net			(850	)			(937	)
Allowance for loan losses			(8,530	)			(8,393	)
Net loans			772,964				756,589
Premises and equipment, net			13,173				13,440
Accrued interest receivable			2,921				2,841
Other real estate owned			1,363				511
Right of use asset			13,067				-
Other assets			3,779				3,929
Total assets		$	924,718			$	883,736
Liabilities and Stockholders’ Equity
LIABILITIES:
Deposits:
Noninterest-bearing demand deposits		$	113,279			$	118,489
Savings and interest bearing transaction accounts			278,743				298,108
Time deposits $250 and under			249,215				213,855
Time deposits over $250			120,764				106,250
Total deposits			762,001				736,702
Borrowed funds			51,169				51,658
Lease liability			13,490				-
Accrued expenses and other liabilities			5,539				6,269
Total liabilities			832,199				794,629
Stockholders’ equity:
Common stock, no par value, authorized 20,000,000 shares; issued and outstanding 7,293,697 at June 30, 2019 and 7,295,466 at December 31, 2018			76,848				76,713
Retained earnings			15,719				12,814
Accumulated other comprehensive loss			(48	)			(420	)
Total stockholders’ equity			92,519				89,107
Total liabilities and stockholders’ equity		$	924,718			$	883,736