New Jersey Community Bank Reports Fourth Quarter and Full Year Results for 2015
/EINPresswire.com/ -- FREEHOLD, NJ -- (Marketwired) -- 03/04/16 -- New Jersey Community Bank (OTCQB: NJCB) (the "Bank") reported a net loss of $2.2 million, or $(1.16) per common share for the three months ended December 31, 2015, compared to a net loss of $123 thousand, or $(0.06) per common share for the three months ended December 31, 2014. For the year 2015, the Bank reported a net loss of $2.8 million, or $(1.46) per common share compared with net loss of $68 thousand, or $(0.04) per common share for the year ended December 31, 2014.
The earnings for the year 2015 were negatively impacted by a valuation allowance recorded against the deferred tax assets. The earnings were further impacted by increases in professional fees as the Bank satisfies the requirements of the regulatory Consent Orders. The Provision for Loan Losses continues to burden the Bank's earnings as management attempts to address its asset quality and problem credits.
Annual Meeting Date
The Board of Directors voted that the Annual Meeting of Shareholders shall be held on April 21, 2016 at the American Hotel in Freehold, New Jersey at 9:30am. The record date of March 8, 2016 was established for the determination of the shareholders entitled to notice of, and to vote at, the annual meeting.
Balance Sheet Summary
At December 31, 2015, total assets were $111.1 million, a decrease of $10.9 million compared to year end 2014, primarily due to the decline in total loans. Total cash and cash equivalents were $11.4 million, an increase of $5.5 million from year end 2014. Total investment securities decreased $1.1 million to $15.6 million at December 31, 2015 compared with year end 2014.
Gross loans receivable decreased $13.4 million from December 31, 2014, primarily due to pay-offs of certain loans. The cash flow resulting from the decrease in total loans was largely used to fund the run-off of deposits and supported the increase in cash and cash equivalents.
Deposits totaled $98.8 million at December 31, 2015, a decrease of $8.3 million from year end 2014, primarily as a result of run-off of the core deposits and management's decision to utilize the excess liquidity to fund the matured time deposits. Of the total decrease, savings, NOW and money market deposits decreased $6.2 million and time deposits decreased $6.5 million, offset by an increase of $4.5 million in non-interest bearing demand deposits. Shareholders' equity totaled $11.8 million at December 31, 2015. The Bank's capital ratios continue to remain strong, with a tier 1 leverage ratio of 9.84%, a common equity tier 1 risk based capital ratio of 13.95% and a total risk based capital ratio of 15.21%. These ratios exceed those needed to be deemed a well-capitalized financial institution.
Results of Operations
Fourth Quarter 2015
For the quarter ended December 31, 2015, net interest income totaled $0.9 million, a decrease of $136 thousand over the same period in the prior year. Total interest income declined $158 thousand compared to the prior year fourth quarter largely due to a reduction in loan volume which impacted the decline in loan interest income. The reduction in interest expense on deposits was a result of a decrease in interest-bearing deposits.
The Bank did not record any provision for loan loss in the fourth quarter of 2015, compared with $263 thousand recorded in the same quarter a year-ago. The allowance for loan loss at period-end was $1.6 million, or 2.16% of gross loans compared with $1.6 million, or 1.83% of gross loans for the same period in the prior year. Management continually monitors the adequacy of the allowance for loan loss and considers the current level of the allowance for loan losses to be adequate.
Non-interest income increased moderately to $84 thousand for the quarter ended December 31, 2015 compared with $78 thousand for the same quarter in the prior year. The majority of the increase is directly related to a gain recorded on the sale of a bank owned automobile.
Non-interest expense totaled $1.3 million for the quarter ended December 31, 2015, an increase of $202 thousand from the year-ago quarter, primarily related to an increase in professional and other fees compared to the same quarter last year.
Income tax expense in the fourth quarter 2015 increased $2.0 million when compared to the same period in the prior year as a result of the valuation allowance recorded against the deferred tax assets ("DTA"). The DTA at year-end 2014 was $1.5 million. The pretax loss for the year 2015 created an additional $447 thousand in DTA as a result of the fact that net operating loss carrybacks claims have been exhausted. A full valuation allowance against the DTA was recorded resulting in an income tax expense of $1.9 million for the fourth quarter 2015.
US GAAP requires that all net deferred tax assets be evaluated on at least an annual basis to ensure that the asset is recorded at its net realizable value. If evidence exists which questions the realizability of this net deferred tax asset prior to its expiration, the Bank must record a valuation allowance.
Based on strong negative evidence that existed at year end December 31, 2015, management concluded that it needed to record a full valuation allowance against the Bank's deferred tax assets was necessary.
Full Year 2015
For the full year ended December 31, 2015, net interest income totaled $3.8 million, decreasing $558 thousand over the full prior year. The decrease in net interest income was primarily due to a decline in gross interest income resulting from a decrease in gross loans offset by a reduction in interest paid on deposits resulting primarily from declining balances in money market and time deposits. For the year, average interest earning assets and average interest bearing liabilities declined $8.3 million and $8.7 million, respectively, while the yield on interest earning assets and interest bearing deposits both declined 2 basis points. Net interest margin for the year declined 24 basis points to 3.25% over prior year.
The provision for loan losses was $710 thousand for the year, an increase of $82 thousand compared to prior year. The provision for loan loss continue to be impacted by classified loans during the year as management continues to resolve these problem credits.
Non-interest income totaled $339 thousand for the year 2015, reflecting a decrease of $82 thousand over the full year 2014, primarily resulting from decreases in fees on deposit accounts and loan fee income offset by gain on sale of fixed assets.
Non-interest expense totaled $4.7 million for the full year 2015, an increase of $415 thousand over prior full year, the majority of which was related to the litigation cost reversal recorded in the year 2014. Excluding the litigation cost reversal of $500 thousand, non-interest expense would have decreased $85 thousand year over year. Salaries and employee benefits, the largest component of non-interest expense, decreased $190 thousand as a result of reduction in staff. Professional fees increased $137 thousand primarily due to the consulting services utilized in connection with the compliance of the regulatory Consent Orders. Occupancy and equipment expense and data processing expenses decreased $36 thousand and $29 thousand, respectively, while other operating expenses increased $41 thousand.
Although the Bank reported a pretax loss for the year 2015, it had to record an income tax expense of $1.5 million for the year, primarily due to management's decision to provide for the valuation allowance against its deferred tax assets. Please refer to the discussion about the fourth quarter 2015 results for details on the valuation allowance.
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) 12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014
------------------- ---------- --------- --------- --------- ----------
Summary of
Operations:
Interest income $ 1,060 $ 1,118 $ 1,238 $ 1,219 $ 1,218
Interest expense 185 217 216 211 207
---------- --------- --------- --------- ----------
Net interest
income 875 901 1,022 1,008 1,011
Provision for loan
and lease loss - 695 - 15 263
---------- --------- --------- --------- ----------
Net interest
income after
provision for
loan loss 875 206 1,022 993 748
Non-interest
income 84 88 86 81 78
Non-interest
expense 1,254 1,097 1,175 1,149 1,052
---------- --------- --------- --------- ----------
Loss before
income tax
expense
(benefit) (295) (803) (67) (76) (226)
Income tax expense
(benefit) 1,919 (322) (26) (29) (103)
---------- --------- --------- --------- ----------
Net loss $ (2,214) $ (481) $ (41) $ (46) $ (123)
========== ========= ========= ========= ==========
Per Common Share:
Basic $ (1.16) $ (0.25) $ (0.02) $ (0.02) $ (0.06)
Diluted (1.16) (0.25) (0.02) (0.02) (0.06)
Book value per
share 6.17 7.35 7.56 7.62 7.60
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 -7.39% -1.50% -0.13% -0.15% -0.39%
Return on average
common equity -63.56% -13.35% -1.13% -1.26% -3.35%
Average equity to
average assets 11.62% 11.21% 11.21% 11.53% 11.72%
Risk-based
capital:
Total risk-based
capital ratio 15.21% 15.20% 14.62% 14.51% 14.45%
Common equity
tier 1 risk-
based capital
ratio 13.95% 13.92% 13.26% 13.26% 13.19%
Tier 1 leverage
capital ratio 9.84% 9.83% 10.20% 10.48% 10.54%
Financial
Condition:
Total assets $ 111,078 $ 126,250 $ 132,065 $ 129,317 $ 122,018
Loans, net of
unearned income 72,674 77,092 81,914 83,058 86,111
Deposits 98,819 111,779 117,205 114,293 107,088
Shareholders'
equity 11,770 14,021 14,420 14,543 14,495
New Jersey Community Bank
Statements of Financial Condition
(dollars in thousands, except share data)
---------------------------------------------------------------------------
December 31, December 31,
2015 2014
------------ ------------
Assets (unaudited)
Cash and due from banks - non-interest bearing $ 1,615 $ 1,107
Federal funds sold and interest-bearing
deposits with banks 9,736 4,728
------------ ------------
Total Cash and Cash Equivalents 11,351 5,835
Due from banks - time deposits 6,027 5,577
Investment Securities:
Available-for-sale 9,069 13,680
Held-to-maturity 6,537 3,043
------------ ------------
Total Investment Securities 15,606 16,723
Loans Receivable, net of unearned fees 72,674 86,111
Less: Allowance for loan losses (1,569) (1,576)
------------ ------------
Net Loans 71,105 84,535
Premises and equipment, net 2,128 2,361
Accrued interest receivable 276 277
Bank-owned life insurance 3,774 3,678
Deferred tax assets 17 1,589
Other assets 794 1,443
------------ ------------
Total Assets $ 111,078 $ 122,018
============ ============
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Non-interest bearing $ 15,155 $ 10,670
Savings, NOW and money market 38,808 45,028
Time deposits $100M and over 33,251 38,750
Time deposits, other 11,605 12,640
------------ ------------
Total Deposits 98,819 107,088
Accrued interest payable 9 10
Other liabilities 480 425
------------ ------------
Total Liabilities 99,308 107,523
------------ ------------
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 13,861 13,854
Accumulated Deficit (5,883) (3,101)
Accumulated other comprehensive loss (25) (75)
------------ ------------
Total Shareholders' Equity 11,770 14,495
------------ ------------
Total Liabilities and Shareholders'
Equity $ 111,078 $ 122,018
============ ============
New Jersey Community Bank
Statements of Operations
(dollars in thousands, except per share data)(unaudited)
---------------------------------------------------------------------------
Three Months Ended For the Year Ended
December 31, December 31,
---------------------- ----------------------
2015 2014 2015 2014
---------- ---------- ---------- ----------
Interest Income
Loans receivable,
including fees $ 954 $ 1,117 $ 4,188 $ 4,862
Investment securities 84 88 366 372
Federal funds sold and
interest-bearing deposits
with banks 9 3 26 21
Due from banks - interest
bearing 13 10 55 41
---------- ---------- ---------- ----------
Total Interest Income 1,060 1,218 4,635 5,296
---------- ---------- ---------- ----------
Interest Expense
Deposits 185 207 829 932
---------- ---------- ---------- ----------
Net Interest Income
before Provision for
Loan Loss 875 1,011 3,806 4,364
Provision for Loan Loss - 263 710 628
---------- ---------- ---------- ----------
Net Interest Income after
Provision for Loan Loss 875 748 3,096 3,736
---------- ---------- ---------- ----------
Non-Interest Income
Fees and service charges
on deposit accounts 30 38 162 242
Loan fee income 2 4 12 29
Income from bank owned
life insurance 24 25 96 99
All other income 28 11 69 51
---------- ---------- ---------- ----------
Total Non-Interest
Income 84 78 339 421
---------- ---------- ---------- ----------
Non-Interest Expense
Salaries and employee
benefits 572 571 2,311 2,501
Occupancy and equipment 178 201 761 797
Data processing services 62 39 211 240
Professional and other
fees 282 92 678 541
Advertising and promotion 3 1 8 11
Federal insurance
assessment 62 62 266 270
Litigation cost - - - (500)
Other operating expenses 95 86 440 400
---------- ---------- ---------- ----------
Total Non-Interest
Expenses 1,254 1,052 4,675 4,260
---------- ---------- ---------- ----------
Loss Before Income Tax
Expense (Benefit) (295) (226) (1,240) (103)
Income tax expense
(benefit) 1,919 (103) 1,542 (35)
---------- ---------- ---------- ----------
Net Loss $ (2,214) $ (123) $ (2,782) $ (68)
========== ========== ========== ==========
Loss per share:
Basic and diluted $ (1.16) $ (0.06) $ (1.46) $ (0.04)
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
-----------------------------------------------------
December 31, 2015 December 31, 2014
-------------------------- --------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
-------- -------- ------- -------- -------- -------
Interest Earning
Assets:
Loans $ 74,788 $ 954 5.06% $ 86,698 $ 1,117 5.11%
Investment securities 16,132 84 2.08% 17,105 88 2.06%
Federal funds sold
and interest-bearing
deposits with banks 13,821 9 0.26% 6,038 3 0.20%
Due from banks - time
deposits 6,336 13 0.83% 5,970 10 0.66%
-------- -------- ------- -------- -------- -------
Total interest-
earning assets 111,077 1,060 3.79% 115,811 1,218 4.18%
Allowance for loan
loss (1,921) (1,368)
Cash and due from
banks - non-interest
bearing 1,798 1,470
All other assets 8,946 9,261
-------- --------
Total assets $119,900 $125,174
======== ========
Interest Bearing
Liabilities:
Deposits:
Savings, NOW and
money market $ 42,761 35 0.32% $ 46,563 58 0.49%
Time deposits $100M
and over 12,091 116 3.81% 39,387 118 1.19%
Time deposits, other 36,780 34 0.37% 12,718 31 0.97%
-------- -------- ------- -------- -------- -------
Total interest-
bearing deposits 91,632 185 0.80% 98,668 207 0.83%
Demand 13,862 11,318
Other liabilities 474 518
-------- --------
Total liabilities 105,968 110,504
Stockholders' equity 13,932 14,670
-------- --------
Total liabilities &
stockholders'
equity $119,900 $125,174
======== -------- ======== --------
Net interest income $ 876 $ 1,011
======== ========
Average interest rate
spread 2.99% 3.35%
======= =======
Net interest margin 3.13% 3.46%
======= =======
New Jersey Community Bank
Analysis of Average Balance Sheet and Net Interest Income
(unaudited)
----------------------------------------------------------------------------
For the Year Ended
-----------------------------------------------------
December 31, 2015 December 31, 2014
-------------------------- --------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
-------- -------- ------- -------- -------- -------
Interest Earning
Assets:
Loans $ 80,649 $ 4,188 5.19% $ 91,725 $ 4,862 5.30%
Investment securities 18,044 366 2.03% 17,604 372 2.11%
Federal funds sold
and interest bearing
deposits with banks 11,183 26 0.23% 9,621 21 0.22%
Due from banks -
interest bearing 7,059 55 0.78% 6,268 41 0.65%
-------- -------- ------- -------- -------- -------
Total interest-
earning assets 116,935 4,635 3.96% 125,218 5,296 4.23%
Allowance for loan
loss (1,671) (1,603)
Cash and due from
banks - non-interest
bearing 1,680 1,771
All other assets 9,045 9,276
-------- --------
Total assets $125,989 $134,662
======== ========
Interest Bearing
Liabilities:
Deposits:
Savings, NOW and
money market $ 47,699 225 0.47% $ 45,165 215 0.48%
Time deposits under
$100M 12,221 135 1.10% 14,967 170 1.14%
Time deposits $100M
and over 38,282 469 1.23% 46,761 547 1.17%
-------- -------- ------- -------- -------- -------
Total deposits 98,201 829 0.84% 106,893 932 0.87%
Demand 12,963 11,972
Other liabilities 476 1,312
-------- --------
Total liabilities 111,640 120,177
Stockholders' equity 14,349 14,485
-------- --------
Total liabilities &
stockholders'
equity $125,989 $134,662
======== -------- ======== --------
Net interest income $ 3,806 $ 4,364
======== ========
Average interest rate
spread 3.12% 3.36%
======= =======
Net interest margin 3.25% 3.49%
======= =======
Contacts at New Jersey Community Bank:
William H. Placke
Chairman, President and CEO
bplacke@njcbk.com
Naqi A. Naqvi
Executive Vice President & CFO
nnaqvi@njcbk.com
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