New Jersey Community Bank Reports Second Quarter 2016 Results
/EINPresswire.com/ -- FREEHOLD, NJ -- (Marketwired) -- 08/04/16 -- New Jersey Community Bank (OTCQB: NJCB) (the "Bank") reported a net loss of $580 thousand, or ($0.30) per common share for the three months ended June 30, 2016, compared to a net loss of $41 thousand, or ($0.02) per common share in the second quarter of 2015. For the first six months of 2016, the Bank reported net loss of $863 thousand, or ($0.45) per common share compared with a net loss of $87 thousand, or ($0.05) per common share for the same period in the prior year. The losses for first six months and the second quarter 2016 were negatively impacted by higher level of consulting expense associated with complying with the Consent Orders among the Bank, the FDIC and the NJ Department of Banking and Insurance during 2016.
The results for the quarter were further negatively impacted by a decline in interest income on loans as a result of a decrease in total loans, coupled with increased non-interest expenses. Net interest margin during the second quarter 2016, declined 26 basis points year over year primarily due to a decline in yield on earning assets resulting from the reduction in interest income on loans.
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 June 30, 2016, total assets were $103.3 million, a decrease of $7.8 million from December 31, 2015. Total cash and cash equivalents and due from banks-time deposits decreased $610 thousand and $258 thousand, respectively, compared to year end 2015, largely as a result of decrease in overnight federal funds sold. Total investment securities decreased $5.0 million from year-end 2015, resulting from the calls of certain available-for-sale investment securities. Total loans receivable decreased $1.3 million compared to year end 2015, reflecting principal payoffs exceeding new loan originations, as the Bank continues to focus on resolving existing credit issues.
Total deposits decreased $7.0 million compared to the levels at year end 2015. Of the total decrease, non-interest bearing deposits decreased $2.5 million and savings, NOW and money market deposits combined decreased $8.1 million, partially offset by $3.6 million increase in total time deposits. The decline in total deposits resulted from the general outflow of deposits and, in part, due to the anticipated closure of one of the bank's branch in Cranbury, NJ.
Shareholders' equity totaled $11.0 million at June 30, 2016, decreasing $804 thousand 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 June 30, 2016, net interest income totaled $752 thousand, decreasing $270 thousand over the same period in the prior year. The decrease in net interest income was a direct result of declining average loans receivables which impacted the interest income on loans. Net interest margin decreased 26 basis points to 3.14% for the quarter ended June 30, 2016, over the comparable quarter in 2015. Average yield on earning assets was 3.85%, decreasing 27 basis points over the prior year and average rate on paying liabilities was 0.87%, a moderate decline over the comparable quarter in the prior year.
The Bank did not record any provision for loan loss during the second quarter 2016 or 2015, primarily due to declining balances in the loan portfolio coupled with slight improvement in asset quality. The allowance for loan loss at period-end was $1.6 million, or 2.20% of total loans. Asset quality continues to be monitored and management estimates the current level of allowance for loan loss to be adequate.
Non-interest income totaled $116 thousand for the quarter ended June 30, 2016, an increase of $30 thousand compared with the same quarter in the prior year. The increase in non-interest income was the direct result of $53 thousand in gain on sale of other real estate owned recorded during the second quarter 2016, in part offset by decreased levels of fees and service charges on deposit accounts.
Non-interest expense totaled $1.4 million for the quarter ended June 30, 2016, an increase of $273 thousand from the year-ago same quarter. The increase in non-interest expense was directly related to the consulting expenses associated with satisfying the requirements of the FDIC Consent Orders. Salaries and employee benefits decreased $23 thousand due to a reduction in executive level compensation. Professional and other fees, which includes consulting costs, increased $300 thousand, due to consulting services utilized by the Bank in connection with complying with the Consent Orders among the Bank, the FDIC and the NJ Department of Banking and Insurance during the first six months of 2016. All other expenses combined decreased moderately compared with the second 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) 6/30/2016 3/31/2016 12/31/2015 9/30/2015 6/30/2015
-------------------- --------- --------- ---------- --------- ---------
Summary of
Operations:
Interest income $ 921 $ 995 $ 1,060 $ 1,118 $ 1,238
Interest expense 169 168 185 217 216
--------- --------- ---------- --------- ---------
Net interest
income 752 827 875 901 1,022
Provision for loan
loss - - - 695 -
--------- --------- ---------- --------- ---------
Net interest
income after
provision for
loan loss 740 827 875 206 1,022
Non-interest
income 128 63 84 88 86
Non-interest
expense 1,448 1,173 1,254 1,097 1,175
--------- --------- ---------- --------- ---------
Loss before
income tax
expense
(benefit) (580) (283) (295) (803) (67)
Income tax expense
(benefit) - - 1,919 (322) (26)
--------- --------- ---------- --------- ---------
Net loss $ (580) $ (283) $ (2,214) $ (481) $ (41)
========= ========= ========== ========= =========
Per Common Share:
Basic $ (0.30) $ (0.15) $ (1.16) $ (0.25) $ (0.02)
Diluted (0.30) (0.15) (1.16) (0.25) (0.02)
Book value per
share 5.75 6.05 6.17 7.35 7.56
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 -2.25% -1.07% -7.39% -1.50% -0.13%
Return on average
common equity -20.49% -9.66% -63.57% -13.35% -1.13%
Average equity to
average assets 10.99% 11.05% 11.62% 11.21% 11.21%
Risk-based
capital:
Total risk-based
capital ratio 15.23% 15.91% 15.21% 15.20% 14.62%
Common equity
tier 1 risk-
based capital
ratio 13.98% 14.65% 13.95% - -
Tier 1 risk-
based capital
ratio 13.98% 14.65% 13.95% 13.92% 13.26%
Tier 1 leverage
capital ratio 10.67% 10.84% 9.84% 9.83% 10.20%
Financial Condition:
Total assets $ 103,279 $ 102,844 $ 111,078 $ 126,250 $ 132,065
Loans, net of
unearned income 71,343 68,759 72,674 77,092 81,914
Deposits 91,795 90,892 98,819 111,779 117,205
Shareholder's
equity 10,967 11,535 11,770 14,021 14,420
New Jersey Community Bank
Statements of Financial Condition
(dollars in thousands, except share data)
---------------------------------------------------------------------------
June 30, December 31,
2016 2015
----------- -------------
Assets (unaudited)
Cash and due from banks - non-interest bearing $ 1,785 $ 1,615
Federal funds sold and interest-bearing
deposits with banks 8,956 9,736
----------- -------------
Total Cash and Cash Equivalents 10,741 11,351
Due from banks - time deposits 5,769 6,027
Investment Securities:
Available-for-sale 4,326 9,069
Held-to-maturity 6,270 6,537
----------- -------------
Total Investment Securities 10,596 15,606
Loans Receivable, net of unearned fees 71,343 72,674
Less: Allowance for loan losses (1,569) (1,569)
----------- -------------
Net Loans 69,774 71,105
Premises and equipment, net 2,020 2,128
Accrued interest receivable 250 276
Bank-owned life insurance 3,821 3,774
Deferred tax assets - 17
Other assets 308 794
----------- -------------
Total Assets $ 103,279 $ 111,078
=========== =============
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Non-interest bearing $ 12,651 $ 15,155
Savings, NOW and money market 30,655 38,808
Time deposits $250M and over 7,490 6,713
Time deposits, other 40,999 38,143
----------- -------------
Total Deposits 91,795 98,819
Accrued interest payable 9 9
Other liabilities 508 480
----------- -------------
Total Liabilities 92,312 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 13,864 13,861
Accumulated Deficit (6,746) (5,883)
Accumulated other comprehensive income (loss) 32 (25)
----------- -------------
Total Shareholders' Equity 10,967 11,770
----------- -------------
Total Liabilities and Shareholders'
Equity $ 103,279 $ 111,078
=========== =============
New Jersey Community Bank
Statements of Operations
(dollars in thousands, except per share data)(unaudited)
---------------------------------------------------------------------------
Three Months Six Months
Ended Ended
June 30, June 30,
-------------- --------------
2016 2015 2016 2015
------ ------ ------ ------
Interest Income
Loans receivable, including fees $ 831 $1,121 $1,714 $2,228
Investment securities 62 97 136 185
Federal funds sold and interest-bearing
deposits with banks 12 5 25 28
Due from banks - interest bearing 16 15 29 9
------ ------ ------ ------
Total Interest Income 921 1,238 1,904 2,450
------ ------ ------ ------
Interest Expense
Deposits 169 216 337 427
------ ------ ------ ------
Net Interest Income before Provision for
Loan Loss 752 1,022 1,567 2,023
Provision for Loan Loss - - - 15
------ ------ ------ ------
Net Interest Income after Provision for
Loan Loss 752 1,022 1,567 2,008
------ ------ ------ ------
Non-Interest Income
Fees and service charges on deposit
accounts 23 46 46 86
Loan fee income 3 2 22 16
Income from bank owned life insurance 24 24 47 48
Gain on sale of other real estate owned 53 - 53 -
All other income 13 14 23 24
------ ------ ------ ------
Total Non-Interest Income 116 86 191 174
------ ------ ------ ------
Non-Interest Expense
Salaries and employee benefits 570 593 1,176 1,172
Occupancy and equipment 199 190 387 396
Data processing services 62 56 122 110
Professional and other fees 461 161 623 271
Advertising and promotion 6 2 9 3
Federal insurance assessment 54 69 110 135
Other operating expenses 96 104 194 237
------ ------ ------ ------
Total Non-Interest Expenses 1,448 1,175 2,621 2,324
------ ------ ------ ------
Loss Before Income Taxes (580) (67) (863) (142)
Income tax expense (benefit) - (26) - (55)
------ ------ ------ ------
Net Loss $ (580) $ (41) $ (863) $ (87)
====== ====== ====== ======
Loss per share:
Basic and diluted $(0.30) $(0.02) $(0.45) $(0.05)
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
------------------------------------------------------
June 30, 2016 June 30, 2015
-------------------------- --------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
-------- -------- ------- -------- -------- -------
Interest Earning
Assets:
Loans $ 69,060 $ 831 4.84% $ 83,424 $ 1,121 5.39%
Investment
securities 11,189 62 2.23% 19,389 97 2.00%
Federal funds sold
and interest-
bearing deposits
with banks 10,360 12 0.48% 9,658 5 0.21%
Due from banks -
time deposits 5,608 16 1.12% 7,995 15 0.75%
-------- -------- ------- -------- -------- -------
Total interest-
earning assets 96,217 921 3.85% 120,466 1,238 4.12%
Allowance for loan
loss (1,569) (1,591)
Cash and due from
banks - non-
interest bearing 1,497 1,528
All other assets 6,869 9,039
-------- --------
Total assets $103,014 $129,442
======== ========
Interest Bearing
Liabilities:
Deposits:
Savings, NOW and
money market $ 31,932 26 0.33% $ 50,493 65 0.52%
Time deposits 45,930 143 1.25% 51,100 151 1.19%
-------- -------- ------- -------- -------- -------
Total interest-
bearing deposits 77,862 169 0.87% 101,593 216 0.85%
Demand 13,432 12,872
Other liabilities 401 463
-------- --------
Total liabilities 91,694 114,928
Stockholders'
equity 11,319 14,514
-------- --------
Total liabilities
& stockholders'
equity $103,014 $129,442
======== -------- ======== --------
Net interest income $ 752 $ 1,022
======== ========
Average interest
rate spread 2.98% 3.27%
======= =======
Net interest margin 3.14% 3.40%
======= =======
Contacts at New Jersey Community Bank:
William H. Placke
President and CEO
bplacke@njcbk.com
Naqi A. Naqvi
Executive Vice President & CFO
nnaqvi@njcbk.com
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