New Jersey Community Bank Reports Third Quarter 2015 Results
/EINPresswire.com/ -- FREEHOLD, NJ -- (Marketwired) -- 11/25/15 -- New Jersey Community Bank (OTCQB: NJCB) (the "Bank") reported a net loss of $481 thousand, or ($0.25) per common share for the three months ended September 30, 2015, compared to earnings of $12 thousand, or $0.01 per common share in the third quarter of 2014. For the first nine months of 2015, the Bank reported net loss of $568 thousand, or ($0.30) per common share compared with net income of $54 thousand, or $0.03 per common share for the same period in the prior year. The Bank's results for the first nine months and the third quarter 2015 were negatively impacted by $695 thousand in provision for loan and lease losses recorded in the third quarter 2015 related to the resolution of troubled loans originated prior to the change in senior management in 2015.
The results were further negatively impacted by a decline in interest income on loans as a result of a decrease in total loans, coupled with a decline in fee income on deposit accounts. Net interest margin continues to be pressured, declining 53 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 reducing certain commercial real estate loan concentrations while attempting to grow other segments of the loan portfolio, primarily commercial and industrial loans. Improving asset quality and credit metrics remains management's primary job. While management works on enhancements to the Bank's infrastructure, including strengthening and making more efficient credit administration and the Bank's online banking capability, to produce a better experience for our customers, management also continues to seek out additional efficiencies within the Bank's operations to manage operating expenses.
Balance Sheet Summary
At September 30, 2015, total assets were $126.3 million, an increase of $4.2 million from December 31, 2014. Total cash and cash equivalents and due from banks-time deposits increased $11.6 million and $1.2 million, respectively, compared to year end 2014, primarily as a result of loan payoffs and increase in total deposits. Total investment securities increased $1.3 million from year-end 2014, as management tries to seek avenues to improve interest income while utilizing excess liquidity. Total loans receivable decreased $9.0 million compared to year end 2014, reflecting principal payoffs exceeding new loan originations, as the Bank continues to focus on resolving existing credit issues.
Total deposits increased $4.7 million compared to the levels at year end 2014. Non-interest bearing deposits accounted for 98% of this increase, or $4.6 million, while savings, NOW and money market deposits combined increased $1.0 million. These increases were partially offset by a $0.9 million decline in total time deposits resulting from maturing time deposits which were not renewed.
Shareholders' equity totaled $14.0 million at September 30, 2015, decreasing $474 thousand, from year-end 2014 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.
The Bank has been carrying a Deferred Tax Asset ("DTA") on its balance sheet in the amount of $1.5 million. DTAs are recorded on the books for non-cash expenses that are not currently deductible for tax purposes but are future deductions for future income returns when the expense is actually paid. The largest component of the DTA relates to federal and state net operating loss carry forwards ("NOL"). These NOLs are allowed to be carried forward for future income tax returns for 20 years expiring in 2034, if not fully utilized.
US GAAP Accounting Standards Codification Topic 740, requires the Bank to evaluate its net DTAs 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 DTA prior to its expiration, then the Bank must record a valuation allowance. Management is currently evaluating all the evidence, including viable tax planning strategies, to determine whether such valuation allowance is needed. If management concludes, given the evidence, the realizability of the DTA is doubtful, based on that it will be required to record a valuation allowance prior to year-end 2015.
Results of Operations
For the quarter ended September 30, 2015, net interest income totaled $901 thousand, decreasing $208 thousand over the same period in the prior year. The decrease in net interest income was a direct result of declining average loan receivables which impacted the interest income on loans. Net interest margin decreased 53 basis points to 3.00% for the quarter ended September 30, 2015, over the comparable quarter in 2014. Average yield on earning assets was 3.72%, decreasing 60 basis points over the prior year and average rate on paying liabilities was 0.86%, a moderate decline over the comparable quarter in the prior year.
The Bank recorded $695 thousand in provision for loan and lease losses during the third quarter 2015 primarily as a result of a loan write-off coupled with additional reserves required for certain existing problem credits. Compared to the third quarter 2014, the provision for loan loss increased $665 thousand. The allowance for loan loss at period-end was $2.0 million, or 2.58% 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 $88 thousand for the quarter ended September 30, 2015, a moderate decrease compared with the same quarter in the prior year resulting from decreased levels of fees and service charges on deposit accounts.
Non-interest expense totaled $1.1 million for the quarter ended September 30, 2015, a decrease of $44 thousand from the year-ago same quarter. For the year, non-interest expense increased $216 thousand compared to the same period in 2014. The increase in non-interest expense was directly related to the reversal of $500 thousand in a litigation expense recorded in the second quarter of 2014 related to a judgment entered and expensed in 2013 that was subsequently settled at a cost lower than the accrued expense. Had it not been for this one-time adjustment to the operating expenses in 2014, non-interest expenses would have decreased $284 thousand or 8%, year over year.
Salaries and employee benefits decreased $74 thousand due to a reduction in executive level compensation. Data processing costs decreased $24 thousand quarter over quarter as a result of onetime expenses associated with the installation of a new core processing system in 2014. Professional and other fees increased $47 thousand, in part due to consulting services utilized by the Bank to comply with the Consent Order among the Bank, the FDIC and the NJ Department of Banking and Insurance. All other operating expenses combined increased moderately.
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) 9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014
--------- --------- --------- ---------- ---------
Summary of
Operations:
Interest income $ 1,118 $ 1,238 $ 1,219 $ 1,218 $ 1,339
Interest expense 217 216 211 207 230
--------- --------- --------- ---------- ---------
Net interest
income 901 1,022 1,008 1,011 1,109
Provision for loan
and lease loss 695 - 15 263 30
--------- --------- --------- ---------- ---------
Net interest
income after
provision for
loan loss 206 1,022 993 748 1,079
Non-interest
income 88 86 80 78 92
Non-interest
expense 1,097 1,175 1,149 1,052 1,141
--------- --------- --------- ---------- ---------
Income (loss)
before income
tax expense
(benefit) (803) (67) (76) (226) 30
Income tax
(benefit) expense (322) (26) (30) (103) 18
--------- --------- --------- ---------- ---------
Net income
(loss) $ (481) $ (41) $ (46) $ (123) $ 12
========= ========= ========= ========== =========
Per Common Share:
Basic $ (0.25) $ (0.02) $ (0.02) $ (0.06) $ 0.01
Diluted (0.25) (0.02) (0.02) (0.06) 0.01
Book value per
share 7.35 7.56 7.62 7.60 7.63
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 -1.50% -0.13% -0.15% -0.39% 0.04%
Return on average
common equity -13.35% -1.13% -1.26% -3.35% 0.33%
Average equity to
average assets 11.21% 11.21% 11.53% 11.72% 11.03%
Risk-based
capital:
Total risk-based
capital ratio 15.20% 14.62% 14.51% 14.45% 14.41%
Tier 1 risk-
based capital
ratio 13.92% 13.26% 13.26% 13.19% 13.16%
Tier 1 leverage
capital ratio 9.83% 10.20% 10.48% 10.54% 10.15%
Financial Condition:
Total assets $ 126,250 $ 132,065 $ 129,317 $ 122,018 $ 128,171
Loans, net of
unearned income 77,092 81,914 83,058 86,111 86,472
Deposits 111,779 117,205 114,293 107,088 113,192
Shareholders'
equity 14,021 14,420 14,543 14,495 14,554
New Jersey Community Bank
Statements of Financial Condition
(dollars in thousands, except share data)
----------------------------
September 30, December 31,
2015 2014
------------- -------------
Assets (unaudited)
Cash and due from banks - non-interest
bearing $ 2,120 $ 1,107
Federal funds sold and interest-bearing
deposits with banks 15,325 4,728
------------- -------------
Total Cash and Cash Equivalents 17,445 5,835
Due from banks - time deposits 6,770 5,577
Investment Securities:
Available-for-sale 11,463 13,680
Held-to-maturity 6,546 3,043
------------- -------------
Total Investment Securities 18,009 16,723
Loans Receivable, net of unearned fees 77,092 86,111
Less: Allowance for loan losses (1,990) (1,576)
------------- -------------
Net Loans 75,102 84,535
Premises and equipment, net 2,183 2,361
Accrued interest receivable 273 277
Bank-owned life insurance 3,751 3,678
Deferred tax assets 1,530 1,589
Other assets 1,187 1,443
------------- -------------
Total Assets $ 126,250 $ 122,018
============= =============
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Non-interest bearing $ 15,299 $ 10,670
Savings, NOW and money market 46,043 45,028
Time deposits $100M and over 38,202 38,750
Time deposits, other 12,235 12,640
------------- -------------
Total Deposits 111,779 107,088
Accrued interest payable 12 10
Other liabilities 438 425
------------- -------------
Total Liabilities 112,229 107,523
------------- -------------
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 13,860 13,854
Accumulated Deficit (3,669) (3,101)
Accumulated other comprehensive loss 13 (75)
------------- -------------
Total Shareholders' Equity 14,021 14,495
------------- -------------
Total Liabilities and Shareholders'
Equity $ 126,250 $ 122,018
============= =============
New Jersey Community Bank
Statements of Operations
(dollars in thousands, except per share data)(unaudited)
-------------------------------------------
For the Nine Months
Three Months Ended Ended
September 30, September 30,
--------------------- --------------------
2015 2014 2015 2014
--------- ---------- --------- ---------
Interest Income
Loans receivable, including
fees $ 999 $ 1,234 $ 3,234 $ 3,746
Investment securities 98 89 283 283
Federal funds sold and
interest-bearing deposits
with banks 8 5 42 18
Due from banks - interest
bearing 13 11 18 31
--------- ---------- --------- ---------
Total Interest Income 1,118 1,339 3,577 4,078
--------- ---------- --------- ---------
Interest Expense
Deposits 217 230 644 725
--------- ---------- --------- ---------
Net Interest Income
before Provision for
Loan Loss 901 1,109 2,933 3,353
Provision for Loan Loss 695 30 710 365
--------- ---------- --------- ---------
Net Interest Income after
Provision for Loan Loss 206 1,079 2,223 2,988
--------- ---------- --------- ---------
Non-Interest Income
Fees and service charges on
deposit accounts 47 53 132 205
Loan fee income 3 2 11 25
Income from bank owned life
insurance 24 25 72 111
All other income 14 12 39 -
--------- ---------- --------- ---------
Total Non-Interest Income 88 92 254 341
--------- ---------- --------- ---------
Non-Interest Expense
Salaries and employee
benefits 567 641 1,739 1,930
Occupancy and equipment 186 194 582 595
Data processing services 38 62 148 201
Professional and other fees 125 78 397 449
Advertising and promotion 2 2 5 10
Federal insurance assessment 69 73 204 208
Other operating expenses 110 91 347 (187)
--------- ---------- --------- ---------
Total Non-Interest
Expenses 1,097 1,141 3,422 3,206
--------- ---------- --------- ---------
Income (Loss) Before
Income Tax Expense
(Benefit) (803) 30 (945) 123
Income tax (benefit) expense (322) 18 (377) 69
--------- ---------- --------- ---------
Net Income (Loss) $ (481) $ 12 $ (568) $ 54
========= ========== ========= =========
Income (loss) per share:
Basic and diluted $ (0.25) $ 0.01 $ (0.30) $ 0.03
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, 2015 September 30, 2014
-------------------------- --------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
-------- -------- ------- -------- -------- -------
Interest Earning
Assets:
Loans $ 79,365 $ 999 4.99% $ 89,892 $ 1,234 5.45%
Investment
securities 19,396 98 2.02% 17,255 89 2.06%
Federal funds sold
and interest-
bearing deposits
with banks 13,845 8 0.23% 9,472 5 0.21%
Due from banks -
time deposits 6,872 13 0.75% 6,336 11 0.69%
-------- -------- ------- -------- -------- -------
Total
interest-
earning
assets 119,478 1,118 3.72% 122,955 1,339 4.32%
Allowance for loan
loss (1,586) (1,646)
Cash and due from
banks - non-
interest bearing 1,709 1,742
All other assets 8,872 9,210
-------- --------
Total assets $128,473 $132,261
======== ========
Interest Bearing
Liabilities:
Deposits:
Savings, NOW and
money market $ 49,006 65 0.53% $ 46,115 51 0.44%
Time deposits
$100M and over 38,311 118 1.22% 44,544 147 1.31%
Time deposits,
other 12,208 33 1.07% 14,218 46 1.28%
-------- -------- ------- -------- -------- -------
Total
interest-
bearing
deposits 99,525 216 0.86% 104,877 244 0.92%
Demand 14,074 12,374
Other liabilities 467 427
-------- --------
Total
liabilities 114,066 117,678
Stockholders' equity 14,407 14,583
-------- --------
Total
liabilities &
stockholders'
equity $128,473 $132,261
======== -------- ======== --------
Net interest income $ 902 $ 1,095
======== ========
Average interest
rate spread 2.86% 3.40%
======= =======
Net interest margin 3.00% 3.53%
======= =======
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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