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New Jersey Community Bank Reports Fourth Quarter and Full Year Results for 2017

FREEHOLD, N.J., Feb. 09, 2018 (GLOBE NEWSWIRE) -- New Jersey Community Bank (OTCQB:NJCB) (the “Bank”) reported a net loss of $320 thousand, or ($0.17) per share for the three months ended December 31, 2017, compared with a net loss of $361 thousand, or ($0.19) per share for the same period in the prior year. For 2017, the Bank reported a net loss of $1.2 million, or ($0.63) per common share compared with a net loss of $1.6 million, or ($0.85) per common share for the year 2016. The losses for the year were negatively impacted largely due to one-time expenses associated with the anticipated merger with 1st Constitution Bank, legal fees and certain other expenses. Without such one-time expenses, the Bank would have reported a net loss of $706 thousand for the year 2017.

The losses for the quarter and the year 2017 were, in part, further impacted by the increased cost of deposits as a result of increases in both average volume and interest rates when compared to the same periods in the prior year. Total interest income for the quarter increased primarily as a result of an increase in interest income on loans due to increased loans outstanding year over year complemented by additional yield related fee income on loans. Net interest margin for the quarter increased 37 basis points year over year primarily due to the improved net interest income during the quarter.

Balance Sheet Summary

At December 31, 2017, total assets were $103.1 million, a decrease of $2.0 million from December 31, 2016. Due from banks-time deposits decreased $3.2 million, and total investment securities decreased $1.0 million. These decreases were offset in part by an increase in loans. Loans totaled $79.0 million, increasing $2.2 million compared to year end 2016. The growth in loans was funded utilizing the available liquidity in due from banks-time deposits.

Total deposits decreased $842 thousand compared to the levels at year end 2016. Non-interest bearing deposits decreased $2.1 million; Savings, NOW and money market accounts decreased $3.5 million; these were substantially offset by a $4.8 million increase in total time deposits. Time deposits increased as a result of deposit promotions during the second half of 2017.

Shareholders' equity totaled $8.9 million at December 31, 2017, decreasing primarily due to the net losses reported during the year 2017. At December 31, 2017, the Bank reported a leverage ratio of 8.67%; both common equity tier 1 risk based capital and tier 1 risk-based capital ratio of 11.19%; and a total risk based capital ratio of 12.45%. These ratios exceed those needed to be deemed a well-capitalized financial institution.

Results of Operations

Fourth Quarter 2017
For the quarter ended December 31, 2017, net interest income totaled $872 thousand, increasing $121 thousand over the same period in the prior year, largely due to yield related fee income collected on loans. At December 31, 2017, the net interest margin was 3.55%, increasing 37 basis points compared to the same period a year ago. The yield on average earning assets increased 60 basis points to 4.57%. The cost of interest-bearing deposits increased 23 basis points to 1.17%, compared to the same period in the prior year, primarily due to competitive market conditions.

The Bank did not record any provision for loan losses during the fourth quarter 2017 nor for the similar period in 2016. The allowance for loan losses at period-end was $1.5 million, or 1.90% of total loans. Management continues to monitor the asset quality and will take actions necessary to affect the provision for loan losses; however, the current level of the allowance for loan loss is considered to be more than adequate.

Non-interest income totaled $56 thousand for the quarter ended December 31, 2017, compared with $59 thousand for the same quarter in the prior year, a moderate decrease compared to last year.

Non-interest expense totaled $1.2 million for the quarter ended December 31, 2017, a moderate increase from a year-ago quarter.  Of the total non-interest expenses, salaries and employee benefits is the largest component, increasing $73 thousand from a year-ago quarter primarily due to filling certain open positions coupled with utilizing certain temporary assistance. Occupancy and equipment expense increased slightly as a result of change in accounting for deferred rent liability. Professional and other fees declined $115 thousand, while the FDIC insurance assessment increased $36 thousand as a result of changes in quarterly assessment rates. The decline in professional and other fees resulted from reduced consulting and recruiting fees. All other components of total non-interest expenses showed moderate variances.

Full Year 2017
For the full year ended December 31, 2017, net interest income totaled $3.1 million, almost unchanged over the full prior year. While total interest income increased $206 thousand year over year, the category was offset by a similar increase in interest paid on deposits resulting from both the increase in average balances as well as interest yields. On a year over year basis, the yield on interest earning assets increased 18 basis points while the yield on interest bearing deposits increased 19 basis points. Net interest margin for the year declined 3 basis points to 3.16% over prior year.

The Bank did not record any provision for loan losses during the year 2017 nor 2016. Management considers the current level of the allowance for loan loss to be more than adequate.

Non-interest income totaled $238 thousand for the year 2017, reflecting a decrease of $51 thousand over the full year 2016, primarily as a direct result of a decrease in gain on sale of other real estate owned.

Non-interest expense totaled $4.5 million for the full year 2017, a decrease of $470 thousand over prior full year, the majority of which was related to the consulting costs associated with compliance under the regulatory Consent Order and, in part, related to legal expenses in the prior year.  Salaries and benefits expense and occupancy and equipment expense declined $23 thousand and $86 thousand respectively, largely due to the closure of the Cranbury branch location in July, 2016. The FDIC insurance assessment declined $47 thousand year over year primarily due to a reduction in premium in early 2017. During late 2017, the Bank incurred certain one-time expenses related to the anticipated merger with 1st Constitution Bank and certain other expenses. Excluding the one-time expenses of approximately $500 thousand, total non-interest expense would have been $4.0 million, or $500 thousand below last year.

The Bank believes that the non-GAAP measurements disclosed within this document are useful for investors, regulators, management and others to evaluate our results of operations and financial condition relative to other financial institutions. These non-GAAP financial measures exclude from corresponding GAAP measures the impact of certain elements that we do not believe are representative of our financial results, which we believe enhance an overall understanding of our performance. The one-time expenses of $500 thousand includes $180 thousand in merger related expenses, $225 thousand in litigation expenses, and $95 thousand in other professional fees.

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 two full-service banking offices in the central New Jersey counties of Monmouth. 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.

Contacts at New Jersey Community Bank:

William H. Placke                                                    
Chairman, President and CEO                                   
bplacke@njcbk.com                                              

/EIN News/ -- Naqi A. Naqvi
Executive Vice President & CFO
nnaqvi@njcbk.com 

Source: New Jersey Community Bank

New Jersey Community Bank and Subsidiary        
Selected Consolidated Financial Highlights                
(unaudited)                  
   As of or for the Quarters Ended
(in thousands, except per share and percentage data) 12/31/2017   9/30/2017   6/30/2017   3/31/2017   12/31/2016
                   
Summary of Operations:                  
Interest income $   1,121     $   1,005     $   953     $   928     $   939  
Interest expense     248         232         224         204         187  
Net interest income     873         773         729         724         752  
  Non-interest income     57         56         69         55         59  
  Non-interest expense     1,235         1,204         1,076         1,013         1,170  
Loss before income tax expense     (305 )       (375 )       (278 )       (234 )       (359 )
  Income tax expense     15         -         -         -         2  
  Net loss $   (320 )   $   (375 )   $   (278 )   $   (234 )   $   (361 )
                   
Per Common Share:                  
  Basic $   (0.17 )   $   (0.20 )   $   (0.15 )   $   (0.12 )   $   (0.19 )
  Diluted     (0.17 )       (0.20 )       (0.15 )       (0.12 )       (0.19 )
  Book value per share     4.67         4.85         5.05         5.18         5.30  
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   -1.24 %     -1.45 %     -1.07 %     -0.91 %     -1.44 %
Return on average common equity   -13.36 %     -15.40 %     -11.25 %     -9.34 %     -13.85 %
Average equity to average assets   9.25 %     9.39 %     9.51 %     9.75 %     10.40 %
Risk-based capital:                  
Total risk-based capital ratio   12.45 %     12.11 %     12.87 %     13.94 %     14.08 %
Common equity tier 1 risk-based capital ratio   11.19 %     10.85 %     11.62 %     12.68 %     12.83 %
Tier 1 risk-based capital ratio   11.19 %     10.85 %     11.62 %     12.68 %     12.83 %
Tier 1 leverage capital ratio   8.67 %     8.99 %     9.20 %     9.67 %     10.16 %
                   
Financial Condition:                  
  Total assets $   103,120     $   103,572     $   103,554     $   106,718     $   105,163  
  Loans, net of unearned income     78,992         83,380         80,512         75,665         76,796  
  Deposits     93,696         93,816         93,516         96,355         94,538  
  Shareholder's equity     8,920         9,263         9,638         9,885         10,115  




New Jersey Community Bank and Subsidiary      
Consolidated Statements of Financial Condition      
(dollars in thousands, except share data)      
  December 31,   December 31,
    2017       2016  
Assets (unaudited)    
Cash and due from banks - non-interest bearing $   1,247     $   1,531  
Federal funds sold and interest-bearing deposits with banks     5,548         5,415  
Total Cash and Cash Equivalents     6,795         6,946  
Due from banks - time deposits     987         4,175  
Investment Securities:      
Available-for-sale     5,949         6,152  
Held-to-maturity     5,478         6,255  
Total Investment Securities     11,427         12,407  
Loans Receivable, net of unearned fees     78,992         76,796  
Less: Allowance for loan losses     (1,503 )       (1,608 )
Net Loans     77,489         75,188  
Premises and equipment, net     1,855         1,941  
Accrued interest receivable     267         260  
Bank-owned life insurance     3,953         3,868  
Other assets     348         378  
Total Assets $   103,120     $   105,163  
       
Liabilities and Shareholders’ Equity      
Liabilities      
Deposits:      
Non-interest bearing $   10,788     $   12,917  
Savings, NOW and money market     25,108         28,570  
Time deposits $250M and over     7,740         7,731  
Time deposits, less than $250M     50,060         45,320  
Total Deposits     93,696         94,538  
       
Accrued interest payable     14         10  
Other liabilities     491         500  
Total Liabilities     94,201         95,048  
       
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     13,878         13,866  
Accumulated Deficit     (8,712 )       (7,505 )
Accumulated other comprehensive loss     (63 )       (63 )
Total Shareholders’ Equity     8,920         10,115  
Total Liabilities and Shareholders’ Equity $   103,120     $   105,163  


New Jersey Community Bank and Subsidiary            
Consolidated Statements of Operations              
(dollars in thousands, except per share data)(unaudited)              
  Three Months Ended   Year Ended
  December 31,   December 31,
    2017       2016       2017       2016  
Interest Income              
Loans receivable, including fees $   1,043     $   852     $   3,677     $   3,433  
Investment securities     61         66         257         264  
Federal funds sold and interest-bearing deposits with banks     13         6         48         44  
Due from banks - interest bearing     4         15         25         60  
Total Interest Income     1,121         939         4,007         3,801  
Interest Expense              
Deposits     248         187         909         711  
Net Interest Income before Provision for Loan Loss     873         752         3,098         3,090  
Provision for Loan Loss     -         -         -         -  
Net Interest Income     873         752         3,098         3,090  
Non-Interest Income              
Fees and service charges on deposit accounts     21         21         86         90  
Loan fee income     1         6         18         11  
Income from bank owned life insurance     20         23         85         93  
Gain on sale of other real estate owned     -         -         -         53  
All other income     15         9         49         42  
Total Non-Interest Income     57         59         238         289  
Non-Interest Expense              
Salaries and employee benefits     580         507         2,193         2,216  
Occupancy and equipment     174         160         630         716  
Data processing services     68         60         256         242  
Professional and other fees     224         340         911         1,290  
Advertising and promotion     3         6         22         18  
Federal insurance assessment     33         (4 )       87         134  
Other operating expenses     153         101         429         383  
Total Non-Interest Expenses     1,235         1,170         4,528         4,999  
Loss Before Income Taxes     (305 )       (359 )       (1,192 )       (1,620 )
Income tax expense     15         2         15         2  
Net Loss $   (320 )   $   (361 )   $   (1,207 )   $   (1,622 )
Loss per share:              
Basic and diluted $   (0.17 )   $   (0.19 )   $   (0.63 )   $   (0.85 )
Weighted average number of common shares outstanding              
Basic and diluted     1,908         1,908         1,908         1,908  




New Jersey Community Bank and Subsidiary                
Analysis of Consolidated Average Balance Sheet and Net Interest Income                
(unaudited)                        
    For the Three Months Ended
    December 31, 2017   December 31, 2016
    Average       Average   Average       Average
    Balance   Interest   Rate   Balance   Interest   Rate
Interest Earning Assets:                        
Loans   $   80,965     $   1,043   5.11 %   $   72,533     $   852   4.67 %
Investment securities       11,548         61   2.10 %       11,947         66   2.19 %
Federal funds sold and interest-bearing deposits with banks       3,835         13   1.32 %       4,947         6   0.52 %
Due from banks - time deposits       1,057         4   1.47 %       4,659         15   1.25 %
Total interest-earning assets       97,405         1,120   4.57 %       94,086         939   3.97 %
Allowance for loan loss       (1,503 )               (1,608 )        
Cash and due from banks - non-interest bearing       1,145                 1,311          
All other assets       6,422                 6,379          
Total assets   $   103,469             $   100,168          
                         
Interest Bearing Liabilities:                        
Deposits:                        
Savings, NOW and money market   $   25,619         38   0.59 %   $   27,664         25   0.36 %
Time deposits       58,658         210   1.42 %       51,850         162   1.24 %
Total interest-bearing deposits       84,277         248   1.17 %       79,514         187   0.93 %
Demand       9,600                 9,820          
Other liabilities       477                 415          
Total liabilities       94,354                 89,750          
                         
Stockholders' equity       9,115                 10,418          
Total liabilities & stockholders' equity   $   103,469             $   100,167          
Net interest income       $   872           $   752    
                         
Average interest rate spread           3.40 %           3.04 %
                         
Net interest margin           3.55 %           3.18 %
                         




New Jersey Community Bank and Subsidiary                
Analysis of Consolidated Average Balance Sheet and Net Interest Income                
(unaudited)                      
  For the Year Ended
  December 31, 2017   December 31, 2016
  Average       Average   Average       Average
  Balance   Interest   Rate   Balance   Interest   Rate
Interest Earning Assets:                      
Loans $   79,145     $   3,677   4.65 %   $   70,685     $   3,433   4.86 %
Investment securities     12,101         257   2.13 %       11,797         264   2.24 %
Federal funds sold and interest bearing deposits with banks     4,606         48   1.04 %       9,111         44   0.49 %
Due from banks - interest bearing     1,784         25   1.39 %       5,322         60   1.13 %
Total interest-earning assets     97,637         4,007   4.10 %       96,915         3,801   3.92 %
Allowance for loan loss     (1,539 )               (1,584 )        
Cash and due from banks - non-interest bearing     1,157                 1,416          
All other assets     6,391                 7,283          
Total assets $   103,646             $   104,030          
                       
Interest Bearing Liabilities:                      
Deposits:                      
Savings, NOW and money market $   26,249         123   0.47 %   $   31,047         105   0.34 %
Time deposits $100M and over     57,496         786   1.37 %       48,642         607   1.25 %
Total deposits     83,745         909   1.09 %       79,689         712   0.89 %
                       
Demand     9,845                 12,132          
Other liabilities     473                 1,155          
Total liabilities     94,063                 92,976          
                       
Stockholders' equity     9,583                 11,055          
Total liabilities & stockholders' equity $   103,646             $   104,031          
Net interest income     $   3,098           $   3,089    
                       
Average interest rate spread         3.01 %           3.03 %
                       
Net interest margin         3.16 %           3.19 %

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