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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

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%

Source:New Jersey Community Bank