CST: 25/06/2016 14:23:47   

New Jersey Community Bank Reports Fourth Quarter and Full Year Results for 2015

112 Days ago

FREEHOLD, NJ--(Marketwired - Mar 4, 2016) - 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