09/02/2018 21:38:18

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%

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