FREEHOLD, NJ, Jan 27, 2014 - New Jersey Community Bank (OTCQB: NJCB) (the "Bank") reported net loss of $212 thousand, or $(0.11) per common share for the three months ended December 31, 2013, compared to the fourth quarter 2012 earnings of $139 thousand, or $0.07 per common share. For the year 2012, the Bank reported net income of $114 thousand, or $0.06 per common share compared with net income of $361 thousand, or $0.19 per common share for the year 2012. The earnings for the year 2013 were negatively impacted by an increase in non-performing loans which in turn affected the interest income on loans, and an increase in the provision of loan and lease losses.
Robert D. O'Donnell, Chairman and CEO, commented that, "During the fourth quarter 2013, our earnings were negatively impacted by an increase in our non-performing loans which reduced our interest income on loans. In addition, the increase also resulted in an increase in our provision for loan losses. Our loan officers are working diligently with our borrowers to remedy these credits so that they can return to performing status. Despite the decline in our asset quality, I am pleased to report positive earnings for the year 2013."
All common share data presented in this press release, including earnings per common share data, were adjusted to reflect a five percent stock dividend issued on May 31, 2013.
Balance Sheet Summary
At December 31, 2013, total assets were $143.7 million, an increase of $5.0 million compared to year end 2012. Total cash and cash equivalents were $16.6 million, a decrease of $2.7 million from year end 2012. Total investment securities increased $3.8 million to $17.8 million at December 31, 2013 compared with year end 2012 and total loans receivable increased $2.8 million from December 31, 2012. The cash flow resulting from the increase in total deposits was largely used to fund the growth in investment securities and loans.
Deposits totaled $127.9 million at December 31, 2013, an increase of $5.4 million from year end 2012. Of the total increase, non-interest bearing increased $3.2 million and savings, NOW and money market deposits increased $2.8 million, offset by a $0.6 million net decrease in time deposits. Shareholders' equity totaled $15.6 million at December 31, 2013. The Bank's capital ratios remain strong, with a leverage ratio of 10.74%, a tier 1 risk based capital ratio of 13.69% and a total risk based capital ratio of 14.94%. These ratios exceed those needed to be deemed a well capitalized financial institution.
Results of Operations
Fourth Quarter 2013
For the quarter ended December 31, 2013, net interest income totaled $943 thousand, a decrease of $255 thousand over the same period in the prior year. The decrease in net interest income was primarily due to a $313 thousand decrease in total interest income offset by $58 thousand reduction in total interest expense. The decrease in total interest income was a result of a decline in interest income on loans due to an increase in non-performing loans. The reduction in interest expense on deposits was a result of declining interest rates on deposits. As a result of decline in loan interest income, the net interest margin for the quarter dropped 93 basis points to 2.82% from 3.75% reported during the fourth quarter of 2012.
The provision for loan loss was $385 thousand for the fourth quarter 2013, an increase of $358 thousand compared to the year-ago quarter. The allowance for loan loss at period-end was $1.7 million, or 1.8% of total loans. 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 $21 thousand to $117 thousand for the quarter ended December 31, 2013 compared with $96 thousand for the same quarter in the prior year. The majority of the increase is directly related to increases in fees and service charges on deposit accounts and income from bank owned life insurance.
Non-interest expense totaled $1.1 million for the quarter ended December 31, 2013, an increase of $31 thousand from year-ago quarter, primarily due to increased personnel and employee benefit costs and other operating expenses.
Full Year 2013
For the full year ended December 31, 2013, net interest income totaled $4.5 million, decreasing $103 thousand over the full prior year. The decrease in net interest income was primarily due to a decline in total income resulting from an increase in non-performing loans offset by a reduction in interest paid on deposits resulting primarily from declining interest rates on deposits. For the year, average interest earning assets and average interest bearing liabilities were almost unchanged, while the yield on interest earning assets declined 33 basis points to 4.30% and the cost of interest bearing liabilities declined 31 basis points to 0.88%. Net interest margin for the year declined 9 basis points to 3.53% over the full year 2012.
The provision for loan loss was $580 thousand for the year, an increase of $463 thousand compared to prior year, primarily due to an increase in the level of non-performing loans during the year.
Non-interest income totaled $448 thousand for the year 2013 reflecting an increase of $99 thousand over the full year 2012, primarily resulting from increases in fees on deposit accounts and income from bank owned life insurance.
Non-interest expense totaled $4.2 million for the full year 2013, almost unchanged over prior full year. Salaries and employee benefits, the largest component of non-interest expense, decreased $88 thousand despite the addition of personnel and increased health benefit costs. The results for 2012 reflect the impact of a settlement expense recorded in connection with a former executive. All other operating expenses increased $56 thousand primarily due to the overall growth of the bank while data processing costs and advertising expense both increased moderately year over year.
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.
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
As of or for the Quarters Ended
(in thousands, except per share and percentage data)
Summary of Operations:
Net interest income
Provision for loan and lease loss
Net interest income after provision for loan loss
Income before income tax expense
Income tax expense
Per Common Share(1):
Book value per share
Average shares outstanding
Average diluted shares outstanding
Selected Financial Ratios:
Return on average assets
Return on average common equity
Average equity to average assets
Total risk-based capital ratio
Tier 1 risk-based capital ratio
Tier 1 leverage capital ratio
Loans, net of unearned income
(1) Data have been restated to give effect to the 5% stock dividend declared and paid in 2013.
New Jersey Community Bank
Statements of Financial Condition
(dollars in thousands, except share data)
At Year End December 31,