New Jersey Community Bank Reports First Quarter 2017 Results

FREEHOLD, NJ--(Marketwired - May 5, 2017) -  New Jersey Community Bank (OTCQB: NJCB) (the "Bank") reported a net loss of $234 thousand, or ($0.12) per share for the three months ended March 31, 2017, compared with a net loss of $283 thousand, or ($0.15) per share for the same period in the prior year.

The earnings for the quarter were negatively impacted largely due to a decline in interest income on loans as a result of declining interest yield despite an increase in average loans outstanding year over year. In addition, the interest expense on paying deposits increased year over year as a result of increased cost of time deposits. Net interest margin decreased 31 basis points year over year primarily due to the reasons noted above. The decline in net interest income was more than offset by decline in total operating expenses.

Balance Sheet Summary

At March 31, 2017, total assets were $106.7 million, an increase of $1.6 million from December 31, 2016 primarily as a result of an increase in overnight funds sold. Total cash and cash equivalents increased $5.2 million while due from banks-time deposits decreased $2.5 million. Total loans decreased $1.1 million compared to year end 2016 resulting from loan pay-offs.

Total deposits increased $1.8 million compared to the levels at year end 2016. Non-interest bearing deposits decreased $2.7 million; Savings, NOW and money market accounts decreased $1.4 million; these were offset by a $5.9 million increase in total time deposits. Time deposits increased as a result of deposit promotion on longer term time deposits.

Shareholders' equity totaled $9.9 million at March 31, 2017, decreasing primarily due to net losses reported during the first quarter of 2017 when compared to year-end 2016. The Bank's capital ratios continue to remain strong, with a leverage ratio of 9.67%, common equity tier 1 risk based capital ratio of 12.68% and a total risk based capital ratio of 13.94%. These ratios exceed those needed to be deemed a well-capitalized financial institution.

Results of Operations

For the quarter ended March 31, 2017, net interest income totaled $724 thousand, decreasing $103 thousand over the same period in the prior year. At March 31, 2017, the net interest margin was 3.03%, decreasing 31 basis points compared to the same period a year ago. The yield on average earning assets decreased 14 basis points to 3.88% while the cost of interest-bearing deposits increased 15 basis points to 0.99%, 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 first quarter 2017 and 2016. The allowance for loan losses at period-end was $1.6 million, or 2.13% of total loans. The asset quality continued to be monitored and management will take actions as necessary to affect the provision for loan loss; however, the current level of the allowance for loan loss is considered to be adequate.

Non-interest income decreased $8 thousand to $55 thousand for the quarter ended March 31, 2017, compared with $63 thousand for the same quarter in the prior year. The majority of such decrease is directly related to decrease in fee income on loans.

Non-interest expense totaled $1.0 million for the quarter ended March 31, 2017, decreasing $160 thousands from a year-ago quarter. Of the total decrease in non-interest expense, salaries and employee benefits decreased $71 thousand as a result of a reduction in head count while management is attempting to fill certain open positions. Occupancy and equipment expense declined $30 thousand as a direct result of the closure of one of the branch facilities. FDIC insurance assessment declined $41 thousand as a result of lifting of the Consent Orders. All other components of total non-interest expenses showed moderate variances.

The Bank announced the appointment of Mr. James M. Burns to the Board of the Bank. Mr. Burns is a co-founder and partner in the law firm of Genova Burns LLC. He has served on the Boards of several organizations including New Jersey Institute of Technology, Covenant House International and Community Health Charities. He is currently serving on the boards of Integrity House and the Hudson County Chamber of Commerce.

Separately, the Bank announced that director William E. Sansone chose not to stand for the re-election to the Board of the Bank.

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.

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)						3/31/2017				12/31/2016				9/30/2016				6/30/2016				3/31/2016
Summary of Operations:
		Interest income				$	928			$	939			$	935			$	932			$	995
		Interest expense					204				187				186				170				168
				Net interest income			724				752				749				762				827
Non-interest income							55				59				60				107				63
Non-interest expense							1,013				1,170				1,207				1,449				1,173
				Loss before income tax expense (benefit)			(234	)			(359	)			(398	)			(580	)			(283	)
Income tax expense (benefit)							-				2				-				-				-
			Net loss			$	(234	)		$	(361	)		$	(398	)		$	(580	)		$	(283	)
Per Common Share:
		Basic				$	(0.12	)		$	(0.19	)		$	(0.21	)		$	(0.30	)		$	(0.15	)
		Diluted					(0.12	)			(0.19	)			(0.21	)			(0.30	)			(0.15	)
Book value per share							5.18				5.30				5.54				5.75				6.05
		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					-0.91	%			-1.44	%			-1.53	%			-2.25	%			-1.07	%
		Return on average common equity					-9.34	%			-13.85	%			-14.78	%			-20.49	%			-9.66	%
		Average equity to average assets					9.75	%			10.40	%			10.37	%			10.99	%			11.05	%
		Risk-based capital:
			Total risk-based capital ratio				13.94	%			14.08	%			14.96	%			15.23	%			15.91	%
			Common equity tier 1 risk-based capital ratio				12.68	%			12.83	%			13.70	%			13.98	%			14.65	%
			Tier 1 risk-based capital ratio				12.68	%			12.83	%			13.70	%			13.98	%			14.65	%
			Tier 1 leverage capital ratio				9.67	%			10.16	%			10.15	%			10.67	%			10.84	%
Financial Condition:
	Total assets					$	106,718			$	105,163			$	101,890			$	103,279			$	102,844
	Loans, net of unearned income						75,665				76,796				71,514				71,343				68,759
	Deposits						96,355				94,538				90,900				91,795				90,892
	Shareholder's equity						9,885				10,115				10,571				10,967				11,535

New Jersey Community Bank and Subsidiary
Consolidated Statements of Financial Condition
(dollars in thousands, except share data)
							March 31,				December 31,
							2017				2016
Assets							(unaudited)
		Cash and due from banks - non-interest bearing					$	1,143			$	1,531
		Federal funds sold and interest-bearing deposits with banks						10,961				5,415
					Total Cash and Cash Equivalents			12,104				6,946
		Due from banks - time deposits						1,685				4,175
		Investment Securities:
			Available-for-sale					6,488				6,152
			Held-to-maturity					5,998				6,255
					Total Investment Securities			12,486				12,407
		Loans Receivable, net of unearned fees						75,665				76,796
				Less: Allowance for loan losses				(1,610	)			(1,608	)
					Net Loans			74,055				75,188
		Premises and equipment, net						1,918				1,941
		Accrued interest receivable						237				260
		Bank-owned life insurance						3,889				3,868
		Other assets						344				378
					Total Assets		$	106,718			$	105,163
Liabilities and Shareholders' Equity
	Liabilities
		Deposits:
			Non-interest bearing				$	10,236			$	12,917
			Savings, NOW and money market					27,210				28,570
			Time deposits $250M and over					7,288				7,731
			Time deposits, other					51,621				45,320
					Total Deposits			96,355				94,538
		Accrued interest payable						12				10
		Other liabilities						466				500
					Total Liabilities			96,833				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						13,869				13,866
		Accumulated Deficit						(7,739	)			(7,505	)
		Accumulated other comprehensive income loss						(62	)			(63	)
					Total Shareholders' Equity			9,885				10,115
					Total Liabilities and Shareholders' Equity		$	106,718			$	105,163

New Jersey Community Bank and Subsidiary
Consolidated Statements of Operations
(dollars in thousands, except per share data)(unaudited)
				Three Months Ended
				March 31,
				2017				2016
Interest Income
	Loans receivable, including fees			$	841			$	894
	Investment securities				67				74
	Federal funds sold and interest-bearing deposits with banks				11				13
	Due from banks - interest bearing				9				14
		Total Interest Income			928				995
Interest Expense
	Deposits				204				168
		Net Interest Income			724				827
Non-Interest Income
	Fees and service charges on deposit accounts				21				22
	Loan fee income				2				7
	Income from bank owned life insurance				22				23
	All other income				10				11
		Total Non-Interest Income			55				63
Non-Interest Expense
	Salaries and employee benefits				535				606
	Occupancy and equipment				158				188
	Data processing services				62				60
	Professional and other fees				154				161
	Advertising and promotion				4				4
	Federal insurance assessment				15				56
	Other operating expenses				85				98
		Total Non-Interest Expenses			1,013				1,173
Net Loss				$	(234	)		$	(283	)
Loss per share:
	Basic and diluted			$	(0.12	)		$	(0.15	)
Weighted average number of common shares outstanding
	Basic and diluted				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
					March 31, 2017										March 31, 2016
					Average							Average			Average							Average
					Balance				Interest			Rate			Balance				Interest			Rate
Interest Earning Assets:
	Loans				$	76,296			$	841		4.47	%		$	69,482			$	894		5.18	%
	Investment securities					12,531				67		2.15	%			13,488				74		2.18	%
	Federal funds sold and interest-bearing deposits with banks					5,421				11		0.80	%			10,878				13		0.48	%
	Due from banks - time deposits					2,606				9		1.33	%			5,693				14		0.96	%
			Total interest-earning assets			96,855				928		3.88	%			99,541				995		4.02	%
	Allowance for loan loss					(1,609	)									(1,569	)
	Cash and due from banks - non-interest bearing					1,116										1,534
	All other assets					6,403										6,544
			Total assets		$	102,764									$	106,050
Interest Bearing Liabilities:
	Deposits:
		Savings, NOW and money market			$	27,934				27		0.39	%		$	35,989				28		0.31	%
		Time deposits				55,199				177		1.30	%			45,205				140		1.25	%
			Total interest-bearing deposits			83,134				204		0.99	%			81,194				168		0.83	%
Demand						9,094										12,842
Other liabilities						520										293
			Total liabilities			92,747										94,329
	Stockholders' equity					10,017										11,721
			Total liabilities & stockholders' equity		$	102,764									$	106,050
Net interest income									$	724									$	827
Average interest rate spread												2.89	%									3.19	%
Net interest margin												3.03	%									3.34	%