New Jersey Community Bank Reports Second Quarter 2014 Results

FREEHOLD, NJ / ACCESSWIRE / August 4, 2014 / New Jersey Community Bank NJCB (the "Bank") reported net income of $51 thousand, or $0.03 per common share for the three months ended June 30, 2014, compared to the second quarter 2013 earnings of $112 thousand, or $0.06 per common share. For the first six months of 2014, the Bank reported net income of $42 thousand, or $0.02 per common share compared with a net income of $204 thousand, or $0.11 per common share for the same period in the prior year.

Robert D. O'Donnell, Chairman and CEO commented that, "During the second quarter 2014, our earnings were positively impacted by a partial reversal of the litigation expense recorded at year-end 2013, as we reached a settlement ending the proceeding. Our credit officers are taking steps to repair the non-performing loans which reduced our interest income on loans. In addition, the level of non-performing loans also resulted in an increase in our provision for loan losses. Improving the asset quality now is our primary focus. Expense management also remains a focus as we continue to seek out additional efficiencies within our operations."

Balance Sheet Summary

At June 30, 2014, total assets were $138.6 million, a decline of $5.9 million from December 31, 2013. Total cash and cash equivalents declined $4.1 million compared to year end 2013, which was offset by a decline in total deposits. Due from banks – time deposits declined $1.7 million and majority of the proceeds were used to fund a pending litigation which was reserved for at year-end 2013. Total investment securities increased $0.5 million while loans receivable decreased $0.5 million compared to year end 2013. The decrease in loans receivables reflects principal payments exceeding new loan originations, as the Bank works through its asset quality issues.

Total deposits decreased $4.2 million compared to the levels at year end 2013.  The majority of the decrease resulted from the maturing time deposits, which were not renewed. Non-interest bearing deposits increased $1.7 million and Savings, NOW and money market deposits combined increased $2.6 million compared to the levels reported at year-end 2013. Total time deposits decreased $8.5 million.

Shareholders' equity totaled $14.5 million at June 30, 2014, increasing moderately from year-end 2013 primarily due to improvement in accumulated other comprehensive loss. The Bank's capital ratios remain strong and exceed the regulatory requirements to be deemed a well-capitalized financial institution.

Results of Operations

For the quarter ended June 30, 2014, net interest income totaled $1.1 million, decreasing $80 thousand over the same period in the prior year. The decrease in net interest income was a direct result of declining average yield on loans receivables.  Net interest margin decreased 48 basis points to 3.49% for the quarter ended June 30, 2014, over the comparable quarter in 2013. Average yield on earning assets was 4.25%, decreasing 47 basis points over the prior year and average rate on paying liabilities was 0.88%, unchanged over the comparable quarter in the prior year.

The provision for loan loss was $275 thousand for the second quarter 2014, an increase of $220 thousand compared to the year-ago same quarter. The allowance for loan loss at period-end was $1.8 million, or 1.87% of total loans. The asset quality continued to be unstable which resulted in an increase in management's estimates of allowance for loan losses.

Non-interest income was almost unchanged for the quarter ended June 30, 2014 compared with the same quarter in the prior year.

Non-interest expense totaled $0.9 million for the quarter ended June 30, 2014, a decrease of $195 thousand from year-ago same quarter. The decrease in non-interest expense was directly related to the reversal of $500 thousand in a litigation expense recorded at year-end 2013 related to a judgment that was subsequently settled at a cost lower than the accrued expense. Salaries and employee benefits increased $27 thousand due to annual salary increases and increased health benefit costs. Data processing costs increased $50 thousand quarter over quarter as a result of onetime expenses associated with the installation of a new core processing system. Professional and other fees increased $138 thousand in part due to increase in audit fees as it relates to changing regulatory landscape, consulting and legal services utilized by the Bank in connection with complying with the consent order among the Bank, the FDIC and the NJ Department of Banking and Insurance.

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.

Contacts at New Jersey Community Bank:

Robert D. O'Donnell
Chairman and CEO
rodonnell@njcbk.com

Terry H. Thompson    
President and COO
tthompson@njcbk.com

Naqi A. Naqvi
Executive Vice President & CFO
nnaqvi@njcbk.com

SOURCE: New Jersey Community Bank