Market Overview

Bancorp of New Jersey Reports 2018 Second Quarter Financial Results

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FORT LEE, N.J., Aug. 07, 2018 (GLOBE NEWSWIRE) -- Bancorp of New Jersey, Inc. (NYSE American:  BKJ) (the "Company"), holding company for Bank of New Jersey (the "Bank"), today reported financial results for its second quarter and six months ended June 30, 2018. All share and per share data reported in this news release have been adjusted for a 5% stock dividend declared on June 28, 2018. Net income for the second quarter of 2018 was $1.19 million, or $0.16 per diluted share, compared to net income of $1.29 million, or $0.19 per diluted share, for the second quarter of 2017. For the year to date period, net income increased by $181,000, or 7.7% over the prior year, to $2.5 million, or $0.35 per diluted share, compared to earnings of $0.35 per diluted share for the first six months of 2017 reflecting an increase in outstanding shares due to the 5% stock dividend and stock options exercised.

2018 Highlights

  • Net interest income for the six months ended June 30, 2018 was $13.2 million, an increase of $932,000 or 7.6%, compared to $12.3 million for the same period of 2017. 
  • Total loans were $741.1 million at June 30, 2018, up $19.9 million, or 2.8% from the December 31, 2017 balance of $721.2 million. Commercial real estate loans increased $36.4 million, offsetting decreased balances in home equity loans and residential mortgages.
  • Noninterest-bearing demand deposits at June 30, 2018 were $152.2 million, up $18.5 million, from $133.7 million at December 31, 2017. Noninterest-bearing demand deposits represent 20.2% of total deposits as of June 30, 2018, compared to 17.0% as of December 31, 2017.
  • Non-accrual loans decreased by $3.7 million, or 20.0%, during the six months ended June 30, 2018.

Nancy E. Graves, Bancorp of New Jersey's President and Chief Executive Officer, stated, "Our 2018 second quarter results were consistent with our expectations. Commercial loan activity reflects local loan and deposit relationships we have cultivated. Net interest margin decreased to 3.08% from 3.15%, due to the rising costs of deposits and borrowings. Our average yield on loans declined slightly from 4.56% to 4.52%, partly due to a change in our loan mix with less construction loans outstanding at June 30, 2018.  We remain focused on increasing demand deposits and on loan pricing. Our retail franchise marketing through June 30, 2018 resulted in 945 new customer deposit accounts.  Our core growth in new customers is particularly impressive in light of the heightened competitive deposit market."

The Bank will convert to a new core system in November. CEO Graves described the new system as offering many technological enhancements to the customer access channels. "The complete consumer and business suite of products will provide enhanced technology our current and future customers expect. This fully integrated system will result in a more robust and efficient operating environment, which will level the playing field for us as a community bank, making the Bank of New Jersey an even more attractive choice for customers."   

CEO Graves continued, "The strategic analysis of our branch network has resulted in two branch changes that will take place in the fourth quarter of this year. After ten years, we will close the leased Harrington Park branch. Given the proximity to the Haworth location, which we own, it makes sense to consolidate the two locations and continue to serve our customers and the community. Later this year we will open a branch at our new corporate headquarters in Englewood Cliffs. This 1,000 square foot branch will provide our customers with another convenient location and will be a new model which will have no lobby tellers, offering high tech solutions with personal service. We are executing on our strategies of organic growth, improving metrics and offering products and services that will continue to benefit both our customer base and shareholders."

The following tables show information regarding our loan and deposit portfolios (in thousands):


Period Ended  
  June 30, 2018   December 31, 2017
 
Loan Composition        
Commercial Real Estate $ 610,388     $ 573,941    
Residential Mortgages   59,715       66,497    
Commercial and Industrial   25,541       27,237    
Home Equity   45,110       53,199    
Consumer   299       317    
Total Loans   741,053       721,191    
Deferred Loan Fees and Costs, net   (878 )     (798 )  
Allowance for Loan Losses   (8,188 )     (8,317 )  
Net Loans $ 731,987     $ 712,076    
         
Deposit Composition        
Noninterest-Bearing Demand Deposits $ 152,154     $ 133,661    
Savings and Interest-Bearing Transaction Accounts   250,185       307,583    
Time Deposits $250 and under   231,181       231,224    
Time Deposits over $250   121,488       115,825    
Total Deposits $ 755,008     $ 788,293    
         

Three and Six Months Ended June 30, 2018 Financial Review

Net Income
Net income for the second quarter of 2018 was $1.19 million compared to net income of $1.29 million for the second quarter of 2017.  This decrease was primarily due to an increase in non-interest expenses and a $325,000 provision for loan losses recognized by the Company in the second quarter of 2018, while no provision was recognized for the same period in 2017, partially offset by an increase in net interest income due to loan growth and a decrease in tax expense related to a lower federal corporate tax rate in 2018 provided by the Tax Cuts and Jobs Act (the "Tax Act") signed into law on December 22, 2017.

Net income for the six months ended June 30, 2018 was $2.5 million, or $0.35 per diluted share, compared to $2.4 million, or $0.35 per diluted share for the six months ended June 30, 2017, an increase of $181,000 or 7.7%. The rise in net income for the six months ended June 30, 2018 was driven by an increase in net interest income and a decrease in tax expense related to a lower federal corporate tax rate in 2018 provided by the Tax Act, offset by an increase in provision for loans losses of $650,000 and total non-interest expenses.

Net Interest Income
For the three month period ended June 30, 2018, net interest income increased by $264,000 or 4.3% versus the same period last year. For the six months ended June 30, 2018, net interest income increased by $932,000 or 7.6% versus the same period last year. 

Total interest income increased by $510,000, or 6.3% for the three months ended June 30, 2018 as compared to the corresponding period last year. During the six months ended June 30, 2018, interest income increased by $1.4 million or 9.0% versus the same period last year.  This increase in interest income was primarily due to loan growth and higher interest received on cash and investment balances due to rising interest rates.

Total interest expense increased by $246,000 in the second quarter of 2018 to $2.2 million. During the six months ended June 30, 2018, interest expense increased by $494,000 or 13.4% versus the same period last year. The increase in interest expense was due to higher interest rates on deposits as market rates continue to increase in our market area and the cost associated with the planned increase in borrowings during the second quarter of 2018. We continue to face significant competition for deposits.

Provision for Loan Losses
The Company recognized a provision for loan losses of $325,000 for the three months ended June 30, 2018 and $650,000 for the six months ended June 30, 2018 compared to no provision in the three or six months ended June 30, 2017. The provision recognized in 2018 was mainly due to the growth in loans. The allowance for loan losses to total loans was 1.10% as of June 30, 2018.

Non-Interest Expense
Non-interest expense was $4.7 million during the second quarter of 2018, up from $4.3 million in the second quarter of 2017, an increase of $405,000 or 9.4%, while non-interest expense was $9.4 million for the six months ended June 30, 2018 compared to $8.8 million for the same period in 2017, an increase of $607,000 or 6.9%.

The increase was primarily in salaries and employee benefits, legal fees and occupancy and equipment expense, offset by decreases in professional fees, FDIC premiums and data processing.  The increase in salaries and employee benefits costs is associated with health insurance premium increases, annual increases and executive stock awards expenses. The increase in legal fees is mainly associated with the working out of non-performing loans. The increase in occupancy and equipment expense is related to the relocation of the corporate offices to a new location in Englewood Cliffs. The decrease in professional fees is mainly attributable to non-recurring consulting fees related to enhancing the Company's risk management system in the prior year.

Financial Condition
At June 30, 2018, the Bank maintained capital ratios that were in excess of regulatory standards for well capitalized institutions. The Company's and Bank's Tier 1 capital to average assets ratio was 9.86%, common equity Tier 1 capital and Tier 1 capital to risk weighted assets were both 10.86% and total capital to risk weighted assets ratio was 11.93%.

Total consolidated assets decreased by $13.9 million, or 1.6%, from $887.4 million at December 31, 2017 to $873.5 million at June 30, 2018, reflecting a decrease in cash, offset by an increase in loans receivable. 

Loans receivable, or "total loans," increased from $721.2 million at December 31, 2017 to $741.1 million at June 30, 2018, an increase of $19.9 million.

Total deposits decreased by $33.3 million to $755.0 million at June 30, 2018, from $788.3 million at December 31, 2017. The decrease is mainly due to outflows of government and municipal deposits attributable to the cyclical nature of real estate tax collections and payments and the current competitive landscape of obtaining new deposits. Borrowings increased by $16.6 million during the second quarter of 2018 to $30.0 million from $13.4 million. The increase in borrowings was planned in order to offset the amortization of existing borrowings and to fund loan growth. Total borrowings are less than 4.0% of total deposits.

Loan Quality
At June 30, 2018 the Bank had non-accrual loans of $14.7 million. Included in this total are $7.0 million in Troubled Debt Restructured Loans ("TDRs"). At year-end 2017, non-accrual loans totaled $18.4 million. The reduction in non-accrual loans was mainly due to management's continued focus on working out the non-performing loans.  Accruing loans delinquent greater than 30 days were $3.0 million as of June 30, 2018, compared to $6.3 million at December 31, 2017.

About the Company
Founded in 2006, Bancorp of New Jersey is the holding company for Bank of New Jersey, which provides traditional commercial and consumer banking products and services. The Bank's corporate office is in Englewood Cliffs and the Bank currently has 9 branch offices located in Fort Lee, Hackensack, Haworth, Harrington Park, Englewood, Cliffside Park, and Woodcliff Lake, New Jersey. For more information about Bank of New Jersey and its products and services, please visit http://www.bonj.net or call 201-720-3201. If you would like to receive future Bancorp of New Jersey announcements electronically, please email us at shareholder@bonj.net.

Forward-Looking Statements This press release and other statements made from time to time by Bancorp of New Jersey's management contain express and implied statements relating to our future financial condition, results of operations, credit quality, corporate objectives, and other financial and business matters, which are considered forward-looking statements. These forward-looking statements are necessarily speculative and speak only as of the date made, and are subject to numerous assumptions, risks and uncertainties, all of which may change over time. Actual results could differ materially from those expected or implied by such forward-looking statements. Risks and uncertainties which could cause our actual results to differ materially and adversely from such forward-looking statements are included in our Annual Report on Form 10-K under Item 1a – Risk Factors and in the description of our business under Item 1, as revised by our subsequent filings with the SEC. Any statements made that are not historical facts should be considered to be forward-looking statements. You should not place undue reliance on any forward-looking statements. We undertake no obligation to update forward-looking statements or to make any public announcement when we consider forward-looking statements to no longer be accurate, whether as a result of new information of future events, except as may be required by applicable law or regulation.

Investor Relations:
The Equity Group Inc.
Fred Buonocore, CFA  212-836-9607
Kevin Towle 212-836-9620



BANCORP OF NEW JERSEY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for per share data)

               
    For the Three Months Ended June 30,   
    2018   2017  
INTEREST INCOME              
Loans, including fees   $ 8,179   $ 7,684  
Securities     233     189  
Federal funds sold and other     261     290  
TOTAL INTEREST INCOME     8,673     8,163  
               
INTEREST EXPENSE              
Savings and interest bearing transaction accounts     464     442  
Time deposits     1,609     1,435  
Borrowed funds     123     73  
TOTAL INTEREST EXPENSE     2,196     1,950  
               
NET INTEREST INCOME     6,477     6,213  
Provision for loan losses     325      
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES     6,152     6,213  
NON-INTEREST INCOME              
Fees and service charges on deposit accounts     110     112  
TOTAL NON-INTEREST INCOME     110     112  
               
NON-INTEREST EXPENSE              
Salaries and employee benefits     2,372     2,256  
Occupancy and equipment expense     828     682  
FDIC premiums and related expenses     148     208  
Legal fees     219     57  
Other real estate owned expenses     2     9  
Professional fees     245     246  
Data processing     205     332  
Other expenses     692     516  
TOTAL NON-INTEREST EXPENSE     4,711     4,306  
Income before provision for income taxes     1,551     2,019  
Income tax expense     361     730  
Net income   $ 1,190   $ 1,289  
               
PER SHARE OF COMMON STOCK              
Basic   $ 0.16   $ 0.19  
Diluted   $ 0.16   $ 0.19  
               


BANCORP OF NEW JERSEY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for per share data)

               
    For the Six Months Ended June 30,   
    2018   2017  
INTEREST INCOME              
Loans, including fees   $ 16,327   $ 15,069  
Securities     469     389  
Federal funds sold and other     568     480  
TOTAL INTEREST INCOME     17,364     15,938  
               
INTEREST EXPENSE              
Savings and interest bearing transaction accounts     881     880  
Time deposits     3,123     2,643  
Borrowed funds     172     160  
TOTAL INTEREST EXPENSE     4,176     3,683  
               
NET INTEREST INCOME     13,188     12,255  
Provision for loan losses     650      
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES     12,538     12,255  
NON-INTEREST INCOME              
Fees and service charges on deposit accounts     205     230  
TOTAL NON-INTEREST INCOME     205     230  
               
NON-INTEREST EXPENSE              
Salaries and employee benefits     4,787     4,548  
Occupancy and equipment expense     1,695     1,420  
FDIC premiums and related expenses     306     441  
Legal fees     357     140  
Other real estate owned expenses     9     11  
Professional fees     493     733  
Data processing     538     636  
Other expenses     1,229     878  
TOTAL NON-INTEREST EXPENSE     9,414     8,807  
Income before provision for income taxes     3,329     3,678  
Income tax expense     796     1,327  
Net income   $ 2,533   $ 2,351  
               
PER SHARE OF COMMON STOCK              
Basic   $ 0.35   $ 0.35  
Diluted   $ 0.35   $ 0.35  
               


BANCORP OF NEW JERSEY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except for per share data)

               
    June 30, 2018   December 31, 2017  
Assets              
Cash and due from banks   $ 4,688     $ 1,627    
Interest bearing deposits     55,257       90,540    
Federal funds sold     453       452    
Total cash and cash equivalents     60,398       92,619    
Interest bearing time deposits     1,000       1,000    
Securities available for sale     51,433       53,234    
Securities held to maturity (fair value $5,852 and $6,058 at June 30, 2018 and December 31, 2017, respectively)     5,852       6,058    
Restricted investment in bank stock, at cost     2,265       1,380    
Loans receivable     741,053       721,191    
Deferred loan fees and costs, net     (878 )     (798 )  
Allowance for loan losses     (8,188 )     (8,317 )  
Net loans     731,987       712,076    
Premises and equipment, net     13,463       13,725    
Accrued interest receivable     2,676       2,695    
Other real estate owned     -       415    
Other assets     4,407       4,205    
Total assets   $ 873,481     $ 887,407    
Liabilities and Stockholders' Equity              
LIABILITIES:              
Deposits:              
Noninterest-bearing demand deposits   $ 152,154     $ 133,661    
Savings and interest bearing transaction accounts     250,185       307,583    
Time deposits $250 and under     231,181       231,224    
Time deposits over $250     121,488       115,825    
Total deposits     755,008       788,293    
Borrowed funds     30,034       13,385    
Accrued expenses and other liabilities     2,576       2,420    
Total liabilities     787,618       804,098    
Stockholders' equity:              
Common stock, no par value, authorized 20,000,000 shares; issued and outstanding 7,295,492 at June 30, 2018 and 6,932,690 at December 31, 2017     76,574       70,182    
Retained earnings     9,866       13,482    
Accumulated other comprehensive loss     (577 )     (355 )  
Total stockholders' equity     85,863       83,309    
Total liabilities and stockholders' equity   $ 873,481     $ 887,407    

 

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