New Jersey Community Bank (OTCBB: NJCB) (the “Bank”) reported net income of $140 thousand, or $0.08 per common share for the three months ended December 31, 2012, compared to the fourth quarter 2011 earnings of $138 thousand, or $0.08 per common share. For the year 2012, the Bank reported net income of $361 thousand, or $0.20 per common share compared with a net income of $552 thousand, or $0.30 per common share for the year 2011. The earnings for the year 2012 were negatively impacted by non-interest expense recorded in connection with a settlement with a former executive in the amount of $130 thousand, net of tax effect. Excluding this item, the Bank would have reported earnings of $491 thousand, or $0.27 per common share.
Robert D. O’Donnell, Chairman and CEO commented that, “We are pleased with our fourth quarter and full year 2012 results of operation despite a difficult economic environment. The New Jersey economy, job market and real estate market remain weak according to the latest reports and survey data. We continue to combat the low level of interest rates, which squeezes our margin, and intense competition for new loans. Though our new loan demand has softened somewhat, we continue to remain cautiously optimistic during this uncertain economic environment.”
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, 2012.
Balance Sheet Summary
At December 31, 2012, total assets were $138.7 million, an increase $6.7 million compared to year end 2011. Total cash and cash equivalents totaled $19.3 million, an increase of $4.9 million from year end 2011. Due from banks time deposits increased $1.1 million to $7.8 million from a year ago. Total investment securities decreased $6.2 million to $14.0 million at December 31, 2012 compared with year end 2011 while total loans receivable increased $4.3 million from December 31, 2011. The cash flow resulting from the decrease in investment securities was largely offset by the increases in total loans and due from banks time deposits.
Deposits totaled $122.5 million at December 31, 2012, an increase of $6.1 million from year end 2011. Of the total increase, non-interest bearing, savings, NOW and money market and time deposits over $100M increased $4.0 million, $3.8 million and $2.5 million, respectively, offset by a $4.3 million decrease in all other time deposits. A majority of the increase in total deposits was used to fund the loan growth. Shareholders’ equity totaled $15.7 million at December 31, 2012. The Bank’s capital ratios remain strong and exceed the regulatory requirements to be deemed a well capitalized financial institution.
Results of Operations
Fourth Quarter 2012
For the quarter ended December 31, 2012, net interest income totaled $1.2 million, an increase of $115 thousand over the same period in the prior year. The increase in net interest income was primarily due to a $37 thousand increase in total interest income coupled with $78 thousand reduction in total interest expense resulting from declining interest rates on deposits despite an increase in average interest-bearing deposits. Net interest margin improved by 33 basis points to 3.75% for the quarter ended December 31, 2012, over the comparable quarter in 2011. Average yield on earning assets was 4.69%, increasing 7 basis points over the prior year and the average rate on interest paying liabilities was 1.11%, dropping 28 basis points over the comparable quarter in the prior year.
The provision for loan loss was $28 thousand for the fourth quarter 2012, a decrease of $7 thousand compared to the year-ago quarter. The allowance for loan loss at period-end was $1.2 million, or 1.31% 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 decreased $32 thousand to $95 thousand for the quarter ended December 31, 2012 compared with $127 thousand for the same quarter in the prior year. The majority of the decrease is directly related to a decrease in fees and service charges on deposit accounts.
Non-interest expense totaled $1.0 million for the quarter ended December 31, 2012, an increase of $61 thousand from year-ago quarter, primarily due to increased personnel and employee benefit costs. Of the total increase, salaries and employee benefits increased $89 thousand while all other non-interest expenses combined declined $28 thousand.
Full Year 2012
For the full year ended December 31, 2012, net interest income totaled $4.6 million, increasing $162 thousand over the full prior year. The increase in net interest income was primarily due to declining interest rates on deposits resulting in a reduction in interest paid on deposits. For the year, average interest earning assets increased $7.6 million coupled with an increase of $5.8 million in average interest bearing liabilities, while the yield on interest earning assets declined 30 basis points to 4.63% and the cost of interest bearing liabilities declined 23 basis points to 1.19%. Net interest margin for the year declined 11 basis points to 3.61% over the full year 2011.
The provision for loan loss was $117 thousand for the year, a decrease of $127 thousand compared to prior year, primarily due to stable level of non-performing loans during the year.
Non-interest income totaled $349 thousand for the year 2012 reflecting a decrease of $71 thousand over the full year 2010, primarily resulting from a decline in fees on deposit accounts.
Non-interest expense totaled $4.2 million for the full year 2012, an increase of $531 thousand over prior full year. Of the total increase, salaries and employee benefits, the largest component of non-interest expense, increased $435 thousand primarily due to compensation expense recorded in connection with a settlement with a former executive, addition of personnel and increased health benefit costs. Occupancy and equipment expense increased $82 thousand primarily due to addition of Cranbury branch office. All other operating expenses combined increased a net of $14 thousand primarily due to the overall growth 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 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.
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