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New Jersey Community Bank Reports Fourth Quarter and Full Year Results for 2016

FREEHOLD, NJ — (Marketwired) — 03/08/17 — New Jersey Community Bank (OTC PINK: NJCB) (the “Bank”) reported a net loss of $361 thousand, or ($0.19) per common share for the three months ended December 31, 2016, compared to a net loss of $2.2 million, or ($1.16) per common share in the fourth quarter of 2015. For the year ended December 31, 2016, the Bank reported net loss of $1.6 million, or ($0.85) per common share compared with a net loss of $2.8 million, or ($1.46) per common share for the year 2015. The losses for the year and the fourth quarter 2016 were negatively impacted largely due to declining yields on earning assets and in part due to one-time expenses associated with professional services associated with complying with the regulatory Consent Orders as well as legal expenses. Without such one-time expenses, the Bank would have reported a loss of $800 thousand for the year 2016.

William H. Placke, Chairman, President and CEO commented, “While we are very gratified at the lifting at mid-year 2016 of the regulatory Consent Orders which we previously reported, we are encouraged since that time with the decline of monthly operating losses attributable mainly to the reduction in one-time expenses and the steady improvement of our consumer and commercial pipeline. We continue to invest in personnel, product development and technology to support our growth objectives.”

Over the past two years, management–s attention was focused on maintaining sound underwriting standards, monitoring certain concentrations of commercial real estate loans, improving asset quality and credit metrics. In 2017, management will continue to focus on these elements while attempting to grow the loan portfolio. Management will explore opportunities to improve non-interest income and seek out additional efficiencies within its operations to return the Bank to profitability.

The Board of Directors voted that the Annual Meeting of Shareholders shall be held on April 20, 2017 at the American Hotel in Freehold, New Jersey at 9:30 am. The record date of March 10, 2017 was established for the determination of the shareholders entitled to notice of, and to vote at, the annual meeting.

At December 31, 2016, total assets were $105.2 million, a decrease of $5.9 million from December 31, 2015. Total cash and cash equivalents and due from banks-time deposits decreased $4.4 million and $1.8 million, respectively, compared to year-end 2015. Total investment securities decreased $3.2 million from year-end 2015, resulting from the calls of certain available-for-sale investment securities. Total loans receivable increased $4.1 million compared to year-end 2015. The resulting liquidity from the above noted decreases was used to fund the loan growth and meet the outflow of deposits.

Total deposits decreased $4.3 million compared to the levels at year end 2015. Of the total decrease, non-interest bearing deposits decreased $2.2 million and savings, NOW and money market deposits combined decreased $10.3 million, majority of which was offset by $8.2 million increase in total time deposits. The decline in total deposits resulted from the general outflow of deposits, in part, due to the closure of one of the bank–s branches in Cranbury, NJ.

Shareholders– equity totaled $10.1 million at December 31, 2016, decreasing $1.6 million from year-end 2015, due to the reported net loss. The Bank–s capital ratios remain strong and exceed the regulatory requirements to be deemed a well-capitalized financial institution.

For the quarter ended December 31, 2016, net interest income totaled $752 thousand, decreasing $123 thousand over the same period in the prior year. The decrease in net interest income was largely a result of declining average loans receivables which impacted the interest income on loans. Interest expense on interest bearing deposits increased moderately due to an increase in average cost of deposits.

The Bank did not record any provision for loan losses during the fourth quarter 2016 and 2015, primarily due to sufficient reserves in allowance for loan loss. The allowance for loan losses at period-end was $1.6 million, or 2.09% of total loans. Asset quality continues to be monitored and management estimates the current level of the allowance for loan losses to be adequate.

Non-interest income totaled $59 thousand for the quarter ended December 31, 2016, a decrease of $25 thousand when compared with the same quarter in the prior year. The decrease in non-interest income was the result of a $19 thousand decline in all other income and $9 thousand decline in fees and service charges on deposit accounts slightly offsetting an increase in loan fees income during the fourth quarter.

Non-interest expense totaled $1.2 million for the quarter ended December 31, 2016, a decrease of $84 thousand from the year-ago same quarter. The decrease in non-interest expense was largely related to decreases in salaries and employee benefits, occupancy and equipment and federal insurance assessment, in part offset by an increase in professional and other fees.

Income tax expense was negligible for the fourth quarter 2016 compared to the fourth quarter 2015 as a result of $1.9 million in valuation allowance recorded against the deferred tax assets since the net operating loss carryback claims have been exhausted.

For the full year ended December 31, 2016, net interest income totaled $3.1 million, decreasing $716 thousand over the full prior year. The decrease in net interest income was primarily due to a decline in total interest income resulting from decreases of $10 million in average loans outstanding and $6.2 million in average investment securities, offset by $118 thousand reduction in interest paid on deposits resulting primarily from declining average balances in interest bearing deposits. For the year, average interest earning assets and average interest bearing liabilities declined $20.0 million and $18.5 million, respectively. The yield on interest earning assets declined 4 basis points while the yield on interest bearing deposits increased 5 basis points, year over year. Net interest margin for the year declined 7 basis points to 3.18% over prior year.

The Bank did not record any provision for loan losses during 2016, compared to $710 thousand for the year 2015. The provision for loan loss in the year 2015 was impacted by increased levels of classified loans during the year 2015, as management was addressing the problem credits.

Non-interest income totaled $289 thousand for the year 2016, reflecting a decrease of $50 thousand over the full year 2015, primarily resulting from decreases in fees on deposit accounts and all other income offset by gain on sale of other real estate owned.

Non-interest expense totaled $5.0 million for the full year 2016, an increase of $324 thousand over prior full year, all of which was related to the consulting costs associated with the compliance of the regulatory Consent Order and in part related to legal expenses. Salaries and benefits expense and occupancy and equipment expense declined $95 thousand and $45 thousand, respectively, largely due to the closure of the Cranbury branch location in July 2016. FDIC insurance assessment declined $132 thousand year over year primarily due to a reduction in premium for such insurance. All other operating expenses declined $57 thousand due to management efforts in curtailing operating expenses. Professional and other fees for the year 2016 totaled $1.3 million, an increase of $632 thousand when compared to the prior year. The increase was largely attributable to complying with the regulatory Consent Orders and legal expenses. Excluding the one-time expenses of approximately $800 thousand, professional fees would have totaled $500 thousand, or total non-interest expense would have been $4.2 million, or $500 thousand below last year.

Income tax expense for the year 2016 was negligible when compared to the year 2015. In 2015, although the Bank reported a pretax loss for the year, it had to record an income tax expense of $1.5 million for the year, primarily due to management–s decision to provide for the valuation allowance against its deferred tax assets. Please refer to the discussion about the fourth quarter 2015 results for details on the valuation allowance.

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 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:

William H. Placke
Chairman, President and CEO

Naqi A. Naqvi
Executive Vice President & CFO

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Posted by on Mar 8 2017. Filed under Commercial & Investment Banking, Picture Gallery. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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