New Jersey Community Bank Reports Second Quarter 2017

FREEHOLD, NJ--(Marketwired - Aug 21, 2017) - New Jersey Community Bank ( OTCQB : NJCB ) (the "Bank") reported a net loss of $278 thousand, or ($0.15) per share for the three months ended June 30, 2017, compared with a net loss of $580 thousand, or ($0.30) per share for the same period in the prior year. For the first six months of 2017, the Bank reported net loss of $512 thousand, or ($0.27) per common share compared with a net loss of $863 thousand, or ($0.45) per common share for the same period in the prior year. The losses for the first six months and the second quarter 2017 improved when compared to the prior year largely due to a substantial decline in operating expenses.

The losses for the second quarter 2017 were further impacted in part due to increased cost of deposits as a result of increases in both average volume and interest rates when compared to the same period in the prior year. Total interest income for the quarter increased primarily as a result of an increase in average loans outstanding despite a decline in interest yield year over year. Net interest margin for the quarter decreased 39 basis points year over year primarily due to the reasons noted above.

Balance Sheet Summary

At June 30, 2017, total assets were $103.6 million, a decrease of $1.6 million from December 31, 2016 primarily as a result of a slight decrease in deposits. Total cash and cash equivalents decreased $3.1 million while due from banks-time deposits decreased $2.2 million. Loans totaled $80.5 million at June 30, 2017, an increase of $3.7 million from the year-end 2016. The growth in loans was funded utilizing the available liquidity in cash and cash equivalents.

Total deposits decreased $1.0 million compared to the levels at year end 2016. Non-interest bearing deposits decreased $687 thousand; Savings, NOW and money market accounts decreased $3.5 million; these were substantially offset by a $3.2 million increase in total time deposits. Time deposits increased as a result of deposit promotion on longer term time deposits.

Shareholders' equity totaled $9.6 million at June 30, 2017, decreasing primarily due to net losses reported during the first six months of 2017 when compared to year-end 2016. The Bank's capital ratios continue to remain strong, with a leverage ratio of 9.20%; common equity tier 1 risk based capital ratio of 11.62%; and a total risk based capital ratio of 12.87%. These ratios exceed those needed to be deemed a well-capitalized financial institution.

Results of Operations

For the quarter ended June 30, 2017, net interest income totaled $729 thousand, decreasing $23 thousand over the same period in the prior year. At June 30, 2017, the net interest margin was 2.95%, decreasing 39 basis points compared to the same period a year ago. The yield on average earning assets decreased 16 basis points to 3.86% while the cost of interest-bearing deposits increased 23 basis points to 1.06%, 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 second quarter 2017 and 2016. The allowance for loan losses at period-end was $1.5 million, or 1.87% of total loans. Management continue to monitor the asset quality and will take actions necessary to affect the provision for loan losses; however, the current level of the allowance for loan loss is considered to be more than adequate.

Non-interest income decreased $47 thousand to $69 thousand for the quarter ended June 30, 2017, compared with $116 thousand for the same quarter in the prior year. The majority of such decrease is directly related to the gain on sale of other real estate owned recorded in the prior year.

Non-interest expense totaled $1.1 million for the quarter ended June 30, 2017, decreasing $372 thousands from a year-ago quarter. Of the total decrease in non-interest expense, salaries and employee benefits decreased $67 thousand as a result of a reduction in head count while management is attempting to fill certain open positions. Occupancy and equipment expense declined $45 thousand as a direct result of the closure of one of the branch facilities. Professional and other fees decline $215 thousand while the FDIC insurance assessment declined $37 thousand as a result of lifting of the Consent Orders. The decline in professional and other fees was directly related to the Bank complying with certain regulatory orders during the same period in the prior year. All other components of total non-interest expenses showed moderate variances.

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)						6/30/2017				3/31/2017				12/31/2016				9/30/2016				6/30/2016
Summary of Operations:
	Interest income					$	953			$	928			$	939			$	935			$	932
	Interest expense						224				204				187				186				170
	Net interest income						729				724				752				749				762
					Non-interest income		69				55				59				60				107
	Non-interest expense						1,076				1,013				1,170				1,207				1,449
					Loss before income tax expense (benefit)		(278	)			(234	)			(359	)			(398	)			(580	)
	Income tax expense (benefit)						-				-				2				-				-
				Net loss		$	(278	)		$	(234	)		$	(361	)		$	(398	)		$	(580	)
Per Common Share:
			Basic			$	(0.15	)		$	(0.12	)		$	(0.19	)		$	(0.21	)		$	(0.30	)
			Diluted				(0.15	)			(0.12	)			(0.19	)			(0.21	)			(0.30	)
	Book value per share						5.05				5.18				5.30				5.54				5.75
		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						-1.07	%			-0.91	%			-1.44	%			-1.53	%			-2.25	%
	Return on average common equity						-11.25	%			-9.34	%			-13.85	%			-14.78	%			-20.49	%
	Average equity to average assets						9.51	%			9.75	%			10.40	%			10.37	%			10.99	%
	Risk-based capital:
		Total risk-based capital ratio					12.87	%			13.94	%			14.08	%			14.96	%			15.23	%
		Common equity tier 1 risk-based capital ratio					11.62	%			12.68	%			12.83	%			13.70	%			13.98	%
		Tier 1 risk-based capital ratio					11.62	%			12.68	%			12.83	%			13.70	%			13.98	%
		Tier 1 leverage capital ratio					9.20	%			9.67	%			10.16	%			10.15	%			10.67	%
Financial Condition:
	Total assets					$	103,554			$	106,718			$	105,163			$	101,890			$	103,279
	Loans, net of unearned income						80,512				75,665				76,796				71,514				71,343
	Deposits						93,516				96,355				94,538				90,900				91,795
	Shareholder's equity						9,638				9,885				10,115				10,571				10,967

New Jersey Community Bank and Subsidiary
Consolidated Statements of Financial Condition
(dollars in thousands, except share data)
							June 30,				December 31,
							2017				2016
Assets							(unaudited)
	Cash and due from banks - non-interest bearing						$	972			$	1,531
	Federal funds sold and interest-bearing deposits with banks							2,869				5,415
					Total Cash and Cash Equivalents			3,841				6,946
	Due from banks - time deposits							1,934				4,175
	Investment Securities:
		Available-for-sale						6,356				6,152
		Held-to-maturity						5,991				6,255
					Total Investment Securities			12,347				12,407
	Loans Receivable, net of unearned fees							80,512				76,796
			Less: Allowance for loan losses					(1,503	)			(1,608	)
					Net Loans			79,009				75,188
	Premises and equipment, net							1,895				1,941
	Accrued interest receivable							271				260
	Bank-owned life insurance							3,912				3,868
	Other assets							345				378
				Total Assets			$	103,554			$	105,163
Liabilities and Shareholders' Equity
	Liabilities
	Deposits:
		Non-interest bearing					$	12,230			$	12,917
		Savings, NOW and money market						25,071				28,570
		Time deposits $250M and over						6,765				7,731
		Time deposits, less than $250M						49,450				45,320
				Total Deposits				93,516				94,538
	Accrued interest payable							11				10
	Other liabilities							389				500
				Total Liabilities				93,916				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							13,872				13,866
	Accumulated Deficit							(8,017	)			(7,505	)
	Accumulated other comprehensive income loss							(34	)			(63	)
				Total Shareholders' Equity				9,638				10,115
				Total Liabilities and Shareholders' Equity			$	103,554			$	105,163

New Jersey Community Bank and Subsidiary
Consolidated Statements of Operations
(dollars in thousands, except per share data)(unaudited)
				Three Months Ended								Year Ended
				June 30,								June 30,
				2017				2016				2017				2016
Interest Income
	Loans receivable, including fees			$	861			$	831			$	1,702			$	1,732
	Investment securities				67				62				135				136
	Federal funds sold and interest-bearing deposits with banks				19				12				30				25
	Due from banks - interest bearing				6				16				15				29
		Total Interest Income			953				921				1,882				1,922
Interest Expense
	Deposits				224				169				428				337
		Net Interest Income			729				752				1,454				1,585
Non-Interest Income
	Fees and service charges on deposit accounts				21				23				42				46
	Loan fee income				14				3				16				4
	Income from bank owned life insurance				22				24				44				47
	Gain on sale of other real estate owned				-				53				-				53
	All other income				12				13				22				23
		Total Non-Interest Income			69				116				124				173
Non-Interest Expense
	Salaries and employee benefits				503				570				1,038				1,176
	Occupancy and equipment				154				199				312				387
	Data processing services				64				62				125				122
	Professional and other fees				246				461				400				623
	Advertising and promotion				4				6				8				9
	Federal insurance assessment				17				54				32				110
	Other operating expenses				88				96				175				194
		Total Non-Interest Expenses			1,076				1,448				2,090				2,621
Net Loss				$	(278	)		$	(580	)		$	(512	)		$	(863	)
Loss per share:
	Basic and diluted			$	(0.15	)		$	(0.30	)		$	(0.27	)		$	(0.45	)
Weighted average number of common shares outstanding
	Basic and diluted				1,908				1,908				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
				June 30, 2017										June 30, 2016
				Average							Average			Average							Average
				Balance				Interest			Rate			Balance				Interest			Rate
Interest Earning Assets:
	Loans			$	77,395			$	861		4.46	%		$	69,482			$	831		5.18	%
	Investment securities				12,428				67		2.16	%			13,488				62		2.18	%
	Federal funds sold and interest-bearing deposits with banks				7,607				19		1.02	%			10,878				12		0.48	%
	Due from banks - time deposits				1,693				6		1.42	%			5,693				16		0.96	%
			Total interest-earning assets		99,123				953		3.86	%			99,541				921		4.02	%
Allowance for loan loss					(1,542	)									(1,569	)
Cash and due from banks - non-interest bearing					1,165										1,534
All other assets					6,304										6,544
			Total assets	$	105,050									$	106,050
Interest Bearing Liabilities:
	Deposits:
		Savings, NOW and money market		$	26,331				27		0.41	%		$	35,989				28		0.31	%
		Time deposits			58,311				197		1.35	%			45,205				141		1.25	%
			Total interest-bearing deposits		84,642				224		1.06	%			81,194				169		0.83	%
Demand					10,214										12,842
Other liabilities					403										293
			Total liabilities		95,259										94,329
	Stockholders' equity				9,791										11,721
			Total liabilities & stockholders' equity	$	105,050									$	106,050
Net interest income								$	729									$	752
Average interest rate spread											2.80	%									3.19	%
Net interest margin											2.95	%									3.34	%