Bancorp of New Jersey Reports 2017 Second Quarter Financial Results Highlighted by a 25% Increase in Net Income

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| Source: Bancorp of New Jersey, Inc.

FORT LEE, N.J., Aug. 10, 2017 (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, 2017. All share and per share data reported in this news release have been adjusted for a 5% stock dividend declared on June 26, 2017.   The second quarter financial results were highlighted by reported net income of $1.3 million, or $0.19 per diluted share, a 25% increase from $1.0 million, or $0.16 per diluted share, in the prior year period. For the year to date period, net income increased by $28,000 over the prior year, to $2.4 million. 

Second Quarter 2017 Highlights

  • Total assets of the Company increased by 5.28% to $865.9 million at June 30, 2017, from $822.4 million at December 31, 2016.
  • Total loans were $676.0 million at June 30, 2017, up $15.5 million, or 2.34% from the December 31, 2016 balance of $660.6 million.
  • Total deposits were $766.6 million at June 30, 2017, up $48.6 million, or 6.76% from the December 31, 2016 balance of $718.0 million.

“We generated a strong year-over-year increase in net income in the second quarter, driven largely by the expansion of our loan portfolio and effective cost management,” stated Nancy E. Graves, Bancorp of New Jersey’s President and Chief Executive Officer.  “Our commercial real estate (“CRE”) lending continues to be an important source of growth for the bank, which has been funded by our strong deposit growth.  We closed $89 million in commercial loans to a diverse group of borrowers including light industrial, multi-family, retail office, and credit tenant customers, and our pipeline of new loan opportunities in our core Northern New Jersey and metro-New York markets looks healthy.  While pay-offs were accelerated in the second quarter, resulting in a headwind to net loan growth, we expect that to ease as we reduce our exposure to construction loans that do not convert to permanent loans.  We currently have in excess of $50 million in commercial loans approved to close.  Over the course of 2017, we’ve been successfully building our core deposits through proactive marketing campaigns, while simultaneously reducing our reliance on municipal funding.  Following the CD promotion that we ran through the first part of the year, in May we began advertising our totally free business and personal checking accounts.  These campaigns contributed to our nearly $49 million year-to-date increase in total deposits, which were up approximately $11 million in the second quarter.  Replacing municipal deposits with core deposits has resulted in an increased cost of funds, but reduced volatility in our overall source of funds. 

“We are in a relationship-centric business and consistently positive employee-customer interactions and low employee turnover are critical to our ability to succeed and grow. We have enhanced our employee benefits, which we believe will enable us to continue to attract and retain high quality talent.  We feel that the increases to our salaries and benefits are worthwhile investments in our bank’s future.” 

Ms. Graves continued, “Over the balance of 2017, our management team is focused on capitalizing on the opportunities presented by the densely populated North Jersey and metro-New York markets as we continue to strengthen our brand and leverage the investments we’ve made in our infrastructure over the past 12 months.  Looking further ahead, our goal is to deliver on our defined long-term strategy aimed at increasing loan production and commercial deposit relationships, while at the same time controlling expenses, improving our asset quality and managing risk.  We believe that our second quarter performance is a positive indicator that our plan is working, and we look forward to sharing our continued progress for the second half of the year.”

  

Period Ended
 June 30, 2017 December 31, 2016
Loan Composition   
Commercial Real Estate$526,419  $492,296 
Residential Mortgages 68,870   78,961 
Commercial and Industrial 26,283   30,259 
Home Equity 54,125   58,399 
Consumer 336   656 
Total Loans 676,033   660,571 
Deferred Loan Fees and Costs, net (719)  (586)
Allowance for Loan Losses (7,993)  (8,287)
Net Loans$667,321  $651,698 
    
Deposit Composition   
Noninterest-Bearing Demand Deposits$143,045  $137,564 
Savings and Interest-Bearing Transaction Accounts   282,178   287,682 
Time Deposits 341,333   292,742 
Total Deposits$         766,556  $717,988 
    

Second Quarter and First Half 2017 Financial Review

Net Income
Net income for the second quarter of 2017 was $1.3 million compared to $1.0 million for second quarter of 2016, an increase of $258,000, or 25%.  This increase was primarily due to increases in interest income from loans of $216,000 and Federal Funds and other interest earning deposits of $181,000. These increases were partially offset by increases in interest expense on deposit products of $224,000.

Total operating expenses and provision for loan losses decreased by $114,000 and $150,000, respectively, in the second quarter of 2017 compared to the second quarter of 2016.

Net income for the six months ended June 30, 2017 was $2.4 million, or $0.35 per diluted share, compared to $2.3 million, or $0.37 per diluted share for the six months ended June 30, 2016, an increase of 1.2%. An increase in total operating expenses of $396,000 was offset by a decrease in provision for loan losses of $450,000, while net interest income remained constant between the two periods. 

Net Interest Income
For the three month period ended June 30, 2017, net interest income increased by $166,000 or 2.7% from the same period last year. Interest income increased by $389,000 for the three months ended June 30, 2017 as compared to the corresponding period last year. This increase in interest income was primarily due to growth in the commercial loan portfolio and cash balances.

Total interest expense increased by $224,000 in the second quarter of 2017 to $2.0 million compared to $1.7 million in the prior year. The increase in interest expense was due to higher average deposit balances coupled with higher interest rates. Interest on borrowed funds decreased by $43,000 due to declining balances of borrowed funds. During the second quarter of 2017, average time deposits increased to $349.0 million from $313.4 million in the comparable quarter of 2016.

Average other interest bearing deposits increased to $294.0 million in the current quarter from $260.9 million in the second quarter of 2016. Average borrowed funds decreased to $18.9 million in the current quarter from $34.5 million in the same quarter last year.

During the six months ended June 30, 2017, net interest income was constant at $12.3 million compared to the six months ended June 30, 2016.  Decreases in interest income from loans and investments of $151,000 and $26,000 respectively were offset by an increase in interest income from Federal Funds and other interest earning deposits of $280,000.  At the same time, total interest expense increased by $121,000 for the six months ended June 30, 2017 from the six months ended June 30, 2016.  The Company’s average rate paid on interest bearing liabilities decreased slightly to 1.15% for the six months ended June 30, 2017, from 1.16% for the six months ended June 30, 2016.

Provision for Loan Losses
The Company recognized no provision for loan losses for the three and six months ended June 30, 2017 compared to provisions of $150,000 and $450,000 the three and six months ended June 30, 2016.  The allowance for loan losses to total loan ratio was 1.18% as of the end of the second quarter of 2017.

Non-Interest Expense
Non-interest expense was $4.3 million during the second quarter of 2017 compared to $4.4 million in the second quarter of 2016, a decrease of approximately $114,000, reflecting non-recurring charges of $190,000 in the second quarter of 2016. During the six months ended June 30, 2017, net-interest expense was $8.8 million, $396,000 greater than the same period last year.

The increase in salaries and employee benefits costs is associated with health insurance premium increases and a new 401(k) plan with a safe harbor match. The increase in professional fees is mainly attributable to non-recurring consulting fees for the completion of loan system enhancements.

Financial Condition
At June 30, 2017, the Company and 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 9.07%, its common equity Tier 1 capital and Tier 1 capital to risk weighted assets, each, was 11.19% and its total capital to risk weighted assets ratio was 12.34%.

Total consolidated assets increased by $43.4 million, or 5.28%, from $822.4 million at December 31, 2016 to $865.9 million at June 30, 2017. 

Total cash and cash equivalents increased from $77.0 million at December 31, 2016 to $117.5 million at June 30, 2017, an increase of $40.5 million. The change in cash is mainly due to the increase in deposit account balances, pending redeployment into earning assets.

Loans receivable, or “total loans,” increased from $660.6 million at December 31, 2016 to $676.0 million at June 30, 2017, an increase of approximately $15.5 million, or 2.34%. 

Total deposits grew by $48.6 million to $766.6 million at June 30, 2017, from $718.0 million at December 31, 2016, attributable to successful deposit campaigns.

Loan Quality
At June 30, 2017 the Bank had non-accrual loans of $17.3 million. Included in this total are $10.0 million in Troubled Debt Restructured Loans (“TDR”). At year-end 2016, non-accrual loans totaled $18.8 million. The decrease in non-accrual loans reflects payoffs of two credits with outstanding balances totaling of $1.3 million associated with a former Director and a sale of one credit totaling $302,000.  Accruing loans delinquent 30 to 90 days were $7.5 million as of June 30, 2017, compared to $4.3 million at December 31, 2016.

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 currently has 9 branch offices located in Fort Lee, Hackensack, Haworth, Harrington Park, Englewood, Cliffside Park, and Woodcliff Lake. 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. 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.

  
BANCORP OF NEW JERSEY, INC. 
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME 
(in thousands, except for per share data) 
  
  For the Three Months Ended June 30, 
  2017 2016 
INTEREST INCOME       
Loans, including fees $7,684 $7,467 
Securities  189  198 
Federal funds sold and other  290  109 
TOTAL INTEREST INCOME  8,163  7,774 
        
INTEREST EXPENSE       
Savings and interest bearing transaction accounts  442  373 
Time deposits  1,435  1,238 
Borrowed funds  73  115 
TOTAL INTEREST EXPENSE  1,950  1,726 
        
NET INTEREST INCOME  6,213  6,048 
Provision for loan losses    150 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES    6,213  5,898 
NON-INTEREST INCOME       
Fees and service charges  112  105 
TOTAL NON-INTEREST INCOME  112  105 
        
NON-INTEREST EXPENSE       
Salaries and employee benefits  2,256  2,201 
Occupancy and equipment expense  682  647 
FDIC premiums and related expenses  208  270 
Legal fees  57  98 
Other real estate owned expenses  9  69 
Professional fees  246  189 
Data processing  332  289 
Other expenses  516  657 
TOTAL NON-INTEREST EXPENSE  4,306  4,420 
Income before provision for income taxes  2,019  1,583 
Income tax expense  730  552 
Net income $1,289 $1,031 
        
PER SHARE OF COMMON STOCK       
Basic $0.19 $0.17 
Diluted $0.19 $0.16 
        


  
BANCORP OF NEW JERSEY, INC. 
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME 
(in thousands, except for per share data) 
  
  For the Six Months Ended June 30, 
  2017 2016 
INTEREST INCOME       
Loans, including fees $15,069 $15,220 
Securities  389  415 
Federal funds sold and other  480  201 
TOTAL INTEREST INCOME  15,938  15,836 
        
INTEREST EXPENSE       
Savings and interest bearing transaction accounts  880  724 
Time deposits  2,643  2,622 
Borrowed funds  160  216 
TOTAL INTEREST EXPENSE  3,683  3,562 
        
NET INTEREST INCOME  12,255  12,274 
Provision for loan losses    450 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES    12,255  11,824 
NON-INTEREST INCOME       
Fees and service charges  230  190 
TOTAL NON-INTEREST INCOME  230  190 
        
NON-INTEREST EXPENSE       
Salaries and employee benefits  4,548  4,193 
Occupancy and equipment expense  1,420  1,348 
FDIC premiums and related expenses  441  539 
Legal fees  140  134 
Other real estate owned expenses  11  72 
Professional fees  733  440 
Data processing  636  572 
Other expenses  878  1,113 
TOTAL NON-INTEREST EXPENSE  8,807  8,411 
Income before provision for income taxes  3,678  3,603 
Income tax expense  1,327  1,280 
Net income $2,351 $2,323 
        
PER SHARE OF COMMON STOCK       
Basic $0.35 $0.37 
Diluted $0.35 $0.37 
        


  
BANCORP OF NEW JERSEY, INC. 
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION 
(in thousands, except for per share data) 
  
  June 30, 2017 December 31, 2016 
Assets       
Cash and due from banks $2,855  $2,628  
Interest bearing deposits  114,143   73,896  
Federal funds sold  452   452  
Total cash and cash equivalents  117,450   76,976  
Interest bearing time deposits  1,000   1,000  
Securities available for sale  49,666   61,589  
Securities held to maturity (fair value $7,076 and $7,343 at June 30, 2017 and December 31, 2016, respectively)  7,076   7,343  
Restricted investment in bank stock, at cost  1,665   1,983  
Loans receivable  676,033   660,571  
Deferred loan fees and costs, net  (719)  (586) 
Allowance for loan losses  (7,993)  (8,287) 
Net loans  667,321   651,698  
Premises and equipment, net  13,736   13,497  
Accrued interest receivable  2,294   2,366  
Other real estate owned  456   614  
Other assets  5,211   5,374  
Total assets $           865,875  $822,440  
Liabilities and Stockholders’ Equity       
LIABILITIES:       
Deposits:       
Noninterest-bearing demand deposits $143,045  $137,564  
Savings and interest bearing transaction accounts  282,178   287,682  
Time deposits $250 and under  223,979   156,477  
Time deposits over $250  117,354   136,265  
Total deposits  766,556   717,988  
Borrowed funds - Long Term  16,709   25,008  
Accrued expenses and other liabilities  2,316   2,300  
Total liabilities  785,581   745,296  
Stockholders’ equity:       
Common stock, no par value, authorized 20,000,000 shares; issued and outstanding 6,707,223 at June 30, 2017 and 6,316,291 at December 31, 2016    67,487   61,524  
Retained earnings  12,894   15,813  
Accumulated other comprehensive loss  (87)  (193) 
Total stockholders’ equity  80,294   77,144  
Total liabilities and stockholders’ equity $865,875  $822,440