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Bancorp of New Jersey Reports 2017 Fourth Quarter and Full Year Financial Results

Net Loans Increased 9.3 % for Full Year 2017

FORT LEE, N.J., March 14, 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 fourth quarter and full year ended December 31, 2017. Net loss for the fourth quarter of 2017 was $126,000, compared to net income of $998,000 for the fourth quarter of 2016. Net income for the twelve months ended December 31, 2017 was $3.6 million or $0.54 per diluted share, compared to $4.0 million or $0.64 per diluted share, for the twelve months ended December 31, 2016.  Fourth quarter and full year performance were affected by the revaluation of our deferred tax assets as a result of the Tax Cuts and Jobs Act (the “Tax Act”), which resulted in a $1.4 million, or $0.20 per diluted share, charge to income tax expense for the fourth quarter of 2017. Net income for the fourth quarter, adjusted for the impact of the one-time non-cash charge to income tax expense, was $1.27 million, or $0.18 per diluted share, a 26.9% increase from $998,000, or $0.16 per diluted share, in the prior year period.  For the full year, net income, adjusted for the aforementioned tax-related item increased by $966,000 over the prior year, to $4.97 million. The Company expects that future periods will benefit from the new, lower tax rate.

Annual 2017 Highlights

  • Total assets of the Company increased by 7.90% to $887.4 million at December 31, 2017, from $822.4 million at December 31, 2016.
  • Total loans were $721.2 million at December 31, 2017, up $60.6 million, or 9.18% from the December 31, 2016 balance of $660.6 million.
  • Total deposits were $788.3 million at December 31, 2017, up $70.3 million, or 9.79% from the December 31, 2016 balance of $718.0 million.

Nancy E. Graves, Bancorp of New Jersey’s President and Chief Executive Officer, stated, “Our year-over-year financial results reflect the experience and dedication of our leadership team executing a clear strategic plan to grow while leveraging our investments in risk management and system enhancements.  We are pleased with our growth in net loans, which exceeded 9% for the full year, and our growth in earnings, as adjusted for the deferred tax asset revaluation.  Our commitment to a community based strategy has resulted in an increase of $82 million in commercial loans made to our local borrowers and $70 million in deposit growth.  The attractive Northern New Jersey and metro-New York markets and the experience of our management team in terms of cultivating relationships has enabled us to continue to grow our commercial loans and deposits. Looking ahead, the disciplined execution of our strategy positions us well for continued growth and increased shareholder value in 2018 and beyond.”

The following tables show information regarding the growth in our loan and deposit portfolios:


 Period Ended
  December 31,
2017
  December 31,
2016
Loan Composition      
Commercial Real Estate $   573,941     $   492,296  
Residential Mortgages     66,497         78,961  
Commercial and Industrial     27,237         30,259  
Home Equity     53,199         58,399  
Consumer     317         656  
Total Loans     721,191         660,571  
Deferred Loan Fees and Costs, net      (798 )         (586 )
Allowance for Loan Losses      (8,317 )        (8,287 )
Net Loans $   712,076     $   651,698  
       
Deposit Composition      
Noninterest-Bearing Demand Deposits $   133,661     $     137,564  
Savings and Interest-Bearing Transaction Accounts     307,583         287,682  
Time Deposits $250 and under     231,224         156,477  
Time Deposits over $250     115,825         136,265  
Total Deposits $   788,293     $   717,988  
       

Fourth Quarter and Full Year Ended December 31, 2017 Financial Review

Net Income
Net loss for the fourth quarter of 2017 was $126,000 compared to net income of $998,000 for the fourth quarter of 2016. Net income for the twelve months ended December 31, 2017 was $3.6 million or $0.54 per diluted share, compared to $4.0 million or $0.64 per diluted share, for the twelve months ended December 31, 2016.  Fourth quarter and full year performance were affected by the revaluation of our deferred tax assets as a result of the Tax Act, which resulted in a $1.4 million, or $0.20 per diluted share, charge to income tax expense for the fourth quarter of 2017. Excluding the impact of the aforementioned charge to income tax expense, net income per diluted share for the three and twelve months ended December 31, 2017 was $1.27 and $4.97, an increase of 26.9% and 24.1% over the prior year, respectively.  The increase in adjusted net income for the three and twelve month periods ended December 31, 2017 compared to the same periods in 2016 was primarily due to an increase in net interest income due to loan growth and increased cash balances, and to the provision for loan losses recognized by the Company in 2017 compared to 2016.

Net Interest Income
For the three month period ended December 31, 2017, net interest income increased by $523,000 or 8.7% versus the same period last year. Interest income increased by $824,000 for the three months ended December 31, 2017 as compared to the corresponding period last year. This increase in interest income was primarily due to loan growth and increased cash balances.

Total interest expense increased by $301,000 in the fourth 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, as market rates began to increase in our market area.  Interest on borrowed funds decreased by $41,000 due to declining balances of borrowed funds.

For the twelve months ended December 31, 2017, net interest income increased to $25.0 million from $24.4 million in the twelve months ended December 31, 2016.  Total interest income increased by $1.2 million, while interest expense increased by $637,000 for the twelve months ended December 31, 2017 from the twelve months ended December 31, 2016.

Provision for Loan Losses
The Company recognized a $400,000 provision for loan losses over both the three and twelve months ended December 31, 2017 compared to no provision in the three months ended December 31, 2016 and $1.6 million in the twelve months ended December 31, 2016, respectively. The provisions in 2016 were mainly due to a provision recognized in the third quarter of 2016 related to a single credit.  The allowance for loan losses to total loans was 1.15% as of the end of the fourth quarter of 2017.

Non-Interest Expense
Non-interest expense was $4.8 million during the fourth quarter of 2017, up from $4.6 million in the fourth quarter of 2016. During the twelve months ended December 31, 2017, non-interest expense was $17.8 million, $609,000 greater than the same period last year. The increase in non-interest expense primarily reflects an increase in salaries and employee benefits costs associated with health insurance premium increases and a new 401(k) plan with a safe harbor match.  The change in non-interest expense also reflects non-recurring charges of $220,000 in the twelve months ended December 31, 2016.

Financial Condition
At December 31, 2017, 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 9.59%, each of their common equity Tier 1 capital and Tier 1 capital to risk weighted assets were 10.84% and their total capital to risk weighted assets ratio was 11.95%.

Total consolidated assets increased by $65.0 million, or 7.90%, from $822.4 million at December 31, 2016 to $887.4 million at December 31, 2017. 

Total cash and cash equivalents increased from $77.0 million at December 31, 2016 to $92.6 million at December 31, 2017, an increase of $15.6 million. The change in cash is mainly due to the increase in deposit account balances, pending redeployment into interest earning assets.

Loans receivable, or “total loans,” increased from $660.6 million at December 31, 2016 to $721.2 million at December 31, 2017, an increase of approximately $60.6 million, or 9.18%. 

Total deposits grew by $70.3 million to $788.3 million at December 31, 2017, from $718.0 million at December 31, 2016, attributable to successful deposit promotion campaigns.

Loan Quality
At December 31, 2017 the Bank had non-accrual loans of $18.4 million. Included in this total are $10.8 million in Troubled Debt Restructured Loans (“TDRs”). At year-end 2016, non-accrual loans totaled $18.8 million. Accruing loans delinquent greater than 30 days were $6.3 million as of December 31, 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’s corporate office is in Englewood Cliffs and 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.

/EIN News/ -- Non-GAAP Financial Measures This press release may contain references to measures which are not defined in generally accepted accounting principles ("GAAP"). Information concerning these non-GAAP financial measures can be found in the opening paragraphs of the release.

On December 22, 2017, the Tax Act was signed into law. The fourth quarter of 2017 and full year 2017 results reflect the estimated impact of the enactment of the Tax Act, which resulted in a $1.4 million decrease in net income. Net income and earnings per share excluding these related expenses are non-GAAP financial measures. Management believes these measures are meaningful because it reflects adjustments commonly made by management, investors, regulators, and analysts to evaluate the adequacy of earnings per common share and provides a greater understanding of ongoing operations and enhances comparability of results with prior periods.

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 December  31,   
    2017   2016  
INTEREST INCOME              
Loans, including fees   $  8,024   $  7,402  
Securities      239      169  
Federal funds sold and other      239      107  
TOTAL INTEREST INCOME      8,502      7,678  
               
INTEREST EXPENSE              
Savings and money markets      436      414  
Time deposits      1,487      1,166  
Borrowed funds      56      97  
TOTAL INTEREST EXPENSE      1,979      1,677  
               
NET INTEREST INCOME      6,523      6,001  
Provision for loan losses     400      —  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES      6,123      6,001  
NON-INTEREST INCOME              
Fees and service charges on deposit accounts      107      100  
TOTAL NON-INTEREST INCOME      107      100  
               
NON-INTEREST EXPENSE              
Salaries and employee benefits     2,186      2,070  
Occupancy and equipment expense      806      759  
FDIC premiums and related expenses      134      51  
Legal fees      113      38  
Other real estate owned expenses      51      14  
Professional fees      266      721  
Data processing      500      317  
Other expenses      738      600  
TOTAL NON-INTEREST EXPENSE      4,794      4,570  
Income before provision for income taxes      1,436      1,531  
Income tax expense      1,562      533  
Net income   $  (126 ) $  998  
               
PER SHARE OF COMMON STOCK              
Basic   $  (0.01 $  0.16  
Diluted   $  (0.02 $  0.16  


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

               
    For the Twelve Months Ended December 31,   
    2017   2016  
INTEREST INCOME              
Loans, including fees   $  30,707   $  30,242  
Securities      862      751  
Federal funds sold and other      1,072      417  
TOTAL INTEREST INCOME      32,641      31,410  
               
INTEREST EXPENSE              
Savings and money markets      1,756      1,523  
Time deposits      5,577      5,026  
Borrowed funds      278      425  
TOTAL INTEREST EXPENSE      7,611      6,974  
               
NET INTEREST INCOME      25,030      24,436  
Provision for loan losses      400      1,570  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES      24,630      22,866  
NON-INTEREST INCOME              
Fees and service charges on deposit accounts      448      491  
TOTAL NON-INTEREST INCOME      448      491  
               
NON-INTEREST EXPENSE              
Salaries and employee benefits      9,012      8,338  
Occupancy and equipment expense      2,966      2,755  
FDIC premiums and related expenses      729      868  
Legal fees      398      260  
Other real estate owned expenses      70      95  
Professional fees      1,248      1,543  
Data processing      1,433      1,201  
Other operating expenses      1,975      2,162  
TOTAL NON-INTEREST EXPENSE      17,831      17,222  
  Income before income taxes      7,247      6,135  
Income tax expense      3,673      2,134  
Net income   $  3,574   $  4,001  
               
Earnings per share:              
Basic   $  0.55   $  0. 64  
Diluted   $  0.54   $  0. 64  


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

               
    December 31, 2017   December 31, 2016  
Assets              
Cash and due from banks   $  1,627     $  2,628    
Interest bearing deposits      90,540        73,896    
Federal funds sold      452        452    
Total cash and cash equivalents      92,619        76,976    
Interest bearing time deposits      1,000        1,000    
Securities available for sale      53,234        61,589    
Securities held to maturity (fair value $6,058 and $7,343 at December 31, 2017 and December 31, 2016, respectively)      6,058        7,343    
Restricted investment in bank stock, at cost      1,380        1,983    
Loans receivable      721,191       660,571    
Deferred loan fees and costs, net      (798 )      (586 )  
Allowance for loan losses      (8,317 )      (8,287 )  
Net loans      712,076        651,698    
Premises and equipment, net      13,725        13,497    
Accrued interest receivable      2,695        2,366    
Other real estate owned      415        614    
Other assets      4,205        5,374    
Total assets   $  887,407     $  822,440    
Liabilities and Stockholders’ Equity              
LIABILITIES:              
Deposits:              
Noninterest-bearing demand deposits   $  133,661     $  137,564    
Savings and interest bearing transaction accounts      307,583        287,682    
Time deposits $250 and under      231,224        156,477    
Time deposits over $250      115,825        136,265    
Total deposits      788,293        717,988    
Borrowed funds      13,385        25,008    
Accrued expenses and other liabilities      2,420        2,300    
Total liabilities      804,098        745,296    
Stockholders’ equity:              
Common stock, no par value, authorized 20,000,000 shares; issued and outstanding 6,932,690 at December 31, 2017 and 6,316,291 at December 31, 2016      70,182        61,524    
Retained earnings      13,482        15,813    
Accumulated other comprehensive loss      (355 )      (193 )  
Total stockholders’ equity      83,309        77,144    
Total liabilities and stockholders’ equity   $  887,407     $  822,440    

 

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