American Bancorp N J (MM) (NASDAQ:ABNJ)
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American Bancorp of New Jersey, Inc. (NASDAQ: ABNJ) ("American")
announced today earnings of $93,000 for the quarter ended December 31,
2007. By comparison, net income for the quarter ended December 31, 2006
was $329,000. Both basic and diluted earnings per share for the quarter
ended December 31, 2007 were $0.01. By comparison, for the quarter ended
December 31, 2006, both basic and diluted earnings per share were $0.03.
For the quarter ended December 31, 2007, loans receivable, net increased
$11.2 million or 2.6% to $449.1 million from $437.9 million at September
30, 2007. The growth was comprised of net increases in commercial loans,
including multi-family, commercial real estate, construction and
business loans, totaling $12.0 million. The increase in loans
receivable, net also included net increases in home equity loans and
home equity lines of credit totaling $1.3 million and net increases in
consumer loans of $116,000. Offsetting the growth in these categories
was a $2.0 million decrease in the balance of 1-4 family first mortgages
and a net increase to the allowance for loan losses totaling $139,000.
For that same period, the balance of the Company’s
investment securities decreased by $9.6 million as funds received from
maturing debentures and mortgage-related security repayments, net of new
investment securities purchased, were reinvested into loans. Similarly,
the Company’s balance of cash and cash
equivalents decreased by $5.5 million. A portion of this decrease
augmented the funding for net loan growth while the remainder provided
the funding for the Company’s share
repurchases during the quarter.
The balance of deposits increased $388,000 for the quarter ended
December 31, 2007. This net growth reflected increases in certificates
of deposit of $6.3 million offset by reductions in other deposit
categories. In particular, the balance of noninterest bearing deposits
decreased $4.4 million due primarily to the transfer of an attorney
trust account included in the balance of noninterest-bearing deposits at
September 30, 2007 to an interest-bearing IOLTA account during the
current quarter. Offsetting this increase in deposits was a net decrease
in borrowings totaling $1.0 million primarily attributable to the
repayment of a maturing FHLB term advance. Additionally, the Company
reported an increase of $4.6 million in treasury stock attributable to
the Company’s recently completed share
repurchase program. The Company had previously announced the initiation
of a subsequent program to repurchase up to an additional 5% of its
outstanding shares which remains underway.
The continued growth in the Company’s
commercial lending activities contributed significantly to improved
yields on earning assets, which increased 36 basis points to 5.84% for
the quarter ended December 31, 2007 from 5.48% for quarter ended
December 31, 2006. However, the improved yields were more than offset by
increases in the cost of interest-bearing liabilities which grew by 40
basis points to 4.33% from 3.93% for the same comparative periods. This
increase in interest expense was largely attributable to higher costs of
interest-bearing deposits, which grew 52 basis points to 4.24% for the
quarter ended December 31, 2007 from 3.72% for the quarter ended
December 31, 2006. Contributing to this increase in the cost of
interest-bearing liabilities was the residual impact of higher
promotional interest rates paid on new deposit accounts at the three
branches opened during fiscal 2007. In total, the Company’s
net interest spread shrank 4 basis points from 1.54% to 1.50% for those
same comparative periods.
The factors resulting in the compression of the Company’s
net interest spread also impacted the Company’s
net interest margin. However, our net interest margin was also adversely
impacted by the Company’s share repurchase
plans. For the comparative quarters ended December 31, 2007 and 2006,
the average balance of treasury stock increased $22.3 million due to the
Company’s shares repurchase programs. The
foregone interest income on the earning assets used to fund those share
repurchases contributed significantly to the 28 basis point reduction in
the Company’s net interest margin to 2.31%
from 2.59% for the same comparative periods.
The effects of net interest margin compression contributed significantly
to a $68,000 or 2.1% decrease in net interest income to $3.1 million for
the quarter ended December 31, 2007 from $3.2 million for the quarter
ended December 31, 2006. This decrease was exacerbated by a
comparatively greater net provision to the allowance for loan losses.
For those same comparative periods, the Company’s
net loan loss provision increased $89,000 to $139,000 from $50,000. The
provision expense for the quarter ended December 31, 2006 reflected the
reversal of an $86,000 loss reserve against a previously impaired loan
participation. Excluding this adjustment, the Bank’s
provision expense for the earlier comparative quarter totaled $136,000.
For both comparative quarters, the increases to the allowance for loan
losses resulted from the application of historical and environmental
loss factors against the net growth in loans in accordance with the Bank’s
loan loss methodology. No additions to the allowance for loan losses
were required for either comparative quarter associated with
nonperforming loans.
Noninterest income increased $108,000 to $395,000 for the quarter ended
December 31, 2007 from $287,000 for the quarter ended December 31, 2006.
The growth in noninterest income was attributable, in part, to increases
in deposit service fees and charges of $66,000. Such increases were
partly attributable to deposit service fees and charges at the Bank’s
de novo branches opened during fiscal 2007. However, the reported
increase was primarily due to growth in deposit-related fees and charges
within the Bank’s other branches. The Company
also reported a $49,000 increase in income from the cash surrender value
of life insurance attributable to a combination of higher average
balances and improved yields on those assets. These increases were
partially offset by lower loan servicing fee income attributable to a
lower outstanding balance of mortgage loans serviced for others.
Noninterest expense increased $386,000 to $3.3 million for the quarter
ended December 31, 2007 from $2.9 million for the quarter ended December
31, 2006. This increase was attributable, in part, to a $178,000
increase in salaries and employee benefits resulting primarily from the
additions to Bank staff supporting the three de novo branches opened
during fiscal 2007. The growth in noninterest expense also included an
increase in occupancy and equipment expense of $238,000 primarily
attributable to the additional branches opened during fiscal 2007.
However, the comparative increase also reflects the land lease costs
associated with the relocation of the Bank’s
Bloomfield branch which is currently under construction and is targeted
for completion during the second fiscal quarter ending March 31, 2008.
The increases to noninterest expense were partially offset by
comparative reductions in advertising and marketing expenses of $34,000.
This reduction reflects the higher costs during the earlier comparative
period attributable to promoting the Bank’s
Verona branch which celebrated its grand opening in December 2006.
Subsequent Event
Finally, the Company regrettably announced the death of Stanley Obal,
Director Emeritus of the Company, subsequent to the quarter ended
December 31, 2007. Mr. Obal had retired from the Company and Bank Board
in August of 2007 after serving for sixteen years as a director. Under
the terms of the Company’s restricted stock
and stock option plans, the vesting of the remaining unearned benefits
accruing to Mr. Obal through these plans is automatically accelerated.
The Company expects to incur an acceleration of the remaining pre-tax
expenses associated with these benefits totaling approximately $254,000
during the second fiscal quarter ending March 31, 2008. In the absence
of this acceleration, the Company would have incurred approximately
$66,000 in related expenses through the remainder of fiscal 2008.
The following tables present selected financial data as of December 31,
2007 and September 30, 2007 and selected operating data for the quarters
ended December 31, 2007 and December 31, 2006.
FINANCIAL HIGHLIGHTS
(unaudited)
At December 31,
At September 30,
2007
2007
Balance
% Total
Assets
Balance
% Total
Assets
SELECTED FINANCIAL DATA
(in thousands):
Assets
Cash and cash equivalents
$
31,880
5.61
%
$
37,421
6.52
%
Securities available-for-sale
47,673
8.38
58,093
10.13
Securities held-to-maturity
7,564
1.33
6,730
1.17
Loans held for sale
-
-
1,243
0.22
Loans receivable, net
449,093
78.96
437,883
76.32
Premises and equipment
11,482
2.02
10,856
1.89
Federal Home Loan Bank stock
2,508
0.44
2,553
0.45
Cash surrender value of life insurance
13,347
2.35
13,214
2.30
Accrued interest receivable
2,217
0.39
2,212
0.39
Other assets
2,936
0.52
3,533
0.61
Total assets
$
568,700
100.00
%
$
573,738
100.00
%
Liabilities and equity
Deposits
$
428,988
75.43
%
$
428,600
74.70
%
Advances for taxes and insurance
2,536
0.45
2,702
0.47
Borrowings
36,596
6.44
37,612
6.56
Other liabilities
4,062
0.71
4,231
0.74
Equity
96,518
16.97
100,593
17.53
Total liabilities and equity
$
568,700
100.00
%
$
573,738
100.00
%
Loan Data
Balance
% Total
Loans
Balance
% Total
Loans
1-4 family mortgage loans
$
261,405
58.22
%
$
263,448
60.16
%
Home equity loans
14,987
3.34
14,625
3.34
Home equity lines of credit
20,786
4.63
19,829
4.53
Multifamily mortgage loans
33,029
7.35
30,552
6.98
Nonresidential mortgage loans
75,870
16.89
68,431
15.63
Land and property acquisition loans
3,338
0.74
3,340
0.76
Construction loans
34,412
7.66
32,542
7.43
Business loans
7,201
1.60
7,029
1.61
Consumer loans
771
0.17
655
0.15
Allowance for loans losses
(2,706
)
(0.60
)
(2,568
)
(0.59
)
Loans receivable, net
$
449,093
100.00
%
$
437,883
100.00
%
Deposit Data
Balance
% Total
Deposits
Balance
% Total
Deposits
Noninterest-bearing deposits
26,137
6.09
%
30,494
7.11
%
Interest-bearing checking
111,408
25.97
111,795
26.08
Savings
91,638
21.36
92,778
21.65
Certificates of deposit
199,805
46.58
193,533
45.16
Deposits
$
428,988
100.00
%
$
428,600
100.00
%
FINANCIAL HIGHLIGHTS (continued)
(unaudited)
At December 31,
At September 30,
2007
2007
Capital Ratios
Equity to total assets (%)
16.97
17.53
Outstanding shares (#)
11,509,716
11,946,190
Asset Quality Ratios:
Non-performing loans to total loans (%)
0.17
0.28
Non-performing assets to total assets (%)
0.14
0.22
Net charge offs to average loans outstanding (%)
0.00
0.00
Allowance for loan losses to non-performing loans (%)
347.98
205.56
Allowance for loan losses to total loans (%)
0.60
0.58
For the three months ended December 31,
2007
2006
SELECTED OPERATING DATA
(in thousands):
Total interest income
$
7,834
$
6,708
Total interest expense
4,732
3,538
Net interest income
3,102
3,170
Provision for loan losses
139
50
Net interest income after provision for loan losses
2,963
3,120
Noninterest income
395
287
Noninterest expense
3,276
2,890
Income before income taxes
82
517
Income tax provision
(11
)
188
Net income
$
93
$
329
Performance Ratios:
Return on average assets
0.07
%
0.26
%
Return on average equity
0.38
1.10
Net interest rate spread
1.50
1.54
Net interest margin
2.31
2.59
Noninterest income to average total assets
0.28
0.22
Noninterest expense to average total assets
2.30
2.26
Efficiency Ratio
93.68
83.60
PER SHARE DATA:
Earnings per share
Basic
0.01
0.03
Diluted
0.01
0.03
The foregoing material contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
concerning our financial condition, results of operations and business.
We caution that such statements are subject to a number of
uncertainties and actual results could differ materially, and,
therefore, readers should not place undue reliance on any
forward-looking statements. We do not undertake, and specifically
disclaim, any obligation to publicly release the results of any
revisions that may be made to any forward-looking statements to reflect
the occurrence of anticipated or unanticipated events or circumstances
after the date of such statements.