American Bancorp N J (MM) (NASDAQ:ABNJ)
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American Bancorp of New Jersey, Inc. (NASDAQ: ABNJ)
("American") announced today earnings of $464,000 for the quarter
ended June 30, 2006. By comparison, net income for the quarters ended
March 31, 2006 and June 30, 2005 were $688,000 and $325,000,
respectively. Basic and diluted earnings per share for the quarter
ended June 30, 2006 were $0.04 and $0.04, respectively. By comparison,
for the quarter ended March 31, 2006 both basic and diluted earnings
per share were $0.05. For the quarter ended June 30, 2005, both basic
and diluted earnings per share were $0.02 after adjusting for the
exchange of shares relating to the Company's recent second-step
conversion.
On October 5, 2005, American Savings, MHC closed its second step
conversion. Through this transaction, the Company replaced ASB Holding
Company as the holding company of American Bank of New Jersey, a
federally chartered stock savings bank which conducts business from
its main office in Bloomfield, New Jersey and one branch office in
Cedar Grove, New Jersey. Upon closing the conversion, each share of
ASB Holding Company stock was exchanged for 2.55102 shares of American
Bancorp of New Jersey, Inc. The earnings for the quarter ended June
30, 2005 reported by American are those of ASB Holding Company.
The Company reported a lower net interest spread and margin for
the quarter ended June 30, 2006 from that reported for the prior
quarter ended March 31, 2006. For those comparative periods, the
Company's net interest margin shrank 3 basis points from 2.80% to
2.77% while its net interest spread shrank by 10 basis points from
1.91% to 1.81%. In large part, the compression in the Company's net
interest spread and margin was attributable to increases in costs of
interest bearing liabilities which outpaced its improved yields on
earning assets. The continued growth in the Company's commercial
lending activities contributed significantly to improved yields on
earning assets, which increased 20 basis points from 5.04% to 5.24%.
However, these improved yields were more than offset by increases in
the cost of interest bearing liabilities which increased 30 basis
points from 3.13% to 3.43%. This increase in interest costs was
largely attributable to increased costs of interest bearing deposits,
which increased from 2.84% to 3.16%.
For the quarter ended June 30, 2006, loans receivable, net
increased $12.3 million or 3.3% to $384.2 million from $372.0 million
at March 31, 2006. The growth was comprised of net increases in
multi-family, commercial real estate and construction loans totaling
$7.3 million, coupled with net increases in commercial and business
loans totaling $930,000. Together, net growth in these loan balances
totaled $8.2 million comprising approximately two-thirds of the
Company's net increase in loans receivable for the quarter. The
remaining net growth in loans included increases in 1-4 family
mortgages, including equity loans and home equity lines of credit,
totaling $4.1 million.
During the June 30, 2006 quarter, the balance of the Company's
investment securities decreased $9.0 million while its interest
bearing cash equivalents also decreased $14.6 million. The combined
decrease in these categories of approximately $23.6 million provided
the funding for the net growth in loans reported for the quarter ended
June 30, 2006.
Deposits decreased by $2.5 million or 0.8% to $326.7 million at
June 30, 2006 from $329.2 million at March 31, 2006. This decrease was
primarily attributable to net outflows of noninterest bearing deposits
of approximately $2.6 million. In addition to this decrease in
deposits, the Company reported a decrease of $4.7 million in
borrowings due largely to the repayment of maturing Federal Home Loan
Bank advances.
The Company's net interest spread of 1.81% for the current quarter
was below its net interest spread of 2.24% for the same comparative
period in 2005 as increases in the Company's cost of interest bearing
liabilities continued to outpace the increase in the Company's yield
on earning assets. This decline was attributable, in part, to the
Company maintaining a comparatively higher average balance of
investment securities and short term, liquid assets during the current
quarter. These balances resulted from the receipt of capital proceeds
from the Company's second step conversion which were initially
deployed into such assets. Additionally, continued upward pressure on
the cost of retail deposits resulted in increases in interest expense
which outpaced the increase in interest income resulting from improved
yields on loans. The cost of interest bearing deposits increased 90
basis points from 2.26% for the quarter ended June 30, 2005 to 3.16%
for the quarter ended June 30, 2006. For the same comparative periods,
yield on loans increased 18 basis points from 5.34% to 5.52%.
The factors resulting in the compression of the Company's net
interest spread also impacted the Company's net interest margin.
However, the effects of that compression have been offset by the
impact of the additional capital raised in the Company's second-step
conversion. As a result, the Company's net interest margin increased
19 basis points from 2.58% for the quarter ended June 30, 2005 to
2.77% for the quarter ended June 30, 2006.
Overall balance sheet growth and improvements in net interest
margin contributed significantly to a $655,000 or 23.9% improvement in
net interest income from $2.7 million for the quarter ended June 30,
2005 to $3.4 million for the quarter ended June 30, 2006. This
improvement was offset, in part, by comparatively higher provisions
for loan losses. For those same comparative periods, the Company's net
loan loss provision increased $115,000. The Company's net loan loss
provision for the quarter ended June 30, 2005 reflected the reversal
of a previously recorded loss provision of $42,000. Consequently, the
Company recorded a negative loss provision of $6,000 for that quarter.
By comparison, the Company recorded net loan loss provision expense of
$109,000 for the quarter ended June 30, 2006. After adjusting for the
reversal in the earlier comparative period, the increase in loan loss
provision is primarily attributable to the comparatively higher net
growth in our commercial loan portfolio.
Noninterest income increased $41,000 from $264,000 for the quarter
ended June 30, 2005 to $306,000 for the quarter ended June 30, 2006.
This improvement was due, in part, to comparatively higher income from
cash surrender value of life insurance of approximately $11,000 and
the recognition as income of a $27,000 nonrefundable deposit
previously held in escrow on an REO property sold in a prior period
for which a potential buyer did not fulfill its purchase obligations.
Additionally, the quarter ended June 30, 2005 reflected a loss on sale
of an investment security of approximately $16,000 for which no
equivalent loss was incurred in the current quarter. Finally, for the
same comparative periods, income from deposit service fees and charges
was reduced by approximately $15,000 due primarily to reduced levels
of annuity sales and related fee income.
These comparative improvements in net interest and noninterest
income were partially offset by increases to noninterest expense.
Noninterest expense increased $343,000 from $2.5 million for the
quarter ended June 30, 2005 to $2.9 million for the quarter ended June
30, 2006. This increase was attributable, in part, to the recognition
of approximately $90,000 of deposit branch acquisition costs relating
to sites for which the Bank and/or Seller were unable to fulfill the
conditional terms of the sales contract. Such expenses would have been
capitalized into the depreciable cost of the branch had they come to
fruition. Notwithstanding these challenges, the Company continues to
pursue its deposit branch growth strategy. Toward that end, the Bank
is currently in the process of constructing a full service branch
located along Bloomfield Avenue in Verona, New Jersey and has recently
received the requisite municipal approvals needed to construct a full
service branch on a site in Clifton, New Jersey.
Other increases in noninterest expense for those same comparative
periods included increases in advertising and marketing expenses of
$39,000 attributable primarily to costs associated with enhanced
corporate and lending marketing programs. Legal expenses for the
quarter ended June 30, 2006 were $94,000 higher than those recorded
for the same quarter in 2005. This comparative increase in legal
expenses was attributable, in large part, to the Company's annual
meeting held in May, 2006 and matters addressed by shareholders at
that time. Additionally, professional and consulting fees increased
$77,000 to $128,000 for the quarter ended June 30, 2006 from $51,000
for the same quarter in 2005. In large part, these increases were
attributable to audit and consulting costs incurred by the Company
relating to compliance with the Sarbanes Oxley Act of 2002 and the
outsourcing of other internal audit-related services. These increases
in noninterest expense were partially offset by reversals of prior
expense accruals relating to management incentive plan compensation.
Such accrual adjustments reflect the Company's performance for the
nine months ended June 30, 2006.
The following table presents selected comparative financial data
for the periods ended June 30, 2006, March 31, 2006 and September 30,
2005 and selected comparative operating data for the quarters ended
June 30, 2006, March 31, 2006 and June 30, 2005:
-0-
*T
FINANCIAL HIGHLIGHTS
(unaudited)
At
June March September
30, 31, 30,
2006 2006 2005
------- --------- ---------
(In thousands)
SELECTED FINANCIAL DATA:
Total Assets $509,016 $516,278 $555,860
Cash and cash equivalents 6,253 18,905 125,773
Securities available-for-sale 84,549 92,873 62,337
Securities held-to-maturity 11,205 11,887 7,824
Construction Loans 11,206 7,909 1,098
1-4 Family mortgage loans 280,183 277,839 268,103
Multifamily (5+) mortgage loans 32,627 31,946 27,489
Nonresidential mortgage loans 37,792 34,518 31,072
Home equity lines of credit 18,047 16,286 13,455
Consumer loans 796 722 701
Commercial loans 5,593 4,663 746
Allowance for loans losses (2,014) (1,904) (1,658)
--------- -------- --------
Loans receivable, net 384,230 371,979 341,006
Loans held for sale 523 419 280
Federal Home Loan Bank stock 2,979 3,121 3,119
Noninterest bearing deposits 24,399 27,001 25,583
Interest bearing deposits 302,318 302,189 315,342
--------- -------- --------
Deposits 326,717 329,190 340,925
Total borrowings 47,690 52,405 53,734
Total equity 128,250 128,630 39,506
3 months ended
June 30, March 31, June 30,
2006 2006 2005
--------- --------- --------
(In thousands)
SELECTED OPERATING DATA:
Total interest income $ 6,432 $ 6,239 $ 5,223
Total interest expense 3,033 2,773 2,479
-------- -------- ---------
Net interest income 3,399 3,466 2,744
Provision for loan losses 109 159 (6)
-------- -------- ---------
Net interest income after provision for
loan losses 3,290 3,307 2,750
Non interest income 306 372 265
Non interest expense 2,859 2,564 2,516
-------- -------- ---------
Income before income taxes 737 1,115 499
Income tax provision 273 427 174
-------- -------- ---------
Net income $ 464 $ 688 $ 325
======== ======== =========
PER SHARE DATA:
Earnings per share
Basic $ 0.04 $ 0.05 $ 0.02
Diluted $ 0.04 $ 0.05 $ 0.02
*T
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.