American Bancorp N J (MM) (NASDAQ:ABNJ)
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American Bancorp of New Jersey, Inc. (NASDAQ: ABNJ) ("American")
announced today earnings of $150,000 for the quarter ended June 30,
2007. By comparison, net income for the quarter ended June 30, 2006 was
$464,000. Basic and diluted earnings per share for the quarter ended
June 30, 2007 were $0.01 and $0.01, respectively. By comparison, for the
quarter ended June 30, 2006, basic and diluted earnings per share were
$0.04 and $0.04, respectively.
The Company’s earnings for the nine months
ended June 30, 2007 were $628,000 in comparison to $1.8 million for the
nine months ended June 30, 2006. Basic and diluted earnings per share
for the nine months ended June 30, 2007 were $0.05 and $0.05,
respectively. By comparison, for the nine months ended June 30, 2006,
basic and diluted earnings per share were $0.14 and $0.14, respectively.
For the nine months ended June 30, 2007, loans receivable, net increased
$27.0 million or 6.8% to $425.6 million from $398.6 million at September
30, 2006. The growth was comprised of net increases in commercial loans
totaling $36.8 million. Such loans include multi-family, nonresidential
real estate, construction and business loans. The increase in loans
receivable, net also included net increases in home equity loans and
home equity lines of credit totaling $2.8 million. Offsetting the growth
in these categories was a $12.2 million decrease in the balance of 1-4
family first mortgages and net increases to the allowance for loan
losses totaling $320,000.
For that same period, the balance of the Company’s
investment securities decreased $25.1 million from September 30, 2006 as
most incoming cash flows from that portfolio were reinvested into
commercial loans.
We also experienced a net increase in cash and cash equivalents of $37.8
million. The reported growth in cash and cash equivalents resulted
largely from the growth in the Bank’s
deposits. For the nine months ended June 30, 2007, total deposits
increased by $82.8 million from $327.1 million at September 30, 2006 to
$409.9 million. A significant portion of this growth in deposits was
attributable to the Bank’s newest branches
located in Verona and Nutley, New Jersey. Deposits at the Verona branch,
which celebrated its grand opening on December 2, 2006, grew to $62.0
million at June 30, 2007. Deposits at the Nutley branch, which
celebrated its grand opening on June 16, 2007, grew to $7.2 million at
June 30, 2007. The remaining $13.6 million of deposit growth was shared
between the Bank’s other branches in
Bloomfield and Cedar Grove, New Jersey.
The increase in deposits enabled the bank to reduce its borrowings by
$16.4 million through the repayment of overnight FHLB borrowings of
$10.4 million coupled with the repayment of fixed rate advances of $6.0
million. Additionally, the Company reported an increase of $20.3 million
in treasury stock attributable to the Company’s
share repurchase programs.
The continued growth in the Company’s
commercial lending activities contributed significantly to improved
yields on earning assets for the periods reported. For the three and
nine month periods ended June 30, 2007, yield on earning assets
increased 47 basis points and 58 basis points, respectively, from the
same periods in fiscal 2006. However, the improved yields were more than
offset by increases in the cost of interest-bearing liabilities. For the
three and six month periods ended June 30, 2007, cost of
interest-bearing liabilities increased 87 basis points and 97 basis
points, respectively, from the same comparative periods in fiscal 2006.
The increase in interest costs was largely attributable to higher costs
of interest-bearing deposits. Contributing to this increase in the cost
of interest-bearing deposits was the impact of higher promotional
interest rates paid on new deposit accounts at the Bank’s
Verona and Nutley branches. However, a significant portion of this
increase was also attributable to continued upward pressure on deposit
interest rates in the highly competitive markets serviced by the Bank.
As a result, for the three and nine month periods ended June 30, 2007,
the Company’s net interest spread shrank 39
basis points and 39 basis points, respectively, to 1.40% and 1.46%
compared with that reported for the same periods in fiscal 2006. For
those same comparative three and nine month periods, the Company’s
net interest margin shrank 44 basis points and 31 basis points,
respectively, to 2.32% and 2.44%.
The effects of net interest margin compression contributed significantly
to decreases in net interest income. For the three and nine month
periods ended June 30, 2007, net interest income decreased $335,000 and
$954,000, respectively, compared with that reported for the same periods
in fiscal 2006.
For the three and nine month periods ended June 30, 2007, the decrease
in net interest income was partially offset by a decrease of $32,000 and
$35,000 in the net provision to the allowance for loan losses compared
with that reported for the same periods in fiscal 2006. The decrease in
the three month period ended June 30, 2007 reflects the comparatively
lower net loan growth compared with that in fiscal 2006. By contrast,
the decrease in the comparative nine month period reflected the reversal
of an $86,000 loss reserve against a previously impaired loan
participation during the quarter ended December 31, 2006. Excluding this
adjustment, the Bank’s provision expense for
the nine month period ended June 30, 2007 increased $51,000. The
reported growth in the provision for loan losses reflects the Company’s
increased strategic emphasis in commercial lending and the comparatively
higher rate of growth in such loan balances in the current year to date
period. No additions to the allowance for lease and loan losses were
required for nonperforming loans which decreased to 0.22% of total
assets at June 30, 2007 from 0.41% at September 30, 2006.
For the three month period ended June 30, 2007, noninterest income
increased $102,000 compared with that reported for the same period in
fiscal 2006. The net increase was primarily attributable to increases in
income from the cash surrender value of life insurance attributable to a
combination of higher average balances and improved yields on those
assets. Increases in noninterest income also included comparatively
higher deposit service charges attributable, in part, to the growth in
deposits and gains on sale of loans reflecting a comparative increase in
mortgage loans sold.
For the nine months ended June 30, 2007, noninterest income increased
$347,000 compared with that reported for the same period in fiscal 2006.
The net increase was attributable, in large part, to a comparative
decrease in losses on the sale of investment securities totaling
$260,000. The losses reported in the 2006 period included a $271,000
loss on sale of an underperforming investment security. During the 2007
period, the Company also reported an 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. Additional
increases in noninterest income were reported in gain on sale of loans
and mortgage servicing fees offset by comparative decreases in other
noninterest income categories including deposit service fees and charges
and other loan fees and charges.
For the three and nine month periods ended June 30, 2007, noninterest
expense increased $345,000 and $1.4 million, respectively, compared with
that reported for the same periods in fiscal 2006. The comparative three
month period increase was primarily attributable to a $429,000 increase
in salaries and employee benefits expense. The increase for the
comparative quarters included increases to employee salaries and payroll
taxes. Such increases were primarily attributable to additions to retail
deposit staff associated with the Company’s
branching strategy and, to a lesser extent, additions to the Company’s
commercial lending staff. Other noteworthy increases to salaries and
employee benefits resulted from the additional costs associated with the
Company’s 2006 Equity Incentive Plan approved
by shareholders in May, 2006. Finally, director compensation costs
increased due primarily to assumption changes utilized in retirement
benefit expense accruals.
Other increases in noninterest expense for the comparative three month
periods included increases in data processing and other noninterest
expense primarily attributable to the start up and ongoing operation of
the Bank’s newest branches in Verona and
Nutley, New Jersey. Offsetting these increases were reductions in
advertising and professional fees, including legal fees. The comparative
decreases in professional and consulting fees were the result of lower
internal and external audit costs associated with the Sarbanes Oxley Act
of 2002 (“the Act”)
during the current quarter. The decrease in legal fees reflects, in
part, the higher fees paid in the earlier comparative period for matters
addressed by shareholders at the Company’s
prior annual meeting on May 23, 2006 including the approval of the
Company’s 2006 Equity Incentive Plan.
In large part, the factors causing the increases to operating expenses
for the comparative three month periods described above similarly
affected the operating expenses reported for the comparative nine month
periods. Specifically, the increase in noninterest expense of $1.4
million was primarily attributable to a $1.4 million increase in
salaries and employee benefits expense. As above, these increases were
attributable, in part, to increases in employee salaries and payroll
taxes. Such increases were primarily attributable to additions to retail
deposit staff associated with the Company’s
branching strategy and, to a lesser extent, additions to the Company’s
commercial lending staff. Similarly, noteworthy increases to salaries
and employee benefits also resulted from the costs associated with the
implementation of the Company’s 2006 Equity
Incentive Plan. As above, additional expenses were also recorded for
director compensation costs due primarily to assumption changes utilized
in retirement benefit expense accruals. The variance for the comparative
nine month periods also reflects the reversal of $131,000 of profit
sharing expense recorded in first quarter of the earlier comparative
period resulting from the discontinuation of that benefit plan.
The remaining increase in noninterest expense for the comparative nine
month periods comprised increases in occupancy and equipment, data
processing, advertising and other noninterest expense primarily
attributable to the start up and ongoing operation of the Bank’s
newest branches in Verona and Nutley, New Jersey. Offsetting these
increases were reductions in professional fees, including legal fees. As
above, these reductions were attributable, in part, to comparatively
lower compliance costs relating to Section 404 of the Sarbanes-Oxley Act
of 2002 and comparatively lower legal fees for the reasons noted above.
The following tables present selected financial data as of June 30, 2007
and September 30, 2006 and selected operating data for the three and
nine month periods ended June 30, 2007 and June 30, 2006.
FINANCIAL HIGHLIGHTS
(unaudited)
At June 30,
At September 30,
2007
2006
Balance
% TotalAssets
Balance
% TotalAssets
SELECTED FINANCIAL DATA:
Assets
Cash and cash equivalents
$
44,930
7.99%
$
7,165
1.39%
Securities available-for-sale
52,793
9.39
74,523
14.49
Securities held-to-maturity
7,215
1.28
10,547
2.05
Loans held for sale
503
0.09
-
-
Loans receivable, net
425,563
75.70
398,624
77.51
Premises and equipment
10,341
1.84
6,523
1.27
Federal Home Loan Bank stock
2,644
0.47
3,356
0.65
Cash surrender value of life insurance
13,084
2.33
8,747
1.70
Accrued interest receivable
2,162
0.38
1,979
0.38
Other assets
2,971
0.53
2,855
0.56
Total Assets
$
562,206
100.00
$
514,319
100.00
Liabilities and equity
Deposits
$
409,916
72.91%
$
327,147
63.61%
Advances for taxes and insurance
2,865
0.51
2,466
0.48
Borrowings
39,628
7.05
56,075
10.90
Other liabilities
3,827
0.68
3,770
0.73
Equity
105,970
18.85
124,861
24.28
Total liabilities and equity
$
562,206
100.00%
$
514,319
100.00%
Loan Data
Balance
% TotalLoans
Balance
% TotalLoans
1-4 family mortgage loans
$
260,148
61.12%
$
272,318
68.32%
Home equity loans
14,031
3.30
12,294
3.08
Home equity lines of credit
20,210
4.75
19,194
4.82
Multifamily mortgage loans
31,057
7.30
35,059
8.80
Nonresidential mortgage loans
61,944
14.56
38,395
9.63
Land and property acquisition loans
4,220
0.99
534
0.13
Construction loans
29,039
6.82
16,155
4.05
Business loans
6,716
1.58
6,078
1.52
Consumer loans
641
0.15
720
0.18
Allowance for loans losses
(2,443)
(0.57)
(2,123)
(0.53)
Loans receivable, net
$
425,563
100.00%
$
398,624
100.00%
Deposit Data
Balance
% TotalDeposits
Balance
% TotalDeposits
Noninterest-bearing deposits
29,748
7.26
23,545
7.20
Interest-bearing checking
101,465
24.75
31,429
9.61
Savings
97,267
23.73
107,008
32.71
Certificates of deposit
181,436
44.26
165,165
50.48
Deposits
$
409,916
100.00
$
327,147
100.00
FINANCIAL HIGHLIGHTS (continued)
(unaudited)
At June 30,
At September 30,
2007
2006
Capital Ratios
Equity to total assets
18.85%
24.28%
Outstanding shares
12,468,866
14,163,220
Asset Quality Ratios:
Non-performing loans to total loans
0.29%
0.52%
Non-performing assets to total assets
0.22
0.41
Net charge offs to average loans outstanding
0.00
0.00
Allowance for loan losses to non-performing loans
195.76
101.64
Allowance for loan losses to total loans
0.57
0.53
For the nine monthsended June 30,
For the three monthsended June 30,
2007
2006
2007
2006
SELECTED OPERATING DATA:
Total interest income
$
21,375
$
18,751
$
7,508
$
6,432
Total interest expense
12,085
8,507
4,444
3,033
Net interest income
9,290
10,244
3,064
3,399
Provision for loan losses
320
355
77
109
Net interest income after provision for loan losses
8,970
9,889
2,987
3,290
Noninterest income
1,051
704
408
306
Noninterest expense
9,117
7,668
3,204
2,859
Income before income taxes
904
2,925
191
737
Income tax provision
276
1,111
41
273
Net income
$
628
$
1,814
$
150
$
464
Performance Ratios:
Return on average assets
0.16%
0.47%
0.11%
0.36%
Return on average equity
0.75
1.90
0.56
1.45
Net interest rate spread
1.46
1.85
1.40
1.79
Net interest margin
2.44
2.75
2.32
2.76
Noninterest income to average total assets
0.26
0.18
0.29
0.24
Noninterest expense to average total assets
2.27
1.99
2.30
2.24
Efficiency Ratio
88.16
70.04
92.29
77.17
PER SHARE DATA:
Earnings per share
Basic
0.05
0.14
0.01
0.04
Diluted
0.05
0.14
0.01
0.04
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.