UNITED
STATES
|
SECURITIES
AND EXCHANGE COMMISSION
|
Washington,
D.C. 20549
|
|
FORM
10-Q
|
|
|
x
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
For
the quarterly period ended March 31, 2009
|
|
|
o
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
|
|
For
the transition period from __ to __
|
|
Commission
file number 000-51500
|
|
AMERICAN
BANCORP OF NEW JERSEY, INC.
|
(Exact
name of registrant as specified in its
charter)
|
|
New
Jersey
|
|
|
55-0897507
|
|
(State
or other jurisdiction
|
(I.R.S.
Employer
|
of
incorporation or organization)
|
Identification
Number)
|
|
365
Broad Street, Bloomfield, New Jersey 07003
|
|
(Address
of Principal Executive Offices)
|
|
|
(973)
748-3600
|
|
(Registrant’s
telephone number, including area
code)
|
Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90
days.
Indicate by check
mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post
such files). Yes
o
No
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer
o
|
Accelerated
filer
x
|
Non-accelerated
filer
o
|
Smaller
reporting company
o
|
|
|
(Do
not check if a smaller
reporting
company)
|
|
Indicate by check
mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act.): Yes
o
No
x
As
of May 8, 2009, there were 10,855,529 outstanding shares of the Registrant’s
Common Stock.
AMERICAN
BANCORP OF NEW JERSEY, INC.
Table
of Contents
|
|
|
|
|
|
PART
I – FINANCIAL INFORMATION (UNAUDITED)
|
|
|
|
|
|
|
|
|
Item
1.
|
|
Financial
Statements
|
|
3
|
|
|
|
Notes
to Financial Statements
|
|
9
|
|
|
|
|
|
|
|
Item
2.
|
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
18
|
|
|
|
|
|
|
|
Item
3.
|
|
Quantitative
and Qualitative Disclosures About Market Risk
|
|
41
|
|
|
|
|
|
|
|
Item
4.
|
|
Controls
and Procedures
|
|
46
|
|
|
|
|
|
|
PART
II – OTHER INFORMATION
|
|
|
|
|
|
|
Item
1.
|
|
Legal
Proceedings
|
|
47
|
|
Item
1A.
|
|
Risk
Factors
|
|
47
|
|
Item
2.
|
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
|
47
|
|
Item
3.
|
|
Defaults
Upon Senior Securities
|
|
47
|
|
Item
4.
|
|
Submission
of Matters to a Vote of Securities Holders
|
|
47
|
|
Item
5.
|
|
Other
Information
|
|
47
|
|
Item
6.
|
|
Exhibits
|
|
48
|
|
|
|
|
|
|
FORM
10-Q SIGNATURE PAGE
|
|
49
|
|
|
|
CERTIFICATIONS
|
|
|
PART
I – FINANCIAL INFORMATION
ITEM
1.
|
FINANCIAL
STATEMENTS
|
|
|
American
Bancorp of New Jersey, Inc.
|
Statements
of Financial Condition
|
(in
thousands, except share data)
|
(unaudited)
|
|
|
March
31,
2009
|
|
|
September
30,
2008
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
|
|
|
|
Cash
and due from banks
|
|
$
|
4,164
|
|
|
$
|
5,158
|
|
Interest-earning
deposits
|
|
|
37,012
|
|
|
|
15,217
|
|
Federal
funds sold
|
|
|
—
|
|
|
|
—
|
|
Total
cash and cash equivalents
|
|
|
41,176
|
|
|
|
20,375
|
|
|
|
|
|
|
|
|
|
|
Securities
available-for-sale
|
|
|
94,311
|
|
|
|
81,163
|
|
Securities
held-to-maturity (fair value, March 31, 2009 - $6,936 September 30, 2008 -
$7,443)
|
|
|
6,804
|
|
|
|
7,509
|
|
Loans
held for sale
|
|
|
—
|
|
|
|
—
|
|
Loans
receivable, net of allowance for loan losses March 31, 2009 - $4,610,
September 30, 2008 - $3,035)
|
|
|
490,717
|
|
|
|
478,574
|
|
Premises
and equipment
|
|
|
11,646
|
|
|
|
11,894
|
|
Federal
Home Loan Bank stock, at cost
|
|
|
2,382
|
|
|
|
2,743
|
|
Cash
surrender value of life insurance
|
|
|
14,060
|
|
|
|
13,761
|
|
Accrued
interest receivable
|
|
|
2,355
|
|
|
|
2,391
|
|
Other
assets
|
|
|
3,461
|
|
|
|
3,223
|
|
Total
assets
|
|
$
|
666,912
|
|
|
$
|
621,633
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND EQUITY
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
|
|
|
Non-interest-bearing
|
|
$
|
31,206
|
|
|
$
|
31,447
|
|
Interest-bearing
|
|
|
467,741
|
|
|
|
416,240
|
|
Total
deposits
|
|
|
498,947
|
|
|
|
447,687
|
|
|
|
|
|
|
|
|
|
|
Advance
payments by borrowers for taxes and insurance
|
|
|
3,004
|
|
|
|
2,811
|
|
Borrowings
|
|
|
67,513
|
|
|
|
75,547
|
|
Accrued
expenses and other liabilities
|
|
|
5,073
|
|
|
|
4,740
|
|
Total
liabilities
|
|
$
|
574,537
|
|
|
$
|
530,785
|
|
|
|
|
|
|
|
|
|
|
Commitments
and contingent liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Preferred
stock, $.10 par value, 10,000,000 shares authorized at March 31, 2009 and
September 30, 2008;
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Common
stock, $.10 par value, 20,000,000 shares authorized, 14,527,953 shares
issued at March 31, 2009 and September 30, 2008; 10,855,529 and 10,859,692
outstanding at March 31, 2009 and September 30, 2008;
|
|
|
1,453
|
|
|
|
1,453
|
|
|
|
|
|
|
|
|
|
|
Additional
paid in capital
|
|
|
116,566
|
|
|
|
115,661
|
|
Unearned
ESOP shares
|
|
|
(7,424
|
)
|
|
|
(7,649
|
)
|
Retained
earnings
|
|
|
22,443
|
|
|
|
23,648
|
|
Treasury
Stock; 3,672,424 and 3,668,261 shares at March 31, 2009 and September 30,
2008
|
|
|
(41,771
|
)
|
|
|
(41,724
|
)
|
Accumulated
other comprehensive income (loss)
|
|
|
1,108
|
|
|
|
(541
|
)
|
Total
equity
|
|
|
92,375
|
|
|
|
90,848
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and equity
|
|
$
|
666,912
|
|
|
$
|
621,633
|
|
See
accompanying notes to unaudited consolidated financial statements
American
Bancorp of New Jersey, Inc.
Statements
of Income
(in
thousands, except share data)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
Months Ended
March
31,
|
|
|
Three
Months Ended
March
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Interest
and dividend income
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan,
including fees
|
|
$
|
13,747
|
|
|
$
|
13,423
|
|
|
$
|
6,774
|
|
|
$
|
6,685
|
|
Securities
|
|
|
2,004
|
|
|
|
1,328
|
|
|
|
975
|
|
|
|
683
|
|
Federal
funds sold and other
|
|
|
72
|
|
|
|
673
|
|
|
|
32
|
|
|
|
222
|
|
Total
interest income
|
|
|
15,823
|
|
|
|
15,424
|
|
|
|
7,781
|
|
|
|
7,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOW
and money market
|
|
|
846
|
|
|
|
2,131
|
|
|
|
406
|
|
|
|
917
|
|
Savings
|
|
|
810
|
|
|
|
1,121
|
|
|
|
382
|
|
|
|
516
|
|
Certificates
of deposit
|
|
|
5,224
|
|
|
|
4,850
|
|
|
|
2,606
|
|
|
|
2,430
|
|
Borrowings
|
|
|
1,132
|
|
|
|
1,015
|
|
|
|
548
|
|
|
|
521
|
|
Total
interest expense
|
|
|
8,012
|
|
|
|
9,117
|
|
|
|
3,942
|
|
|
|
4,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income
|
|
|
7,811
|
|
|
|
6,307
|
|
|
|
3,839
|
|
|
|
3,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for loan losses
|
|
|
1,666
|
|
|
|
309
|
|
|
|
1,513
|
|
|
|
171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
interest income after provision for loan losses
|
|
|
6,145
|
|
|
|
5,998
|
|
|
|
2,326
|
|
|
|
3,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposit
service fees and charges
|
|
|
428
|
|
|
|
442
|
|
|
|
205
|
|
|
|
216
|
|
Income
from cash surrender value of life insurance
|
|
|
299
|
|
|
|
266
|
|
|
|
150
|
|
|
|
133
|
|
Gain
on sale of loans
|
|
|
—
|
|
|
|
9
|
|
|
|
—
|
|
|
|
2
|
|
Loss
on sales of securities available-for-sale
|
|
|
—
|
|
|
|
(5
|
)
|
|
|
—
|
|
|
|
—
|
|
Other
|
|
|
117
|
|
|
|
121
|
|
|
|
49
|
|
|
|
87
|
|
Total
noninterest income
|
|
|
844
|
|
|
|
833
|
|
|
|
404
|
|
|
|
438
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries,
benefits and director fees
|
|
|
4,025
|
|
|
|
4,556
|
|
|
|
2,003
|
|
|
|
2,414
|
|
Occupancy
and equipment
|
|
|
973
|
|
|
|
908
|
|
|
|
481
|
|
|
|
454
|
|
Data
processing
|
|
|
433
|
|
|
|
384
|
|
|
|
219
|
|
|
|
204
|
|
Advertising
and marketing
|
|
|
65
|
|
|
|
131
|
|
|
|
28
|
|
|
|
46
|
|
Professional
and consulting
|
|
|
330
|
|
|
|
198
|
|
|
|
224
|
|
|
|
96
|
|
Legal
|
|
|
295
|
|
|
|
119
|
|
|
|
132
|
|
|
|
68
|
|
Other
|
|
|
860
|
|
|
|
548
|
|
|
|
481
|
|
|
|
286
|
|
Total
noninterest expense
|
|
|
6,981
|
|
|
|
6,844
|
|
|
|
3,568
|
|
|
|
3,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) before provision for income taxes
|
|
|
8
|
|
|
|
(13
|
)
|
|
|
(838
|
)
|
|
|
(95
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
(benefit) for income taxes
|
|
|
26
|
|
|
|
(93
|
)
|
|
|
(265
|
)
|
|
|
(82
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
(18
|
)
|
|
$
|
80
|
|
|
$
|
(573
|
)
|
|
$
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income (loss)
|
|
$
|
1,631
|
|
|
$
|
592
|
|
|
$
|
(99
|
)
|
|
$
|
298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
(loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.00
|
|
Diluted
|
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.00
|
|
See
accompanying notes to unaudited consolidated financial statements
American
Bancorp of New Jersey, Inc.
Statements
of Shareholders’ Equity
Six
months ended March 31, 2008
(in
thousands, except share data)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
Additional
Paid-In
Capital
|
|
|
Unearned
ESOP
Shares
|
|
|
Retained
Earnings
|
|
|
Accumulated
Other
Comprehensive
Loss
|
|
|
Treasury
Stock
|
|
|
Total
Equity
|
|
|
Compre-
hensive
Income
(Loss)
|
|
Balance
at September 30, 2007
|
|
$
|
1,453
|
|
|
$
|
113,607
|
|
|
$
|
(8,099
|
)
|
|
$
|
24,258
|
|
|
$
|
(273
|
)
|
|
$
|
(30,353
|
)
|
|
$
|
100,593
|
|
|
|
|
RSP
shares earned including tax benefit of vested awards
|
|
|
—
|
|
|
|
770
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
770
|
|
|
|
|
Tax
benefit on dividends paid on unvested RSP shares
|
|
|
—
|
|
|
|
61
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
61
|
|
|
|
|
Share
purchases (807,855 shares)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(8,427
|
)
|
|
|
(8,427
|
)
|
|
|
|
Stock
options exercised
|
|
|
—
|
|
|
|
(19
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
48
|
|
|
|
29
|
|
|
|
|
Stock
options earned
|
|
|
—
|
|
|
|
356
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
356
|
|
|
|
|
ESOP
shares earned
|
|
|
—
|
|
|
|
53
|
|
|
|
225
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
278
|
|
|
|
|
Cash
dividends paid – $0.08 per share
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(839
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(839
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
80
|
|
|
|
—
|
|
|
|
—
|
|
|
|
80
|
|
|
$
|
80
|
|
Change
in unrealized loss on securities available-for-sale, net of
taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
512
|
|
|
|
—
|
|
|
|
512
|
|
|
|
512
|
|
Total
comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
592
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at March 31, 2008
|
|
$
|
1,453
|
|
|
$
|
114,828
|
|
|
$
|
(7,874
|
)
|
|
$
|
23,499
|
|
|
$
|
239
|
|
|
$
|
(38,732
|
)
|
|
$
|
93,413
|
|
|
|
|
|
See
accompanying notes to unaudited consolidated financial
statements
American
Bancorp of New Jersey, Inc.
Statements
of Shareholders’ Equity
Six
months ended March 31, 2009
(in
thousands, except share data)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
|
|
Additional
Paid-In
Capital
|
|
|
Unearned
ESOP
Shares
|
|
|
Retained
Earnings
|
|
|
Accumulated
Other
Comprehensive
Loss
|
|
|
Treasury
Stock
|
|
|
Total
Equity
|
|
|
Compre-
hensive
Income
(Loss)
|
|
Balance
at September 30, 2008
|
|
$
|
1,453
|
|
|
$
|
115,661
|
|
|
$
|
(7,649
|
)
|
|
$
|
23,648
|
|
|
$
|
(541
|
)
|
|
$
|
(41,724
|
)
|
|
$
|
90,848
|
|
|
|
|
Cumulative
effect of adoption of EITF 06-04
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(193
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(193
|
)
|
|
|
|
Balance
at October 1, 2008
|
|
|
1,453
|
|
|
|
115,661
|
|
|
|
(7,649
|
)
|
|
|
23,455
|
|
|
|
(541
|
)
|
|
|
(41,724
|
)
|
|
|
90,655
|
|
|
|
|
Share
purchase (4,163 shares)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(47
|
)
|
|
|
(47
|
)
|
|
|
|
RSP
shares earned including tax benefit of vested awards
|
|
|
—
|
|
|
|
591
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
591
|
|
|
|
|
Tax
benefit on dividends paid on unvested RSP shares
|
|
|
—
|
|
|
|
11
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11
|
|
|
|
|
Stock
options earned
|
|
|
|
|
|
|
267
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
267
|
|
|
|
|
ESOP
shares earned
|
|
|
—
|
|
|
|
36
|
|
|
|
225
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
261
|
|
|
|
|
Cash
dividends paid – $0.10 per share
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(994
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(994
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(18
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(18
|
)
|
|
$
|
(18
|
)
|
Change
in unrealized loss on securities available-for-sale, net of
taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,649
|
|
|
|
—
|
|
|
|
1,649
|
|
|
|
1,649
|
|
Total
comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at March 31, 2009
|
|
$
|
1,453
|
|
|
$
|
116,566
|
|
|
$
|
(7,424
|
)
|
|
$
|
22,443
|
|
|
$
|
1,108
|
|
|
$
|
(41,771
|
)
|
|
$
|
92,375
|
|
|
|
|
|
See
accompanying notes to unaudited consolidated financial
statements
American
Bancorp of New Jersey, Inc.
Statements
of Cash Flows
(in
thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
Six
Months Ended
March
31,
|
|
|
|
2009
|
|
|
2008
|
|
Cash
flows from operating activities
|
|
|
|
|
|
|
Net
Income (loss)
|
|
$
|
(18
|
)
|
|
$
|
80
|
|
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
301
|
|
|
|
252
|
|
Net
amortization and accretion of premiums and discounts
|
|
|
(14
|
)
|
|
|
(43
|
)
|
Losses
on sales of securities available-for-sale
|
|
|
—
|
|
|
|
5
|
|
ESOP
compensation expense
|
|
|
261
|
|
|
|
278
|
|
Restricted
stock plan compensation expense
|
|
|
528
|
|
|
|
715
|
|
Stock
option plan compensation expense
|
|
|
267
|
|
|
|
356
|
|
Provision
for loan losses
|
|
|
1,666
|
|
|
|
309
|
|
Increase
in cash surrender value of life insurance
|
|
|
(299
|
)
|
|
|
(266
|
)
|
Gain
on sale of loans
|
|
|
—
|
|
|
|
(7
|
)
|
Proceeds
from sales of loans
|
|
|
—
|
|
|
|
1,869
|
|
Origination
of loans held for sale
|
|
|
—
|
|
|
|
(619
|
)
|
Decrease
(increase) in accrued interest receivable
|
|
|
36
|
|
|
|
(261
|
)
|
Decrease
(increase) in other assets
|
|
|
(520
|
)
|
|
|
(83
|
)
|
Change
in deferred income taxes
|
|
|
(787
|
)
|
|
|
(448
|
)
|
Increase
(Decrease) in other liabilities
|
|
|
140
|
|
|
|
340
|
|
Net
cash provided by operating activities
|
|
|
1,561
|
|
|
|
2,477
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
|
Net
increase in loans receivable
|
|
|
(13,808
|
)
|
|
|
(22,085
|
)
|
Purchases
of securities held-to-maturity
|
|
|
—
|
|
|
|
(1,108
|
)
|
Principal
paydowns on securities held-to-maturity
|
|
|
699
|
|
|
|
631
|
|
Purchases
of securities available-for-sale
|
|
|
(20,001
|
)
|
|
|
(54,841
|
)
|
Sales
of securities available-for-sale
|
|
|
—
|
|
|
|
11,510
|
|
Principal
paydowns on securities available-for-sale
|
|
|
9,590
|
|
|
|
7,964
|
|
Purchase
of Federal Home Loan Bank stock
|
|
|
—
|
|
|
|
(675
|
)
|
Redemption
of Federal Home Loan Bank stock
|
|
|
361
|
|
|
|
46
|
|
Purchase
of premises and equipment
|
|
|
(53
|
)
|
|
|
(1,489
|
)
|
Net
cash used in investing activities
|
|
|
(23,212
|
)
|
|
|
(60,047
|
)
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
|
|
|
|
|
Net
increase in deposits
|
|
|
51,260
|
|
|
|
8,430
|
|
Net
change in advance payments by borrowers for taxes and
insurance
|
|
|
193
|
|
|
|
110
|
|
Proceeds
from borrowings
|
|
|
—
|
|
|
|
50,000
|
|
Repayment
of borrowings
|
|
|
(8,034
|
)
|
|
|
(1,032
|
)
|
RSP
tax benefit of vested awards
|
|
|
63
|
|
|
|
55
|
|
Tax
benefit on dividends paid on unvested RSP shares
|
|
|
11
|
|
|
|
61
|
|
Proceeds
from stock option exercises
|
|
|
—
|
|
|
|
29
|
|
Cash
dividends paid
|
|
|
(994
|
)
|
|
|
(839
|
)
|
Treasury
share purchases
|
|
|
(47
|
)
|
|
|
(8,427
|
)
|
Net
cash provided by financing activities
|
|
|
42,452
|
|
|
|
48,387
|
|
Net
change in cash and cash equivalents
|
|
|
20,801
|
|
|
|
(9,183
|
)
|
Cash
and cash equivalents at beginning of year
|
|
|
20,375
|
|
|
|
37,421
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of period
|
|
$
|
41,176
|
|
|
$
|
28,238
|
|
(Continued)
American
Bancorp of New Jersey, Inc.
Statements
of Cash Flows
(in
thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
Six
Months Ended
March
31,
|
|
|
|
2009
|
|
|
2008
|
|
Supplemental
cash flow information:
|
|
|
|
|
|
|
Cash
paid during the period for
|
|
|
|
|
|
|
Interest
|
|
$
|
8,026
|
|
|
$
|
9,114
|
|
Income
taxes, net of refunds
|
|
|
1,177
|
|
|
|
485
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of non-cash financing transaction:
|
|
|
|
|
|
|
|
|
Cumulative
effect of adoption of EITF 06-04
|
|
|
(193
|
)
|
|
|
—
|
|
See
accompanying notes to unaudited consolidated financial
statements
American
Bancorp of New Jersey, Inc.
Notes
To Unaudited Financial Statements
Note 1 -
Basis of Presentation
American
Bancorp of New Jersey, Inc. (the “Company”) is a New Jersey chartered
corporation organized in May 2005 that was formed for the purpose of acquiring
all of the capital stock of American Bank of New Jersey, a federally chartered
Bank, (the “Bank”), which was previously owned by ASB Holding Company (“ASBH”).
ASBH was a federally chartered corporation organized in June 2003 that was
formed for the purpose of acquiring all of the capital stock of the Bank, which
was previously owned by American Savings, MHC (the “MHC”), a federally chartered
mutual holding company. The Bank had previously converted from a mutual to a
stock savings bank in a mutual holding company reorganization in 1999 in which
no stock was issued to any person other than the MHC.
On
October 3, 2003, ASB Holding Company, the predecessor of American Bancorp of New
Jersey, Inc., completed a minority stock offering and sold 1,666,350 shares of
common stock in a subscription offering at $10 per share and received proceeds
of $16,060,000, net of offering costs of $603,000. ASBH contributed $9,616,000,
or approximately 60% of the net proceeds, to the Bank in the form of a capital
contribution. ASBH loaned $1,333,080 to the Bank’s employee stock ownership plan
(“ESOP”) and the ESOP used those funds to acquire 133,308 shares of common stock
at $10 per share.
After
the sale of the stock, the MHC held 70%, or 3,888,150 shares, of the outstanding
stock of ASBH with the remaining 30% or, 1,666,350 shares, held by persons other
than the MHC. ASBH held 100% of the Bank’s outstanding common
stock.
On
October 5, 2005, the Company completed a second step conversion in which the
3,888,150 shares of ASB Holding Company held by the MHC were converted and sold
in a subscription offering. Through this transaction, ASBH ceased to exist and
was replaced by American Bancorp of New Jersey, Inc. as the holding company for
the Bank. A total of 9,918,750 shares of common stock were sold in the offering
at $10 per share through which the Company received proceeds of $97,524,302, net
of offering costs of $1,663,198. The Company contributed $48,762,151 or
approximately 50% of the net proceeds to the Bank in the form of a capital
contribution. The Company loaned $7,935,000 to the Bank’s ESOP which used those
funds to acquire 793,500 shares of common stock at $10 per share.
As
part of the second step conversion, each of the 1,666,350 outstanding shares of
ASBH held by public shareholders was exchanged for 2.55102 of the Company’s
shares. This exchange resulted in an additional 4,250,719 shares of the Company
being issued, for a total of 14,169,469 outstanding shares.
The
accompanying unaudited consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, the Bank and ASB Investment Corp.
(the “Investment Corp.”) as of March 31, 2009 and September 30, 2008 and for the
three and six months ended March 31, 2009 and March 31, 2008. Significant
intercompany accounts and transactions have been eliminated in consolidation.
References in this Quarterly Report on Form 10-Q to the Company generally refer
to the Company and the Bank, unless the context indicates otherwise. References
to “we,” “us,” or “our” refer to the Bank or Company, or both, as the context
indicates.
The
primary business of the Company is the ownership of the Bank and the Investment
Corp. The Bank provides a full range of banking services to individual and
corporate customers located primarily in the New Jersey and New York
metropolitan area. The Bank is subject to competition from other financial
institutions and to the regulations of certain federal and state agencies and
undergoes periodic examinations by those regulatory authorities. The Investment
Corp. was organized for the purpose of selling insurance and investment
products, including annuities, to customers of the Bank and the general public,
with initial activities limited to the sale of fixed rate annuities. The
Investment Corp. has had limited activity to date.
The
accompanying unaudited consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all the
information and notes required by accounting principles generally accepted in
the United States of America for complete financial statements. These interim
statements should be read in conjunction with the consolidated financial
statements and notes included in the Company’s Annual Report on Form 10-K for
the year ended September 30, 2008. The September 30, 2008 balance sheet
presented herein has been derived from the audited financial statements included
in the consolidated financial statements and notes included in the Annual Report
on Form 10-K filed with the Securities and Exchange Commission, but does not
include all disclosures required by accounting principles generally accepted in
the United States of America.
To
prepare financial statements in conformity with accounting principles generally
accepted in the United States of America, management makes estimates and
assumptions based on available information. These estimates and assumptions
affect the amounts reported in the financial statements and the disclosures
provided, and future results could differ. The allowance for loan losses,
prepayment speeds on mortgage–backed securities, and status of contingencies are
particularly subject to change.
Interim
statements are subject to possible adjustment in connection with the annual
audit of the Company for the year ending September 30, 2009. In the opinion of
management of the Company, the accompanying unaudited interim consolidated
financial statements reflect all of the adjustments (consisting of normal
recurring adjustments) necessary for a fair presentation of the consolidated
financial position and consolidated results of operations for the periods
presented.
The
results of operations for the three and six months ended March 31, 2009 are not
necessarily indicative of the results to be expected for the full year or any
other period.
Note 2 -
Earnings Per Share (EPS)
Amounts
reported as basic earnings per share of common stock reflect earnings available
to common shareholders for the period divided by the weighted average number of
common shares outstanding during the period less unearned ESOP and restricted
stock plan shares. Diluted EPS reflects the potential dilution that could occur
if securities or other contracts to issue common stock (such as stock awards and
options) were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the entity. Diluted
EPS is computed by dividing income by the weighted-average number of shares
outstanding for the period plus common-equivalent shares computed using the
treasury stock method.
The
factors used in the earnings per share computation follow (in thousands except
share data).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six
Months Ended
March
31,
|
|
|
Three
Months Ended
March
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
(18
|
)
|
|
$
|
80
|
|
|
$
|
(573
|
)
|
|
$
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding
|
|
|
9,757,026
|
|
|
|
10,318,852
|
|
|
|
9,775,687
|
|
|
|
10,110,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings(loss) per common share
|
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
(18
|
)
|
|
$
|
80
|
|
|
$
|
(573
|
)
|
|
$
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding for basic earnings
per common share
|
|
|
9,757,026
|
|
|
|
10,318,852
|
|
|
|
9,775,687
|
|
|
|
10,110,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add:
Dilutive effects of assumed exercises of stock
options
|
|
|
133,478
|
|
|
|
139,706
|
|
|
|
139,912
|
|
|
|
142,214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add:
Dilutive effects of full vesting of stock awards
|
|
|
7,234
|
|
|
|
17,075
|
|
|
|
6,591
|
|
|
|
15,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
shares and dilutive potential common shares
|
|
|
9,897,738
|
|
|
|
10,475,633
|
|
|
|
9,922,190
|
|
|
|
10,268,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings (loss) per common share
|
|
$
|
0.00
|
|
|
$
|
0.01
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.00
|
|
For the
three months ended March 31, 2009 and March 31, 2008, stock options and
restricted stock awards for 900,934 and 972,382 shares of common stock ,
respectively, were not considered in computing diluted earnings per common share
because they were antidilutive. For the six months ended March 31, 2009 and
March 31, 2008, stock options and restricted stock awards for 909,765 and
985,643 shares of common stock, respectively, were not considered in computing
diluted earnings per common share because they were
antidilutive.
Note 3 -
Other Stock-Based Compensation
At March
31, 2009, all shares and options available under the 2005 Restricted Stock Plan,
2005 Stock Option Plan and the 2006 Equity Incentive Plan had been awarded to
participants.
A summary
of the activity in the Company’s stock option plans for the six months ended
March 31, 2009 and 2008 is as follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the six months ended
|
|
|
|
March
31, 2009
|
|
|
March
31, 2008
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Shares
|
|
|
Weighted
Average
Exercise
Price
|
|
Outstanding
at beginning of period
|
|
|
1,412,782
|
|
|
$
|
9.27
|
|
|
|
1,416,948
|
|
|
$
|
9.26
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
(4,166
|
)
|
|
|
6.80
|
|
Forfeited
or expired
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at end of period
|
|
|
1,412,782
|
|
|
$
|
9.27
|
|
|
|
1,412,782
|
|
|
$
|
9.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
exercisable at period end
|
|
|
857,966
|
|
|
$
|
8.55
|
|
|
|
590,622
|
|
|
$
|
8.21
|
|
Weighted
average remaining contractual life
|
|
|
|
|
|
6.3
years
|
|
|
|
|
|
|
7.2
years
|
|
A summary
of the status of the Company’s nonvested restricted stock plan shares as of
March 31, 2009 and 2008 and changes during the six months ended March 31, 2009
and 2008 are as follows.
|
|
For
the six months ended
|
|
|
|
March
31, 2009
|
|
|
March
31, 2008
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Weighted
Average
Grant
Date
Fair
Value
|
|
|
Shares
|
|
|
Weighted
Average
Grant
Date
Fair
Value
|
|
Outstanding
at beginning of period
|
|
|
285,169
|
|
|
$
|
10.25
|
|
|
|
414,281
|
|
|
$
|
10.13
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Vested
|
|
|
(37,078
|
)
|
|
|
6.97
|
|
|
|
(58,915
|
)
|
|
|
8.05
|
|
Forfeited
or expired
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at end of period
|
|
|
248,091
|
|
|
$
|
10.74
|
|
|
|
355,366
|
|
|
$
|
10.47
|
|
Note 4 –
Recent Accounting Pronouncements
In
September 2006, the FASB issued Statement of Financial Accounting Standards No.
157
“
Fair
Value Measurements
”
(“SFAS No. 157”),
which defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007. In February 2008, the FASB
issued Staff Position (FSP) 157-2, Effective Date of FASB Statement No. 157.
This FSP delays the effective date of FAS 157 for all nonfinancial assets and
nonfinancial liabilities, except those that are recognized or disclosed at fair
value on a recurring basis (at least annually) to fiscal years beginning after
November 15, 2008, and interim periods within those fiscal years. The adoption
of SFAS No. 157 did not have a material impact on the Company’s consolidated
financial statements.
In
February 2007, the FASB issued Statement of Financial Accounting Standards No.
159 “The Fair Value Option for Financial Assets and Financial Liabilities”
(“SFAS No. 159”), SFAS No. 159 permits entities to choose to measure certain
financial assets and financial liabilities at fair value. The objective is to
improve financial reporting by providing entities with the opportunity to
mitigate volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. SFAS No. 159 is effective for financial statements issued for fiscal
years beginning after November 15, 2007. The adoption of SFAS No. 159 became
effective for the Company on October 1, 2008 and did not have a material impact
on the Company’s consolidated financial statements. The Company did not adopt
the fair value option under SFAS No. 159 as of October 1, 2008.
At
its September 2006 meeting, the Emerging Issues Task Force (“EITF”) reached a
final consensus on Issue 06-04, “Accounting for Deferred Compensation and
Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance
Arrangements.” The consensus stipulates that an agreement by an employer to
share a portion of the proceeds of a life insurance policy with an employee
during the postretirement period is a postretirement benefit arrangement
required to be accounted for under SFAS No. 106 or Accounting Principles Board
Opinion (“APB”) No. 12, “Omnibus Opinion – 1967.” The consensus concludes that
the purchase of a split-dollar life insurance policy does not constitute a
settlement under SFAS No. 106 and, therefore, a liability for the postretirement
obligation must be recognized under SFAS No. 106 if the benefit is offered under
an arrangement that constitutes a plan or under APB No. 12 if it is not part of
a plan. Issue 06-04 is effective for annual or interim reporting periods
beginning after December 15, 2007. The provisions of Issue 06-04 should be
applied through either a cumulative effect adjustment to retained earnings as of
the beginning of the year of adoption or retrospective application. The Company
recorded a cumulative effect adjustment to retained earnings of $193,281 on
October 1, 2008 resulting from the adoption of EITF 06-04.
In
December 2007, the FASB issued FAS No. 141 (revised 2007), Business Combinations
(“FAS 141(R)”), which establishes principles and requirements for how an
acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any noncontrolling interest in an
acquiree, including the recognition and measurement of goodwill acquired in a
business combination. FAS No. 141(R) is effective for fiscal years beginning on
or after December 15, 2008. Earlier adoption is prohibited. The adoption of this
standard is not expected to have a material effect on the Corporation’s results
of operations or financial position.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interest in
Consolidated Financial Statements, an amendment of ARB No. 51” (“SFAS No. 160”),
which will change the accounting and reporting for minority interests, which
will be recharacterized as noncontrolling interests and classified as a
component of equity within the consolidated balance sheets. FAS No. 160 is
effective as of the beginning of the first fiscal year beginning on or after
December 15, 2008. Earlier adoption is prohibited and the Corporation does not
expect the adoption of FAS No. 160 to have a significant impact on its results
of operations or financial position.
In
April 2009, the FASB issued Staff Position (FSP) No. 115-2 and No. 124-2,
Recognition and Presentation of Other-Than-Temporary Impairments, which amends
existing guidance for determining whether impairment is other-than-temporary for
debt securities. The FSP requires an entity to assess whether it intends to
sell, or it is more likely than not that it will be required to sell a security
in an unrealized loss position before recovery of its amortized cost basis. If
either of these criteria is met, the entire difference between amortized cost
and fair value is recognized in earnings. For securities that do not meet the
aforementioned criteria, the amount of impairment recognized in earnings is
limited to the amount related to credit losses, while impairment related to
other factors is recognized in other comprehensive income. Additionally, the FSP
expands and increases the frequency of existing disclosures about
other-than-temporary impairments for debt and equity securities. This FSP is
effective for interim and annual reporting periods ending after June 15, 2009,
with early adoption permitted for periods ending after March 15, 2009. The
Company plans to adopt this FSP in the third quarter, however, does not expect
the adoption to have a material effect on the results of operations or financial
position.
In
April 2009, the FASB issued Staff Position (FSP) No. 157-4, Determining Fair
Value When the Volume and Level of Activity for the Asset and Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly. This
FSP emphasizes that even if there has been a significant decrease in the volume
and level of activity, the objective of a fair value measurement remains the
same. Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction (that is, not a forced
liquidation or distressed sale) between market participants. The FSP provides a
number of factors to consider when evaluating whether there has been a
significant decrease in the volume and level of activity for an asset or
liability in relation to normal market activity. In addition, when transactions
or quoted prices are not considered orderly, adjustments to those prices based
on the weight of available information may be needed to determine the
appropriate fair value. The FSP also requires increased disclosures. This FSP is
effective for interim and annual reporting periods ending after June 15, 2009,
and shall be applied prospectively. Early adoption is permitted for periods
ending after March 15, 2009. The Company plans to adopt this FSP in the third
quarter, however, does not expect the adoption to have a material effect on the
results of operations or financial position.
In
April 2009, the FASB issued Staff Position (FSP) No. 107-1 and APB 28-1, Interim
Disclosures about Fair Value of Financial Instruments. This FSP amends FASB
Statement No. 107, Disclosures about Fair Value of Financial Instruments, to
require disclosures about fair value of financial instruments for interim
reporting periods of publicly traded companies that were previously only
required in annual financial statements. This FSP is effective for interim
reporting periods ending after June 15, 2009, with early adoption permitted for
periods ending after March 15, 2009. The Company plans to adopt this FSP in the
third quarter.
Note 5 –
Fair Value
Effective
October 1, 2008, the Company adopted SFAS No. 157
“
Fair Value
Measurements” as described in Note 4 above. SFAS No. 157 applies only to fair
value measurements already required or permitted by other accounting standards
and does not impose requirements for additional fair value measures. SFAS No.
157 was issued to increase consistency and comparability in reporting fair
values. As noted earlier, our adoption of SFAS No. 157 did not have a material
impact on our financial condition or results of operation.
Fair
values generally reflect the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between willing market
participants at the measurement date. Statement 157 establishes a fair value
hierarchy which requires an entity to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair value. The standard
describes three levels of inputs that may be used to measure fair
value:
|
|
|
Level
1: Quoted prices (unadjusted) for identical assets or liabilities in
active markets that the entity has the ability to access as of the
measurement date.
|
|
|
|
Level
2: Significant other observable inputs other than Level 1 prices such as
quoted prices for similar assets or liabilities; quoted prices in markets
that are not active; or other inputs that are observable or can be
corroborated by observable market data.
|
|
|
|
Level
3: Significant unobservable inputs that reflect a reporting entity’s own
assumptions about the assumptions that market participants would use in
pricing an asset or
liability.
|
We
use fair value measurements on both a recurring and nonrecurring basis to record
fair value adjustments to certain assets and liabilities and to present fair
value disclosures in our financial statements. Assets currently subject to
recurring fair value measurement are limited to the Company’s available-for-sale
securities. Our available-for-sale portfolio is carried at an estimated fair
value on a recurring basis with any unrealized gains and losses, net of taxes,
reported as accumulated other comprehensive income/loss in stockholder’s equity.
The fair values of available for sale securities are generally obtained from an
independent pricing service utilizing matrix pricing. Matrix pricing is a form
of Level 2 input which utilizes a mathematical technique widely used in the
industry to value debt securities without relying exclusively on quoted prices
for the specific securities but relying instead on the securities’ relationship
to other benchmark quoted securities. At March 31, 2009, the Company recorded a
unrealized gain, net of taxes, of $1,108,000 to stockholder’s equity based upon
the fair value of the available-for-sale securities portfolio as of that
date.
We
also regularly review and evaluate the available-for-sale portfolio to determine
if the fair value of any security has declined below its amortized cost and if
such impairment in fair value is “other-than temporary
”
. Other than
temporary impairments in a security’s fair value would require the Company to
reduce the carrying value of the security to its fair value at the date of
measurement by recognizing an impairment valuation through the income statement.
Where appropriate, the Company may utilize Level 1 inputs to validate
other-than-temporary impairments of fair value. No other-than-temporary
impairments of fair value were identified in the Company’s available-for-sale
securities portfolio at March 31, 2009.
The
following table reports the level of valuation assumptions used to determine the
carrying value of our assets measured at fair value on a recurring basis at
March 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value Measurements
at
March 31, 2009 Using
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31, 2009
|
|
Quoted
Prices
in
Active
Markets
for
Identical
Assets
(Level
1)
|
|
Significant
Other
Observable
Inputs
(Level
2)
|
|
Significant
Unobservable
Inputs
(Level
3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale
securities
|
|
$
|
94,311
|
|
|
|
|
$
|
94,311
|
|
|
|
|
Assets
generally subject to nonrecurring fair value measurement may include the
Company’s held-to-maturity securities, certain loans receivable and real estate
owned, which are reviewed for impairment using fair value measurements, where
applicable. The held-to-maturity securities portfolio is generally carried at
amortized cost. However, we periodically review and evaluate the
held-to-maturity portfolio for “other-than temporary” impairment of fair value
utilizing the same inputs applied to the valuation of the available-for-sale
portfolio. No other-than-temporary impairments of fair value were identified in
the Company’s held-to-maturity securities portfolio at March 31,
2009.
The
Company evaluates certain “non-homogeneous” loans for impairment in accordance
with SFAS No. 114. The Company’s non-homogeneous loans generally comprise its
commercial loans including construction and land loans, multifamily and
nonresidential mortgage loans and business loans. An eligible loan is determined
by the Company to be impaired if it is probable that payment of all amounts owed
by the borrower will not be made in accordance with the contractual terms of the
loan agreement. Our impaired loans are generally collateral dependent and, as
such, are carried at lower of historical cost or the estimated fair value of the
collateral less estimated selling costs. All real estate owned taken in full or
partial settlement of a loan obligation is also carried at the lower of the
original loan’s historical cost or the estimated fair value of the collateral
less estimated selling costs. The fair value of collateral securing an impaired
loan or real estate owned is estimated through current appraisals and adjusted
as necessary by management to reflect current market conditions - a form of
Level 3 input. During the quarter ended March 31, 2009, the Company recorded an
additional $1.5 million valuation allowance against impaired loans based upon
the updated fair value of the collateral securing those loans. Impaired loans
had a carrying amount of $7.5 million with a valuation allowance of $1.5 million
as of March 31, 2009.
The
following table reports the level of valuation assumptions used to determine the
carrying value of our assets measured at fair value on a nonrecurring basis at
March 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value Measurements
at
March 31, 2009 Using
|
|
|
|
|
|
|
|
|
|
|
March
31, 2009
|
|
Quoted
Prices in
Active
Markets
for
Identical
Assets
(Level
1)
|
|
Significant
Other
Observable
Inputs
(Level
2)
|
|
Significant
Unobservable
Inputs
(Level
3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired
loans
|
|
$
|
5,954
|
|
|
|
|
|
|
|
$
|
5,954
|
|
The
Company may have commitments to fund loans held for sale and commitments to sell
such loans relating to its mortgage banking activities which are generally
considered free-standing derivative instruments subject to fair value
measurement. Additionally, the sale of mortgage loans on a servicing retained
basis results in the recognition of mortgage servicing rights which are also
generally subject to fair value measurement. However, the fair values of these
instruments are not material to our financial condition or results of operations
and are therefore excluded from the Company’s fair value
disclosures.
Note 6 –
Merger
On
December 15, 2008, American Bancorp of New Jersey, Inc. and Investors Bancorp,
Inc. jointly announced the signing of a definitive agreement under which
Investors Bancorp will acquire American Bancorp of New Jersey. The transaction
has been approved by the boards of directors of each company and is expected to
close on or about May 29, 2009, subject to customary closing conditions
including regulatory approvals and approval by American Bancorp of New Jersey’s
shareholders. All requisite regulatory approvals for the transaction have been
received and shareholders are scheduled to vote on the merger proposal at the
Company’s annual meeting scheduled for May 19, 2009.
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Forward-Looking
Statements
This
report contains certain forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. The Company intends such forward-looking
statements to be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995 as
amended and is including this statement for purposes of these safe harbor
provisions. Forward-looking statements, which are based on certain assumptions
and describe future plans, strategies, and expectations of the Company, are
generally identifiable by use of the words “believe,” “expect,” “intend,”
“anticipate,” “estimate,” “project,” or similar expressions. The Company’s
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain. Factors that could have a material adverse affect on the
operations and future prospects of the Company and its wholly-owned subsidiaries
include, but are not limited to, changes in: interest rates; general economic
conditions; legislative/regulatory provisions; monetary and fiscal policies of
the U.S. Government, including policies of the U.S. Treasury and the Federal
Reserve Board; the quality or composition of the loan or investment portfolios;
demand for loan products; deposit flows; competition; and demand for financial
services in the Company’s market area. These risks and uncertainties should be
considered in evaluating forward-looking statements, and undue reliance should
not be placed on such statements.
Announcement
of Proposed Merger
On
December 15, 2008, American Bancorp of New Jersey, Inc. and Investors Bancorp,
Inc. jointly announced the signing of a definitive agreement under which
Investors Bancorp will acquire American Bancorp of New Jersey.
Under
the terms of the agreement, as amended on March 9, 2009, 65% of American Bancorp
of New Jersey shares will be converted into Investors Bancorp common stock and
the remaining 35% will be converted into cash. American Bancorp of New Jersey’s
stockholders will have the option to elect to receive either 0.9218 shares of
Investors Bancorp common stock or $12.50 in cash for each American Bancorp of
New Jersey common share, subject to proration to ensure that in the aggregate
65% of the American Bancorp of New Jersey shares will be converted into stock.
The transaction is intended to qualify as a reorganization for federal income
tax purposes. As a result, the shares of American Bancorp exchanged for
Investors Bancorp stock will be transferred on a tax-free basis.
The
transaction has been approved by the boards of directors of each company and is
expected to close on or about May 29, 2009, subject to customary closing
conditions including regulatory approvals and approval by American Bancorp of
New Jersey’s shareholders. All requisite regulatory approvals for the
transaction have been received and shareholders are scheduled to vote on the
merger proposal at the Company’s annual meeting scheduled for May 19,
2009.
After
the transaction is completed, James H. Ward III, American Bancorp of New
Jersey’s Vice Chairman, will join the board of directors of Investors
Bancorp.
Citigroup
Global Markets Inc. acted as financial advisor to Investors Bancorp, and Luse,
Gorman, Pomerenk & Schick, P.C. acted as legal advisor. Keefe, Bruyette
& Woods, Inc. acted as financial advisor to American Bancorp of New Jersey,
and Silver, Freedman & Taff, L.L.P. as legal advisor.
Business
Strategy
Historically,
our business strategy has been to operate as a well-capitalized independent
financial institution dedicated to providing convenient access and quality
service at competitive prices. Until the closing date of the proposed merger
described above, we will continue to operate as a well-capitalized, independent
financial institution pursuing goals and objectives of our business plan through
the strategies outlined in this section.
During
recent years, we have experienced significant loan and deposit growth. Our
current strategy seeks to continue that growth while we evolve from a
traditional thrift institution into a full service, community bank. Our key
business strategies are highlighted below accompanied by a brief overview of our
progress in implementing each of these strategies:
|
|
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●
|
Grow
and diversify the deposit mix by emphasizing non-maturity account
relationships acquired through de novo branching and existing deposit
growth. Our current business plan calls for us to open up to three de novo
branches over approximately the next five years.
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Having
opened three full service branches located in Verona, Nutley and Clifton,
New Jersey during fiscal 2007, the Company did not open additional de novo
deposit branches during fiscal 2008. Rather, the Company directed
significant strategic effort during fiscal 2008 toward achieving and
enhancing profitability of these three branches. Based on the Company’s
internal branch profitability model, the Verona branch, which opened in
December 2006, achieved profitability during the quarter ended March 31,
2008. The Bank’s Nutley branch, which opened in May 2007, achieved
profitability during the quarter ended September 30, 2008. Both Verona and
Nutley continued to operate profitably through March 31, 2009. The
quarterly operating loss for the Clifton branch, which opened in August
2007, continued to decrease through the most recent quarter ended March
31, 2009 compared with prior quarters. The Company expects the Clifton
branch to achieve profitability during the latter half of fiscal 2009.
While the Company currently has no commitments to open additional de novo
deposit branches during the next fiscal year, the Company would consider
additional branching projects during fiscal 2009 if appropriate
opportunities were to arise.
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Increase
and diversify the loan mix by increasing commercial loan origination
volume while increasing the balance of such loans as a percentage of total
loans.
|
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|
For
the six months ended March 31, 2009, our commercial loans, including
multi-family, nonresidential real estate, construction and business loans,
increased $4.8 million, or 2.7%, from $181.8 million to $186.6 million
with such balances representing approximately 38% of loans receivable,
net. We expect to continue our strategic emphasis on multifamily and
nonresidential real estate lending throughout the remainder of fiscal 2009
while reducing our strategic focus on originating new construction loans
over the near term.
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Continue
to implement or enhance alternative delivery channels for the origination
and servicing of loan and deposit products.
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In
support of this objective, we previously completed a significant overhaul
of our Internet website which serves as a portal through which our
customers access a growing menu of online services. Having enhanced our
online services for retail customers, we are currently addressing the
growth in business demand for such services. Toward that end, we have
expanded our business online banking product and service offerings to now
include remote check deposit, online cash management and online bill
payment services for
business.
|
|
●
|
Broaden
and strengthen customer relationships by bolstering cross marketing
strategies and tactics with a focus on multiple account/service
relationships.
|
|
|
|
|
|
We
will continue to cross market other products and services to promote
multiple account/service relationships and the retention of long term
customers and core deposits. These efforts will be directed to customers
within all five of the Bank’s branches.
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●
|
Utilize
capital markets tools to effectively manage capital and enhance
shareholder value.
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Toward
that end, the Company completed two previous share repurchase plans during
fiscal 2007 through which it repurchased ten percent and five percent,
respectively, of its outstanding shares. During fiscal 2008, the Company
completed its third and fourth share repurchase programs through each of
which it repurchased an additional five percent of its outstanding shares.
A fifth share repurchase plan for an additional five percent of its
outstanding shares was announced in August 2008 and remains ongoing at
March 31, 2009. Additionally, the Company increased its regular quarterly
cash dividend paid to shareholders from $0.04 per share to $0.05 per share
during the quarter ended June 30, 2008 and continued paying a quarterly
dividend of $0.05 per share through the quarter ended March 31,
2009.
|
A
number of the strategies outlined above have historically had a detrimental
impact on short term earnings. Notwithstanding, we expect to continue to execute
these growth and diversification strategies designed to enhance future earnings
and resist adverse changes in market conditions toward the goal of enhancing
shareholder value.
In
general, we expect that the reductions in market interest rates and overall
steepening of the yield curve that occurred during fiscal 2008 - and have been
maintained during the first half of fiscal 2009 - may have a beneficial impact
on earnings over time. However, during the past two quarters, the Bank has
experienced significant growth in deposits that outpaced its near term ability
to deploy such incoming cash flows into creditworthy loans. Consequently, the
Bank has experienced significant net growth in short term interest-earning
assets and shorter duration investment securities whose current yields reflect
the recent reductions in short term market interest rates to historical lows.
The Bank continues to incrementally reduce its cost of interest-bearing maturity
and non-maturity deposits, but such reductions have lagged the decline in short
term market interest rates. As such, the rapid growth in deposits during the
first half of fiscal 2009 has had a detrimental near-term impact on the
Company’s net interest spread and margin. The Bank expects to deploy the
accumulated balances of lower yielding cash and investments into higher yielding
assets over time which is expected to enhance earnings in future
periods.
Executive
Summary
The
Company’s results of operations depend primarily on its net interest income. Net
interest income is the difference between the interest income we earn on our
interest-earning assets and the interest we pay on our interest-bearing
liabilities. It is a function of the average balances of loans and investments
versus deposits and borrowed funds outstanding in any one period and the yields
earned on those loans and investments versus the cost of those deposits and
borrowed funds. Our loans consist primarily of residential mortgage loans,
comprising first and second mortgages and home equity lines of credit, and
commercial loans, comprising multi-family and nonresidential real estate
mortgage loans, construction loans and business loans. Our investments primarily
include U.S. Agency residential mortgage-related securities but may also include
U.S. Agency debentures and U.S. Government debentures and mortgage-related
securities. Our interest-bearing liabilities consist primarily of retail
deposits, advances from the Federal Home Loan Bank of New York and other
borrowings associated with reverse repurchase agreement transactions with
institutional counterparties.
For
the first six months of fiscal 2009, the Company’s net interest rate spread
increased 21 basis points to 2.08% in comparison to 1.87% during fiscal 2008.
The increase in net interest rate spread was largely attributable to a reduction
in the Company’s cost of interest-bearing liabilities of 57 basis points to
3.16% from 3.73% for those same comparative periods. The reduction in interest
costs resulted from continued decreases in the cost of retail deposits augmented
by reductions in the overall cost of borrowings. The decrease in retail deposit
interest costs from the prior fiscal year continued to reflect the overall
reduction in market interest rates and their effect on deposit pricing. The
decrease in borrowing costs primarily reflected the cumulative, combined effects
of repaying higher cost borrowings at maturity and the addition of lower cost
borrowings arising from a wholesale growth transaction executed in March
2008.
The
decrease in interest costs was partially offset by a reduction in the Company’s
yield on interest-earning assets which declined 35 basis points to 5.24% from
5.59% for those same comparative periods. This reduction in yield reflected, in
part, the effects of lower market interest rates on the Company’s adjustable
rate loans, including construction loans, business loans and home equity lines
of credit. However, the near term accumulation of short term interest-earning
assets and shorter duration investment securities discussed in the preceding
section contributed significantly to the reduction in earning asset yields. As
noted earlier, the Bank expects to deploy the accumulated balances of lower
yielding cash and investments into higher yielding assets over time which is
expected to enhance earnings in future periods.
The
factors resulting in the widening of the Company’s net interest rate spread also
positively impacted the Company’s net interest margin. However, the impact of
improved net interest rate spread was substantially offset by the impact of the
Company’s share repurchase program on the Company’s net interest margin. The
foregone interest income on the earning assets used to fund share repurchases
contributed significantly to limiting the increase in the Company’s net interest
margin which increased 9 basis points to 2.59% for the six months ended March
31, 2009 from 2.50% for all of fiscal 2008.
Our
net interest rate spread and margin may be adversely affected throughout several
possible interest rate environments. The risks presented by movements in
interest rates is addressed more fully under Item 3. Quantitative and
Qualitative Disclosures About Market Risk found later in this
report.
Our
results of operations are also affected by our provision for loan losses which
reflect the overall deterioration of the economy and declining real estate
values. For the six months ended March 31, 2009, the Company recorded a net loan
loss provision of $1.7 million. The provision for loan losses for the current
six month period reflected specific provisions totaling $1.6 million
attributable to four impaired loans. The largest of these impaired loans is one
fully disbursed construction loan with an outstanding principal balance of $6.8
million against which the Bank established a $1,375,000 valuation allowance
during the six months ended March 31, 2009. Three additional nonperforming
commercial loans with combined principal balances of approximately $679,000, net
of charge offs, required loss provisions totaling $227,000 during the current
six month period due to their respective nonaccrual statuses and reduced
collateral values. In total, annualized net loan loss provision expense,
reflected as a percentage of average earning assets, was reported as 0.55% for
the six months ended March 31, 2009 compared with 0.09% for all of fiscal
2008.
At
March 31, 2009, the Bank has classified 12 loans with total outstanding
principal balances of $12.3 million, or 1.85% of total assets, as nonperforming
representing an increase in nonperforming loan balances from $1.1 million or
0.18% of total assets at September 30, 2008. Additional information about the
Bank’s nonperforming loans is included in the discussion of loans receivable in
following section.
Our
results of operations also depend on our noninterest income and noninterest
expense. Noninterest income includes deposit service fees and charges, income on
the cash surrender value of life insurance, gains on sales of loans and
securities, gains on sales of other real estate owned and loan related fees and
charges. Noninterest income as a percentage of average assets decreased four
basis points to 0.26% for the six months ended March 31, 2009 from 0.30% for all
of fiscal 2008. This decrease was largely attributable to comparative decreases
in branch fee income due, in part, to lower annuity sales and associated fee
income as well as reductions in deposit account service charges resulting from
decreased customer utilization of overdraft protection services.
Gains
and losses on sale of assets, included in noninterest income, typically resulted
from the Company selling long term, fixed rate mortgage loan originations into
the secondary market. Demand for such loans typically moves inversely with
market interest rates. That is, as interest rates rise, market demand for long
term, fixed rate mortgage loans diminishes in favor of hybrid ARMs which the
Company has historically retained in its portfolio rather than selling into the
secondary market. By contrast, when interest rates decline, market demand for
long term, fixed rate mortgage loans increases due to favorable refinancing
opportunities and improved affordability of housing. Consequently, the gains and
losses on sale of loans reported by the Company have historically fluctuated
with market conditions. Additionally, changes to the Company’s asset/liability
management strategy - such as those implemented during fiscal 2008 by which all
loans originated were added to the portfolio - will also cause fluctuations in
gains and losses on sale of loans. Additionally, such gains and losses also
reflected the impact of infrequent investment security sales for asset/liability
management purposes. As a percentage of average total assets, the Company
reported no gains and losses on asset sales for the six months ended March 31,
2009 while such gains and losses totaled less than 0.01% for all of fiscal
2008.
Noninterest
expense includes salaries and employee benefits, occupancy and equipment
expenses, data processing and other general and administrative expenses. As a
percentage of average total assets, noninterest expense for the six months ended
March 31, 2009 totaled 2.19% representing an eight basis point reduction from
2.27% reported for all of fiscal 2008.
A
significant portion of the improvement in noninterest expense was attributable
to various compensation-related factors. For example, as a continuation of the
efforts initiated during fiscal 2008, additional adjustments to the Company’s
non-branch staffing levels were initiated in the first quarter of fiscal 2009
resulting in further reductions in the Company’s number of full time equivalent
employees. Through March 31, 2009, the Company has reduced its number of full
time equivalent employees by over 11% since the beginning of fiscal 2008. The
Company will continue to monitor its employee staffing levels in relation to the
goals and objectives of its business plan and may consider further opportunities
to adjust such staffing levels, as appropriate, to support the achievement of
those goals and objectives.
Additionally,
in 2008, the Company recognized an increase in compensation expense attributable
to the death of a Director Emeritus of the Company during the second fiscal
quarter. Under the terms of the Company’s restricted stock and stock option
plans, the vesting of the remaining unearned benefits accruing to the director
through these plans was automatically accelerated. As such, the Company incurred
an acceleration of the remaining pre-tax expenses associated with these benefits
totaling approximately $254,000 during fiscal 2008 for which no comparable
expense has been recorded in fiscal 2009.
The
noninterest expense reported for both comparative periods fully reflects the
ongoing costs of the three full-service branches opened during fiscal 2007. In
general, management expects occupancy and equipment expense to increase in the
future as we continue to implement our de novo branching strategy to expand our
branch office network. As noted earlier, while the Company currently has no
commitments to open additional de novo deposit branches during the next fiscal
year, the Company would consider additional branching projects during fiscal
2009 if appropriate opportunities were to arise. Our current business plan
targets the opening of up to three additional de novo branches over
approximately the next five years. The costs for land purchases or leases,
branch construction costs and ongoing operating costs for additional branches
will impact future earnings.
The
Company also expects occupancy and data processing expense to continue to
reflect the costs associated with the relocation of the Bank’s Bloomfield branch
which opened in April 2008. This relocation has significantly upgraded and
modernized the Bloomfield branch facility, supporting the Company’s deposit
growth and customer service enhancement objectives. The relocation will also
support potential expansion of the administrative and lending office space
within the Company’s existing headquarters facility, where the branch had
previously been located, should such expansion be required to support the
Company’s business plan.
The
Company has reported noteworthy increases in legal and professional and
consulting expenses relating to the upcoming merger with Investors Bancorp
announced on December 15, 2008. For the six months ended March 31, 2009, such
merger-related expenses totaled approximately $315,000. Additionally, the
Company has reported significant increases in other noninterest expense
attributable largely to increases in FDIC insurance assessments.
In
total, our return on average assets decreased 22 basis points to -0.01% for the
six months ended March 31, 2009 from 0.21% for all of fiscal 2008, while return
on average equity decreased 135 basis points to -0.04% from 1.31% for the same
comparative periods.
Comparison
of Financial Condition at March 31, 2009 and September 30, 2008
Our
total assets increased by $45.3 million, or 7.3%, to $666.9 million at March 31,
2009 from $621.6 million at September 30, 2008. The increase primarily reflected
comparatively higher balances of cash and equivalents, investment securities and
loans receivable, net.
Cash
and cash equivalents increased by $20.8 million, or 102.1%, to $41.2 million at
March 31, 2009 from $20.4 million at September 30, 2008. The net increase in
cash and cash equivalents primarily reflects net growth in deposits partially
offset by growth in investment securities and loans receivable, net and
repayment of maturing and amortizing borrowings.
The
Company expects to continue reinvesting the proceeds received through its growth
in deposits into the loan portfolio over time as lending opportunities arise. To
the extent supported by loan demand and origination volume, the Company expects
to reinvest deposit proceeds into its commercial loan portfolio. However, the
net addition of residential mortgages to the loan portfolio, including longer
term, fixed rate one- to four-family mortgages which were historically sold into
the secondary market, may continue augmenting the growth in the Company’s
commercial loans. (See further discussion in the subsequent section titled
“Quantitative and Qualitative Disclosures About Market Risk”.)
Securities
classified as available-for-sale increased $13.1 million, or 16.2%, to $94.3
million at March 31, 2009 from $81.2 million at September 30, 2008 while
securities held-to-maturity decreased approximately $705,000, or 9.4% to $6.8
million from $7.5 million for those same comparative periods.
The
balance of available-for-sale securities includes investments acquired in a
wholesale growth transaction executed during fiscal 2008 through which the
Company purchased approximately $50.0 million of mortgage-related investment
securities funded by an equivalent amount of borrowings. The ongoing net
interest income resulting from this transaction continues to augment the
Company’s earnings to offset a portion of the near term costs associated with
executing its business plan. Through this transaction, the Company took
advantage of the opportunity to acquire agency, AAA-rated mortgage-related
securities at historically wide interest rate spreads in relation to the cost of
wholesale funding sources.
The
following table compares the composition of the Company’s investment securities
portfolio by security type as a percentage of total assets at March 31, 2009
with that of September 30, 2008. Amounts reported exclude unrealized gains and
losses on the available for sale portfolio.
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|
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|
March
31, 2009
|
|
|
September
30, 2008
|
|
Type
of Securities
|
|
|
Amount
|
|
|
Percent
of
Total
Assets
|
|
|
Amount
|
|
|
Percent
of
Total
Assets
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
Fixed
rate MBS
|
|
$
|
43,643
|
|
|
|
6.55
|
%
|
|
$
|
48,669
|
|
|
|
7.83
|
%
|
ARM
MBS
|
|
|
8,900
|
|
|
|
1.33
|
|
|
|
9,454
|
|
|
|
1.52
|
|
Fixed
rate CMO
|
|
|
25,236
|
|
|
|
3.78
|
|
|
|
29,699
|
|
|
|
4.78
|
|
Floating
rate CMO
|
|
|
1,518
|
|
|
|
0.23
|
|
|
|
1,750
|
|
|
|
0.28
|
|
Fixed
rate agency debentures
|
|
|
20,001
|
|
|
|
3.00
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
99,298
|
|
|
|
14.89
|
%
|
|
$
|
89,572
|
|
|
|
14.41
|
%
|
Assuming
no change in interest rates, the estimated average life of the investment
securities portfolio was 2.32 years and 4.42 years, respectively, at March 31,
2009 and September 30, 2008. Assuming a hypothetical immediate and permanent
increase in interest rates of 300 basis points, the estimated average life of
the portfolio would have extended to 4.77 years and 6.03 years at March 31, 2009
and September 30, 2008, respectively.
Loans
receivable, net increased by $12.1 million, or 2.5%, to $490.7 million at March
31, 2009 from $478.6 million at September 30, 2008. The growth was comprised of
net increases in commercial loans totaling $4.8 million or 2.7%. This growth
comprised net increases in multifamily, nonresidential real estate, land and
business loans of $11.7 million partially offset by net reductions in the
outstanding balance of construction loans of $6.8 million. The increase in loans
receivable, net also included net increases in one- to four-family first
mortgages of $7.5 million, net increases in home equity loans and home equity
lines of credit totaling $1.1 million and net increases in consumer loans of
$259,000. Offsetting the growth in these categories was a net increase to the
allowance for loan losses totaling $1.6 million. As described earlier, the
increase in the allowance for loan losses was largely attributable to a
$1,375,000 specific valuation allowance established against one impaired
construction loan. The remaining net growth in the allowance was attributable,
in part, to provisions, net of charge offs, associated with three other impaired
commercial loans plus general provisions associated with overall growth in the
loan portfolio.
One-
to four-family mortgage loans are generally grouped by the Bank into one of
three categories based upon underwriting criteria: “Prime”, “Alt-A” and
“Sub-prime” mortgages. Sub-prime loans are generally defined by the Bank as
loans to borrowers with deficient credit histories and/or higher debt-to-income
ratios. Loans falling within the Alt-A category, as defined by the Bank, include
loans to borrowers with blemished credit credentials that are less severe than
those characterized by Sub- prime loans but otherwise preclude the loan from
being considered Prime. Alt-A loans may also be characterized by other
underwriting or documentation exceptions such as reduced or limited loan
documentation. Loans without the deficiencies or exceptions characterizing
Sub-prime and Alt-A loans are considered Prime and comprise over 98% of the one-
to four-family mortgages within the Bank’s loan portfolio.
The
Bank does not currently offer Sub-prime loan programs. Prior to fiscal 2007, the
Bank had offered a limited number of one- to four-family loan programs through
which it originated and retained Sub-prime loans to borrowers with deficient
credit histories or higher debt-to-income ratios. At March 31, 2009 and
September 30, 2008, the remaining balance and number of these loans were
approximately $1.1 million and $1.2 million, respectively, representing a total
of 8 loans and 9 loans, respectively, at each date. One Sub-prime loan with a
balance of $141,548 was one payment past due at March 31, 2009. The remaining
seven loans were performing in accordance with their terms for the periods
reported.
Through
fiscal 2007, the Bank offered an Alt-A stated income loan program by which it
originated and retained loans to borrowers whose income was affirmatively stated
at the time of application, but not verified by the Bank. The Bank discontinued
that program in the first quarter of fiscal 2008. At March 31, 2009 and
September 30, 2008, the remaining balance and number of these loans were
approximately $6.8 million and 25 loans, respectively, at each date. One Alt-A
loan with a remaining balance of $413,896 was three payments past due at March
31, 2009. The remaining 24 loans were performing in accordance with their terms
for the periods reported.
The
Bank continues to offer a limited Alt-A program through which it originates and
sells all such loans to Fannie Mae under its Expanded Approval program on a
non-recourse, servicing retained basis. A significant portion of the loans
originated under this remaining Alt-A program support the procurement of
mortgage financing for first time home buyers.
At
March 31, 2009 and September 30, 2008, respectively, the balance of one- to
four-family mortgage loans included $20.3 million and $22.5 million of thirty
year adjustable rate loans with initial fixed interest rate periods of three to
ten years during which time monthly loan payments comprise interest only. Such
balances included 46 and 50 loans, respectively, for the periods reported. After
the initial fixed interest rate period, the monthly payments on such loans are
adjusted to reflect the collection of both interest and principal over the
loan’s remaining term to maturity.
As
noted earlier, the Bank has classified a total of 12 loans with outstanding
principal balances of $12.3 million as nonperforming at March 31, 2009. Of these
loans, $6.8 million, or approximately 55%, is attributable to one fully
disbursed construction loan. The loan, which includes personal guarantees for
all indebtedness, is secured by a completed 13-unit residential condominium
project located in Wildwood Crest, New Jersey. The Bank classified the loan as
nonperforming and initiated foreclosure action during the quarter ended March
31, 2009. Based upon the loan’s nonaccrual status and updated collateral value,
the Bank established a $1,375,000 valuation allowance against the impaired loan
during the most recent quarter ended March 31, 2009.
Nonperforming
loans also include one additional construction loan with a disbursed balance of
$3.0 million secured by two residential properties in process of construction in
Alpine, New Jersey. No impairment allowance was required against this
construction loan at March 31, 2009.
Four
nonresidential mortgage loans and one land loan with combined outstanding
principal balances of approximately $1.6 million, net of charge offs, were
classified as nonperforming at March 31, 2009. Based upon their respective
nonaccrual statuses and collateral values, impairment allowances totaling
$135,000 have been established against two of these five nonperforming
loans.
The
remaining five nonperforming loans include three one- to-four family mortgage
loans, one multifamily mortgage loan and one consumer loan with total
outstanding balances of $925,000. No impairment allowance was required against
these loans at March 31, 2009.
The
following two tables compare the composition of the Company’s loan portfolio by
loan type as a percentage of total assets at March 31, 2009 with that of
September 30, 2008. Amounts reported exclude allowance for loan losses and net
deferred origination costs.
The
table below generally defines loan type by loan maturity and/or repricing
characteristics:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31, 2009
|
|
|
September
30, 2008
|
|
Type
of Loans
|
|
|
Amount
|
|
|
Percent
of
Total
Assets
|
|
|
Amount
|
|
|
Percent
of
Total
Assets
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
(1)
|
|
$
|
33,260
|
|
|
|
4.99
|
%
|
|
$
|
40,119
|
|
|
|
6.45
|
%
|
Prime-indexed
Land
|
|
|
8,846
|
|
|
|
1.33
|
|
|
|
3,666
|
|
|
|
0.59
|
|
1/1
and 3/3 ARMs
|
|
|
3,248
|
|
|
|
0.49
|
|
|
|
7,275
|
|
|
|
1.17
|
|
3/1
and 5/1 ARMs
|
|
|
132,895
|
|
|
|
19.93
|
|
|
|
128,984
|
|
|
|
20.75
|
|
5/5
and 10/10 ARMs
|
|
|
47,246
|
|
|
|
7.08
|
|
|
|
46,565
|
|
|
|
7.49
|
|
7/1
and 10/1 ARMs
|
|
|
6,038
|
|
|
|
0.91
|
|
|
|
5,489
|
|
|
|
0.88
|
|
15
year fixed or less
|
|
|
152,239
|
|
|
|
22.82
|
|
|
|
150,117
|
|
|
|
24.15
|
|
Greater
than 15 year fixed
|
|
|
76,213
|
|
|
|
11.43
|
|
|
|
68,850
|
|
|
|
11.08
|
|
Prime-indexed
HELOC
|
|
|
23,450
|
|
|
|
3.52
|
|
|
|
20,836
|
|
|
|
3.35
|
|
Consumer
(2)
|
|
|
1,418
|
|
|
|
0.21
|
|
|
|
1,159
|
|
|
|
0.19
|
|
Business
(3)
|
|
|
9,432
|
|
|
|
1.41
|
|
|
|
7,543
|
|
|
|
1.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
494,285
|
|
|
|
74.12
|
%
|
|
$
|
480,603
|
|
|
|
77.31
|
%
|
(1)
|
Construction
loans are generally floating rate with original maturities of two years or
less.
|
(2)
|
Consumer
loans are generally fixed rate with original maturities of less than five
years.
|
(3)
|
Business
loans are generally fixed or floating rate with original maturities of
five years or less.
|
The
table below generally defines loan type by collateral or purpose:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31, 2009
|
|
|
September
30, 2008
|
|
Type
of Loans
|
|
|
Amount
|
|
|
Percent
of
Total
Assets
|
|
|
Amount
|
|
|
Percent
of
Total
Assets
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction
(1)
|
|
$
|
33,260
|
|
|
|
4.99
|
%
|
|
$
|
40,119
|
|
|
|
6.45
|
%
|
1-4
family mortgage
|
|
|
282,718
|
|
|
|
42.40
|
|
|
|
276,690
|
|
|
|
44.51
|
|
Multifamily
(5+) mortgage
|
|
|
38,224
|
|
|
|
5.73
|
|
|
|
36,869
|
|
|
|
5.93
|
|
Nonresidential
mortgage
|
|
|
96,424
|
|
|
|
14.46
|
|
|
|
90,704
|
|
|
|
14.59
|
|
Land
|
|
|
9,359
|
|
|
|
1.40
|
|
|
|
6,683
|
|
|
|
1.08
|
|
1-4
family HELOC
|
|
|
23,450
|
|
|
|
3.52
|
|
|
|
20,836
|
|
|
|
3.35
|
|
Consumer
(2)
|
|
|
1,418
|
|
|
|
0.21
|
|
|
|
1,159
|
|
|
|
0.19
|
|
Business
(3)
|
|
|
9,432
|
|
|
|
1.41
|
|
|
|
7,543
|
|
|
|
1.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
494,285
|
|
|
|
74.12
|
%
|
|
$
|
480,603
|
|
|
|
77.31
|
%
|
(1)
|
Construction
loans generally include loans collateralized by land and one- to four
family, multifamily and commercial buildings in process of
construction.
|
(2)
|
Consumer
loans generally include secured account loans and unsecured overdraft
protection balances.
|
(3)
|
Business
loans generally include secured and unsecured business lines of credit and
term notes.
|
Total
deposits increased by $51.3 million, or 11.4%, to $498.9 million at March 31,
2009 from $447.7 million at September 30, 2008. This net growth reflected
increases in certificates of deposit, savings accounts and interest-bearing
checking accounts, including money market checking accounts, of $42.2 million,
$3.7 million and $5.6 million, respectively. This growth in deposits was
partially offset by reductions in the balance of noninterest-bearing checking
accounts of $241,000.
The
noteworthy growth in the Bank’s deposits during the past six months has
coincided with a significant reduction in deposit interest rates as offered by
the Bank as well as those offered in the marketplace as a whole. The Bank
attributes a portion of its deposit gathering success to the continued marketing
efforts focused on achieving or growing the profitability of its branches.
However, the Bank acknowledges that the recent volatility within the financial
markets and the resulting economic uncertainty has caused many consumers to seek
the safety of FDIC-insured accounts to protect the value of their financial
assets.
As a result of these factors, the Bank has experienced significant growth in
deposits that outpaced its near term ability to deploy such incoming cash flows
into creditworthy loans. Consequently, the Bank has experienced significant net
growth in short term interest-earning assets and shorter duration investment
securities whose current yields reflect the recent reductions in short term
market interest rates to historical lows. As noted earlier, the Bank expects to
deploy the accumulated balances of lower yielding cash and investments into
higher yielding assets over time which is expected to enhance earnings in future
periods. In doing so, however, the Bank will be cognizant of the potential risk
of deposit outflows when and if the financial markets and economic conditions
improve and consumers elect to reinvest their insured deposits into alternative,
noninsured investments.
The
following table compares the composition of the Company’s deposit portfolio by
category as a percentage of total assets at March 31, 2009 with that of
September 30, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31, 2009
|
|
|
September
30, 2008
|
|
Deposit
category
|
|
|
Amount
|
|
|
Percent
of
Total
Assets
|
|
|
Amount
|
|
|
Percent
of
Total
Assets
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest
bearing checking
|
|
$
|
31,206
|
|
|
|
4.68
|
%
|
|
$
|
31,447
|
|
|
|
5.06
|
%
|
Money
market checking
|
|
|
63,818
|
|
|
|
9.57
|
|
|
|
60,580
|
|
|
|
9.75
|
|
Interest
bearing checking
|
|
|
17,127
|
|
|
|
2.57
|
|
|
|
14,727
|
|
|
|
2.37
|
|
Money
market savings
|
|
|
8,728
|
|
|
|
1.31
|
|
|
|
8,355
|
|
|
|
1.34
|
|
Other
savings
|
|
|
80,047
|
|
|
|
12.00
|
|
|
|
76,737
|
|
|
|
12.34
|
|
Certificates
of deposit
|
|
|
298,021
|
|
|
|
44.68
|
|
|
|
255,841
|
|
|
|
41.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
498,947
|
|
|
|
74.81
|
%
|
|
$
|
447,687
|
|
|
|
72.02
|
%
|
The
following table compares the composition of the Company’s deposit portfolio by
branch as a percentage of total assets at March 31, 2009 with that of September
30, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31, 2009
|
|
|
September
30, 2008
|
|
Branch
|
|
|
Amount
|
|
|
Percent
of
Total
Assets
|
|
|
Amount
|
|
|
Percent
of
Total
Assets
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bloomfield
|
|
$
|
232,171
|
|
|
|
34.81
|
%
|
|
$
|
220,421
|
|
|
|
35.45
|
%
|
Cedar
Grove
|
|
|
122,926
|
|
|
|
18.43
|
|
|
|
111,876
|
|
|
|
18.00
|
|
Verona
|
|
|
55,545
|
|
|
|
8.33
|
|
|
|
46,298
|
|
|
|
7.45
|
|
Nutley
|
|
|
49,165
|
|
|
|
7.37
|
|
|
|
37,789
|
|
|
|
6.08
|
|
Clifton
|
|
|
39,140
|
|
|
|
5.87
|
|
|
|
31,303
|
|
|
|
5.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
498,947
|
|
|
|
74.81
|
%
|
|
$
|
447,687
|
|
|
|
72.02
|
%
|
Borrowings
decreased $8.0 million, or 10.6%, to $67.5 million at March 31, 2009 from $75.5
million at September 30, 2008. The reduction in borrowings was attributable to
net repayment of maturing and amortizing fixed rate FHLB term advances of which
$5.0 million had originally been drawn in connection with the $50 million
wholesale growth strategy executed in fiscal 2008.
The
following table compares the composition of the Company’s borrowing portfolio by
remaining term to maturity as a percentage of total assets at March 31, 2009
with that of September 30, 2008. Scheduled principal payments on amortizing
borrowings are reported as maturities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31, 2009
|
|
|
September
30, 2008
|
|
Remaining
Term
|
|
|
Amount
|
|
|
Percent
of
Total
Assets
|
|
|
Amount
|
|
|
Percent
of
Total
Assets
|
|
|
|
(Dollars
in thousands)
|
|
Overnight
|
|
$
|
—
|
|
|
|
—
|
%
|
|
$
|
—
|
|
|
|
—
|
%
|
One
year or less
|
|
|
17,513
|
|
|
|
2.63
|
|
|
|
12,547
|
|
|
|
2.02
|
|
Greater
than one to two years
|
|
|
6,000
|
|
|
|
0.90
|
|
|
|
16,000
|
|
|
|
2.57
|
|
Greater
than two to three years
|
|
|
6,000
|
|
|
|
0.90
|
|
|
|
6,000
|
|
|
|
0.97
|
|
Greater
than three to four years
|
|
|
3,000
|
|
|
|
0.44
|
|
|
|
5,000
|
|
|
|
0.80
|
|
Greater
than four to five years
|
|
|
—
|
|
|
|
—
|
|
|
|
1,000
|
|
|
|
0.16
|
|
More
than five years (1)
|
|
|
35,000
|
|
|
|
5.25
|
|
|
|
35,000
|
|
|
|
5.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
67,513
|
|
|
|
10.12
|
%
|
|
$
|
75,547
|
|
|
|
12.15
|
%
|
(1)
Borrowing category includes two reverse repurchase agreements totaling
$35.0 million originally drawn in March 2008 and maturing in March 2018
whose terms enable the counterparty, at their option, to require full
repayment of the borrowing at par prior to maturity. Early repayment may
be required on one $25.0 million borrowing on or after the two year
anniversary of its original funding. Similarly, early repayment may be
required on the remaining $10.0 million borrowing on or after the four
year anniversary of its original
funding.
|
Equity
increased $1.5 million, or 1.7% to $92.4 million at March 31, 2009 from $90.8
million at September 30, 2008. The reported increase in equity was primarily
attributable to an increase in accumulated other comprehensive income
attributable to a $1.6 million after-tax improvement in the market value of
available-for-sale investments and other credits to additional paid-in–capital
partially offset by the Company’s net loss and dividends paid for the six months
ended March 31, 2009.
Comparison
of Operating Results for the Three Months Ended March 31, 2009 and March 31,
2008
General.
The Company recorded a net loss of $573,000 for the three months ended March 31,
2009, representing an increased loss of $560,000 from the three months ended
March 31, 2008 when the Company reported a net loss of $13,000. The decrease in
net income resulted from increases in the provision for loan losses and a
decrease in noninterest income which were partially offset by an increase in net
interest income and a decrease in the provision for income taxes. Total
noninterest expense was unchanged between the comparative three month
periods.
Interest
Income.
Total interest income increased $191,000 or 2.5% to $7.8 million
for the three months ended March 31, 2009 from $7.6 million for the three months
ended March 31, 2008. For those same comparative periods, the average yield on
interest-earning assets decreased 58 basis points to 5.05% from 5.63% while the
average balance of interest-earning assets increased $77.0 million to $616.1
million from $539.1 million.
Interest
income on loans increased $88,000 or 1.3%, to $6.8 million for the three months
ended March 31, 2009 from $6.7 million for the three months ended March 31,
2008. This increase was due, in part, to a $36.5 million increase in the average
balance of loans receivable, including loans held for sale, to $492.2 million
for the three months ended March 31, 2009 from $455.7 million for the three
months ended March 31, 2008. The impact of the higher average balance was
partially offset by a reduction in the average yield on loans which decreased 37
basis points to 5.50% from 5.87% for those same comparative
periods.
Interest
income on securities increased $292,000 or 42.8% to $975,000 for the three
months ended March 31, 2009 from $683,000 for the three months ended March 31,
2008. The increase was due, in part, to a $29.3 million increase in the average
balance of investment securities, excluding the available for sale mark to
market adjustment, to $90.0 million for the three months ended March 31, 2009
from $60.7 million for the three months ended March 31, 2008. The impact on
interest income from the increase in the average balance of investments was
partially offset by a 17 basis point decline in the yield on investment
securities which decreased to 4.33% for the three months ended March 31, 2009
from 4.50% for the three months ended March 31, 2008. The decrease in yield
primarily resulted from the maturity and repayment of higher yielding investment
securities coupled with lower yields on newly purchased securities.
Additionally, the lower yields on investments also reflected the downward
repricing of adjustable and floating rate investments in accordance with the
reduction in overall market interest rates.
Interest
and dividend income on federal funds sold, other interest-earning deposits and
FHLB stock decreased $190,000 to $32,000 for the three months ended March 31,
2009 from $222,000 for the three months ended March 31, 2008. This decrease in
income was due primarily to a decline in the average yield on these assets which
decreased 354 basis points to 0.38% from 3.92% for the same comparative periods
reflecting reductions in short term market interest rates. The impact on
interest income from the decrease in the yield was partially offset by an $11.3
million increase in the average balance of these assets to $33.9 million for the
three months ended March 31, 2009 from $22.7 million for the three months ended
March 31, 2008. The average balances reported and used for yield calculations
reflect, where appropriate, the reduction for outstanding checks issued against
such accounts. This has the effect of increasing the reported yield on such
assets.
Interest
Expense.
Total interest expense decreased by $442,000 or 10.1% to $3.9
million for the three months ended March 31, 2009 from $4.4 million for the
three months ended March 31, 2008. For those same comparative periods, the
average cost of interest-bearing liabilities decreased 90 basis points from
3.93% to 3.03%, while the average balance of interest-bearing liabilities
increased $73.9 million or 16.6% to $519.7 million for the three months ended
March 31, 2009 from $445.8 million for the three months ended March 31,
2008.
Interest
expense on deposits decreased $470,000 or 12.2% to $3.4 million for the three
months ended March 31, 2009 from $3.9 million for the three months ended March
31, 2008. This decrease was largely attributable to a reduction in the Company’s
overall cost of interest-bearing deposits which decreased 85 basis points to
3.01% for the three months ended March 31, 2009 from 3.86% for the three months
ended March 31, 2008. The components of this decrease include a 138 basis point
reduction in the average cost of interest-bearing checking accounts to 2.17%
from 3.55%, a 51 basis point reduction in the average cost of savings accounts
to 1.78% from 2.29% and a 110 basis point reduction in the cost of certificates
of deposit to 3.59% from 4.69%. The decrease in the cost of interest-bearing
deposits was primarily attributable to reductions in market interest rates which
enabled the Company to reduce rates paid on most interest-bearing deposit types
across all branches.
The
effect of the reduction in deposit costs on interest expense was partially
offset by growth in the average balance of interest-bearing deposits which
increased $50.0 million to $450.7 million for the three months ended March 31,
2009 from $400.7 million for the three months ended March 31, 2008. The reported
net growth in the average balance of interest-bearing deposits comprised a $83.1
million increase in the average balance of certificates of deposit partially
offset by declines of $28.5 million and $4.5 million, respectively, in the
average balances of interest-bearing checking accounts and savings accounts.
Such declines are partly attributable to the disintermediation of such deposits
into higher yielding time deposits.
Interest
expense on borrowings increased $27,000 to $548,000 for the three months ended
March 31, 2009 from $521,000 for the three months ended March 31, 2008. This
increase in interest expense reflects a $23.9 million increase in the average
balance of borrowings to $69.0 million for the three months ended March 31, 2009
from $45.1 million for the three months ended March 31, 2008. The impact on
interest expense attributable to this increase in average balance was partially
offset by a decline in cost of borrowings which decreased 144 basis points to
3.18% for the three months ended March 31, 2009 from 4.62% for the three months
ended March 31, 2008. The changes in the average cost and average balance of
borrowings between the two comparative periods generally reflects the addition
of $50.0 million of comparatively lower costing borrowings relating to the
wholesale growth transaction noted earlier, partially offset by the repayment of
all maturing FHLB term advances, including a portion of those related to that
transaction, since the close of the earlier comparative period.
Net
Interest Income.
Net interest income increased by $634,000 or 19.8%, to
$3.8 million for the three months ended March 31, 2009 from $3.2 million for the
three months ended March 31, 2008. For those same comparative periods, the
Company’s net interest rate spread widened 32 basis points to 2.02% from 1.70%
while the net interest margin increased 11 basis points to 2.49% from 2.38%. As
noted earlier, the change in the Company’s net interest margin was significantly
impacted by the Company’s share repurchase plans. The average balance of the
Company’s treasury stock increased $5.1 million to $41.8 million for the three
months ended March 31, 2009 from $36.7 million for the three months ended March
31, 2008. Based upon that growth in the average balance of the Company’s
treasury stock account and its average yield on interest-earning assets reported
for the earlier comparative period, the Company estimates that the net increase
of $634,000 in net interest income was reduced by approximately $72,000
attributable to interest earned during the earlier comparative period on the
interest-earning assets that were subsequently utilized to fund share
repurchases.
Provision
for Loan Losses.
Using the loan loss allowance methodology described
under Critical Accounting Policies found later in this discussion, the provision
for loan losses totaled $1.5 million for the three months ended March 31, 2009,
representing an increase of $1.3 million from the three months ended March 31,
2008. The expense for the second quarter of fiscal 2009 reflected specific
provisions on impaired loans of $1.5 million. These provisions included a
specific allowance of $1,375,000 relating to one impaired construction loan and
additional specific allowances of $135,000 relating to two impaired
nonresidential mortgage loans. By contrast, the $171,000 provision for loan
losses for the second quarter of fiscal 2008 included a $34,000 specific
provision attributable to one impaired land loan that was charged off in that
same period. Excluding these specific provisions on impaired loans, the
remaining provision for loan losses for both comparative periods 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.
In
total, the allowance for loan losses as a percentage of gross loans outstanding
increased from 0.63% at September 30, 2008 to 0.93% at March 31, 2009. These
ratios reflect allowance for loan loss balances of $3.0 million and $4.6
million, respectively. Included in the $4.6 million of allowance for loan losses
at March 31, 2009 is $1.5 million of specific valuation allowances attributable
to impaired loans. Excluding theses specific impairment allowances, the Bank’s
allowance for loan losses totaled $3.1 million or 0.63% of gross loans
outstanding at March 31, 2009 – a level that is consistent with that reported
for the earlier comparative period. The level of the allowance is based on
estimates and the ultimate losses may vary from those estimates.
Noninterest
Income.
Noninterest income decreased $34,000 to $404,000 for the three
months ended March 31, 2009 from $438,000 for the three months ended March 31,
2008. The decline in noninterest income was largely attributable to a decrease
of $38,000 in loan-related fees and charges resulting primarily from decreases
in prepayment penalties and late charges. Additionally, deposit service fees and
charges declined $10,000 due primarily to decreased customer utilization of
overdraft protection services partially offset by increased fee income from
annuity sales. Partially offsetting these declines in noninterest income was a
$17,000 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.
Noninterest
Expense.
Due to a number of offsetting factors, total noninterest expense
was consistent at $3.6 million for the three months ended March 31, 2009 and
March 31, 2008. These factors included increases in occupancy and equipment,
data processing, legal, professional and consulting and other noninterest
expenses which were fully offset by decreases in compensation expense and
advertising and marketing expense.
The
reported increase in occupancy and equipment expense was largely attributable to
additional facility-related costs including depreciation arising from the Bank’s
Bloomfield branch which was relocated from the administrative headquarters to a
new facility in April 2008. Increases in data processing expense generally
reflect the additional core processing and item processing costs resulting from
the growth in accounts and transaction volume coupled with the added data
processing infrastructure costs associated with the relocated Bloomfield
branch.
The
increase in legal expenses and professional and consulting expenses were largely
attributable to costs incurred associated with the Company’s upcoming merger
with Investors Bancorp announced on December 15, 2008. Such costs include, but
were not limited to, legal services associated with the termination of certain
employee benefit plans resulting from the upcoming merger as well as external
accounting and investment banking fees associated with that merger. The increase
in legal expense also reflects increased expenditures associated with the
collection and foreclosure of certain nonperforming loans.
The
reported increase in other noninterest expense resulted primarily from increases
in FDIC insurance expense. This increase was attributable, in part, to overall
growth in the balance of FDIC-insured deposits. However, the increase also
reflects increases in FDIC insurance assessments mandated by the FDIC for the
quarter ended March 31, 2009 and the expiration of FDIC insurance credits which
had previously reduced the Bank’s net cost of FDIC deposit insurance throughout
a portion of fiscal 2008. Additionally, the FDIC has proposed to charge all
insured institutions a one-time “emergency” assessment of up to 20 basis points
of insured deposits to replenish the insurance fund that has been depleted due
to recent bank failures. Based upon the balance of its insurable deposits as
March 31, 2009, the Company estimates the cost of that one-time assessment to be
as much as $1.0 million which would be charged during the quarter ended
September 30, 2009 if the FDIC’s proposal is passed into law.
The
reported decrease in salaries, benefits and director fees was partly the result
of the death of a director emeritus of the Company, during the earlier
comparative quarter ended March 31, 2008. Under the terms of the Company’s
restricted stock and stock option plans, the vesting of the remaining unearned
benefits accruing to the former director through these plans was automatically
accelerated. As such, the Company incurred an acceleration of the remaining
pre-tax expenses associated with these benefits totaling approximately $254,000
during the quarter ended March 31, 2008.
Other
decreases in compensation-related expenses included an $80,000 reduction in
employee wages and salaries, including bonuses and payroll taxes, resulting
largely from prior adjustments to staffing levels. Such decreases also include a
$77,000 reduction in deferred compensation expenses associated with the Bank’s
supplemental executive retirement plans arising from the absence of related
expenses in the current fiscal year for a participant whose benefit was fully
accrued by the close of the prior fiscal year.
Finally,
the reported decrease in advertising and marketing expense reflects the higher
level of such expenditures during the earlier comparative period attributable to
the continued promotion of the Bank’s Nutley and Clifton branches which opened
in May 2007 and August 2007, respectively.
Provision
for Income Taxes
. The provision for income taxes decreased $183,000 for
the three months ended March 31, 2009 compared with the three months ended March
31, 2008. For the more recent period, the Company’s effective income tax benefit
rate was 31.6% compared with an effective income tax benefit rate of 86.3% for
the earlier comparative period. The tax expense in the current and prior period,
respectively, reflects the comparative levels of pre-tax income coupled with the
level of “tax favored” income reported by the Company during each period. “Tax
favored” income arises from revenue sources on which the Company pays income
taxes at a comparatively lower effective tax rate than it generally pays on
other sources of income.
Specifically,
the Company’s effective tax rate is influenced by the level of interest income
on investment securities held by the Bank’s investment subsidiary, American
Savings Investment Corporation (“ASIC”). ASIC is a wholly owned New Jersey
investment subsidiary formed in August 2004 by American Bank of New Jersey. The
purpose of this subsidiary is to invest in stocks, bonds, notes and all types of
equity, mortgages, debentures and other investment securities. Interest income
from this subsidiary is taxed by the state of New Jersey at an effective rate
lower than the statutory corporate state income tax rate. Additionally, the
Company also recognizes tax exempt income from the cash surrender value of bank
owned life insurance.
The
Company recognized income from these two “tax favored” sources during both
comparative periods. However, the comparatively lower pretax net loss reported
for earlier comparative period resulted in the items discussed above having a
proportionally greater net beneficial impact on the Company’s reported effective
tax rate in the earlier period.
Comparison
of Operating Results for the Six Months Ended March 31, 2009 and March 31,
2008
General.
The Company recorded a net loss of $18,000 for the six months ended March 31,
2009, a decrease of $98,000 from the six months ended March 31, 2008 when the
Company reported net income of $80,000. The decrease in net income resulted from
increases in noninterest expense and the provisions for loan losses and income
taxes partially offset by increases in net interest income and noninterest
income.
Interest
Income.
Total interest income increased 2.6% or $399,000 to $15.8 million
for the six months ended March 31, 2009 from $15.4 million for the six months
ended March 31, 2008. For those same comparative periods, the average yield on
interest-earning assets decreased 49 basis points to 5.24% from 5.73% while the
average balance of interest-earning assets increased $66.0 million to $604.0
million from $538.0 million.
Interest
income on loans increased $323,000 or 2.4%, to $13.7 million for the six months
ended March 31, 2009 from $13.4 million for the six months ended March 31, 2008.
This increase was due, in part, to a $38.2 million increase in the average
balance of loans receivable, including loans held for sale, to $487.7 million
for the six months ended March 31, 2009 from $449.5 million for the six months
ended March 31, 2008. The impact of the higher average balance was partially
offset by a decline in the average yield on loans which decreased 33 basis
points to 5.64% from 5.97% for those same comparative periods.
The
rise in interest income on loans was augmented by higher interest income on
securities, which increased $676,000 or 50.9% to $2.0 million for the six months
ended March 31, 2009 from $1.3 million for the six months ended March 31, 2008.
The increase was primarily due to a $30.0 million increase in the average
balance of investment securities, excluding the available for sale mark to
market adjustment, to $89.1 million for the six months ended March 31, 2009 from
$59.1 million for the six months ended March 31, 2008. The average yield on
securities was unchanged between the two comparative periods at
4.50%.
Interest
and dividend income on federal funds sold, other interest-bearing deposits and
FHLB stock decreased $601,000 to $72,000 for six months ended March 31, 2009
from $673,000 for the six months ended March 31, 2008. This decrease in income
was due primarily to a decline in the average yield of these assets which
decreased 404 basis points to 0.53% from 4.57% for the same comparative periods
reflecting reductions in current market interest rates. A reduction in the
average balance of these assets of $2.2 million from $29.4 million to $27.2
million also contributed to the reduction in interest income. The average
balances reported and used for yield calculations reflect, where appropriate,
the reduction for outstanding checks issued against such accounts. This has the
effect of increasing the reported yield on such assets.
Interest
Expense.
Total interest expense decreased by $1.1 million or 12.1% to
$8.0 million for the six months ended March 31, 2009 from $9.1 million for the
six months ended March 31, 2008. For those same comparative periods, the average
cost of interest-bearing liabilities decreased 97 basis points from 4.13% to
3.16%, while the average balance of interest-bearing liabilities increased $66.2
million or 15.0% to $507.5 million for the six months ended March 31, 2009 from
$441.3 million for the six months ended March 31, 2008.
Interest
expense on deposits decreased $1.2 million or 15.1% to $6.9 million for the six
months ended March 31, 2009 from $8.1 million for the six months ended March 31,
2008. This decrease was due largely to a 90 basis point decline in the average
cost of interest-bearing deposits from 4.05% for the six months ended March 31,
2008 to 3.15% for the six months ended March 31, 2009. The components of this
decrease include a 106 basis point decline in the average cost of certificates
of deposit to 3.74% from 4.80%, a 169 basis point reduction in the average cost
of interest-bearing checking accounts to 2.31% from 4.00% and a 55 basis point
reduction in the average cost of savings accounts to 1.91% from
2.46%.
The
impact of the decline in the average cost of interest-earning deposits was
partially offset by an increase in their comparative average balances.
Interest-bearing deposits grew $37.4 million to $437.4 million for the six
months ended March 31, 2009 from $400.0 million for the six months ended March
31, 2008. The reported net growth in average interest-bearing deposits comprised
$77.3 million of growth in the average balance of certificates of deposit.
Offsetting this growth was a net decline in the average balance of savings and
interest-bearing checking accounts of $6.4 million and $33.5 million,
respectively, primarily reflecting the disintermediation of such deposits into
higher yielding time deposits.
Interest
expense on borrowings increased $117,000 to $1.1 million for the six months
ended March 31, 2009 from $1.0 million for the six months ended March 31, 2008.
This increase was due primarily to a $28.8 increase in the average balance of
borrowings from $41.3 million for the six months ended March 31, 2008 to $70.1
million for the six months ended March 31, 2009. The impact of the increase in
average balance of borrowings was partially offset by a reduction in their
average cost which declined 168 basis points from 4.91% for six months ended
March 31, 2008 to 3.23% for the six months ended March 31, 2009. The changes in
the average cost and average balance of borrowings between the two comparative
periods generally reflects the addition of $50.0 million of comparatively lower
costing borrowings relating to the wholesale growth transaction noted earlier,
partially offset by the repayment of all maturing FHLB term advances, including
a portion of those related to that transaction, since the close of the earlier
comparative period.
Net
Interest Income.
Net interest income increased by $1.5 million or 23.8%,
to $7.8 million for the six months ended March 31, 2009 from $6.3 million for
the six months ended March 31, 2008. The Company’s net interest spread widened
48 basis points to 2.08% from 1.60% for the same comparative periods, while the
net interest margin increased 25 basis points to 2.59% from 2.34%. As noted
earlier, the change in the Company’s net interest margin was significantly
impacted by the Company’s share repurchase plans. The average balance of
Company’s treasury stock increased $7.5 million to $41.7 million for the six
months ended March 31, 2009 from $34.3 million for the six months ended March
31, 2008. Based upon that growth in the average balance of the Company’s
treasury stock account and its average yield on earning assets reported for the
earlier comparative period, the Company estimates that the net increase of $1.5
million in net interest income was reduced by approximately $215,000
attributable to interest earned during the earlier comparative period on the
earning assets that were subsequently utilized to fund share
repurchases.
Provision
for Loan Losses.
Using the loan loss allowance methodology described
under Critical Accounting Policies found later in this discussion, the provision
for loan losses totaled $1.7 million for the six months ended March 31, 2009,
representing an increase of $1.4 million from the six months ended March 31,
2008. The expense for the first six months of fiscal 2009 reflected specific
provisions on impaired loans of $1.5 million. These provisions included a
specific allowance of $1,375,000 relating to one impaired construction loan and
additional specific allowances of $135,000 relating to two impaired
nonresidential mortgage loans. An additional $92,000 specific allowance on an
impaired land loan was also provided and charged off during the first six months
of fiscal 2009. By contrast, the $309,000 provision for loan losses for the
first six months of fiscal 2008 included a $34,000 specific provision
attributable to one impaired land loan that was charged off during that same
earlier period. Excluding these specific provisions on impaired loans, the
remaining provision for loan losses for both comparative periods 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.
As
noted earlier, the allowance for loan losses as a percentage of gross loans
outstanding increased from 0.63% at September 30, 2008 to 0.93% at March 31,
2009. These ratios reflect allowance for loan loss balances of $3.0 million and
$4.6 million, respectively. Included in the $4.6 million of allowance for loan
losses at March 31, 2009 is $1.5 million of specific valuation allowances
attributable to impaired loans. Excluding theses specific impairment allowances,
the Bank’s allowance for loan losses totaled $3.1 million or 0.63% of gross
loans outstanding at March 31, 2009 – a level that is consistent with that
reported for the earlier comparative period. The level of the allowance is based
on estimates and the ultimate losses may vary from those estimates.
Noninterest
Income.
Noninterest income increased $11,000 to $844,000 for the six
months ended March 31, 2009 from $833,000 for the six months ended March 31,
2008. The increase in noninterest income was attributable to several offsetting
factors including a $33,000 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. Additionally, the Company recognized an
additional $17,000 in other noninterest income attributable to a partial
recovery of losses incurred several years earlier relating to assets held by the
Bank’s retirement plan. Partially offsetting these was a decrease of $24,000 in
loan-related fees and charges resulting primarily from decreases in prepayment
penalties and late charges. Additionally, deposit service fees and charges
declined $15,000 due primarily to decreased customer utilization of overdraft
protection services.
Noninterest
Expense.
Noninterest expense increased $137,000 to $7.0 million for the
six months ended March 31, 2009 from $6.8 million for the six months ended March
31, 2008. This increase in noninterest expense comprised several offsetting
factors which included increases in occupancy and equipment, data processing,
legal, professional and consulting and other noninterest expenses which were
partially offset by decreases in compensation expense and advertising and
marketing expense.
The
reported increase in occupancy and equipment expense was largely attributable to
additional facility-related costs including depreciation arising from the Bank’s
Bloomfield branch which was relocated from the administrative headquarters to a
new facility in April 2008. Increases in data processing expense generally
reflect the additional core processing and item processing costs resulting from
the growth in accounts and transaction volume coupled with the added data
processing infrastructure costs associated with the relocated Bloomfield
branch.
The
increase in legal expenses and professional and consulting expenses were largely
attributable to costs incurred associated with the Company’s upcoming merger
with Investors Bancorp announced on December 15, 2008. Such costs include, but
were not limited to, legal services associated with the termination of certain
employee benefit plans resulting from the upcoming merger as well as external
accounting and investment banking fees associated with that merger. The increase
in legal expense also reflects increased expenditures associated with the
collection and foreclosure of certain nonperforming loans.
The
reported increase in other noninterest expense resulted primarily from increases
in FDIC insurance expense. This increase was attributable, in part, to overall
growth in the balance of FDIC-insured deposits. However, the greater expense
also reflects increases in FDIC insurance assessments mandated by the FDIC for
the quarter ended March 31, 2009 and the expiration of FDIC insurance credits
which had previously reduced the Bank’s net cost of FDIC deposit insurance
throughout a portion of fiscal 2008. As noted earlier, the FDIC has proposed to
charge all insured institutions a one-time “emergency” assessment of up to 20
basis points of insured deposits to replenish the insurance fund that has been
depleted due to recent bank failures. Based upon the balance of its insurable
deposits as March 31, 2009, the Company estimates the cost of that one-time
assessment to be as much as $1.0 million which would be charged during the
quarter ended September 30, 2009 if the FDIC’s proposal is passed into
law.
The
reported decrease in salaries, benefits and director fees was due, in part, to
the death of a director emeritus of the Company, during the earlier comparative
quarter ended March 31, 2008. Under the terms of the Company’s restricted stock
and stock option plans, the vesting of the remaining unearned benefits accruing
to the former director through these plans was automatically accelerated. As
such, the Company incurred an acceleration of the remaining pre-tax expenses
associated with these benefits totaling approximately $254,000 during the
quarter ended March 31, 2008.
Other
decreases in compensation-related expenses included a $144,000 reduction in
employee wages and salaries, including bonuses and payroll taxes, resulting
largely from prior adjustments to staffing levels. Such decreases also include a
$142,000 reduction in deferred compensation expenses associated with the Bank’s
supplemental executive retirement plans arising from the absence of related
expenses in the current fiscal year for a participant whose benefit was fully
accrued by the close of the prior fiscal year.
Finally,
the reported decrease in advertising and marketing expense reflects the higher
level of such expenditures during the earlier comparative period attributable to
the continued promotion of the Bank’s Nutley and Clifton branches which opened
in May 2007 and August 2007, respectively.
Provision
for Income Taxes
. The provision for income taxes increased $119,000 for
the six months ended March 31, 2009 compared with the six months ended March 31,
2008. For the more recent period, the Company’s effective income tax rate was
325.0% compared with an effective income tax benefit rate of 715.4% for the
earlier comparative period. The tax expense and benefit in the current and prior
period, respectively, reflects the comparative levels of pre-tax loss or income
coupled with the level of “tax favored” income reported by the Company during
each period. “Tax favored” income arises from revenue sources on which the
Company pays income taxes at a comparatively lower effective tax rate than it
generally pays on other sources of income.
Specifically,
the Company’s effective tax rate is influenced by the level of interest income
on investment securities held by the Bank’s investment subsidiary, American
Savings Investment Corporation (“ASIC”). ASIC is a wholly owned New Jersey
investment subsidiary formed in August 2004 by American Bank of New Jersey. The
purpose of this subsidiary is to invest in stocks, bonds, notes and all types of
equity, mortgages, debentures and other investment securities. Interest income
from this subsidiary is taxed by the state of New Jersey at an effective rate
lower than the statutory corporate state income tax rate. Additionally, the
Company also recognizes tax exempt income from the cash surrender value of bank
owned life insurance.
The Company
recognized income from these two “tax favored” sources during both comparative
periods. However, the comparatively lower pretax net income reported for prior
six month period resulted in the items discussed above having a proportionally
greater net beneficial impact on the Company’s reported effective tax rate in
that earlier period.
Critical
Accounting Policies
Various
elements of our accounting policies, by their nature, are inherently subject to
estimation techniques, valuation assumptions and other subjective assessments.
The following is a description of our critical accounting policy and an
explanation of the methods and assumptions underlying its
application.
Allowance for Loan Losses.
Our
policy with respect to the methodologies used to determine the allowance for
loan losses is our most critical accounting policy. This policy is important to
the presentation of our financial condition and results of operations, and it
involves a higher degree of complexity and requires management to make difficult
and subjective judgments, which often require assumptions or estimates about
highly uncertain matters. The use of different judgments, assumptions, and
estimates could result in material differences in our results of operations or
financial condition.
In
evaluating the level of the allowance for loan losses, management considers the
Company’s historical loss experience as well as various “environmental factors”
including the types of loans and the amount of loans in the loan portfolio,
adverse situations that may affect the borrower’s ability to repay, estimated
value of any underlying collateral, industry condition information, and
prevailing economic conditions. Large groups of smaller balance homogeneous
loans, such as residential real estate and home equity and consumer loans, are
evaluated in the aggregate using historical loss factors adjusted for current
economic conditions. Large balance and/or more complex loans, such as
multi-family, nonresidential real estate, construction and business loans, are
evaluated individually for impairment. This evaluation is inherently subjective,
as it requires estimates that are susceptible to significant revision, as more
information becomes available or as projected events change.
Management
assesses the allowance for loan losses quarterly. While management uses
available information to recognize losses on loans, future loan loss provisions
may be necessary based on changes in economic conditions. In addition,
regulatory agencies, as an integral part of their examination process,
periodically review the allowance for loan losses and may require the Bank to
recognize additional provisions based on their judgment of information available
to them at the time of their examination. The allowance for loan losses in the
periods presented was maintained at a level that represented management’s best
estimate of losses in the loan portfolio to the extent they were both probable
and reasonable to estimate.
Application
of the Bank’s loan loss methodology outlined above results, in part, in
historical and environmental loss factors being applied to the outstanding
balance of homogeneous groups of loans to estimate probable credit losses. Both
historical and environmental loss factors are reviewed and updated quarterly,
where appropriate, as part of management’s assessment of the allowance for loan
losses.
During
fiscal 2008, changes to environmental factors used in the Bank’s allowance for
loan loss calculations were made reflecting the Company’s increased strategic
focus on commercial lending within an increasingly challenging economic and
lending environment. Environmental factors applied to the outstanding balance of
commercial loans reflected the changes to overall lending policies, procedures
and practices associated with that strategic emphasis, the increased volume of
commercial loans in relation to total loan originations, changes in credit
concentration reflecting larger loan balances to borrowers and concerns about
deteriorating economic conditions and their impact on regional real estate
values. The impact of these increases were largely offset by reductions in
environmental factors attributable to tightened underwriting standards within
the one- to four-family mortgage loan portfolio. No changes to environmental
loss factors were enacted during the first six months of fiscal
2009.
Management
generally expects the allowance for loan losses to continue to increase to the
extent that the Company’s strategic emphasis on commercial lending, coupled with
its traditional one- to four-family lending activities, continues to result in
net loan growth given the currently challenging economic and lending
environment. Moreover, the overall deterioration of the economy and financial
markets may result in the need to establish additional specific valuation
allowances against nonperforming assets in the future.
Liquidity
and Commitments
We
are required to have enough investments that qualify as liquid assets in order
to maintain sufficient liquidity to ensure a safe and sound operation. Liquidity
may increase or decrease depending upon the availability of funds and
comparative yields on investments in relation to the return on loans.
Historically, we have maintained liquid assets above levels believed to be
adequate to meet the requirements of normal operations, including potential
deposit outflows. Cash flow projections are regularly reviewed and updated to
assure that adequate liquidity is maintained.
The
Bank’s short term liquidity, represented by cash and cash equivalents, is a
product of its operating, investing and financing activities. The Bank’s primary
sources of funds are deposits, amortization, prepayments and maturities of
outstanding loans and mortgage-backed securities, maturities of investment
securities and other short-term investments and funds provided from operations.
While scheduled payments from the amortization of loans and mortgage-backed
securities and maturing investment securities and short-term investments are
relatively predictable sources of funds, deposit flows and loan prepayments are
greatly influenced by the level of market interest rates, economic conditions,
and competition. In addition, the Bank invests excess funds in short-term
interest-earning assets, which provide liquidity to meet lending requirements.
The Bank also generates cash through borrowings. The Bank utilizes Federal Home
Loan Bank advances and reverse repurchase agreements to leverage its capital
base by providing funds for its lending and investing activities, and to enhance
its interest rate risk management.
Liquidity
management is both a daily and long-term function of business management. Excess
liquidity is generally invested in short-term investments such as overnight
deposits or U.S. Agency securities. On a longer-term basis, the Bank maintains a
strategy of investing in various loan products and in securities collateralized
by loans. The Bank uses its sources of funds primarily to meet its ongoing
commitments, to pay maturing certificates of deposit and savings withdrawals, to
fund loan commitments and to maintain its portfolio of mortgage-backed
securities and investment securities. At March 31, 2009, the total approved loan
origination commitments outstanding amounted to $8.0 million. At the same date,
unused lines of credit were $29.1 million and loans in process were $10.4
million.
Certificates
of deposit scheduled to mature in one year or less at March 31, 2009, totaled
$267.0 million. Management’s policy is to maintain deposit rates at levels that
are competitive with other local financial institutions. Based on the
competitive rates and on historical experience, management believes that a
significant portion of maturing deposits will remain with the Bank.
Additionally, at March 31, 2009 the Bank has $17.5 million of borrowings from
the Federal Home Loan Bank of New York (“FHLB”) maturing in one year or less all
of which are currently expected to be repaid without renewal at maturity.
Repayment of such advances increases the Bank’s unused borrowing capacity from
the FHLB which totaled $134.1 million as of March 31, 2009. In calculating our
borrowing capacity, the Bank utilizes the FHLB’s guideline, which generally
limits advances secured by residential mortgage collateral to 25% of the Bank’s
total assets. On that basis, the total collateralized borrowing limit from the
FHLB was $166.6 million of which we had $32.5 million
outstanding.
The
following tables disclose our contractual obligations and commercial commitments
as of March 31, 2009. Scheduled principal payments on amortizing borrowings are
reported as maturities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
Less
Than
1
Year
|
|
|
1-3
Years
|
|
|
4-5
Years
|
|
|
After
5
Years
|
|
|
(In
thousands)
|
|
Time
Deposits
|
|
$
|
298,021
|
|
|
$
|
267,009
|
|
|
$
|
17,263
|
|
|
$
|
6,226
|
|
|
$
|
7,523
|
|
Borrowings
(1)
|
|
|
67,513
|
|
|
|
17,513
|
|
|
|
12,000
|
|
|
|
3,000
|
|
|
|
35,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
365,534
|
|
|
$
|
284,522
|
|
|
$
|
29,263
|
|
|
$
|
9,226
|
|
|
$
|
42,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Amounts
Committed
|
|
|
Less
Than
1
Year
|
|
|
1-3
Years
|
|
|
4-5
Years
|
|
|
Over
5
Years
|
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lines
of credit
(1)
|
|
$
|
29,065
|
|
|
$
|
4,356
|
|
|
$
|
1,275
|
|
|
$
|
912
|
|
|
$
|
22,522
|
|
Land
lease - Bloomfield
|
|
|
2,210
|
|
|
|
127
|
|
|
|
277
|
|
|
|
305
|
|
|
|
1,501
|
|
Building
lease - Nutley
|
|
|
1,362
|
|
|
|
84
|
|
|
|
184
|
|
|
|
192
|
|
|
|
902
|
|
Loans
in process
(1)
|
|
|
10,376
|
|
|
|
9,124
|
|
|
|
1,252
|
|
|
|
—
|
|
|
|
—
|
|
Other
commitments to extend credit
(1)
|
|
|
7,987
|
|
|
|
7,987
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
51,000
|
|
|
$
|
21,678
|
|
|
$
|
2,988
|
|
|
$
|
1,409
|
|
|
$
|
24,925
|
|
(1)
|
Represents
amounts committed to customers.
|
In
addition to the commitment included in the table above, the Bank has one
outstanding standby letter of credit totaling $247,320. The standby letter of
credit, which represents a contingent liability to the Bank, expires in June
2009.
Regulatory
Capital
Consistent
with its goals to operate a sound and profitable financial organization,
American Bank of New Jersey actively seeks to maintain its classification as a
“well capitalized” institution in accordance with regulatory standards. The
Bank’s total equity was $76.6 million at March 31, 2009, or 11.50% of total
assets on that date. As of March 31, 2009, the Bank exceeded all capital
requirements of the Office of Thrift Supervision. The Bank’s regulatory capital
ratios at March 31, 2009 were as follows: core capital 11.35%; Tier I risk-based
capital, 18.19%; and total risk-based capital, 18.94%. The regulatory capital
requirements to be considered well capitalized are 5.0%, 6.0% and 10.0%,
respectively.
Impact
of Inflation
The
consolidated financial statements presented herein have been prepared in
accordance with accounting principles generally accepted in the United States of
America. These principles require the measurement of financial position and
operating results in terms of historical dollars, without considering changes in
the relative purchasing power of money over time due to inflation.
Our
primary assets and liabilities are monetary in nature. As a result, interest
rates have a more significant impact on our performance than the effects of
general levels of inflation. Interest rates, however, do not necessarily move in
the same direction or with the same magnitude as the price of goods and
services, since such prices are affected by inflation. In a period of rapidly
rising interest rates, the liquidity and maturity structure of our assets and
liabilities are critical to the maintenance of acceptable performance
levels.
The
principal effect of inflation, as distinct from levels of interest rates, on
earnings is in the area of noninterest expense. Such expense items as employee
compensation, employee benefits and occupancy and equipment costs may be subject
to increases as a result of inflation. An additional effect of inflation is the
possible increase in the dollar value of the collateral securing loans that we
have made. We are unable to determine the extent, if any, to which properties
securing our loans have appreciated in dollar value due to
inflation.
Recent
Accounting Pronouncements
See
Note 4 - Recent Accounting Pronouncements within the Notes to Unaudited
Financial Statements included in this report.
|
|
ITEM 3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
Qualitative Analysis.
Because
the income on the majority of our assets and the cost of the majority of our
liabilities are sensitive to changes in interest rates, a significant form of
market risk for us is interest rate risk. Changes in interest rates may have a
significant, adverse impact on our net interest income.
Our
ability to make a profit largely depends on our net interest income, which could
be negatively affected by changes in interest rates. Net interest income is the
difference between:
|
|
|
|
●
|
The
interest income we earn on our interest-earning assets such as loans and
securities; and
|
|
|
|
|
|
The
interest expense we pay on our interest-bearing liabilities such as
deposits and amounts we
borrow.
|
The
rates we earn on our assets and the rates we pay on our liabilities are
generally fixed for a contractual period of time. We, like many savings
institutions, have liabilities that generally have shorter contractual
maturities than our assets. This imbalance can create significant earnings
volatility, because market interest rates change over time. In a period of
rising interest rates, the interest income earned on our assets may not increase
as rapidly as the interest paid on our liabilities. In a period of declining
interest rates the interest income earned on our assets may decrease more
rapidly, due to accelerated prepayments, than the interest paid on our
liabilities.
The
prepayment characteristics of our loans and mortgage-backed and related
securities are greatly influenced by movements in market interest rates. For
example, a reduction in interest rates results in increased prepayments of loans
and mortgage-backed and related securities, as borrowers refinance their debt in
order to reduce their borrowing cost. This causes reinvestment risk, because we
are generally not able to reinvest prepayment proceeds at rates that are
comparable to the rates we previously earned on the prepaid loans or securities.
By contrast, increases in interest rates reduce the incentive for borrowers to
refinance their debt. In such cases, prepayments on loans and mortgage-backed
and related securities may decrease thereby extending the average lives of such
assets and reducing the cash flows that are available to be reinvested by the
Company at higher interest rates.
Tables
presenting the composition and allocation of the Company’s interest-earning
assets and interest-costing liabilities from an interest rate risk perspective
are set forth in the preceding section of this report titled “Comparison of
Financial Condition at March 31, 2009 and September 30, 2008.” These tables
present the Company’s investment securities, loans, deposits, and borrowings by
categories that reflect certain characteristics of the underlying assets or
liabilities that impact the Company’s interest rate risk. Shown as a percentage
of total assets, the comparative data presents changes in the composition and
allocation of those interest-earning assets and interest-bearing liabilities
that have influenced the level of interest rate risk embedded within the
Company’s balance sheet.
Our
net interest margin may be adversely affected throughout several possible
interest rate environments. For example, during fiscal 2007, the continued
inversion of the yield curve, by which shorter term market interest rates exceed
those of longer term rates, triggered further increases in the Bank’s cost of
interest-bearing liabilities that outpaced our increase in yield on earning
assets causing further net interest rate spread compression. Such compression
resulted in a 36 basis point reduction in our net interest rate spread to 1.44%
for fiscal 2007 from 1.80% for the fiscal year ended September 30,
2006.
By
contrast, the steepening of the yield curve during fiscal 2008, by which shorter
term market interest rates fall below those of longer term rates, contributed
significantly to the 43 basis point increase in our net interest spread which
widened to 1.87% for year ended September 30, 2008. This improvement resulted
from reductions in the Company’s cost of interest-bearing liabilities that
outpaced that of the reductions in our yield on earning assets. In large part,
the improvements in net interest rate spread for fiscal 2008 resulted from the
Company’s ability to support its yield on loans through its commercial lending
strategies while it decreased its cost of retail deposits. The reduction in
retail deposit interest costs reflects the overall reduction in shorter term
market interest rates, but also reflected the downward adjustment of interest
rates paid on deposits acquired through the de novo branches opened during
fiscal 2007 on which the Company originally paid higher, promotional interest
rates.
Our
earnings may be impacted by an “earnings squeeze” in the future resulting from
further movements in market interest rates. For example, we are vulnerable to an
increase in interest rates because the majority of our loan portfolio consists
of longer-term, fixed rate loans and adjustable rate mortgages, most of which
are fixed rate for an initial period of time. At March 31, 2009, excluding
allowance for loan losses and net deferred origination costs and including loans
held for sale, loans totaled $494.3 million comprising 74.1% of total assets. As
presented in the loan-related tables in the preceding section of this report
titled “Comparison of Financial Condition at March 31, 2009 and September 30,
2008”, loans reported as fixed rate mortgages totaled $228.5 million or 34.3% of
total assets while adjustable rate mortgages (“ARMs”) totaled $189.4 million or
28.4% of total assets. In a rising rate environment, our cost of funds may
increase more rapidly than the interest earned on our loan portfolio and
investment securities portfolio because our primary source of funds is deposits
with substantially greater repricing sensitivity than that of our loans and
investment securities. Having interest-bearing liabilities that reprice more
frequently than interest-earning assets is detrimental during periods of rising
interest rates and could cause our net interest rate spread to shrink because
the increase in the rates we would earn on our securities and loan portfolios
would be less than the increase in the rates we would pay on deposits and
borrowings.
Notwithstanding
the risks presented by the flat to inverted yield curve that was prevalent
during fiscal 2007, or those resulting from increases to short term interest
rates, a significant decrease in market interest rates could, by contrast,
trigger a new wave of loan refinancing that could result in the margin
compression experienced in prior years when rates fell to their historical lows
at that time. This risk is particularly relevant at March 31, 2009, given the
recent reductions in certain market interest rates to new, historical
lows.
The
Bank also faces the risk of continued disintermediation of our deposits into
higher cost accounts and/or the potential for net deposit outflows in the
future. Specifically, we were successful in growing non-maturity deposits during
fiscal 2007 due, in part, to higher promotional interest rates paid at the
Bank’s three newest branches. Our ability to retain such deposits as rates on
such accounts were incrementally adjusted to “non-promotional” levels was
rigorously tested throughout fiscal 2008. While some expected outflows of the
most price sensitive deposits was experienced, we also experienced noteworthy
disintermediation of deposits across all branches into higher yielding accounts,
such as certificates of deposit.
To
some degree, that disintermediation trend continued during the first six months
of fiscal 2009. However, that trend was largely overshadowed by the noteworthy
increase in all interest-bearing deposit types during that same time period. For
the six months ended March 31, 2009, total deposits increased $51.3 million or
11.4% with such growth being shared across all of the Bank’s branches. As noted
earlier, the Bank acknowledges that the recent volatility within the financial
markets and the resulting economic uncertainty has caused many consumers to seek
the safety of FDIC-insured accounts to protect the value of their financial
assets – at least in the near term. The Bank is cognizant of the potential risk
of deposit outflows when and if the financial markets and economic conditions
improve and consumers elect to reinvest their insured deposits into alternative,
noninsured investments.
Quantitative Aspects of Market
Risk.
The following table presents American Bank of New Jersey’s net
portfolio value as of December 31, 2008 – the latest date for which information
is available. The net portfolio value was calculated by the Office of Thrift
Supervision, based on information provided by the Bank.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Portfolio Value
|
|
Net
Portfolio
Value
as % of
Present
Value of Assets
|
|
|
|
Board
Established
Limits
|
|
Changes
in
Rates
|
|
$
Amount
|
|
$
Change
|
|
%
Change
|
|
Net
Portfolio
Value
Ratio
|
|
Basis
Point
Change
|
|
Net
Portfolio
Value
Ratio
|
|
|
Basis
Point
Change
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
+300
bp
|
|
|
61,412
|
|
|
-17,864
|
|
|
-23
|
%
|
|
9.96
|
%
|
|
-227bp
|
|
|
5.00
|
%
|
|
|
-450bp
|
|
+200
bp
|
|
|
69,890
|
|
|
-9,385
|
|
|
-12
|
%
|
|
11.11
|
%
|
|
-112bp
|
|
|
6.00
|
%
|
|
|
-300bp
|
|
+100
bp
|
|
|
76,169
|
|
|
-3,106
|
|
|
-4
|
%
|
|
11.90
|
%
|
|
-32bp
|
|
|
7.00
|
%
|
|
|
-150bp
|
|
0
bp
|
|
|
79,276
|
|
|
|
|
|
|
|
|
12.23
|
%
|
|
|
|
|
8.00
|
%
|
|
|
|
|
-100
bp
|
|
|
78,976
|
|
|
-299
|
|
|
0
|
%
|
|
12.08
|
%
|
|
-15bp
|
|
|
7.00
|
%
|
|
|
-150bp
|
|
Future
interest rates or their effect on net portfolio value or net interest income are
not predictable. Computations of prospective effects of hypothetical interest
rate changes are based on numerous assumptions, including relative levels of
market interest rates, prepayments, and deposit run-offs, and should not be
relied upon as indicative of actual results. Certain shortcomings are inherent
in this type of computation. Although certain assets and liabilities may have
similar maturity or periods of repricing, they may react at different times and
in different degrees to changes in the market interest rates. The interest rate
on certain types of assets and liabilities such as demand deposits and savings
accounts, may fluctuate in advance of changes in market interest rates, while
rates on other types of assets and liabilities may lag behind changes in market
interest rates. Certain assets such as adjustable rate mortgages generally have
features, which restrict changes in interest rates on a short-term basis and
over the life of the asset. In the event of a change in interest rates,
prepayments and early withdrawal levels could deviate significantly from those
assumed in making calculations set forth above. Additionally, an increased
credit risk may result as the ability of many borrowers to service their debt
may decrease in the event of an interest rate increase.
Strategies for the Management of
Interest Rate Risk and Market Risk.
The Board of Directors has
established an Asset/Liability Management Committee which is responsible for
monitoring interest rate risk. The committee comprises the Bank’s Chief
Executive Officer, the Bank’s President and Chief Operating Officer, the Bank’s
Senior Vice President and Chief Financial Officer, the Bank’s Senior Vice
President and Chief Lending Officer, the Bank’s Senior Vice President Commercial
Real Estate, the Bank’s VP Branch Administration and the Bank’s Vice President
and Controller. Management conducts regular, informal meetings, generally on a
weekly basis, to address the day-to-day management of the assets and liabilities
of the Bank, including review of the Bank’s short term liquidity position; loan
and deposit pricing and production volumes and alternative funding sources;
current investments; average lives, durations and repricing frequencies of loans
and securities; and a variety of other asset and liability management topics.
The committee generally meets quarterly to formally review such matters. The
results of the committee’s quarterly review are reported to the full Board,
which makes adjustments to the Bank’s interest rate risk policy and strategies,
as it considers necessary and appropriate.
The
qualitative and quantitative interest rate analyses presented above indicate
that various foreseeable movements in market interest rates may have an adverse
effect on our net interest margin and earnings. The growth and diversification
strategies outlined in the Company’s current business plan are designed not only
to enhance earnings, but also to better support the resiliency of those earnings
throughout various movements in interest rates. Toward that end, implementation
of the Company’s business plan over time is expected to result in a better
matching of the repricing characteristics of its interest-earning assets and
interest-bearing liabilities. Specific business plan strategies to achieve this
objective include:
(1) Open
up to three de novo branches over the next five years with an emphasis on growth
in non-maturity deposits;
(2) Attract
and retain lower cost business transaction accounts by expanding and enhancing
business deposit services including online cash management and remote deposit
capture services;
(3) Attract
and retain lower cost personal checking and savings accounts through expanded
and enhanced cross selling efforts;
(4) Originate
and retain commercial loans with terms that increase overall loan portfolio
repricing frequency and cash flows while reducing call risk through prepayment
compensation provisions;
(5) Originate
and retain one- to four-family home equity loans and variable rate lines of
credit to increase loan portfolio repricing frequency and cash
flows;
(6) Originate
both fixed and adjustable rate one- to four-family first mortgage loans eligible
for sale in the secondary market and, if warranted, sell such loans on either a
servicing retained or servicing released basis. The strategy reduces the balance
of longer duration and/or non-prepayment protected loans while enhancing
noninterest income.
During
the first quarter of fiscal 2009, the Bank continued its strategy of retaining
most one- to four-family mortgage loan originations for a period of time to
augment the growth in commercial loans. The Bank also continued to offer a
limited Alt-A program through which it originates and sells all such loans to
Fannie Mae under its Expanded Approval program on a non-recourse, servicing
retained basis. The Bank carefully monitors the earnings, liquidity, and balance
sheet allocation impact of these strategies and will make interim adjustments,
as necessary, to support achievement of the Company’s business plan goals and
objectives.
Toward
that end, during the quarter ended March 31, 2009, the Bank reevaluated its
strategy of retaining most one- to four-family mortgage loan originations and
reinitiated a strategy of selling a portion of its longer term, fixed rate
conforming mortgage loan originations into the secondary market. Notwithstanding
this modification in strategy, the Bank did not have any outstanding contracts
to sell mortgage loans into the secondary market at March 31, 2009.
In
addition to the strategies noted above, we may utilize other strategies aimed at
improving the matching of interest-earning asset maturities to interest-bearing
liability maturities. Such strategies may include:
(1) Purchase
short to intermediate term securities and maintain a securities portfolio that
provides a stable cash flow, thereby providing investable funds in varying
interest rate cycles;
(2) Lengthen
the maturities of our liabilities through utilization of FHLB advances and other
wholesale funding alternatives.
The
Bank will also selectively consider certain strategies to enhance net interest
income as opportunities arise to do so in a manner that supports the goals and
objectives of the Company’s business plan. Notwithstanding the discussion above,
the implementation of these strategies may result in an acceptable and
manageable increase to the level of interest rate risk within the balance sheet.
Such an opportunity arose during the second quarter of fiscal 2008 when the
Company completed a wholesale growth transaction through which the Company
purchased approximately $50.0 million of mortgage-related investment securities
funded by an equivalent amount of borrowings. Through this transaction, the
Company took advantage of the opportunity presented by the turmoil in the
mortgage securities markets at that time to acquire agency, AAA-rated
mortgage-related securities at historically wide interest rate spreads in
relation to the cost of wholesale funding sources. The ongoing net interest
income resulting from this transaction continues to augment the Company’s core
earnings.
ITEM 4.
|
CONTROLS AND
PROCEDURES
|
|
(a)
|
Evaluation
of disclosure controls and procedures: An evaluation of the Company’s
disclosure controls and procedures (as defined in Section 13(a)-15(e) of
the Securities Exchange Act of 1934 (“the Act”) was carried out under the
supervision and with the participation of the Company’s Chief Executive
Officer, Chief Financial Officer and several other members of the
Company’s senior management. Based on such evaluation, the Company’s Chief
Executive Officer and Chief Financial Officer concluded that the Company’s
disclosure controls and procedures in effect as of the end of the period
covered by this quarterly report are effective in ensuring that the
information required to be disclosed by the Company in the reports it
files or submits under the Act is (i) accumulated and communicated to the
Company’s management (including the Chief Executive Officer and Chief
Financial Officer) in a timely manner, and (ii) recorded, processed,
summarized and reported within the time periods specified in the
Securities and Exchange Commission rules and forms.
|
|
|
|
|
(b)
|
Changes
in internal controls: In the last fiscal quarter, there was no change in
the Company’s internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial
reporting.
|
PART
II - - OTHER INFORMATION
ITEM 1.
|
LEGAL
PROCEEDINGS
|
At
March 31, 2009, the Company and its subsidiaries were not involved in any
pending proceedings other than the legal proceedings occurring in the ordinary
course of business. Such legal proceedings in the aggregate are believed by
management to be immaterial to the Company’s financial condition and results of
operations.
There
have been no material changes to the factors disclosed in Item 1A., Risk
Factors, in our Annual Report on Form 10-K for the year ended September 30, 2008
and our Proxy Statement dated April 10, 2009.
ITEM 2.
|
UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS
|
The
following table summarizes our share repurchase activity during the three months
ended March 31, 2009 and additional information regarding our share repurchase
program.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period
|
|
(a)
Total
Number
Of
Shares (or
Units)
Purchased
|
|
(b)
Average
Price
Paid
per Share
(or
Unit)
|
|
(c)
Total Number
of
Shares (or
Units)
Purchased
as
Part Of
Publicly
Announced
Plans
or
Programs
|
|
(d)
Maximum Number
(or
Approximate Dollar
Value)
of Shares (or
Units)
that May Yet Be
Purchased
Under
Plans
or Programs (1)
|
|
Repurchases
for the Month
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January
1 – January 31, 2009
|
|
4,163
|
|
|
11.19
|
|
|
4,163
|
|
|
|
464,051
|
|
February
1 – February 28, 2009
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
464,051
|
|
March
1 – March 31, 2009
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
464,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
repurchases
|
|
4,163
|
|
|
11.19
|
|
|
4,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
The shares reported were repurchased under a share repurchase plan
announced by the Company on August 19, 2008 through which five percent, or
approximately 547,000, of the Company’s outstanding shares would be
repurchased through open market or privately negotiated
transactions.
|
ITEM 3.
|
DEFAULTS UPON SENIOR
SECURITIES
|
None
ITEM 4.
|
SUBMISSION OF MATTERS TO A VOTE
OF SECURITIES HOLDERS
|
None
ITEM 5.
|
OTHER
INFORMATION
|
None
|
|
|
|
(a)
|
Exhibits
|
|
|
2
|
Agreement
and Plan of Merger dated as of December 14, 2008, by and between Investors
Bancorp, Inc. and American Bancorp of New Jersey, Inc.
(1)
|
|
|
3.1
|
Certificate
of Incorporation of American Bancorp of New Jersey, Inc.
(2)
|
|
|
3.2
|
Amended
and Restated Bylaws of American Bancorp of New Jersey, Inc.
(3)
|
|
|
4
|
Specimen
Stock Certificate of American Bancorp of New Jersey, Inc.
(2)
|
|
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Rule 13a-14a and 15d-14a.
|
|
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Rule 13a-14a and
15d-14a.
|
|
|
32
|
Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of
2002.
|
|
_______________________
|
|
(1)
|
Incorporated
by reference to the Company’s Current Report on Form 8-K (File No.
0-51500) filed with the SEC on December 16, 2008.
|
|
(2)
|
Incorporated
by reference to the Company’s Registration Statement on Form S-1 (File No.
333-125957) filed with the SEC on June 20, 2005.
|
|
(3)
|
Incorporated
by reference to the Company’s Current Report on Form 8-K (File No.
0-51500) filed with the SEC on December 10,
2007.
|
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
|
|
American
Bancorp of New Jersey, Inc.
|
|
(Registrant)
|
|
|
Date:
May 11, 2009
|
/s/
Joseph
Kliminski
|
|
Joseph
Kliminski
|
|
Chief
Executive Officer
|
|
|
Date:
May 11, 2009
|
/s/
Eric
B. Heyer
|
|
Eric
B. Heyer
|
|
Senior
Vice President and Chief Financial
Officer
|
49