BKJ Bancorp of New Jersey Inc.

Bancorp of New Jersey Reports 2019 Third Quarter Financial Results

Bancorp of New Jersey Reports 2019 Third Quarter Financial Results

FORT LEE, N.J., Nov. 08, 2019 (GLOBE NEWSWIRE) -- Bancorp of New Jersey, Inc. (NYSE American:  BKJ) (the “Company”), holding company for Bank of New Jersey (the “Bank”), today reported financial results for its third quarter and nine months ended September 30, 2019. Net income for the third quarter of 2019 was $517 thousand, or $0.07 per diluted share, compared to net income of $1.76 million, or $0.24 per diluted share, for the third quarter of 2018. Net income for the nine months ended September 30, 2019 was $3.42 million, or $0.47 per diluted share, compared to net income of $4.30 million, or $0.61 per diluted share, for the nine months ended September 30, 2018, a decrease of $873 thousand or 20.4%. This decrease in net income for the three and nine month periods is primarily due to merger related expenses, lower net interest income and an increase in the effective tax rate.

Total loans were $798.1 million at September 30, 2019, up $32.2 million or 4.2% from the December 31, 2018 balance of $765.9 million. Total deposits were $799.9 million at September 30, 2019, up $63.2 million or 8.6% from the December 31, 2018 balance of $736.7 million.

Nancy E. Graves, Bancorp of New Jersey’s President and Chief Executive Officer, stated, “We are pleased with our continued organic growth in loans and core deposits during 2019.  With the definitive merger agreement of August 15, 2019, the Company and ConnectOne Bancorp, Inc. (“ConnectOne”) are focused on completing the customary closing conditions of the merger, including outstanding regulatory approvals and approval by the Company’s and ConnectOne’s shareholders. It is anticipated that the transaction will close during the first quarter of 2020.”

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





At the Period Ended

 September 30, 2019

 December 31, 2018

Loan Composition       
Commercial Real Estate$676,154  $640,627 
Residential Mortgages 54,420   58,281 
Commercial and Industrial 23,975   24,852 
Home Equity 43,359   41,833 
Consumer 166   326 
Total Loans 798,074   765,919 
Deferred Loan Fees and Costs, net (830)  (937)
Allowance for Loan Losses (8,696)  (8,393)
Net Loans$788,548  $756,589 
    
Deposit Composition   
Noninterest-Bearing Demand Deposits$128,152  $118,489 
Savings and Interest-Bearing Transaction Accounts 272,516   298,108 
Time Deposits $250 and under 268,199   213,855 
Time Deposits over $250 131,040   106,250 
Total Deposits$799,907  $736,702 
        

Three and Nine Months Ended September 30, 2019 Financial Review

Net Interest Income

Net interest income decreased by $322 thousand or 4.6% and $719 thousand or 3.6% for the three and nine months ended September 30, 2019, respectively, versus the same periods last year.  The lower net interest income is a result of the increase in total interest expense outpacing the increase in total interest income in 2019. Net interest margin was 2.88% at the end of the third quarter compared to 2.92% at the end of the second quarter of 2019.

Total interest income increased by $992 thousand or 10.6% and $2.7 million or 10.1% for the three and nine months ended September 30, 2019, respectively, as compared to the corresponding periods in 2018, and was driven primarily in loan growth.

Total interest expense increased by $1.3 million or 54.9% in the third quarter of 2019 to $3.7 million compared to $2.4 million in the third quarter of 2018. For the nine months ended September 30, 2019, total interest expense increased by $3.4 million or 51.9% versus the same period in 2018. The increase in total interest expense for the three and nine month periods was due to higher deposit balances and rates paid on deposits and borrowed funds.

Provision for Loan Losses

The Company recorded a provision for loan losses of $250 thousand and $390 thousand for both the three and nine months ended September 30, 2019, respectively, compared to a provision for loan losses of $280 thousand and $930 thousand for the three and nine months ended September 30, 2018, respectively. The allowance for loan losses to total loans was 1.09% as of September 30, 2019.

Non-Interest Expense

Non-interest expense was $5.5 million and $4.4 million during the third quarter of 2019 and 2018, respectively, as compared to non-interest expense of $14.8 million and $13.8 million for the nine months ended September 30, 2019 and 2018, respectively. Included in non-interest expense for the three and nine months ended September 30, 2019 are legal and professional fees of approximately $700 thousand in merger related expenses.

Income Tax Expense

The income tax accrual for the three months ended September 30, 2019 was $440 thousand compared to $589 thousand for the same period in 2018. The decrease in income tax expense was the result of lower income before provision of income taxes. The effective tax rate for the three months ended September 30, 2019 and 2018 was 46.2% and 25.1%, respectively.  The increase in the effective tax rate reflected a year-to-date catch up in the accrual for income taxes in anticipation of the issuance of regulations implementing New Jersey’s adoption of tax legislation requiring a combined filing of affiliated companies. In addition, certain merger related costs are not tax deductible.

The income tax accrual for the nine months ended September 30, 2019 was $1.2 million compared to $1.4 million for the same period in 2018 which was a result of lower income before provision of income taxes. The effective tax rate for the nine months ended September 30, 2019 was 26.0%, as the Company anticipates the issuance of regulations implementing the tax legislation discussed above and the non-deductibility of certain merger related expenses.

Net Income

Net income for the third quarter of 2019 was $517 thousand compared to net income of $1.76 million for the third quarter of 2018, a decrease of $1.25 million or 70.9%.  Net income for the nine months ended September 30, 2019 was $3.42 million compared to net income of $4.30 million for the same period in 2018, a decrease of $873 thousand or 20.4%. This decrease in net income for the three and nine month periods is primarily due to merger related expenses, lower net interest income and an increase in the effective tax rate.

Financial Condition

Total assets increased by $77.9 million, or 8.8%, from $883.7 million at December 31, 2018 to $961.7 million at September 30, 2019, reflecting an increase in cash and cash equivalents, loans receivable and other assets related to the booking of a right to use asset due to the adoption of Accounting Standards Update 2016-02, Leases as of January 1, 2019.

Total cash and cash equivalents increased from $64.5 million at December 31, 2018 to $108.5 million at September 30, 2019, an increase of $44.0 million. The change in cash is mainly due to an increase in deposit account balances and the maturity of certain securities.

An increase in deposit balances, primarily in time deposits, and customers transferring funds to higher interest-bearing accounts have increased deposit costs. The Bank has sought to increase its core deposits while reducing its reliance on potentially volatile municipal deposits and their effects of seasonal fluctuations related to real estate tax inflows and payments.

Borrowed funds decreased to $49.9 million as of September 30, 2019 from $51.7 million at December 31, 2018.

At September 30, 2019, the Bank maintained capital ratios that were in excess of regulatory standards for well capitalized institutions. The Company’s and Bank’s Tier 1 capital to average assets ratio was 10.01%, each of their common equity Tier 1 capital and Tier 1 capital to risk weighted assets ratios were 11.29% and their total capital to risk weighted assets ratio was 12.34%.

Loan Quality

At September 30, 2019 the Bank had non-accrual loans of $10.8 million. Included in this total are $3.4 million in Troubled Debt Restructured Loans (“TDRs”). At year-end 2018, non-accrual loans totaled $9.4 million, of which $4.5 million were TDRs. Accruing loans delinquent greater than 30 days were $4.3 million as of September 30, 2019, compared to $5.3 million at December 31, 2018. Of the $4.3 million in delinquent loans at September 30, 2019, two loans totaling $1.2 million reached maturity and were in the process of extension or renewal.

About the Company

Founded in 2006, Bancorp of New Jersey, Inc. is the holding company for Bank of New Jersey, which provides traditional commercial and consumer banking products and services. The Bank’s corporate office is in Englewood Cliffs and the Bank currently operates out of 9 branch offices located in Fort Lee, Hackensack, Haworth, Englewood Cliffs, Englewood, Cliffside Park, and Woodcliff Lake. For more information about Bank of New Jersey and its products and services, please visit or call 201-720-3201. If you would like to receive future Bancorp of New Jersey announcements electronically, please email us at .

Forward-Looking Statements

This press release and other statements made from time to time by Bancorp of New Jersey’s management contain express and implied statements relating to our future financial condition, results of operations, credit quality, corporate objectives, and other financial and business matters, which are considered forward-looking statements. These forward-looking statements are necessarily speculative and speak only as of the date made, and are subject to numerous assumptions, risks and uncertainties, all of which may change over time. Actual results could differ materially from those expected or implied by such forward-looking statements. Risks and uncertainties which could cause our actual results to differ materially and adversely from such forward-looking statements are included in our Annual Report on Form 10-K under Item 1a – Risk Factors and in the description of our business under Item 1. Additional information and other factors that could affect future financial results are included in the Company’s subsequent filings with the Securities and Exchange Commission. Any statements made that are not historical facts should be considered to be forward-looking statements. You should not place undue reliance on any forward-looking statements. We undertake no obligation to update forward-looking statements or to make any public announcement when we consider forward-looking statements to no longer be accurate, whether as a result of new information of future events, except as may be required by applicable law or regulation.

Additional Information

This press release does not constitute an offer to sell or the solicitation of any offer to buy any securities or a solicitation of any vote or approval. Before making any vote or investment decision, investors and shareholders of the Company are urged to read carefully the Company’s definitive proxy statement relating to the merger with ConnectOne Bancorp, Inc.

BANCORP OF NEW JERSEY, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except for per share data)

       
 For the Three Months Ended September 30,  
 2019

 2018 
INTEREST INCOME      
Loans, including fees$9,535  $8,779 
Securities 168   229 
Federal funds sold and other 616   319 
TOTAL INTEREST INCOME 10,319   9,327 
       
INTEREST EXPENSE      
Savings and interest bearing transaction accounts 938   546 
Time deposits 2,387   1,663 
Borrowed funds 382   184 
TOTAL INTEREST EXPENSE 3,707   2,393 
       
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 6,612   6,934 
Provision for loan losses 250   280 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 6,362   6,654 
NON-INTEREST INCOME      
Fees and service charges 134   115 
TOTAL NON-INTEREST INCOME 134   115 
       
NON-INTEREST EXPENSE      
Salaries and employee benefits 2,676   2,369 
Occupancy and equipment expense 889   827 
FDIC premiums and related expenses (95)  130 
Legal fees 686   120 
Other real estate owned expenses 49   1 
Professional fees 455   237 
Data processing 403   149 
Other expenses 476   585 
TOTAL NON-INTEREST EXPENSE 5,539   4,418 
Income before provision for income taxes 957   2,351 
Income tax expense 440   589 
Net Income$517  $1,762 
       
PER SHARE OF COMMON STOCK      
Basic$0.07  $0.24 
Diluted$0.07  $0.24 
        

BANCORP OF NEW JERSEY, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except for per share data)

       
 For the Nine Months Ended September 30,  
 2019 2018 
INTEREST INCOME      
Loans, including fees$27,380 $25,106 
Securities 554  698 
Federal funds sold and other 1,448  887 
TOTAL INTEREST INCOME 29,382  26,691 
       
INTEREST EXPENSE      
Savings and interest bearing transaction accounts 2,736  1,427 
Time deposits 6,161  4,786 
Borrowed funds 1,082  356 
TOTAL INTEREST EXPENSE 9,979  6,569 
       
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 19,403  20,122 
Provision for loan losses 390  930 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 19,013  19,192 
NON-INTEREST INCOME      
Fees and service charges 391  320 
TOTAL NON-INTEREST INCOME 391  320 
       
NON-INTEREST EXPENSE      
Salaries and employee benefits 7,546  7,156 
Occupancy and equipment expense 2,707  2,522 
FDIC premiums and related expenses 138  436 
Legal fees 1,036  477 
Other real estate owned expenses 74  10 
Professional fees 892  730 
Data processing 971  687 
Other expenses 1,418  1,814 
TOTAL NON-INTEREST EXPENSE 14,782  13,832 
Income before provision for income taxes 4,622  5,680 
Income tax expense 1,200  1,385 
Net Income$3,422 $4,295 
       
PER SHARE OF COMMON STOCK      
Basic$0.47 $0.61 
Diluted$0.47 $0.61 

BANCORP OF NEW JERSEY, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(in thousands, except for per share data)

      
 September 30, 2019 December 31, 2018
Assets     
Cash and due from banks$2,601  $3,541 
Interest bearing deposits 101,885   59,024 
Federal funds sold 4,035   1,977 
Total cash and cash equivalents 108,521   64,542 
Interest bearing time deposits 500   500 
Securities available for sale 26,914   32,293 
Securities held to maturity (fair value $264 and $5,852 at September 30, 2019 and December 31, 2018, respectively) 264   5,852 
Restricted investment in bank stock, at cost 3,088   3,239 
Loans receivable 798,074   765,919 
Deferred loan fees and costs, net (830)  (937)
Allowance for loan losses (8,696)  (8,393)
Net loans 788,548   756,589 
Premises and equipment, net 12,996   13,440 
Accrued interest receivable 2,849   2,841 
Other real estate owned 1,363   511 
Right of use asset 12,865   - 
Other assets 3,776   3,929 
Total assets$961,684  $883,736 
Liabilities and Stockholders’ Equity     
LIABILITIES:     
Deposits:     
Noninterest-bearing demand deposits$128,152  $118,489 
Savings and interest bearing transaction accounts 272,516   298,108 
Time deposits $250 and under 268,199   213,855 
Time deposits over $250 131,040   106,250 
Total deposits 799,907   736,702 
Borrowed funds 49,847   51,658 
Lease liability 13,333   - 
Accrued expenses and other liabilities 5,490   6,269 
Total liabilities 868,577   794,629 
Stockholders’ equity:     
Common stock, no par value, authorized 20,000,000 shares; issued and outstanding 7,293,697 at September 30, 2019 and 7,295,466 at December 31, 2018 76,913   76,713 
Retained earnings 16,236   12,814 
Accumulated other comprehensive loss (42)  (420)
Total stockholders’ equity 93,107   89,107 
Total liabilities and stockholders’ equity$961,684  $883,736 
EN
08/11/2019

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