PRESS RELEASE
Contact: Fred G. Kowal
President and Chief Operating Officer
(973) 748-3600
American Bancorp of New Jersey, Inc.
American Bank of New Jersey
365 Broad Street
Bloomfield, NJ 07003-2798
NASDAQ Global Market "ABNJ" For Immediate Release
---------------------
July 25, 2008
AMERICAN BANCORP OF NEW JERSEY, INC. ANNOUNCES
THIRD QUARTER 2008 EARNINGS
Bloomfield, New Jersey - July 25, 2008 - American Bancorp of New Jersey, Inc.
(NASDAQ: ABNJ) ("American" or the "Company"), the holding company for American
Bank of New Jersey (the "Bank"), announced today net income of $431,000 for the
quarter ended June 30, 2008. By comparison, net income for the quarter ended
June 30, 2007 was $150,000. Basic and diluted earnings per share for the quarter
ended June 30, 2008 were $0.04 and $0.04, respectively. By comparison, for the
quarter ended June 30, 2007, basic and diluted earnings per share were $0.01 and
$0.01, respectively.
The Company's earnings for the nine months ended June 30, 2008 were $512,000 in
comparison to $628,000 for the nine months ended June 30, 2007. Basic and
diluted earnings per share for the nine months ended June 30, 2008 were $0.05
and $0.05, respectively. By comparison, for the nine months ended June 30, 2007,
basic and diluted earnings per share were $0.05 and $0.05, respectively.
For the nine months ended June 30, 2008, loans receivable, net increased $33.3
million or 7.6% to $471.2 million from $437.9 million at September 30, 2007. The
growth was comprised of net increases in commercial loans, including
multi-family, commercial real estate, construction and business loans, totaling
$32.5 million. The increase in loans receivable, net also included net increases
in home equity loans and home equity lines of credit totaling $1.8 million and
net increases in consumer loans of $247,000. Offsetting the growth in these
categories was a $799,000 decrease in the balance of 1-4 family first mortgages
and a net increase to the allowance for loan losses totaling $397,000.
For that same period, the balance of the Company's investment securities
increased by $27.2 million. This net growth in securities was largely
attributable to a wholesale growth transaction in March 2008 through which the
Company purchased approximately $50.0 million of mortgage-related investment
securities funded by an equivalent amount of borrowings from the FHLB and
through reverse repurchase agreements. The net interest income resulting from
this transaction is intended to augment the Company's earnings as it continues
to incur the near term costs associated with executing its business plan. The
growth in securities associated with this transaction was partially offset by
the continued reinvestment of a significant portion of the funds received from
maturing debentures and other mortgage-related security repayments into the loan
portfolio. The Company's balance of cash and cash equivalents decreased by $4.8
million which also provided a portion of the funding for the Company's reported
net loan growth and continued share repurchases during the current nine month
period.
The balance of deposits increased $22.2 million for the nine months ended June
30, 2008. This net growth reflected increases in certificates of deposit and
noninterest bearing checking accounts of $36.6 million and $64,000,
respectively. This growth was offset by reductions in interest bearing checking
and savings accounts of $13.7 million and $819,000, respectively. For the same
period, borrowings increased $44.0 million reflecting the additions to FHLB
advances and reverse repurchase agreements associated with the $50.0 million
wholesale growth transaction noted above offset by the net repayment of $6.0
million of maturing FHLB term advances. Additionally, the Company reported a net
increase of $10.5 million in treasury stock attributable primarily to the
Company's share repurchase programs. For the nine months ended June 30, 2008,
the Company has repurchased a total of 1,002,070 shares at an average price of
$10.44 per share.
The Company's yield on earning assets decreased 26 basis points to 5.43% for the
quarter ended June 30, 2008 from 5.69% for the quarter ended June 30, 2007. This
decrease reflected the impact of overall reductions in market interest rates on
the yields of repricing assets which has more than offset the beneficial impact
on earning asset yields resulting from the Company's growth in higher yielding
commercial loans.
The decrease in the yield on earning assets between the comparative quarters was
outpaced by a reduction in the Company's interest costs for the same periods.
The Company's cost of interest-bearing liabilities decreased 86 basis points to
3.44% for the quarter ended June 30, 2008 from 4.30% for the quarter ended June
30, 2007. This decrease in interest cost was primarily attributable to two
related factors. First, the Company continued to reduce the interest rates paid
on deposits generated through the three full service branches opened during
fiscal 2007 on which promotional interest rates had originally been paid.
Second, reductions in market interest rates enabled the Company to reduce rates
paid on many interest-bearing deposit types across all branches. In total, the
Company's net interest spread widened 59 basis points to 1.99% from 1.40% for
those same comparative periods.
The factors noted in the quarterly discussion above have also effected the
Company's comparative net interest spread for the nine months ended June 30,
2008 and 2007. For these comparative periods, the Company's net interest spread
widened 28 basis points to 1.74% from 1.46%. The increase in net interest spread
resulted primarily from a 27 basis point decrease in the Company's cost of
interest-bearing liabilities to 3.88% from 4.15% while the Company's yield on
earnings assets increased by 2 basis points to 5.63% from 5.61%.
The factors resulting in the widening of the Company's net interest spread also
positively impacted the Company's net interest margin for both the three and
nine month periods ended June 30, 2008. However, the impact of the Company's
share repurchase plans on net interest margin for each period diminished the
benefits of the widening net interest spread. For the comparative three and nine
month periods ended June 30, 2008 and 2007, the average balance of treasury
stock increased $16.9 million and $19.1 million, respectively, reflecting the
Company's share repurchase activity. The foregone interest income on the earning
assets used to fund those share repurchases significantly impacted the Company's
net interest margin reported for the comparative three and nine month periods.
For the three months ended June 30, 2008, the Company reported a 21 basis point
increase in net interest margin to 2.53% from 2.32% for the same period in 2007.
By contrast, for the nine months ended June 30, 2008, the Company reported a 3
basis point reduction in net interest margin to 2.41% from 2.44% for the same
period in 2007.
The Company reported an increase in net interest income of $649,000 or 21.2% to
$3.7 million for the quarter ended June 30, 2008 from $3.1 million for the
quarter ended June 30, 2007. This increase was partially offset by a
comparatively greater provision to the allowance for loan losses. For those same
comparative periods, the Company's loan loss provision increased $44,000 to
$121,000 from $77,000. The provision for loan losses for both comparative
periods primarily 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.
For the nine months ended June 30, 2008, the Company reported an increase in net
interest income of $731,000 or 7.9% to $10.0 million from $9.3 million for the
nine months ended June 30, 2007. This increase was partially offset by a
comparatively greater provision for loan losses. For those same comparative
periods, the Company's loan loss provision increased $111,000 to $431,000 from
$320,000. The expense for the nine months ended June 30, 2008 reflected a
provision of $34,000 attributable to one impaired construction loan, that
portion of which was deemed uncollectible by management during its asset quality
review conducted at March 31, 2008 and therefore charged off. The remaining
balance of the impaired loan at June 30, 2008, after the charge off, was
approximately $146,000. By contrast, the expense in the earlier comparative
period reflected a reversal of an $86,000 impairment reserve that was no longer
required. Excluding these adjustments, the provision for loan losses for both
comparative periods primarily 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.
For the three month period ended June 30, 2008, noninterest income increased
$73,000 to $481,000 from $408,000 for the quarter ended June 30, 2007. The
growth in noninterest income was largely attributable to increases in deposit
service fees and charges. A portion of the increase was attributable to deposit
service fees and charges at the Bank's de novo branches opened during fiscal
2007. However, the reported increase was also due to growth in deposit-related
fees and charges within the Bank's other branches. Additionally, the Company
reported increases in income from the cash surrender value of life insurance
attributable to a combination of higher average balances and improved yields on
those assets. The Company also reported an increase in other noninterest income
attributable primarily to growth in loan-related fees and charges including, but
not limited to, increases in prepayment penalties and late charges. Offsetting a
portion of these increases in noninterest income was the absence of loan sale
gains that had been reported during the earlier comparative period when a
portion of one-to four-family loans originated were sold into the secondary
market - a strategy that was discontinued during fiscal 2008 in favor of adding
all loans originated to the Company's portfolio.
For the nine months ended June 30, 2008, noninterest income increased $263,000
to $1.3 million from $1.1 million for the same period in 2007. The growth in
noninterest income for the comparative nine month periods was largely
attributable to the same factors as those impacting the comparative three month
periods discussed above.
For the three months ended June 30, 2008, noninterest expense increased $214,000
to $3.4 million from $3.2 million for the three months ended June 30, 2007. This
growth in noninterest expense was primarily attributable to increases in
occupancy and equipment, data processing, legal, professional and consulting and
other noninterest expenses. These increases in noninterest expense were
partially offset by reductions in salaries and employee benefits and advertising
expenses.
The reported increase of $224,000 in occupancy and equipment expense is
attributable, in part, to the costs of the two additional branches opened in the
latter half of fiscal 2007. However, the comparative increase also reflects the
ongoing operating costs associated with the Bank's relocated Bloomfield branch
which opened in April, 2008. Additionally, the increase includes the cost
associated with outsourcing a significant portion of the Company's information
technology infrastructure support services that had been provided by in-house
resources during the earlier comparative period. The reported increase of
$16,000 in data processing charges was also largely attributable to the
associated costs of the two additional branches opened in the latter half of
fiscal 2007 including both core processing and item processing expenses.
The reported increase in legal expense was primarily attributable to recently
completed revisions to benefit plan agreements as required by newly-implemented
Internal Revenue Service regulations while the increase in professional and
consulting expenses resulted from additional costs associated with disaster
recovery and physical security planning and review services utilized during the
more recent comparative quarter.
Finally, the growth in other noninterest expense includes increases in FDIC
insurance expense resulting from both growth in the balance of FDIC-insured
deposits plus the expiration of FDIC insurance credits which had reduced the
Bank's net cost of FDIC deposit insurance over several prior quarters. Increases
in noninterest expense also included increases in corporate insurance and
regulatory assessment expenses.
The reported net decrease in compensation expense reflects, in part, the absence
in the current period of the changes in director retirement plan benefit accrual
assumptions that had increased the related expenses during the earlier
comparative period. The remaining portion of the decrease is largely
attributable to accrued compensation expense reductions based on current year
bonus projections.
Notwithstanding these factors, other increases in compensation expense
attributable to the two additional branches opened in the latter half of fiscal
2007 have been largely offset by the Company's other compensation expense
control efforts which have resulted in a nearly 10% reduction in the number of
full time equivalent employees during fiscal 2008. Similarly, the absence of
denovo branch grand opening costs resulted in the reduction in advertising costs
reported for the more recent comparative quarter.
For the nine months ended June 30, 2008, noninterest expense increased $1.1
million to $10.3 million from $9.1 million for the same period in 2007. The
growth in noninterest expense for the comparative nine month periods was
generally attributable to the same factors as those impacting the comparative
three month periods discussed above. Additionally, the reported increase in
compensation expense for the nine month period included a charge resulting from
the death of a director emeritus of the Company during the second fiscal 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 that
quarter.
The following tables present selected balance sheet data as of June 30, 2008 and
September 30, 2007 and selected operating data for the three months and nine
months ended June 30, 2008 and June 30, 2007.
FINANCIAL HIGHLIGHTS
(unaudited)
At June 30, At September 30,
2008 2007
---- ----
% Total % Total
Balance Assets Balance Assets
------- ------- ------- -------
SELECTED FINANCIAL DATA
(in thousands):
Assets
Cash and cash equivalents $ 32,643 5.18% $ 37,421 6.52%
Securities available-for-sale 85,136 13.50 58,093 10.13
Securities held-to-maturity 6,856 1.09 6,730 1.17
Loans held for sale - - 1,243 0.22
Loans receivable, net 471,220 74.70 437,883 76.32
Premises and equipment 12,038 1.91 10,856 1.89
Federal Home Loan Bank stock 3,014 0.48 2,553 0.45
Cash surrender value of life insurance 13,619 2.16 13,214 2.30
Accrued interest receivable 2,365 0.37 2,212 0.39
Other assets 3,832 0.61 3,533 0.61
---------------- ------- ---------------- -------
Total assets $ 630,723 100.00% $ 573,738 100.00%
================ ======= ================ =======
Liabilities and equity
Deposits $ 450,760 71.47% $ 428,600 74.70%
Advances for taxes and insurance 2,925 0.46 2,702 0.47
Borrowings 81,564 12.93 37,612 6.56
Other liabilities 4,581 0.73 4,231 0.74
Equity 90,893 14.41 100,593 17.53
---------------- ------- ---------------- -------
Total liabilities and equity $ 630,723 100.00% $ 573,738 100.00%
================ ======= ================ =======
% Total % Total
Loan Data Balance Loans Balance Loans
------- ----- ------- -----
1-4 family mortgage loans $ 262,648 55.74% $ 263,448 60.16%
Home equity loans 14,446 3.07 14,625 3.34
Home equity lines of credit 21,795 4.63 19,829 4.53
Multifamily mortgage loans 33,326 7.07 30,552 6.98
Nonresidential mortgage loans 85,520 18.15 68,431 15.63
Land and property acquisition loans 5,241 1.11 3,340 0.76
Construction loans 1,849 8.88 32,542 7.43
Business loans 8,458 1.79 7,029 1.61
Consumer loans 902 0.19 655 0.15
Allowance for loans losses (2,965) (0.63) (2,568) (0.59)
--------------- ------- ---------------- -------
Loans receivable, net $ 471,220 100.00% $ 437,883 100.00%
=============== ======= ================ =======
% Total % Total
Deposit Data Balance Deposits Balance Deposits
------- -------- ------- --------
Noninterest-bearing deposits 30,558 6.78% 30,494 7.11%
Interest-bearing checking 98,128 21.77 111,795 26.08
Savings 91,959 20.40 92,778 21.65
Certificates of deposit 230,115 51.05 193,533 45.16
--------------- ------- ---------------- -------
Deposits $ 450,760 100.00% $ 428,600 100.00%
=============== ======= ================ =======
FINANCIAL HIGHLIGHTS (continued)
(unaudited)
At June 30, At September 30,
2008 2007
---- ----
Capital Ratios
Equity to total assets (%) 14.41 17.53
Outstanding shares (#) 10,948,286 11,946,190
Asset Quality Ratios:
Non-performing loans to total loans (%) 0.19 0.28
Non-performing assets to total assets (%) 0.14 0.22
Allowance for loan losses to non-performing
loans (%) 332.16 205.56
Allowance for loan losses to total loans (%) 0.63 0.58
For the nine months ended For the three months ended
June 30, June 30,
2008 2007 2008 2007
---- ---- ---- ----
SELECTED OPERATING DATA
(in thousands):
Total interest income $ 23,387 $ 21,375 $ 7,963 $ 7,508
Total interest expense 13,366 12,085 4,250 4,444
--------------- -------------- --------------- ---------------
Net interest income 10,021 9,290 3,713 3,064
Provision for loan losses 431 320 121 77
--------------- -------------- --------------- ---------------
Net interest income after provision for loan
losses 9,590 8,970 3,592 2,987
Noninterest income 1,314 1,051 481 408
Noninterest expense 10,263 9,117 3,420 3,204
--------------- -------------- --------------- ---------------
Income (loss) before income taxes 641 904 653 191
Provision (benefit) for income taxes 129 276 222 41
--------------- -------------- --------------- ---------------
Net income (loss) $ 512 $ 628 $ 431 $ 150
=============== ============== =============== ===============
Performance Ratios:
Return on average assets 0.12% 0.16% 0.28% 0.11%
Return on average equity 0.72 0.75 1.89 0.56
Net interest rate spread 1.74 1.46 1.99 1.40
Net interest margin 2.41 2.44 2.53 2.32
Noninterest income to average total assets 0.30 0.26 0.31 0.29
Noninterest expense to average total assets 2.32 2.27 2.20 2.30
Efficiency Ratio 90.55 88.16 81.52 92.29
PER SHARE DATA:
Earnings per share
Basic 0.05 0.05 0.04 0.01
Diluted 0.05 0.05 0.04 0.01
The foregoing material contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 concerning our financial
condition, results of operations and business. We caution that such statements
are subject to a number of uncertainties and actual results could differ
materially, and, therefore, readers should not place undue reliance on any
forward-looking statements. We do not undertake, and specifically disclaim, any
obligation to publicly release the results of any revisions that may be made to
any forward-looking statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.