LONG BRANCH, N.J., Oct. 26, 2006 (PRIMEZONE) -- Central Jersey Bancorp (Nasdaq:CJBK), the parent company of Central Jersey Bank, N.A., reported net income of $1.84 million for the nine months ended September 30, 2006, as compared to $1.87 million for the same period in 2005. Basic and diluted earnings per share were $0.22 and $0.21, respectively, for the nine months ended September 30, 2006, as compared to $0.23 and $0.21, respectively, for the same prior year period.
For the three months ended September 30, 2006, Central Jersey Bancorp reported net income of $437,000, as compared to net income of $653,000 for the same period in 2005. Basic and diluted earnings per share for the three months ended September 30, 2006 were both $0.05, as compared to $0.08 and $0.07, respectively, for the same period in 2005. Per share earnings have been adjusted in all periods to reflect the two-for-one stock split paid on July 1, 2005 and the 5% stock dividend paid on July 1, 2006.
The reported net income for the third quarter of 2006 was impacted by the decision to record a $306,000 loan loss provision relating to several unsecured loans. This additional loan loss provision reduced reported third quarter 2006 earnings, on an after tax basis, by $184,000.
With respect to the entire Mr. Solomon Dwek and related entities relationship, Central Jersey Bank, N.A.'s initial credit exposure totaled approximately $3.0 million, consisting of a $2.0 million commercial mortgage loan and approximately $1.0 million of unsecured loans. At September 30, 2006, the $1.0 million of unsecured loans had been paid down to $409,000 and have been fully reserved for, as described in the previous paragraph. The $2.0 million commercial mortgage loan is presently performing and fully secured. There is an offer to purchase the property which, if accepted and closed, would result in full payoff of the commercial mortgage loan.
George S. Callas, Chairman of the Board of Directors, and James S. Vaccaro, President and CEO, commented that, "From an operating perspective, Central Jersey Bank, N.A. continues to experience net interest margin compression due to the flat/inverted yield curve and competitive pricing for deposits. During this challenging operating environment, we are committed to prudently manage the balance sheet and the bank's operations and make strategic decisions for achieving long-term shareholder value."
Results of Operations
Net interest income was $4.2 million and $12.8 million, respectively, for the three and nine months ended September 30, 2006, as compared to $4.3 million and $13.0 million, respectively, for the same prior year periods. Net interest income for the three and nine months ended September 30, 2006 was comprised primarily of $5.9 million and $17.3 million, respectively, in interest and fees on loans, $1.3 million and $4.1 million, respectively, in interest on securities, and $239,000 and $351,000, respectively, in other interest income, less interest expense on deposits of $2.9 million and $7.6 million, respectively, interest expense on borrowed funds of $169,000 and $1.1 million, respectively, and interest expense on subordinated debentures of $113,000 and $317,000, respectively.
Although net interest income for the three and nine months ended September 30, 2006 and 2005 was consistent in both comparative periods, the cost of deposits and interest-bearing liabilities increased to an average cost of 2.86% and 2.69%, respectively, for the three and nine months ended September 30, 2006, from an average cost of 1.84% and 1.66%, respectively, for the same periods in 2005. For the three and nine months ended September 30, 2006, the average yield on interest-earning assets was 6.31% and 6.30%, respectively, as compared to 5.78% and 5.72%, respectively, for the same periods in 2005. The average net interest margin for the three and nine months ended September 30, 2006 was 3.54% and 3.68%, respectively, as compared to 3.94% and 4.07%, respectively, for the same periods in 2005. The margin compression experienced during the three and nine months ended September 30, 2006 is reflective of the increase in general interest rates and the competitive deposit pricing environment.
For the three and nine months ended September 30, 2006, the provision for loan losses was $318,000 and $465,000, respectively, as compared to $36,000 and $215,000, respectively, for the same prior year periods. The increase in the provision for loan losses for both periods was due primarily to additional loan loss provision related to the previously-mentioned unsecured loans.
Non-interest income, which consists of service charges on deposit accounts, income from bank owned life insurance and fees from the gain on the sale of residential mortgages, was $422,000 and $1.3 million, respectively, for the three and nine months ended September 30, 2006, as compared to $423,000 and $1.2 million, respectively, for the same prior year periods.
Non-interest expense was $3.6 million and $10.8 million, respectively, for the three and nine months ended September 30, 2006, as compared to $3.7 million and $11.0 million, respectively, for the same prior year periods. Non-interest expense generally includes costs associated with employee salaries and benefits, occupancy expenses, data processing fees, core deposit intangible amortization, and other operating expenses.
Financial Condition
Central Jersey Bancorp's assets, at September 30, 2006, totaled $517.3 million, an increase of $2.7 million, or 0.5%, from the December 31, 2005 total of $514.6 million. The total assets figure of $517.3 million at September 30, 2006, is inclusive of $27.0 million in goodwill and $2.6 million in core deposit intangible.
Cash and cash equivalents were $37.7 million at September 30, 2006, an increase of approximately $16.5 million, or 77.8%, from the December 31, 2005 total of $21.2 million. The increase is due primarily to the timing of cash flows related to the bank's business activities and lower than anticipated loan growth.
Investments totaled $122.4 million at September 30, 2006, a decrease of $11.3 million, or 8.5%, from the December 31, 2005 total of $133.7 million. This decrease was primarily attributable to principal pay downs on mortgage-backed securities totaling $5.5 million and matured investment securities totaling $4.2 million. The proceeds received by Central Jersey Bancorp from these transactions were used to fund loan growth that occurred during the period and pay-down borrowings.
There were no loans held for sale at September 30, 2006, as compared to $3.1 million at December 31, 2005.
Loans, net of the allowance for loan losses, closed the nine months ended September 30, 2006 at $310.2 million, an increase of $3.0 million, or 0.98%, over the $307.2 million balance at December 31, 2005. The modest increase in loans is due primarily to the origination of commercial real estate loans during the period.
Deposits at September 30, 2006 totaled $431.4 million, an increase of $23.8 million, or 5.8%, over the December 31, 2005 total of $407.6 million. The modest increase in deposit balances is reflective of normal seasonal flows and the general funding and liquidity challenges prevalent throughout the banking industry.
Other borrowings were $14.8 million at September 30, 2006, as compared to $38.2 million at December 31, 2005, a decrease of $23.4 million, or 61.3%. These borrowings, which are short-term in nature, were reduced during the period due to cash inflows resulting from deposit growth and the principal amortization and maturity of investment securities.
At September 30, 2006, book value per share and tangible book value per share were $7.80 and $4.22, respectively, as compared to $7.53 and $3.85, respectively, at December 31, 2005.
Asset Quality
The allowance for loan losses, which began the year at $3.17 million, or 1.02% of total loans, was $3.60 million at September 30, 2006, with the allowance for loan losses ratio at 1.15% of total loans. Non-performing loans totaled $510,000 at September 30, 2006, as compared to $79,000 at December 31, 2005. The significant increase in non-performing loans is due primarily to the previously-mentioned unsecured loans totaling $409,000. Loan charge-offs during the nine months ended September 30, 2006 totaled $46,000, as compared to $93,000 for the same prior year period. There were no loan charge-offs for the three months ended September 30, 2006 or 2005.
About the Company
Central Jersey Bancorp is the holding company and sole shareholder of Central Jersey Bank, N.A., the national banking entity resulting from the August 22, 2005 combination of Monmouth Community Bank, N.A. and Allaire Community Bank. Central Jersey Bank, N.A. provides a full range of banking services to both individual and business customers through fourteen branch facilities located in Monmouth and Ocean Counties, New Jersey. Central Jersey Bancorp is traded on the NASDAQ Capital Market under the trading symbol "CJBK." Central Jersey Bank, N.A. can be accessed through the internet at www.CJBNA.com.
Forward-Looking Statements
Statements about the future expectations of Central Jersey Bancorp and its subsidiary, Central Jersey Bank, N.A., including future revenues and earnings, and all other statements in this press release other than historical facts are "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. Since these statements involve risks and uncertainties and are subject to change at any time, the companies' actual results could differ materially from expected results. Among these risks, trends and uncertainties are the effect of governmental regulation on Central Jersey Bank, N.A., the availability of working capital, the cost of personnel, and the competitive market in which Central Jersey Bank, N.A. competes.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2006 (UNAUDITED) AND DECEMBER 31, 2005
(dollars in thousands)
September 30, December 31,
2006 2005
--------- ---------
ASSETS (unaudited)
------
Cash and due from banks $ 9,163 $ 21,228
Federal funds sold 28,495 --
Investment securities available
for sale, at market value 101,225 111,175
Investment securities held to
maturity (market value of
$20,715 (unaudited) and
$22,058 at September 30, 2006 and
December 31, 2005, respectively) 21,211 22,567
Loans held-for-sale -- 3,127
Loans, net 310,241 307,168
Premises and equipment 5,552 6,006
Bank owned life insurance 3,420 3,338
Accrued interest receivable 2,708 2,636
Goodwill 26,957 27,229
Core deposit intangible 2,632 3,097
Other assets 5,654 6,992
--------- ---------
Total assets $ 517,258 $ 514,563
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Deposits:
Non-interest bearing $ 87,082 $ 91,297
Interest bearing 344,272 316,257
--------- ---------
431,354 407,554
Other borrowings 14,835 38,191
Subordinated debentures 5,155 5,155
Accrued expenses and other liabilities 1,514 1,885
--------- ---------
Total liabilities 452,858 452,785
--------- ---------
Shareholders' equity:
Common stock, par value $0.01 per
share. Authorized 100,000,000 shares
and issued and outstanding
8,254,553 and 8,169,844 shares
at September 30, 2006 and
December 31, 2005, respectively 83 82
Additional paid-in capital 60,506 59,999
Accumulated other comprehensive loss,
net of tax benefit (1,876) (2,153)
Retained earnings 5,687 3,850
--------- ---------
Total shareholders' equity 64,400 61,778
--------- ---------
Total liabilities and
shareholders' equity $ 517,258 $ 514,563
========= =========
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(dollars in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
2006 2005 2006 2005
--------- --------- --------- ---------
(unaudited) (unaudited)
Interest and dividend income:
Interest and fees on
loans $ 5,859 $ 4,812 $ 17,346 $ 13,455
Interest on securities
available for sale 1,101 1,144 3,381 3,743
Interest on securities
held to maturity 245 267 750 830
Interest on federal funds
sold and due from banks 239 88 351 189
--------- --------- --------- ---------
Total interest and
dividend income 7,444 6,311 21,828 18,217
Interest expense:
Interest expense on
deposits 2,943 1,822 7,605 4,634
Interest expense on other
borrowings 169 71 1,081 336
Interest expense on
subordinated debentures 113 88 317 244
--------- --------- --------- ---------
Total interest expense 3,225 1,981 9,003 5,214
--------- --------- --------- ---------
Net interest income 4,219 4,330 12,825 13,003
--------- --------- --------- ---------
Provision for loan losses: 318 36 465 215
--------- --------- --------- ---------
Net interest income
after provision for
loan losses 3,901 4,294 12,360 12,788
--------- --------- --------- ---------
Other income:
Service charges on
deposit accounts 367 395 1,048 1,070
Gain on sale of loans
held-for-sale 28 -- 189 --
Income on bank-owned life
insurance 27 28 82 84
Other service charges,
commissions and fees -- -- 6 --
--------- --------- --------- ---------
Total other income 422 423 1,325 1,154
--------- --------- --------- ---------
Operating expenses:
Salaries and employee
benefits 1,831 1,833 5,563 5,454
Net occupancy expenses 442 432 1,268 1,339
Data processing fees 205 204 604 729
Core deposit intangible
amortization 155 172 464 516
Other operating expenses 1,014 1,062 2,883 2,980
--------- --------- --------- ---------
Total other expenses 3,647 3,703 10,782 11,018
--------- --------- --------- ---------
Income before provision
for income taxes 676 1,014 2,903 2,924
Income taxes 239 361 1,066 1,051
--------- --------- --------- ---------
Net income $ 437 $ 653 $ 1,837 $ 1,873
========= ========= ========= =========
Basic earnings per share $ .05 $ .08 $ .22 $ .23
========= ========= ========= =========
Diluted earnings per share $ .05 $ .07 $ .21 $ .21
========= ========= ========= =========
Average basic
shares outstanding 8,262,545 8,152,734 8,231,423 8,132,393
========= ========= ========= =========
Average diluted
shares outstanding 8,720,859 9,054,811 8,718,303 9,008,863
========= ========= ========= =========
Performance Ratios
(unaudited) Three Months Ended Nine Months Ended
(dollars in thousands) September 30, September 30,
---------------------------------------------------------------------
Ratio 2006 2005 2006 2005
------------------------------- -------- -------- -------- --------
Return on average assets 0.34% 0.53% 0.48% 0.52%
------------------------------- -------- -------- -------- --------
Return on average tangible
assets 0.36% 0.56% 0.51% 0.55%
------------------------------- -------- -------- -------- --------
Return on average equity 2.73% 4.19% 3.89% 4.11%
------------------------------- -------- -------- -------- --------
Return on average tangible
equity 5.10% 8.09% 7.41% 8.09%
------------------------------- -------- -------- -------- --------
Efficiency ratio 78.6% 77.9% 76.2% 77.8%
------------------------------- -------- -------- -------- --------
Efficiency ratio (less core
deposit intangible
amortization expense) 75.2% 74.3% 72.9% 74.2%
------------------------------- -------- -------- -------- --------
Operating expense ratio 2.82% 2.99% 2.81% 3.04%
------------------------------- -------- -------- -------- --------
Net interest margin 3.54% 3.94% 3.68% 4.07%
------------------------------- -------- -------- -------- --------
----------------------------------------------------------------------
Ratio Calculations
----------------------------------------------------------------------
Efficiency ratio:
------------------------------- -------- -------- -------- --------
Net interest income $ 4,219 $ 4,330 $ 12,825 $ 13,003
------------------------------- -------- -------- -------- --------
Non-interest income 422 423 1,325 1,154
------------------------------- -------- -------- -------- --------
Total revenue 4,641 4,753 14,150 14,157
------------------------------- -------- -------- -------- --------
Non-interest expense $ 3,647 $ 3,703 $ 10,782 $ 11,018
------------------------------- -------- -------- -------- --------
Ratio 78.6% 77.9% 76.2% 77.8%
------------------------------- -------- -------- -------- --------
----------------------------------------------------------------------
Efficiency ratio (less core
deposit intangible amortization
expense):
------------------------------- -------- -------- -------- --------
Net interest income $ 4,219 $ 4,330 $ 12,825 $ 13,003
------------------------------- -------- -------- -------- --------
Non-interest income 422 423 1,325 1,154
------------------------------- -------- -------- -------- --------
Total revenue 4,641 4,753 14,150 14,157
------------------------------- -------- -------- -------- --------
Non-interest expense 3,647 3,703 10,782 11,018
------------------------------- -------- -------- -------- --------
Less: Core deposit
amortization expense (155) (172) (464) (516)
------------------------------- -------- -------- -------- --------
Non-interest expense (less
core deposit intangible
amortization expense) $ 3,492 $ 3,531 $ 10,318 $ 10,502
------------------------------- -------- -------- -------- --------
Ratio 75.2% 74.3% 72.9% 74.2%
------------------------------- -------- -------- -------- --------
----------------------------------------------------------------------
Operating expense ratio:
------------------------------- -------- -------- -------- --------
Average assets $512,457 $491,629 $512,345 $482,846
------------------------------- -------- -------- -------- --------
Non-interest expense $ 3,647 $ 3,703 $ 10,782 $ 11,018
------------------------------- -------- -------- -------- --------
Ratio 2.82% 2.99% 2.81% 3.04%
------------------------------- -------- -------- -------- --------