LONG BRANCH, N.J., Jan. 23, 2008 (PRIME NEWSWIRE) -- Central Jersey Bancorp (Nasdaq:CJBK), the parent company of Central Jersey Bank, N.A., reported net income of $740,000 for the three months ended December 31, 2007, as compared to $629,000 for the same period in 2006. This represents an increase of $111,000, or 18%. Basic and diluted earnings per share were both $0.08 for the three months ended December 31, 2007 and were both $0.07 for the same period in 2006. Per share earnings have been adjusted in all periods to reflect the 5% stock dividends paid on July 2, 2007 and July 1, 2006.
For the year ended December 31, 2007, Central Jersey Bancorp reported net income of $844,000, as compared to $2.5 million for 2006. Basic and diluted earnings per share for the year ended December 31, 2007 were $0.10 and $0.09, respectively, as compared to $0.28 and $0.27, respectively, for the prior year. The modest net income reported for the year ended December 31, 2007 is primarily due to the balance sheet restructuring initiative announced on April 30, 2007, which resulted in a one-time pre-tax charge of approximately $1.96 million and was reflected in Central Jersey Bancorp's first quarter 2007 consolidated financial statements.
James S. Vaccaro, Chairman, President and CEO, commented, "The current and anticipated general economic environment creates unique challenges and opportunities for the financial services industry. In recognition of those market dynamics, Central Jersey Bancorp, in 2007, implemented a number of strategic initiatives. Each initiative, including our balance sheet restructuring, branch office consolidation and corporate realignment, was undertaken with an understanding that prospective quality balance sheet growth would be difficult to attain and, therefore, other measures were necessary to ensure that we remained positioned to maintain and leverage our high quality credit and banking relationships. To date, each initiative has achieved expected results.
"From an industry perspective in 2007, the equity markets generally punished the financial services sector. We are pleased, however, that of the approximately 560 publicly traded financial institutions in the United States, only 42 publicly traded financial institutions, including Central Jersey Bancorp, achieved share price appreciation in 2007."
Results of Operations
Net interest income was $4.3 million and $16.7 million, respectively, for the three months and year ended December 31, 2007, as compared to $4.1 million and $17.0 million, respectively, for the same prior year periods. Net interest income for the three months and year ended December 31, 2007 was comprised primarily of $5.7 million and $23.0 million, respectively, in interest and fees on loans, $1.7 million and $6.0 million, respectively, in interest on securities, and $227,000 and $1.5 million, respectively, in interest income on federal funds sold and due from banks, less interest expense on deposits of $3.0 million and $12.6 million, respectively, interest expense on borrowed funds of $206,000 and $746,000, respectively, and interest expense on subordinated debentures of $110,000 and $439,000, respectively.
For the three months and year ended December 31, 2007, the average yield on interest-earning assets was 6.48% and 6.54%, respectively, as compared to 6.36% for both periods in 2006. The average cost of deposits and interest-bearing liabilities for the three months and year ended December 31, 2007, was 2.98% and 3.10%, respectively, as compared to an average cost of 3.02% and 3.42%, respectively, for the same periods in 2006. The average net interest margin for the three months and year ended December 31, 2007 was 3.70% and 3.58%, respectively, as compared to 3.47% and 3.67%, respectively, for the same periods in 2006. The margin expansion experienced during the three months ended December 31, 2007, as compared to the same period in 2006, was primarily due to the previously disclosed balance sheet restructuring. The margin compression experienced during the year ended December 31, 2007, was primarily due to the competitive loan and deposit pricing environment during such year and reductions in the Prime Rate of interest.
For the three months and year ended December 31, 2007, the provision for loan losses was $0 and $165,000, respectively, as compared to $35,000 and $500,000, respectively, for the same prior year periods. The provision for loan losses recorded during the year ended December 31, 2007, is a direct result of the change in risk rating of certain commercial loans. Total gross loans outstanding totaling $315.2 million at December 31, 2007, decreased by approximately $149,000 from the December 31, 2006 total of $315.3 million.
Non-interest income (loss), which consists of service charges on deposit accounts, income from bank owned life insurance, gains on the sale of residential mortgages, gains on the sale of securities available-for-sale and the impairment of available-for-sale investment securities, was $425,000 and ($217,000), respectively, for the three months and year ended December 31, 2007, as compared to $415,000 and $1.7 million, respectively, for the same periods in 2006. The non-interest income (loss) for the year ended December 31, 2007, is directly related to the previously disclosed one-time balance sheet restructuring charge of $1.96 million, pre-tax, recorded in the first quarter of 2007.
Non-interest expense was $3.6 million and $14.4 million, respectively, for the three months and year ended December 31, 2007, as compared to $3.5 million and $14.3 million, respectively, for the same periods in 2006. 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 December 31, 2007, totaled $503.5 million, a decrease of $12.8 million, or 2.5%, from the December 31, 2006 total of $516.3 million. The total assets figure of $503.5 million at December 31, 2007, is inclusive of $27.0 million in goodwill and $1.9 million in core deposit intangible.
Cash and cash equivalents were $14.9 million at December 31, 2007, a decrease of $22.9 million, or 60.6%, from the December 31, 2006 total of $37.8 million. The decrease is due primarily to the timing of cash flows related to the bank subsidiary's business activities.
Investment securities totaled $132.3 million at December 31, 2007, an increase of $15.7 million, or 13.5%, over the December 31, 2006 total of $116.6 million. The increase in investment securities is due to purchases of mortgage-backed securities made during the year ended December 31, 2007. For the year ended December 31, 2007, principal pay downs of mortgage-backed securities totaled $9.5 million and $2.0 million of fixed rate government-sponsored agency securities matured.
Loans held-for-sale, at December 31, 2007, totaled $658,000, as compared to $242,000 at December 31, 2006. The increase in loans held-for-sale is due primarily to the timing of residential mortgage loan closings.
Loans, net of the allowance for loan losses, totaled $311.8 million at December 31, 2007, a decrease of $300,000, or 0.1%, from the $312.1 million balance at December 31, 2006. The decrease in loan balances is reflective of general economic conditions resulting in a slowdown in loan origination volume throughout the banking industry.
Deposits, at December 31, 2007, totaled $403.3 million, a decrease of $24.0 million, or 5.6%, from the December 31, 2006 total of $427.3 million. The decrease in deposits is reflective of the general economic slowdown and highly competitive deposit pricing environment prevalent throughout the financial services industry.
Other borrowings were $24.6 million at December 31, 2007, as compared to $17.1 million at December 31, 2006, an increase of $7.5 million, or 43.9%. These borrowings are short-term in nature. The increase is due to growth in the bank subsidiary's sweep account product for business customers.
At December 31, 2007, book value per share and tangible book value per share were $7.88 and $4.57, respectively, as compared to $7.56 and $4.16, respectively, at December 31, 2006.
Asset Quality
The allowance for loan losses, which began the year at $3.23 million, or 1.02% of total loans, increased to $3.41 million at December 31, 2007, or 1.08% of total loans. Non-performing loans totaled $214,000 at December 31, 2007, as compared to $91,000 at December 31, 2006. Loan charge-offs during the three months and year ended December 31, 2007 totaled $84,000 and $88,000, respectively, as compared to $409,000 and $455,000, respectively, for the same periods in 2006.
Previously, Central Jersey Bancorp reported a significant increase in non-performing loans due primarily to one commercial mortgage loan totaling $2.0 million which was placed on non-accrual status in April 2007. During the three months ended December 31, 2007, the property securing this loan was sold and the loan was paid off.
About the Company
Central Jersey Bancorp is the holding company and sole shareholder of Central Jersey Bank, N.A. Central Jersey Bank, N.A. provides a full range of banking services to both individual and business customers through twelve branch facilities located in Monmouth and Ocean Counties, New Jersey. Central Jersey Bancorp is traded on the NASDAQ Global Market under the trading symbol "CJBK." Central Jersey Bank, N.A. can be accessed through the internet at 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 DECEMBER 31, 2007 (UNAUDITED) AND DECEMBER 31, 2006 (dollars in thousands) December 31, December 31, 2007 2006 ------------ ------------ ASSETS (unaudited) ------ Cash and due from banks $ 11,198 $ 16,162 Federal funds sold 3,679 21,634 ---------- --------- Cash and cash equivalents 14,877 37,796 Investment securities available-for-sale, at market value 114,824 95,735 Investment securities held-to-maturity (market value of $17,379 (unaudited) and $20,454 at December 31, 2007 and December 31, 2006, respectively) 17,430 20,820 Loans held-for-sale 658 242 Loans, net 311,765 312,093 Premises and equipment 4,626 5,357 Bank owned life insurance 3,565 3,447 Accrued interest receivable 2,218 2,613 Goodwill 26,957 26,957 Core deposit intangible 1,926 2,478 Due from broker -- 3,527 Other assets 4,660 5,234 ---------- --------- Total assets $ 503,506 $ 516,299 ========== ========= LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Deposits: Non-interest bearing $ 73,955 $ 83,482 Interest bearing 329,335 343,795 ---------- --------- 403,290 427,277 Other borrowings 24,564 17,099 Subordinated debentures 5,155 5,155 Accrued expenses and other liabilities 1,611 1,273 --------- --------- Total liabilities 434,620 450,804 --------- --------- Shareholders' equity: Common stock, par value $0.01 per share. Authorized 100,000,000 shares and issued and outstanding 8,745,990 and 8,667,281 shares at December 31, 2007 and December 31, 2006, respectively. 87 87 Additional paid-in capital 60,791 60,501 Accumulated other comprehensive income (loss), net of tax expense (benefit) 848 (1,409) Retained earnings 7,160 6,316 ---------- --------- Total shareholders' equity 68,886 65,495 ---------- --------- Total liabilities and shareholders' equity $ 503,506 $ 516,299 ========== ========= CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS AND YEAR ENDED DECEMBER 31, 2007 AND 2006 (dollars in thousands, except per share amounts) Three months ended Year ended December 31, December 31, 2007 2006 2007 2006 --------- --------- --------- --------- (unaudited) (unaudited) Interest and dividend income: Interest and fees on loans $ 5,654 $ 5,813 $ 22,975 $ 23,159 Interest on securities available for sale 1,478 1,084 5,100 4,465 Interest on federal funds sold and due from banks 227 453 1,530 804 Interest on securities held to maturity 210 241 883 991 --------- --------- --------- --------- Total interest and dividend income 7,569 7,591 30,488 29,419 Interest expense: Interest expense on deposits 2,964 3,156 12,597 10,760 Interest expense on other borrowings 206 186 746 1,267 Interest expense on subordinated debentures 110 111 439 429 --------- --------- --------- --------- Total interest expense 3,280 3,453 13,782 12,456 --------- --------- --------- --------- Net interest income 4,289 4,138 16,706 16,963 --------- --------- --------- --------- Provision for loan losses: -- 35 165 500 --------- --------- --------- --------- Net interest income after provision for loan losses 4,289 4,103 16,541 16,463 --------- --------- --------- --------- Other income: Impairment on available- for-sale securities -- -- (1,957) -- Service charges on deposit accounts 386 364 1,479 1,412 Income on bank owned life insurance 30 27 118 109 Gain on sale of securities available-for-sale -- -- 87 -- Gain on sale of loans held-for-sale 9 24 56 213 Other service charges, commissions and fees -- -- -- 6 --------- --------- --------- --------- Total other income (loss) 425 415 (217) 1,740 --------- --------- --------- --------- Operating expenses: Salaries and employee benefits 1,866 1,782 7,146 7,345 Net occupancy expenses 405 420 1,821 1,687 Data processing fees 221 205 884 809 Core deposit intangible amortization 138 155 552 619 Abandonment of leasehold improvements -- -- 137 -- Other operating expenses 941 965 3,830 3,849 --------- --------- --------- --------- Total other expenses 3,571 3,527 14,370 14,309 --------- --------- --------- --------- Income before provision for income taxes 1,143 991 1,954 3,894 Income tax expense 403 362 1,110 1,428 --------- --------- --------- --------- Net income $ 740 $ 629 $ 844 $ 2,466 ========= ========= ========= ========= Basic earnings per share $ 0.08 $ 0.07 $ .10 $ 0.28 ========= ========= ========= ========= Diluted earnings per share $ 0.08 $ 0.07 $ .09 $ 0.27 ========= ========= ========= ========= Average basic shares outstanding 8,745,323 8,667,281 8,710,865 8,655,137 ========= ========= ========= ========= Average diluted shares outstanding 9,139,034 9,130,682 9,132,772 9,156,428 ========= ========= ========= ========= --------------------------------------------------------------------- Performance Ratios (unaudited) Three Months Ended Year Ended (dollars in thousands) December 31, December 31, --------------------------------------------------------------------- Ratio 2007 2006 2007 2006 --------------------------------------------------------------------- Return on average assets 0.58% 0.48% 0.16% 0.48% Return on average tangible assets 0.61% 0.51% 0.17% 0.51% Return on average equity 4.33% 3.84% 1.27% 3.88% Return on average tangible equity 7.57% 7.04% 2.27% 7.32% Efficiency ratio 75.8% 77.5% 87.2% 76.5% Efficiency ratio (less core deposit intangible amortization expense) 72.8% 74.1% 83.8% 73.2% Operating expense ratio 2.79% 2.68% 2.80% 2.78% Net interest margin 3.70% 3.47% 3.58% 3.67% Ratio Calculations Efficiency ratio: Net interest income $4,289 $4,138 $16,706 $16,963 Non-interest income (loss) 425 415 (217) 1,740 Total revenue 4,714 4,553 16,489 18,703 Non-interest expense $3,571 $3,527 $14,370 $14,309 Ratio 75.8% 77.5% 87.2% 76.5% Efficiency ratio (less core deposit intangible amortization expense): Net interest income $4,289 $4,138 $16,706 $16,963 Non-interest income (loss) 425 415 (217) 1,740 Total revenue 4,714 4,553 16,489 18,703 Non-interest expense 3,571 3,527 14,370 14,309 Less: Core deposit amortization expense (138) (155) (552) (619) Non-interest expense (less core deposit intangible amortization expense) $3,433 $3,372 $13,818 $13,690 Ratio 72.8% 74.1% 83.8% 73.2% Operating expense ratio: Average assets $507,117 $521,200 $513,191 $514,577 Non-interest expense $3,571 $3,527 $14,370 $14,309 Ratio 2.79% 2.68% 2.80% 2.78%