New Jersey Community Bank Q4 net loss $0.06 per common shareStaff writer ▼ | March 24, 2015
New Jersey Community Bank reported net loss of $123 thousand, or $0.06 per common share for the three months ended December 31, 2014.
New Jersey Community Bank Not such a bad quarter
The earnings for the year 2014 were negatively impacted by a combination of both a decline in total loans and continued decrease in interest yields on earning assets.
The earnings were further impacted by increases in professional fees and the federal insurance assessment as the Bank works its way through in complying with the regulatory consent order issued in March of 2014. Provision for loan loss continues to weigh in on earnings as management attempts to address the asset quality and problem credits.
At December 31, 2014, total assets were $122 million, a decrease of $22.5 million compared to year end 2013, primarily due to decline in total cash and equivalents and total loans. Total cash and cash equivalents were $5.8 million, a decrease of $10.8 million from year end 2013. Total investment securities decreased $1.1 million to $16.7 million at December 31, 2014 compared with year end 2013.
Total loans receivable decreased $8.8 million from December 31, 2013, primarily due to pay-offs of certain loans and more specifically a sizeable portion of classified loans. The cash flow resulting from the decrease in total loans was largely used to fund the run-off of matured deposits.
Deposits totaled $107.1 million at December 31, 2014, a decrease of $20.9 million from year end 2013, primarily as a result of management's decision to utilize the excess liquidity to fund the matured time deposits. Of the total decrease, non-interest bearing deposits decreased $2.6 million, largely offset by an increase of $1.9 million in savings, NOW and money market deposits.
Time deposits decreased $20.2 million, from year ago primarily due to the maturity run-off. Shareholders' equity totaled $14.5 million at December 31, 2014. The Bank's capital ratios continue to remain strong, with a leverage ratio of 10.54%, a tier 1 risk based capital ratio of 13.19% and a total risk based capital ratio of 14.45%. These ratios exceed those needed to be deemed a well-capitalized financial institution.
Fourth quarter 2014
For the quarter ended December 31, 2014, net interest income totaled $1.0 million, an increase of $68 thousand over the same period in the prior year. Total interest income in the prior year fourth quarter was negatively impacted by a sizeable increase in non-performing loans and reversal of interest income previously recognized.
Excluding that impact, total interest income in the fourth quarter of this year would have declined comparatively. The reduction in interest expense on deposits was a result of declining interest rates on deposits.
The provision for loan loss was $263 thousand for the fourth quarter 2014, a decrease of $397 thousand compared to the year-ago quarter. The allowance for loan loss at period-end was $1.6 million, or 1.83% of total loans compared with $2.0 million, or 2.09% of total loans for the same period in the prior year. Management continually monitors the adequacy of the allowance for loan loss and considers the current level of the allowance for loan losses to be adequate.
Non-interest income decreased $38 thousand to $78 thousand for the quarter ended December 31, 2014 compared with $116 thousand for the same quarter in the prior year. The majority of the decrease is directly related to decrease in fees and service charges on deposit accounts.
Non-interest expense totaled $1.1 million for the quarter ended December 31, 2014, a decrease of $2.0 million from year-ago quarter, primarily related to a litigation cost incurred in the same quarter last year.
Full year 2014
For the full year ended December 31, 2014, net interest income totaled $4.4 million, decreasing $163 thousand over the full prior year. The decrease in net interest income was primarily due to a decline in total interest income resulting from a decrease in total loans offset by a reduction in interest paid on deposits resulting primarily from declining balances in time deposits.
For the year, average interest earning assets and average interest bearing liabilities declined $2.5 million and $1.8 million, respectively, while the yield on interest earning assets declined 7 basis points and the cost of interest paying deposits decline 1 basis point. Net interest margin for the year declined 5 basis points to 3.48% over prior year.
The provision for loan loss was $628 thousand for the year, a decrease of $227 thousand compared to prior year. The provision for loan loss continues to be impacted by heightened level of classified loans during the year.
Non-interest income totaled $421 thousand for the year 2014 reflecting a decrease of $27 thousand over the full year 2013, primarily resulting from decreases in fees on deposit accounts.
Non-interest expense totaled $4.2 million for the full year 2014, a reduction of $1.9 million over prior full year, majority of which was related to the litigation cost recorded in the year 2013. Salaries and employee benefits, the largest component of non-interest expense, increased $47 thousand as a result of increased health benefit costs and normal annual salary increases.
Professional fees increased $246 thousand primarily due to the consulting services utilized in connection with the compliance of the regulatory consent order. Also as a result of the consent order, the federal insurance assessment increased $165 thousand.
The results for 2013 reflect the impact of a $2.0 million litigation cost recorded in connection with a judgment against the Bank. During the second quarter 2014, a reversal of $500 in litigation expense was recorded as the Bank reached a settlement at a cost lower than the accrued expense.
Data processing costs increased $72 thousand year over year as a result of onetime expenses associated with the installation of a new core processing system. Occupancy and equipment, advertising and all other expenses combined increased year over year. ■