Bancorp of New Jersey Reports 2018 First Quarter Financial Results

FORT LEE, N.J., May 08, 2018 -- 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 first quarter ended March 31, 2018. Net income for the first quarter of 2018 was $1.34 million, or $0.19 per diluted share, compared to net income of $1.06 million, or $0.17 per diluted share, for the first quarter of 2017. 

First Quarter 2018 Highlights

• Net interest income for the first quarter of 2018 was $6.7 million, an increase of $669,000 or 11.07%, compared to $6.0 million for the same period of 2017. 
• Total loans were $723.8 million at March 31, 2018, up $2.6 million, from the December 31, 2017 balance of $721.2 million.
• Total assets of the Company at March 31, 2018 were $857.5 million, a decrease of 3.37% from $887.4 million at December 31, 2017.
• Total deposits were $759.0 million at March 31, 2018, down $29.3 million, or 3.72% from the December 31, 2017 balance of $788.3 million.

Nancy E. Graves, Bancorp of New Jersey’s President and Chief Executive Officer, stated, “We are very pleased with the increase in net interest income in the first quarter of 2018, which is attributable to the strong loan growth last year. The increase in total loans, along with an increase in our net interest rate spread, expanded our net interest margin to 3.10% at March 31, 2018, from 2.93% at December 31, 2017. Commercial loan growth in the first quarter of 2018 was modest, but our pipeline remains active. On the deposit front, we experienced a cyclical decline in municipal and government deposits attributable to real estate tax payments.  We remain focused on driving organic deposits higher with free checking products and fixed rate offerings. The market is highly competitive but we are pleased with our new business and personal account activity.”

The following tables show information regarding our loan and deposit portfolios:

First Quarter 2018 Financial Review

Net Income
Net income for the first quarter of 2018 was $1.34 million compared to net income of $1.06 million for the first quarter of 2017.  The increase in net income for the three month period ended March 31, 2018 compared to the same period in 2017 was primarily due to an increase in net interest income due to loan growth and a decrease in the tax expense related to a lower federal corporate tax rate in 2018 provided by the Tax Cuts and Jobs Act (the “Tax Act”) signed in to law on December 22, 2017, partially offset by an increase in non-interest expenses and a $325,000  provision for loan losses recognized by the Company in the first quarter of 2018, while no provision was recognized for the same period in 2017.

Net Interest Income
For the three month period ended March 31, 2018, net interest income increased by $669,000 or 11.07% versus the same period last year. Interest income increased by $916,000, or 11.78% for the three months ended March 31, 2018 as compared to the corresponding period last year. This increase in interest income was primarily due to loan growth and higher interest received on cash and investment balances due to rising interest rates.

Total interest expense increased by $247,000 in the first quarter of 2018 to $2.0 million compared to $1.7 million in the prior year. The increase in interest expense was due to higher interest rates as market rates continue to increase in our market area, and we continue to face significant competition for deposits.

Provision for Loan Losses
The Company recognized a provision for loan losses of $325,000 for the three months ended March 31, 2018 compared to no provision in the three months ended March 30, 2017. The provision recognized in 2018 was mainly due to a sale of three non-performing loans in the first quarter of 2018. The allowance for loan losses to total loans was 1.12% as of the end of the first quarter of 2018.

Non-Interest Expense
Non-interest expense was $4.7 million during the first quarter of 2018, up from $4.5 million in the first quarter of 2017, an increase of $202 thousand or 4.5%. The increase was primarily in salaries and employee benefits, data processing, occupancy and equipment expenses and legal fees, partially offset by decreases in professional fees and FDIC premiums and related expenses. The increase in salaries and employee benefits costs is associated with health insurance premium increases, annual increases and executive stock awards expenses. The increase in occupancy and equipment expense is related to the relocation of the corporate offices located in Englewood Cliffs. The decrease in professional fees is mainly attributable to non-recurring consulting fees related to enhancing the Company’s risk management system in the prior year.

Financial Condition
At March 31, 2018, 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 9.68%, common equity Tier 1 capital and Tier 1 capital to risk weighted assets were both 10.97% and total capital to risk weighted assets ratio was 12.05%.

Total consolidated assets decreased by $29.9 million, or 3.37%, from $887.4 million at December 31, 2017 to $857.5 million at March 31, 2018, reflecting a decrease in deposits. 

Total cash and cash equivalents decreased from $92.6 million at December 31, 2017 to $61.1 million at March 31, 2018, a decrease of $31.5 million. The change in cash is mainly due to the decrease in deposit account balances.

Loans receivable, or “total loans,” increased from $721.2 million at December 31, 2017 to $723.8 million at March 31, 2018, an increase of $2.6 million.

Total deposits decreased by $29.3 million to $759.0 million at March 31, 2018, from $788.3 million at December 31, 2017. The decrease is mainly due to outflows of government and municipal deposits attributable to the cyclical nature of real estate tax collections and payments, which may have been compounded this quarter due to the timing of the Tax Act and its impact on payments of local municipal taxes.

Loan Quality
At March 31, 2018 the Bank had non-accrual loans of $16.8 million. Included in this total are $8.9 million in Troubled Debt Restructured Loans (“TDRs”). At year-end 2017, non-accrual loans totaled $18.4 million. The reduction in non-accrual loans was mainly due to a sale of three non-performing loans in the first quarter of 2018.  Accruing loans delinquent greater than 30 days were $8.3 million as of March 31, 2018, compared to $6.3 million at December 31, 2017. Of the $8.3 million in delinquent loans at March 31, 2018, five loans totaling $4.4 million reached maturity and were in the process of extension or renewal.

About the Company
Founded in 2006, Bancorp of New Jersey 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 has 9 branch offices located in Fort Lee, Hackensack, Haworth, Harrington Park, Englewood, Cliffside Park, and Woodcliff Lake, New Jersey. For more information about Bank of New Jersey and its products and services, please visit http://www.bonj.net or call 201-720-3201. If you would like to receive future Bancorp of New Jersey announcements electronically, please email us at [email protected].

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. 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.

Investor Relations:
The Equity Group Inc.
Fred Buonocore, CFA  212-836-9607
Kevin Towle 212-836-9620

BANCORP OF NEW JERSEY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for per share data)

BANCORP OF NEW JERSEY, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except for per share data)