American Bancorp of New Jersey, Inc. (NASDAQ: ABNJ) ("American")
announced today earnings of $150,000 for the quarter ended March
31, 2007. By comparison, net income for the quarter ended March 31,
2006 was $688,000. Basic and diluted earnings per share for the
quarter ended March 31, 2007 were $0.01 and $0.01, respectively. By
comparison, for the quarter ended March 31, 2006, basic and diluted
earnings per share were $0.05 and $0.05, respectively. The
Company�s earnings for the six months ended March 31, 2007 were
$479,000 in comparison to $1.4 million for the six months ended
March 31, 2006. Basic and diluted earnings per share for the six
months ended March 31, 2007 were $0.04 and $0.04, respectively. By
comparison, for the six months ended March 31, 2006, basic and
diluted earnings per share were $0.10 and $0.10, respectively. For
the six months ended March 31, 2007, loans receivable, net
increased $24.3 million or 6.1% to $422.9 million from $398.6
million at September 30, 2006. The growth was comprised of net
increases in commercial loans totaling $30.5 million. Such loans
include multi-family, nonresidential real estate, construction and
business loans. The increase in loans receivable, net also included
net increases in home equity loans and home equity lines of credit
totaling $1.6 million. Offsetting the growth in these categories
was a $7.6 million decrease in the balance of 1-4 family first
mortgages and net increases to the allowance for loan losses
totaling $243,000. For that same period, the balance of the
Company�s investment securities decreased $18.1 million from
September 30, 2006 as most incoming cash flows from that portfolio
continued to be reinvested into commercial loans. This decrease was
offset by a net increase in cash and cash equivalents of $25.6
million. The reported growth in cash and cash equivalents resulted
largely from the growth in the Bank�s deposits. For the six months
ended March 31, 2007, total deposits increased by $69.1 million
from $327.1 million at September 30, 2006 to $396.2 million. A
significant portion of this growth in deposits was attributable to
the Bank�s newest branch located in Verona, New Jersey. Deposits at
the Verona branch, which celebrated its grand opening on December
2, 2006, grew to $55.8 million at March 31, 2007. The remaining
$13.3 million of deposit growth was shared between the Bank�s other
branches in Bloomfield and Cedar Grove, New Jersey. Offsetting this
increase was a net decrease in borrowings totaling $13.4 million,
primarily attributable to the repayment of overnight FHLB
borrowings of $10.4 million coupled with the repayment of maturing
fixed rate, term advances of $3.0 million. Additionally, the
Company reported an increase of $17.1 million in treasury stock
attributable to the Company�s share repurchase program whose
completion was announced on March 28, 2007. The continued growth in
the Company�s commercial lending activities contributed
significantly to improved yields on earning assets for the periods
reported. For the three and six month periods ended March 31, 2007,
yield on earning assets increased 61 basis points and 62 basis
points, respectively, from the same periods in fiscal 2006.
However, the improved yields were more than offset by increases in
the cost of interest-bearing liabilities. For the three and six
month periods ended March 31, 2007, cost of interest-bearing
liabilities increased 106 basis points and 101 basis points,
respectively, from the same comparative periods in fiscal 2006. The
increase in interest costs was largely attributable to higher costs
of interest-bearing deposits. Contributing to this increase in the
cost of interest-bearing deposits was the impact of higher
promotional interest rates paid on new deposit accounts at the
Bank�s Verona branch. However, a significant portion of this
increase was also attributable to continued upward pressure on
deposit interest rates in the highly competitive markets serviced
by the Bank. As a result, for the three and six month periods ended
March 31, 2007, the Company�s net interest spread shrank 46 basis
points and 39 basis points, respectively, to 1.44% and 1.49%
compared with that reported for the same periods in fiscal 2006.
For those same comparative three and six month periods, the
Company�s net interest margin shrank 38 basis points and 24 basis
points, respectively, to 2.41% and 2.50%. The effects of net
interest margin compression contributed significantly to decreases
in net interest income. For the three and six month periods ended
March 31, 2007, net interest income decreased $409,000 and
$619,000, respectively, compared with that reported for the same
periods in fiscal 2006. For the three month period ended March 31,
2007, the decrease in net interest income was exacerbated by an
increase of $34,000 in the net provision to the allowance for loan
losses compared with that reported for the same period in fiscal
2006. By contrast, for the six month period ended March 31, 2007,
the net provision to the allowance for loan loss decreased by
$3,000 compared with the same period in the prior fiscal year. The
decrease in the comparative six month period reflected the reversal
of an $86,000 loss reserve against a previously impaired loan
participation during the quarter ended December 31, 2006. Excluding
this adjustment, the Bank�s provision expense for the six month
period ended March 31, 2007 increased $83,000. The reported growth
in the provision for loan losses reflects the Company�s increased
strategic emphasis in commercial lending and the comparatively
higher rate of growth in such loan balances in the current fiscal
year. No additions to the allowance for lease and loan losses were
required for nonperforming loans which decreased to 0.25% of total
assets at March 31, 2007 from 0.41% at September 30, 2006. For the
three month period ended March 31, 2007, noninterest income
decreased $17,000 compared with that reported for the same period
in fiscal 2006. The net decrease was primarily attributable to
comparatively lower collections of loan prepayment penalties offset
by 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. For the six months ended March
31, 2007, noninterest income increased $245,000 compared with that
reported for the same period in fiscal 2006. The net increase was
attributable, in large part, to a comparative decrease in losses on
the sale of investment securities totaling $260,000. The losses
reported in the 2006 period included a $271,000 loss on sale of an
underperforming investment security. During the 2007 period, the
Company also reported an increase in income from the cash surrender
value of life insurance attributable to a combination of higher
average balances and improved yields on those assets. Offsetting
these increases in noninterest income were comparative reductions
in deposit service fees and charges attributable to comparatively
lower receipts of uncollected and insufficient funds charges on
transaction accounts. Additionally, loan fees and charges decreased
due primarily to comparatively lower loan prepayment penalties. For
the three and six month periods ended March 31, 2007, noninterest
expense increased $458,000 and $1.1 million, respectively, compared
with that reported for the same periods in fiscal 2006. The
comparative three month period increase was primarily attributable
to a $438,000 increase in salaries and employee benefits expense.
The increase for the comparative quarters included increases to
employee salaries and payroll taxes. Such increases were primarily
attributable to additions to retail deposit staff associated with
the Company�s branching strategy and, to a lesser extent, additions
to the Company�s commercial lending support staff. Other noteworthy
increases to salaries and employee benefits resulted from the
additional costs associated with the Company�s 2006 Equity
Incentive Plan approved by shareholders in May, 2006. Finally,
director compensation costs increased due primarily to assumption
changes utilized in retirement benefit expense accruals. The
remaining increase in noninterest expense for the comparative three
month periods comprised increases in occupancy and equipment, data
processing and other noninterest expense primarily attributable to
the start up and ongoing operation of the Bank�s newest branch in
Verona, New Jersey. Offsetting these increases were reductions in
advertising and professional fees, including legal fees. The
comparative decreases in professional and consulting fees were the
result of lower internal and external audit costs associated with
the Sarbanes Oxley Act of 2002 (�the Act�) during the current
quarter. The higher expense incurred in the earlier quarter ended
March 31, 2006 included a portion of the first year costs
associated with the development, implementation and audit of
controls over financial statement reporting in accordance with
Section 404 of the Act. The lower costs in the more recent quarter
reflect the reduced financial burden of maintaining and updating
those controls as required to ensure ongoing compliance with the
Act. In large part, the factors causing the increases to operating
expenses for the comparative three month periods described above
similarly affected the operating expenses reported for the
comparative six month periods. Specifically, the increase in
noninterest expense of $1.1 million was primarily attributable to a
$1.0 million increase in salaries and employee benefits expense. As
above, these increases were attributable, in part, to increases in
employee salaries and payroll taxes. Such increases were primarily
attributable to additions to retail deposit staff associated with
the Company�s branching strategy and, to a lesser extent, additions
to the Company�s commercial lending support staff. Similarly,
noteworthy increases to salaries and employee benefits also
resulted from the costs associated with the implementation of the
Company�s 2006 Equity Incentive Plan. As above, additional expenses
were also recorded for director compensation costs due primarily to
assumption changes utilized in retirement benefit expense accruals.
By contrast, the variance for the comparative six month periods
also reflects the reversal of $131,000 of profit sharing expense
recorded in first quarter of the earlier comparative period
resulting from the discontinuation of that benefit plan. The
remaining increase in noninterest expense for the comparative six
month periods comprised increases in occupancy and equipment, data
processing, advertising and other noninterest expense primarily
attributable to the start up and ongoing operation of the Bank�s
newest branch in Verona, New Jersey. Offsetting these increases
were reductions in professional fees, including legal fees. As
above, these reductions were primarily attributable to
comparatively lower compliance costs relating to Section 404 of the
Sarbanes-Oxley Act of 2002. The following tables present selected
financial data as of March 31, 2007 and September 30, 2006 and
selected operating data for the three and six month periods ended
March 31, 2007 and March 31, 2006. FINANCIAL HIGHLIGHTS (unaudited)
� At March 31, At September 30, 2007� 2006� � Balance % Total
Assets Balance % Total Assets SELECTED FINANCIAL DATA: Assets Cash
and cash equivalents $ 32,781� 5.91% $ 7,165� 1.39% Securities
available-for-sale 57,340� 10.34� 74,523� 14.49� Securities
held-to-maturity 9,632� 1.74� 10,547� 2.05� Loans held for sale
417� 0.08� -� -� Loans receivable, net 422,889� 76.29� 398,624�
77.51� Premises and equipment 9,192� 1.66� 6,523� 1.27� Federal
Home Loan Bank stock 2,752� 0.50� 3,356� 0.65� Cash surrender value
of life insurance 12,957� 2.34� 8,747� 1.70� Accrued interest
receivable 2,113� 0.38� 1,979� 0.38� Other assets � 4,230� 0.76� �
2,855� 0.56� Total Assets $ 554,303� 100.00� $ 514,319� 100.00�
Liabilities and equity Deposits $ 396,172� 71.47% $ 327,147� 63.61%
Advances for taxes and insurance 2,758� 0.50� 2,466� 0.48�
Borrowings 42,644� 7.69� 56,075� 10.90� Other liabilities 3,874�
0.70� 3,770� 0.73� Equity � 108,855� 19.64� � 124,861� 24.28� Total
liabilities and equity $ 554,303� 100.00% $ 514,319� 100.00% � �
Loan Data � Balance % Total Loans � Balance % Total Loans 1-4
family mortgage loans $ 264,762� 62.61% $ 272,318� 68.32% Home
equity loans 13,321� 3.15� 12,294� 3.08� Home equity lines of
credit 19,743� 4.67� 19,194� 4.82� Multifamily mortgage loans
33,017� 7.81� 35,059� 8.80� Nonresidential mortgage loans 58,549�
13.84� 38,395� 9.63� Land and property acquisition loans 4,222�
1.00� 534� 0.13� Construction loans 23,931� 5.66� 16,155� 4.05�
Business loans 7,015� 1.66� 6,078� 1.52� Consumer loans 695� 0.16�
720� 0.18� Allowance for loans losses � (2,366) (0.56) � (2,123)
(0.53) Loans receivable, net $ 422,889� 100.00% $ 398,624� 100.00%
� � Deposit Data � Balance % Total Deposits � Balance % Total
Deposits Noninterest-bearing deposits 31,783� 8.02� 23,545� 7.20�
Interest-bearing checking 88,666� 22.38� 31,429� 9.61� Savings
99,726� 25.17� 107,008� 32.71� Certificates of deposit � 175,997�
44.43� � 165,165� 50.48� Deposits $ 396,172� 100.00� $ 327,147�
100.00� � � � � FINANCIAL HIGHLIGHTS (continued) (unaudited) � At
March 31, At September 30, 2007� 2006� Capital Ratios Equity to
total assets 19.64% 24.28% Asset Quality Ratios: Non-performing
loans to total loans 0.33% 0.52% Non-performing assets to total
assets 0.25� 0.41� Net charge offs to average loans outstanding
0.00� 0.00� Allowance for loan losses to non-performing loans
168.13� 101.64� Allowance for loan losses to total loans 0.56�
0.53� � � For the six months ended March 31, For the three months
ended March 31, 2007� � 2006� 2007� � 2006� SELECTED OPERATING
DATA: Total interest income $ 13,867� $ 12,319� $ 7,159� $ 6,239�
Total interest expense 7,641� � 5,474� 4,102� � 2,773� Net interest
income 6,226� 6,845� 3,057� 3,466� Provision for loan losses 243� �
246� 193� � 159� Net interest income after provision for loan
losses 5,983� 6,599� 2,864� 3,307� Noninterest income 643� 398�
355� 372� Noninterest expense 5,913� � 4,809� 3,022� � 2,564�
Income before income taxes 713� 2,188� 197� 1,115� Income tax
provision 234� � 837� 47� � 427� Net income $ 479� $ 1,351� $ 150�
$ 688� � Performance Ratios: Return on average assets 0.18% 0.53%
0.11% 0.54% Return on average equity 0.83� 2.13� 0.54� 2.14� Net
interest rate spread 1.49� 1.88� 1.44� 1.90� Net interest margin
2.50� 2.74� 2.41� 2.79� Noninterest income to average total assets
0.25� 0.15� 0.26� 0.29� Noninterest expense to average total assets
2.26� 1.87� 2.25� 2.00� Efficiency Ratio 86.08� 66.39� 88.58�
66.81� � PER SHARE DATA: Earnings per share Basic 0.04� 0.10� 0.01�
0.05� Diluted 0.04� 0.10� 0.01� 0.05� 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.
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