American Bancorp of New Jersey, Inc. (NASDAQ: ABNJ) ("American")
announced today earnings of $150,000 for the quarter ended June 30,
2007. By comparison, net income for the quarter ended June 30, 2006
was $464,000. Basic and diluted earnings per share for the quarter
ended June 30, 2007 were $0.01 and $0.01, respectively. By
comparison, for the quarter ended June 30, 2006, basic and diluted
earnings per share were $0.04 and $0.04, respectively. The
Company�s earnings for the nine months ended June 30, 2007 were
$628,000 in comparison to $1.8 million for the nine months ended
June 30, 2006. Basic and diluted earnings per share for the nine
months ended June 30, 2007 were $0.05 and $0.05, respectively. By
comparison, for the nine months ended June 30, 2006, basic and
diluted earnings per share were $0.14 and $0.14, respectively. For
the nine months ended June 30, 2007, loans receivable, net
increased $27.0 million or 6.8% to $425.6 million from $398.6
million at September 30, 2006. The growth was comprised of net
increases in commercial loans totaling $36.8 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 $2.8 million. Offsetting the growth in these categories
was a $12.2 million decrease in the balance of 1-4 family first
mortgages and net increases to the allowance for loan losses
totaling $320,000. For that same period, the balance of the
Company�s investment securities decreased $25.1 million from
September 30, 2006 as most incoming cash flows from that portfolio
were reinvested into commercial loans. We also experienced a net
increase in cash and cash equivalents of $37.8 million. The
reported growth in cash and cash equivalents resulted largely from
the growth in the Bank�s deposits. For the nine months ended June
30, 2007, total deposits increased by $82.8 million from $327.1
million at September 30, 2006 to $409.9 million. A significant
portion of this growth in deposits was attributable to the Bank�s
newest branches located in Verona and Nutley, New Jersey. Deposits
at the Verona branch, which celebrated its grand opening on
December 2, 2006, grew to $62.0 million at June 30, 2007. Deposits
at the Nutley branch, which celebrated its grand opening on June
16, 2007, grew to $7.2 million at June 30, 2007. The remaining
$13.6 million of deposit growth was shared between the Bank�s other
branches in Bloomfield and Cedar Grove, New Jersey. The increase in
deposits enabled the bank to reduce its borrowings by $16.4 million
through the repayment of overnight FHLB borrowings of $10.4 million
coupled with the repayment of fixed rate advances of $6.0 million.
Additionally, the Company reported an increase of $20.3 million in
treasury stock attributable to the Company�s share repurchase
programs. 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 nine month
periods ended June 30, 2007, yield on earning assets increased 47
basis points and 58 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 June 30, 2007, cost of
interest-bearing liabilities increased 87 basis points and 97 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 and Nutley branches. 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 nine
month periods ended June 30, 2007, the Company�s net interest
spread shrank 39 basis points and 39 basis points, respectively, to
1.40% and 1.46% compared with that reported for the same periods in
fiscal 2006. For those same comparative three and nine month
periods, the Company�s net interest margin shrank 44 basis points
and 31 basis points, respectively, to 2.32% and 2.44%. The effects
of net interest margin compression contributed significantly to
decreases in net interest income. For the three and nine month
periods ended June 30, 2007, net interest income decreased $335,000
and $954,000, respectively, compared with that reported for the
same periods in fiscal 2006. For the three and nine month periods
ended June 30, 2007, the decrease in net interest income was
partially offset by a decrease of $32,000 and $35,000 in the net
provision to the allowance for loan losses compared with that
reported for the same periods in fiscal 2006. The decrease in the
three month period ended June 30, 2007 reflects the comparatively
lower net loan growth compared with that in fiscal 2006. By
contrast, the decrease in the comparative nine 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 nine month period ended June 30, 2007 increased
$51,000. 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 year to date period. No additions to the
allowance for lease and loan losses were required for nonperforming
loans which decreased to 0.22% of total assets at June 30, 2007
from 0.41% at September 30, 2006. For the three month period ended
June 30, 2007, noninterest income increased $102,000 compared with
that reported for the same period in fiscal 2006. The net increase
was primarily attributable to 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.
Increases in noninterest income also included comparatively higher
deposit service charges attributable, in part, to the growth in
deposits and gains on sale of loans reflecting a comparative
increase in mortgage loans sold. For the nine months ended June 30,
2007, noninterest income increased $347,000 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. Additional
increases in noninterest income were reported in gain on sale of
loans and mortgage servicing fees offset by comparative decreases
in other noninterest income categories including deposit service
fees and charges and other loan fees and charges. For the three and
nine month periods ended June 30, 2007, noninterest expense
increased $345,000 and $1.4 million, respectively, compared with
that reported for the same periods in fiscal 2006. The comparative
three month period increase was primarily attributable to a
$429,000 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 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. Other
increases in noninterest expense for the comparative three month
periods included increases in data processing and other noninterest
expense primarily attributable to the start up and ongoing
operation of the Bank�s newest branches in Verona and Nutley, 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 decrease in legal fees reflects, in part, the higher fees paid
in the earlier comparative period for matters addressed by
shareholders at the Company�s prior annual meeting on May 23, 2006
including the approval of the Company�s 2006 Equity Incentive Plan.
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 nine month periods. Specifically, the increase in
noninterest expense of $1.4 million was primarily attributable to a
$1.4 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 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.
The variance for the comparative nine 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 nine 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 branches in
Verona and Nutley, New Jersey. Offsetting these increases were
reductions in professional fees, including legal fees. As above,
these reductions were attributable, in part, to comparatively lower
compliance costs relating to Section 404 of the Sarbanes-Oxley Act
of 2002 and comparatively lower legal fees for the reasons noted
above. The following tables present selected financial data as of
June 30, 2007 and September 30, 2006 and selected operating data
for the three and nine month periods ended June 30, 2007 and June
30, 2006. FINANCIAL HIGHLIGHTS (unaudited) At June 30, At September
30, 2007 2006 � Balance % TotalAssets Balance % TotalAssets
SELECTED FINANCIAL DATA: Assets Cash and cash equivalents $ 44,930
7.99% $ 7,165 1.39% Securities available-for-sale 52,793 9.39
74,523 14.49 Securities held-to-maturity 7,215 1.28 10,547 2.05
Loans held for sale 503 0.09 - - Loans receivable, net 425,563
75.70 398,624 77.51 Premises and equipment 10,341 1.84 6,523 1.27
Federal Home Loan Bank stock 2,644 0.47 3,356 0.65 Cash surrender
value of life insurance 13,084 2.33 8,747 1.70 Accrued interest
receivable 2,162 0.38 1,979 0.38 Other assets � 2,971 0.53 � 2,855
0.56 Total Assets $ 562,206 100.00 $ 514,319 100.00 Liabilities and
equity Deposits $ 409,916 72.91% $ 327,147 63.61% Advances for
taxes and insurance 2,865 0.51 2,466 0.48 Borrowings 39,628 7.05
56,075 10.90 Other liabilities 3,827 0.68 3,770 0.73 Equity �
105,970 18.85 � 124,861 24.28 Total liabilities and equity $
562,206 100.00% $ 514,319 100.00% � � Loan Data � Balance %
TotalLoans � Balance % TotalLoans 1-4 family mortgage loans $
260,148 61.12% $ 272,318 68.32% Home equity loans 14,031 3.30
12,294 3.08 Home equity lines of credit 20,210 4.75 19,194 4.82
Multifamily mortgage loans 31,057 7.30 35,059 8.80 Nonresidential
mortgage loans 61,944 14.56 38,395 9.63 Land and property
acquisition loans 4,220 0.99 534 0.13 Construction loans 29,039
6.82 16,155 4.05 Business loans 6,716 1.58 6,078 1.52 Consumer
loans 641 0.15 720 0.18 Allowance for loans losses � (2,443) (0.57)
� (2,123) (0.53) Loans receivable, net $ 425,563 100.00% $ 398,624
100.00% � � Deposit Data � Balance % TotalDeposits � Balance %
TotalDeposits Noninterest-bearing deposits 29,748 7.26 23,545 7.20
Interest-bearing checking 101,465 24.75 31,429 9.61 Savings 97,267
23.73 107,008 32.71 Certificates of deposit � 181,436 44.26 �
165,165 50.48 Deposits $ 409,916 100.00 $ 327,147 100.00 FINANCIAL
HIGHLIGHTS (continued) (unaudited) At June 30, At September 30,
2007 2006 Capital Ratios Equity to total assets 18.85% 24.28%
Outstanding shares 12,468,866 14,163,220 � Asset Quality Ratios:
Non-performing loans to total loans 0.29% 0.52% Non-performing
assets to total assets 0.22 0.41 Net charge offs to average loans
outstanding 0.00 0.00 Allowance for loan losses to non-performing
loans 195.76 101.64 Allowance for loan losses to total loans 0.57
0.53 � For the nine monthsended June 30, For the three monthsended
June 30, 2007 2006 2007 2006 SELECTED OPERATING DATA: Total
interest income $ 21,375 $ 18,751 $ 7,508 $ 6,432 Total interest
expense � 12,085 � 8,507 � 4,444 � 3,033 Net interest income 9,290
10,244 3,064 3,399 Provision for loan losses � 320 � 355 � 77 � 109
Net interest income after provision for loan losses 8,970 9,889
2,987 3,290 Noninterest income 1,051 704 408 306 Noninterest
expense � 9,117 � 7,668 � 3,204 � 2,859 Income before income taxes
904 2,925 191 737 Income tax provision � 276 � 1,111 � 41 � 273 Net
income $ 628 $ 1,814 $ 150 $ 464 Performance Ratios: Return on
average assets 0.16% 0.47% 0.11% 0.36% Return on average equity
0.75 1.90 0.56 1.45 Net interest rate spread 1.46 1.85 1.40 1.79
Net interest margin 2.44 2.75 2.32 2.76 Noninterest income to
average total assets 0.26 0.18 0.29 0.24 Noninterest expense to
average total assets 2.27 1.99 2.30 2.24 Efficiency Ratio 88.16
70.04 92.29 77.17 � PER SHARE DATA: Earnings per share Basic 0.05
0.14 0.01 0.04 Diluted 0.05 0.14 0.01 0.04 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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