American Bancorp of New Jersey, Inc. (NASDAQ: ABNJ) (�American�
or the �Company�), the holding company for American Bank of New
Jersey (the �Bank�), announced today a net loss of $573,000 for the
quarter ended March 31, 2009. By comparison, the Company reported a
net loss of $13,000 for the quarter ended March 31, 2008. The
increase in the net loss for the more recent comparative period was
primarily attributable to increases in the provision for loan
losses. Both basic and diluted earnings per share for the quarter
ended March 31, 2009 were ($0.06). By comparison, for the quarter
ended March 31, 2008, both basic and diluted earnings per share
were $0.00.
Increases in the provision for loan losses similarly affected
the Company�s earnings during the comparative six month periods.
For the six months ended March 31, 2009, the Company reported a net
loss of $18,000 in comparison to net income of $80,000 for the six
months ended March 31, 2008. Both basic and diluted earnings per
share for the six months ended March 31, 2009 were $0.00. By
comparison, for the six months ended March 31, 2008, both basic and
diluted earnings per share were $0.01.
On December 15, 2008, American Bancorp of New Jersey, Inc. and
Investors Bancorp, Inc. jointly announced the signing of a
definitive agreement under which Investors Bancorp will acquire
American Bancorp of New Jersey. Under the terms of the agreement,
as amended on March 9, 2009, 65% of American Bancorp of New Jersey
shares will be converted into Investors Bancorp common stock and
the remaining 35% will be converted into cash. American Bancorp of
New Jersey�s stockholders will have the option to elect to receive
either 0.9218 shares of Investors Bancorp common stock or $12.50 in
cash for each American Bancorp of New Jersey common share, subject
to proration to ensure that in the aggregate 65% of the American
Bancorp of New Jersey shares will be converted into stock. The
transaction is intended to qualify as a reorganization for federal
income tax purposes. As a result, the shares of American Bancorp
exchanged for Investors Bancorp stock will be transferred on a
tax-free basis.
The transaction has been approved by the boards of directors of
each company and is expected to close on or about May 29, 2009,
subject to customary closing conditions including regulatory
approvals and approval by American Bancorp of New Jersey�s
shareholders. All requisite regulatory approvals for the
transaction have been received and shareholders are scheduled to
vote on the merger proposal at the Company�s annual meeting
scheduled for May 19, 2009.
For the first six months of fiscal 2009, loans receivable, net
increased by $12.1 million to $490.7 million at March 31, 2009 from
$478.6 million at September 30, 2008. The growth included net
increases in commercial loans totaling $4.8 million, comprising
increases in multifamily, nonresidential real estate, land and
business loans of $11.7 million, partially offset by net reductions
in the outstanding balance of construction loans of $6.8 million.
The increase in loans receivable, net also included net increases
in one- to four-family first mortgages of $7.5 million, net
increases in home equity loans and home equity lines of credit
totaling $1.1 million and net increases in consumer loans of
$259,000. Offsetting the growth in these categories during the
first six months of fiscal 2009 was a net increase to the allowance
for loan losses totaling $1.6 million primarily attributable to
specific valuation allowances on certain impaired, nonperforming
loans.
Specifically, the Bank has classified a total of 12 loans with
outstanding principal balances of $12.3 million as nonperforming at
March 31, 2009. Of these loans, $6.8 million is attributable to one
fully disbursed construction loan. The loan, which includes
personal guarantees for all indebtedness, is secured by a completed
13-unit residential condominium project located in Wildwood Crest,
New Jersey. The Bank classified the loan as nonperforming and
initiated foreclosure action during the quarter ended March 31,
2009. Based upon the loan�s nonaccrual status and updated
collateral value, the Bank established a $1,375,000 valuation
allowance against the impaired loan during the most recent quarter
ended March 31, 2009.
Nonperforming loans also include one additional construction
loan with a disbursed balance of $3.0 million secured by two
residential properties in process of construction in Alpine, New
Jersey. No impairment allowance was required against this
construction loan at March 31, 2009.
Four nonresidential mortgage loans and one land loan with
combined outstanding principal balances of approximately $1.6
million, net of charge offs, were classified as nonperforming at
March 31, 2009. Based upon their respective nonaccrual statuses and
collateral values, impairment allowances totaling $135,000 were
established against two of these five nonperforming loans during
the most recent quarter ended March 31, 2009.
The remaining five nonperforming loans include three one-
to-four family mortgage loans, one multifamily mortgage loan and
one consumer loan with total outstanding balances of $925,000. No
impairment allowance was required against these loans at March 31,
2009.
For the first six months of fiscal 2009, total deposits
increased by $51.3 million to $498.9 million at March 31, 2009 from
$447.7 million at September 30, 2008. This net growth reflected
increases in certificates of deposit, savings accounts and
interest-bearing checking accounts, including money market checking
accounts, of $42.2 million, $3.7 million and $5.6 million,
respectively. This growth in deposits was partially offset by
reductions in the balance of noninterest-bearing checking accounts
of $241,000.
The noteworthy growth in the Bank�s deposits during the past six
months has coincided with a significant reduction in deposit
interest rates as offered by the Bank as well as those offered in
the marketplace as a whole. The Bank attributes a portion of its
deposit gathering success to the continued marketing efforts
focused on achieving or growing the profitability of its branches.
However, the Bank acknowledges that the recent volatility within
the financial markets and the resulting economic uncertainty has
caused many consumers to seek the safety of FDIC-insured accounts
to protect the value of their financial assets.
As a result of these factors, the Bank has experienced
significant growth in deposits that outpaced its near term ability
to deploy such incoming cash flows into creditworthy loans.
Consequently, the Bank has experienced significant net growth in
short term interest-earning assets and shorter duration investment
securities whose current yields reflect the recent reductions in
short term market interest rates to historical lows. Specifically,
the balance of cash and cash equivalents increased by $20.8 million
to $41.2 million at March 31, 2009 from $20.4 million at September
30, 2008. Additionally, securities classified as available-for-sale
increased $13.1 million to $94.3 million at March 31, 2009 from
$81.2 million at September 30, 2008 while securities
held-to-maturity decreased approximately $705,000 to $6.8 million
from $7.5 million for those same comparative periods.
A portion of the incoming cash flows from deposit growth was
also used to repay other interest-bearing liabilities.
Specifically, borrowings decreased $8.0 million to $67.5 million at
March 31, 2009 from $75.5 million at September 30, 2008. The
reduction in borrowings was attributable to net repayment of
maturing and amortizing fixed rate FHLB term advances of which $5.0
million had originally been drawn in connection with a $50 million
wholesale growth strategy executed in fiscal 2008.
The Bank expects to deploy the accumulated balances of lower
yielding cash and investments into higher yielding assets over time
which is expected to enhance earnings in future periods. In doing
so, however, the Bank will be cognizant of the potential risk of
deposit outflows when and if the financial markets and economic
conditions improve and consumers elect to reinvest their insured
deposits into alternative, noninsured investments.
The factors noted above contributed to the Company�s yield on
earning assets decreasing 58 basis points to 5.05% for the quarter
ended March 31, 2009 from 5.63% for the quarter ended March 31,
2008. This decrease also reflected the impact of overall reductions
in market interest rates on the yields of repricing assets
including, but not limited to, cash and cash equivalents and
adjustable rate loans, as well as the overall reinvestment of
incoming cash flows from loan and investment security maturities
and repayments at comparatively lower yields.
However, the decrease in the yield on interest-earning assets
between the comparative quarters was outpaced by a reduction in the
Company�s interest costs for those same periods. The Company�s cost
of interest-bearing liabilities decreased 90 basis points to 3.03%
for the quarter ended March 31, 2009 from 3.93% for the quarter
ended March 31, 2008. The decrease in the cost of interest-bearing
deposits was primarily attributable to two related factors. First,
the Company has reduced the interest rates paid on deposits
generated through the three full service branches opened during
fiscal 2007 on which promotional interest rates had continued to be
paid during a portion of fiscal 2008. Deposits acquired through
those de novo branches no longer reflect the effects of promotional
pricing. Second, reductions in market interest rates enabled the
Company to reduce rates paid on many interest-bearing deposit types
across all branches. In total, the Company�s net interest spread
widened 32 basis points to 2.02% from 1.70% for those same
comparative periods.
The factors resulting in the widening of the Company�s net
interest rate spread also positively impacted the Company�s net
interest margin over the same comparative periods However, the
impact of the Company�s share repurchase plans on net interest
margin partially offset the benefits of the widening net interest
spread. For the comparative quarters ended March 31, 2009 and March
31, 2008, the average balance of treasury stock increased $5.1
million reflecting the Company�s share repurchase activity. The
foregone interest income on the interest-earning assets used to
fund those share repurchases adversely impacted the Company�s net
interest margin. As a result of these offsetting factors, the
Company reported a $634,000 increase in net interest income to $3.8
million for the quarter ended March 31, 2009 from $3.2 million for
the quarter ended March 31, 2008 reflecting a 11 basis point
increase in net interest margin to 2.49% from 2.38% for those same
comparative periods.
Due primarily to these same factors, net interest income
increased $1.5 million to $7.8 million for the six months ended
March 31, 2009 from $6.3 million for the six months ended March 31,
2008. For those same comparative periods, the Company�s net
interest rate spread widened 48 basis points to 2.08% from 1.60%
while net interest margin widened 25 basis points to 2.59% from
2.34%.
The increase in net interest income was partially offset by a
comparatively greater provision to the allowance for loan losses.
The provision for loan losses totaled $1.5 million for the three
months ended March 31, 2009, representing an increase of $1.3
million from the three months ended March 31, 2008. The provision
for the second quarter of fiscal 2009 reflected specific provisions
of $1.5 million on impaired loans. As noted earlier, these
provisions included a specific allowance of $1,375,000 relating to
one impaired construction loan and additional specific allowances
of $135,000 relating to two impaired nonresidential mortgage loans.
By contrast, the $171,000 provision for loan losses for the second
quarter of fiscal 2008 included a $34,000 specific provision
attributable to one impaired land loan that portion of which was
charged off in that same period. Excluding the specific provisions
on impaired loans, the remaining provision for loan losses for both
comparative periods resulted from the application of historical and
environmental loss factors against the net growth in loans in
accordance with the Bank�s loan loss methodology.
These same factors were the primary contributors to the
provision for loan losses increasing $1.4 million to $1.7 million
for the six months ended March 31, 2009 from $309,000 for the six
months ended March 31, 2008.
Noninterest income decreased $34,000 to $404,000 for the three
months ended March 31, 2009 from $438,000 for the three months
ended March 31, 2008. The decline in noninterest income was largely
attributable to a decrease in loan-related fees and charges
resulting primarily from decreases in prepayment penalties and late
charges. Additionally, deposit service fees and charges declined
due primarily to decreased customer utilization of overdraft
protection services partially offset by increased fee income from
annuity sales. Partially offsetting these declines in noninterest
income was 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.
Total noninterest income increased $11,000 to $844,000 for the
six months ended March 31, 2009 from $833,000 for the six months
ended March 31, 2008. Noninterest income for the comparative six
month periods was generally affected by many of the same factors as
those reported for the three month comparative period. However,
during the six months ended March 31, 2009, the Company also
recognized an additional $17,000 in other noninterest income
attributable to a partial recovery of losses incurred several years
earlier relating to assets held by the Bank�s retirement plan.
Due to a number of offsetting factors, total noninterest expense
was consistent at $3.6 million for the three months ended March 31,
2009 and March 31, 2008. These factors included increases in
occupancy and equipment, data processing, legal, professional and
consulting and other noninterest expenses which were fully offset
by decreases in compensation expense and advertising and marketing
expense.
The reported increase in occupancy and equipment expense was
largely attributable to additional facility-related costs including
depreciation arising from the Bank�s Bloomfield branch which was
relocated from the administrative headquarters to a new facility in
April, 2008. Increases in data processing expense generally reflect
the additional core processing and item processing costs resulting
from the growth in accounts and transaction volume coupled with the
added data processing infrastructure costs associated with the
relocated Bloomfield branch.
The increase in legal expenses and professional and consulting
expenses were largely attributable to costs incurred associated
with the Company�s upcoming merger with Investors Bancorp announced
on December 15, 2008. Such costs include, but were not limited to,
legal services associated with the termination of certain employee
benefit plans resulting from the upcoming merger as well as
external accounting and investment banking fees associated with
that merger. The increase in legal expense also reflects increased
expenditures associated with the collection and foreclosure of
certain nonperforming loans.
The reported increase in other noninterest expense resulted
primarily from increases in FDIC insurance expense. This increase
was attributable, in part, to overall growth in the balance of
FDIC-insured deposits. However, the greater expense also reflects
increases in insurance assessments mandated by the FDIC for the
quarter ended March 31, 2009 and the expiration of FDIC insurance
credits which had previously reduced the Bank�s net cost of FDIC
deposit insurance during a portion of fiscal 2008.
The reported decrease in salaries, benefits and director fees
was partially the result of the death of a director emeritus of the
Company, during the earlier comparative quarter ended March 31,
2008. Under the terms of the Company�s restricted stock and stock
option plans, the vesting of the remaining unearned benefits
accruing to the former director through these plans was
automatically accelerated. As such, the Company incurred an
acceleration of the remaining pre-tax expenses associated with
these benefits totaling approximately $254,000 during the quarter
ended March 31, 2008.
Other decreases in compensation-related expenses included
reductions in employee wages and salaries, including bonuses and
payroll taxes, resulting largely from prior adjustments to staffing
levels. Such decreases also included a reduction in deferred
compensation expenses associated with the Bank�s supplemental
executive retirement plans arising from the absence of related
expenses in the current fiscal year for a participant whose benefit
was fully accrued by the close of the prior fiscal year.
Finally, the reported decrease in advertising and marketing
expense reflects the higher level of such expenditures during the
earlier comparative period attributable to the continued promotion
of the Bank�s Nutley and Clifton branches which opened in May 2007
and August 2007, respectively.
Total noninterest expense increased $137,000 to $7.0 million for
the six months ended March 31, 2009 from $6.8 million for the six
months ended March 31, 2008. The increase in noninterest expense
for the more recent six month period was attributable to many of
the same factors as those reported for the comparative three month
periods. Such factors included increases in occupancy and
equipment, data processing, legal, professional and consulting and
other noninterest expenses which were partially offset by decreases
in compensation expense and advertising and marketing expense.
The following tables present selected balance sheet data as of
March 31, 2009 and September 30, 2008 and selected operating data
for the three and six months ended March 31, 2009 and March 31,
2008.
�
FINANCIAL HIGHLIGHTS
(unaudited)
�
At March 31, �
At September 30,
2009
2008
�
Balance
�
% Total
Assets
Balance
�
% Total
Assets
SELECTED FINANCIAL DATA (in thousands): Assets Cash
and cash equivalents $ 41,176 6.17 % $ 20,375 3.28 % Securities
available-for-sale 94,311 14.14 81,163 13.06 Securities
held-to-maturity 6,804 1.02 7,509 1.21 Loans held for sale - - - -
Loans receivable, net 490,717 73.58 478,574 76.99 Premises and
equipment 11,646 1.75 11,894 1.91 Federal Home Loan Bank stock
2,382 0.36 2,743 0.44 Cash surrender value of life insurance 14,060
2.11 13,761 2.21 Accrued interest receivable 2,355 0.35 2,391 0.38
Other assets �
3,461 �
0.52 � �
3,223 �
0.52 � Total assets
$ 666,912 �
100.00 %
$ 621,633 �
100.00 %
Liabilities and equity Deposits $ 498,947 74.81 % $ 447,687
72.02 % Advances for taxes and insurance 3,004 0.45 2,811 0.45
Borrowings 67,513 10.12 75,547 12.15 Other liabilities 5,073 0.77
4,740 0.77 Equity �
92,375 �
13.85 � �
90,848 �
14.61 � Total liabilities and
equity
$ 666,912 �
100.00 %
$ 621,633 �
100.00 % �
Loan Data
Balance
% Total
Loans
Balance
% Total
Loans
1-4 family mortgage loans $ 271,256 55.27 % $ 263,744 55.11 % Home
equity loans 12,563 2.56 14,053 2.94 Home equity lines of credit
23,489 4.79 20,887 4.36 Multifamily mortgage loans 38,214 7.79
36,855 7.70 Nonresidential mortgage loans 96,374 19.64 90,644 18.94
Land and property acquisition loans 9,347 1.90 6,665 1.39
Construction loans 33,226 6.77 40,051 8.37 Business loans 9,440
1.92 7,551 1.58 Consumer loans 1,418 0.29 1,159 0.24 Allowance for
loans losses �
(4,610 )
(0.93 ) �
(3,035
) (0.63 ) Loans receivable,
net
$ 490,717 �
100.00 %
$ 478,574 �
100.00 % �
Deposit Data
Balance
% Total
Deposits
Balance
% Total
Deposits
Noninterest-bearing deposits $ 31,206 6.25 % $ 31,447 7.02 %
Interest-bearing checking 80,945 16.22 75,307 16.82 Savings 88,775
17.79 85,092 19.01 Certificates of deposit �
298,021 �
59.74 � �
255,841 �
57.15 �
Deposits
$ 498,947 �
100.00
%
$ 447,687 �
100.00 % �
FINANCIAL HIGHLIGHTS (continued)
(unaudited)
�
At March 31, �
At September 30,
2009
2008
Capital Ratios Equity to total assets (%)
13.85�����
14.61�����
Outstanding shares (#)
10,855,529�����
10,859,692�����
�
Asset Quality Ratios:
Non-performing loans to total loans (%)
2.51�����
0.24�����
Non-performing assets to total assets (%)
1.85�����
0.18�����
Allowance for loan losses to non-performing loans (%)
37.40�����
266.97�����
Allowance for loan losses to total loans (%)
0.93�����
0.63�����
�
For the six months ended
March 31,
For the three months ended
March 31,
2009
�
2008
2009
�
2008
SELECTED OPERATING DATA
(in thousands):
Total interest income $ 15,823 $ 15,424 $ 7,781 $ 7,590 Total
interest expense �
8,012 � �
9,117 � �
3,942 � �
4,384 �
Net interest income
7,811 6,307 3,839 3,206 Provision for loan losses �
1,666 � �
309 � �
1,513 � �
171 � Net interest income after provision for loan
losses
6,145
5,998
2,326
3,035
Noninterest income 844 833 404 438 Noninterest expense �
6,981 � �
6,844 � �
3,568 �
�
3,568 � Income (loss) before income taxes 8 (13 )
(838 ) (95 ) Provision (benefit) for income taxes �
26
� �
(93 ) �
(265
) �
(82 ) Net income (loss)
$ (18 ) $
80 �
$ (573 )
$ (13 ) �
Performance Ratios:
Return on average assets (0.01 )% 0.03 % (0.35 )% (0.01 )% Return
on average equity (0.04 ) 0.17 (2.50 ) (0.05 ) Net interest rate
spread 2.08 1.60 2.02 1.70 Net interest margin 2.59 2.34 2.49 2.38
Noninterest income to average total assets 0.26 0.29 0.25 0.31
Noninterest expense to average total assets
2.19
2.39
2.19
2.49
Efficiency Ratio 80.65 95.85 84.09 97.93 �
PER SHARE DATA:
Earnings per share Basic 0.00 0.01 (0.06 ) 0.00 Diluted 0.00 0.01
(0.06 ) 0.00 �
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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