American Bancorp of New Jersey, Inc. (NASDAQ: ABNJ) ("American")
announced today earnings of $464,000 for the quarter ended June 30,
2006. By comparison, net income for the quarters ended March 31,
2006 and June 30, 2005 were $688,000 and $325,000, respectively.
Basic and diluted earnings per share for the quarter ended June 30,
2006 were $0.04 and $0.04, respectively. By comparison, for the
quarter ended March 31, 2006 both basic and diluted earnings per
share were $0.05. For the quarter ended June 30, 2005, both basic
and diluted earnings per share were $0.02 after adjusting for the
exchange of shares relating to the Company's recent second-step
conversion. On October 5, 2005, American Savings, MHC closed its
second step conversion. Through this transaction, the Company
replaced ASB Holding Company as the holding company of American
Bank of New Jersey, a federally chartered stock savings bank which
conducts business from its main office in Bloomfield, New Jersey
and one branch office in Cedar Grove, New Jersey. Upon closing the
conversion, each share of ASB Holding Company stock was exchanged
for 2.55102 shares of American Bancorp of New Jersey, Inc. The
earnings for the quarter ended June 30, 2005 reported by American
are those of ASB Holding Company. The Company reported a lower net
interest spread and margin for the quarter ended June 30, 2006 from
that reported for the prior quarter ended March 31, 2006. For those
comparative periods, the Company's net interest margin shrank 3
basis points from 2.80% to 2.77% while its net interest spread
shrank by 10 basis points from 1.91% to 1.81%. In large part, the
compression in the Company's net interest spread and margin was
attributable to increases in costs of interest bearing liabilities
which outpaced its improved yields on earning assets. The continued
growth in the Company's commercial lending activities contributed
significantly to improved yields on earning assets, which increased
20 basis points from 5.04% to 5.24%. However, these improved yields
were more than offset by increases in the cost of interest bearing
liabilities which increased 30 basis points from 3.13% to 3.43%.
This increase in interest costs was largely attributable to
increased costs of interest bearing deposits, which increased from
2.84% to 3.16%. For the quarter ended June 30, 2006, loans
receivable, net increased $12.3 million or 3.3% to $384.2 million
from $372.0 million at March 31, 2006. The growth was comprised of
net increases in multi-family, commercial real estate and
construction loans totaling $7.3 million, coupled with net
increases in commercial and business loans totaling $930,000.
Together, net growth in these loan balances totaled $8.2 million
comprising approximately two-thirds of the Company's net increase
in loans receivable for the quarter. The remaining net growth in
loans included increases in 1-4 family mortgages, including equity
loans and home equity lines of credit, totaling $4.1 million.
During the June 30, 2006 quarter, the balance of the Company's
investment securities decreased $9.0 million while its interest
bearing cash equivalents also decreased $14.6 million. The combined
decrease in these categories of approximately $23.6 million
provided the funding for the net growth in loans reported for the
quarter ended June 30, 2006. Deposits decreased by $2.5 million or
0.8% to $326.7 million at June 30, 2006 from $329.2 million at
March 31, 2006. This decrease was primarily attributable to net
outflows of noninterest bearing deposits of approximately $2.6
million. In addition to this decrease in deposits, the Company
reported a decrease of $4.7 million in borrowings due largely to
the repayment of maturing Federal Home Loan Bank advances. The
Company's net interest spread of 1.81% for the current quarter was
below its net interest spread of 2.24% for the same comparative
period in 2005 as increases in the Company's cost of interest
bearing liabilities continued to outpace the increase in the
Company's yield on earning assets. This decline was attributable,
in part, to the Company maintaining a comparatively higher average
balance of investment securities and short term, liquid assets
during the current quarter. These balances resulted from the
receipt of capital proceeds from the Company's second step
conversion which were initially deployed into such assets.
Additionally, continued upward pressure on the cost of retail
deposits resulted in increases in interest expense which outpaced
the increase in interest income resulting from improved yields on
loans. The cost of interest bearing deposits increased 90 basis
points from 2.26% for the quarter ended June 30, 2005 to 3.16% for
the quarter ended June 30, 2006. For the same comparative periods,
yield on loans increased 18 basis points from 5.34% to 5.52%. The
factors resulting in the compression of the Company's net interest
spread also impacted the Company's net interest margin. However,
the effects of that compression have been offset by the impact of
the additional capital raised in the Company's second-step
conversion. As a result, the Company's net interest margin
increased 19 basis points from 2.58% for the quarter ended June 30,
2005 to 2.77% for the quarter ended June 30, 2006. Overall balance
sheet growth and improvements in net interest margin contributed
significantly to a $655,000 or 23.9% improvement in net interest
income from $2.7 million for the quarter ended June 30, 2005 to
$3.4 million for the quarter ended June 30, 2006. This improvement
was offset, in part, by comparatively higher provisions for loan
losses. For those same comparative periods, the Company's net loan
loss provision increased $115,000. The Company's net loan loss
provision for the quarter ended June 30, 2005 reflected the
reversal of a previously recorded loss provision of $42,000.
Consequently, the Company recorded a negative loss provision of
$6,000 for that quarter. By comparison, the Company recorded net
loan loss provision expense of $109,000 for the quarter ended June
30, 2006. After adjusting for the reversal in the earlier
comparative period, the increase in loan loss provision is
primarily attributable to the comparatively higher net growth in
our commercial loan portfolio. Noninterest income increased $41,000
from $264,000 for the quarter ended June 30, 2005 to $306,000 for
the quarter ended June 30, 2006. This improvement was due, in part,
to comparatively higher income from cash surrender value of life
insurance of approximately $11,000 and the recognition as income of
a $27,000 nonrefundable deposit previously held in escrow on an REO
property sold in a prior period for which a potential buyer did not
fulfill its purchase obligations. Additionally, the quarter ended
June 30, 2005 reflected a loss on sale of an investment security of
approximately $16,000 for which no equivalent loss was incurred in
the current quarter. Finally, for the same comparative periods,
income from deposit service fees and charges was reduced by
approximately $15,000 due primarily to reduced levels of annuity
sales and related fee income. These comparative improvements in net
interest and noninterest income were partially offset by increases
to noninterest expense. Noninterest expense increased $343,000 from
$2.5 million for the quarter ended June 30, 2005 to $2.9 million
for the quarter ended June 30, 2006. This increase was
attributable, in part, to the recognition of approximately $90,000
of deposit branch acquisition costs relating to sites for which the
Bank and/or Seller were unable to fulfill the conditional terms of
the sales contract. Such expenses would have been capitalized into
the depreciable cost of the branch had they come to fruition.
Notwithstanding these challenges, the Company continues to pursue
its deposit branch growth strategy. Toward that end, the Bank is
currently in the process of constructing a full service branch
located along Bloomfield Avenue in Verona, New Jersey and has
recently received the requisite municipal approvals needed to
construct a full service branch on a site in Clifton, New Jersey.
Other increases in noninterest expense for those same comparative
periods included increases in advertising and marketing expenses of
$39,000 attributable primarily to costs associated with enhanced
corporate and lending marketing programs. Legal expenses for the
quarter ended June 30, 2006 were $94,000 higher than those recorded
for the same quarter in 2005. This comparative increase in legal
expenses was attributable, in large part, to the Company's annual
meeting held in May, 2006 and matters addressed by shareholders at
that time. Additionally, professional and consulting fees increased
$77,000 to $128,000 for the quarter ended June 30, 2006 from
$51,000 for the same quarter in 2005. In large part, these
increases were attributable to audit and consulting costs incurred
by the Company relating to compliance with the Sarbanes Oxley Act
of 2002 and the outsourcing of other internal audit-related
services. These increases in noninterest expense were partially
offset by reversals of prior expense accruals relating to
management incentive plan compensation. Such accrual adjustments
reflect the Company's performance for the nine months ended June
30, 2006. The following table presents selected comparative
financial data for the periods ended June 30, 2006, March 31, 2006
and September 30, 2005 and selected comparative operating data for
the quarters ended June 30, 2006, March 31, 2006 and June 30, 2005:
-0- *T FINANCIAL HIGHLIGHTS (unaudited) At June March September 30,
31, 30, 2006 2006 2005 ------- --------- --------- (In thousands)
SELECTED FINANCIAL DATA: Total Assets $509,016 $516,278 $555,860
Cash and cash equivalents 6,253 18,905 125,773 Securities
available-for-sale 84,549 92,873 62,337 Securities held-to-maturity
11,205 11,887 7,824 Construction Loans 11,206 7,909 1,098 1-4
Family mortgage loans 280,183 277,839 268,103 Multifamily (5+)
mortgage loans 32,627 31,946 27,489 Nonresidential mortgage loans
37,792 34,518 31,072 Home equity lines of credit 18,047 16,286
13,455 Consumer loans 796 722 701 Commercial loans 5,593 4,663 746
Allowance for loans losses (2,014) (1,904) (1,658) ---------
-------- -------- Loans receivable, net 384,230 371,979 341,006
Loans held for sale 523 419 280 Federal Home Loan Bank stock 2,979
3,121 3,119 Noninterest bearing deposits 24,399 27,001 25,583
Interest bearing deposits 302,318 302,189 315,342 ---------
-------- -------- Deposits 326,717 329,190 340,925 Total borrowings
47,690 52,405 53,734 Total equity 128,250 128,630 39,506 3 months
ended June 30, March 31, June 30, 2006 2006 2005 ---------
--------- -------- (In thousands) SELECTED OPERATING DATA: Total
interest income $ 6,432 $ 6,239 $ 5,223 Total interest expense
3,033 2,773 2,479 -------- -------- --------- Net interest income
3,399 3,466 2,744 Provision for loan losses 109 159 (6) --------
-------- --------- Net interest income after provision for loan
losses 3,290 3,307 2,750 Non interest income 306 372 265 Non
interest expense 2,859 2,564 2,516 -------- -------- ---------
Income before income taxes 737 1,115 499 Income tax provision 273
427 174 -------- -------- --------- Net income $ 464 $ 688 $ 325
======== ======== ========= PER SHARE DATA: Earnings per share
Basic $ 0.04 $ 0.05 $ 0.02 Diluted $ 0.04 $ 0.05 $ 0.02 *T 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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