American Bancorp of New Jersey, Inc. (NASDAQ: ABNJ) ("American")
announced today earnings of $93,000 for the quarter ended December
31, 2007. By comparison, net income for the quarter ended December
31, 2006 was $329,000. Both basic and diluted earnings per share
for the quarter ended December 31, 2007 were $0.01. By comparison,
for the quarter ended December 31, 2006, both basic and diluted
earnings per share were $0.03. For the quarter ended December 31,
2007, loans receivable, net increased $11.2 million or 2.6% to
$449.1 million from $437.9 million at September 30, 2007. The
growth was comprised of net increases in commercial loans,
including multi-family, commercial real estate, construction and
business loans, totaling $12.0 million. The increase in loans
receivable, net also included net increases in home equity loans
and home equity lines of credit totaling $1.3 million and net
increases in consumer loans of $116,000. Offsetting the growth in
these categories was a $2.0 million decrease in the balance of 1-4
family first mortgages and a net increase to the allowance for loan
losses totaling $139,000. For that same period, the balance of the
Company�s investment securities decreased by $9.6 million as funds
received from maturing debentures and mortgage-related security
repayments, net of new investment securities purchased, were
reinvested into loans. Similarly, the Company�s balance of cash and
cash equivalents decreased by $5.5 million. A portion of this
decrease augmented the funding for net loan growth while the
remainder provided the funding for the Company�s share repurchases
during the quarter. The balance of deposits increased $388,000 for
the quarter ended December 31, 2007. This net growth reflected
increases in certificates of deposit of $6.3 million offset by
reductions in other deposit categories. In particular, the balance
of noninterest bearing deposits decreased $4.4 million due
primarily to the transfer of an attorney trust account included in
the balance of noninterest-bearing deposits at September 30, 2007
to an interest-bearing IOLTA account during the current quarter.
Offsetting this increase in deposits was a net decrease in
borrowings totaling $1.0 million primarily attributable to the
repayment of a maturing FHLB term advance. Additionally, the
Company reported an increase of $4.6 million in treasury stock
attributable to the Company�s recently completed share repurchase
program. The Company had previously announced the initiation of a
subsequent program to repurchase up to an additional 5% of its
outstanding shares which remains underway. The continued growth in
the Company�s commercial lending activities contributed
significantly to improved yields on earning assets, which increased
36 basis points to 5.84% for the quarter ended December 31, 2007
from 5.48% for quarter ended December 31, 2006. However, the
improved yields were more than offset by increases in the cost of
interest-bearing liabilities which grew by 40 basis points to 4.33%
from 3.93% for the same comparative periods. This increase in
interest expense was largely attributable to higher costs of
interest-bearing deposits, which grew 52 basis points to 4.24% for
the quarter ended December 31, 2007 from 3.72% for the quarter
ended December 31, 2006. Contributing to this increase in the cost
of interest-bearing liabilities was the residual impact of higher
promotional interest rates paid on new deposit accounts at the
three branches opened during fiscal 2007. In total, the Company�s
net interest spread shrank 4 basis points from 1.54% to 1.50% for
those same comparative periods. The factors resulting in the
compression of the Company�s net interest spread also impacted the
Company�s net interest margin. However, our net interest margin was
also adversely impacted by the Company�s share repurchase plans.
For the comparative quarters ended December 31, 2007 and 2006, the
average balance of treasury stock increased $22.3 million due to
the Company�s shares repurchase programs. The foregone interest
income on the earning assets used to fund those share repurchases
contributed significantly to the 28 basis point reduction in the
Company�s net interest margin to 2.31% from 2.59% for the same
comparative periods. The effects of net interest margin compression
contributed significantly to a $68,000 or 2.1% decrease in net
interest income to $3.1 million for the quarter ended December 31,
2007 from $3.2 million for the quarter ended December 31, 2006.
This decrease was exacerbated by a comparatively greater net
provision to the allowance for loan losses. For those same
comparative periods, the Company�s net loan loss provision
increased $89,000 to $139,000 from $50,000. The provision expense
for the quarter ended December 31, 2006 reflected the reversal of
an $86,000 loss reserve against a previously impaired loan
participation. Excluding this adjustment, the Bank�s provision
expense for the earlier comparative quarter totaled $136,000. For
both comparative quarters, the increases to the allowance for loan
losses 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. No additions to
the allowance for loan losses were required for either comparative
quarter associated with nonperforming loans. Noninterest income
increased $108,000 to $395,000 for the quarter ended December 31,
2007 from $287,000 for the quarter ended December 31, 2006. The
growth in noninterest income was attributable, in part, to
increases in deposit service fees and charges of $66,000. Such
increases were partly attributable to deposit service fees and
charges at the Bank�s de novo branches opened during fiscal 2007.
However, the reported increase was primarily due to growth in
deposit-related fees and charges within the Bank�s other branches.
The Company also reported a $49,000 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. These increases were partially offset by lower loan
servicing fee income attributable to a lower outstanding balance of
mortgage loans serviced for others. Noninterest expense increased
$386,000 to $3.3 million for the quarter ended December 31, 2007
from $2.9 million for the quarter ended December 31, 2006. This
increase was attributable, in part, to a $178,000 increase in
salaries and employee benefits resulting primarily from the
additions to Bank staff supporting the three de novo branches
opened during fiscal 2007. The growth in noninterest expense also
included an increase in occupancy and equipment expense of $238,000
primarily attributable to the additional branches opened during
fiscal 2007. However, the comparative increase also reflects the
land lease costs associated with the relocation of the Bank�s
Bloomfield branch which is currently under construction and is
targeted for completion during the second fiscal quarter ending
March 31, 2008. The increases to noninterest expense were partially
offset by comparative reductions in advertising and marketing
expenses of $34,000. This reduction reflects the higher costs
during the earlier comparative period attributable to promoting the
Bank�s Verona branch which celebrated its grand opening in December
2006. Subsequent Event Finally, the Company regrettably announced
the death of Stanley Obal, Director Emeritus of the Company,
subsequent to the quarter ended December 31, 2007. Mr. Obal had
retired from the Company and Bank Board in August of 2007 after
serving for sixteen years as a director. Under the terms of the
Company�s restricted stock and stock option plans, the vesting of
the remaining unearned benefits accruing to Mr. Obal through these
plans is automatically accelerated. The Company expects to incur an
acceleration of the remaining pre-tax expenses associated with
these benefits totaling approximately $254,000 during the second
fiscal quarter ending March 31, 2008. In the absence of this
acceleration, the Company would have incurred approximately $66,000
in related expenses through the remainder of fiscal 2008. The
following tables present selected financial data as of December 31,
2007 and September 30, 2007 and selected operating data for the
quarters ended December 31, 2007 and December 31, 2006. FINANCIAL
HIGHLIGHTS (unaudited) � At December 31, � At September 30, 2007
2007 � Balance � % Total Assets Balance � % Total Assets SELECTED
FINANCIAL DATA (in thousands): Assets Cash and cash equivalents $
31,880 5.61 % $ 37,421 6.52 % Securities available-for-sale 47,673
8.38 58,093 10.13 Securities held-to-maturity 7,564 1.33 6,730 1.17
Loans held for sale - - 1,243 0.22 Loans receivable, net 449,093
78.96 437,883 76.32 Premises and equipment 11,482 2.02 10,856 1.89
Federal Home Loan Bank stock 2,508 0.44 2,553 0.45 Cash surrender
value of life insurance 13,347 2.35 13,214 2.30 Accrued interest
receivable 2,217 0.39 2,212 0.39 Other assets � 2,936 � 0.52 � �
3,533 � 0.61 � Total assets $ 568,700 � 100.00 % $ 573,738 � 100.00
% Liabilities and equity Deposits $ 428,988 75.43 % $ 428,600 74.70
% Advances for taxes and insurance 2,536 0.45 2,702 0.47 Borrowings
36,596 6.44 37,612 6.56 Other liabilities 4,062 0.71 4,231 0.74
Equity � 96,518 � 16.97 � � 100,593 � 17.53 � Total liabilities and
equity $ 568,700 � 100.00 % $ 573,738 � 100.00 % � � Loan Data
Balance % Total Loans Balance % Total Loans 1-4 family mortgage
loans $ 261,405 58.22 % $ 263,448 60.16 % Home equity loans 14,987
3.34 14,625 3.34 Home equity lines of credit 20,786 4.63 19,829
4.53 Multifamily mortgage loans 33,029 7.35 30,552 6.98
Nonresidential mortgage loans 75,870 16.89 68,431 15.63 Land and
property acquisition loans 3,338 0.74 3,340 0.76 Construction loans
34,412 7.66 32,542 7.43 Business loans 7,201 1.60 7,029 1.61
Consumer loans 771 0.17 655 0.15 Allowance for loans losses �
(2,706 ) (0.60 ) � (2,568 ) (0.59 ) Loans receivable, net $ 449,093
� 100.00 % $ 437,883 � 100.00 % � � Deposit Data Balance % Total
Deposits Balance % Total Deposits Noninterest-bearing deposits
26,137 6.09 % 30,494 7.11 % Interest-bearing checking 111,408 25.97
111,795 26.08 Savings 91,638 21.36 92,778 21.65 Certificates of
deposit � 199,805 � 46.58 � � 193,533 � 45.16 � Deposits $ 428,988
� 100.00 % $ 428,600 � 100.00 % FINANCIAL HIGHLIGHTS (continued)
(unaudited) � At December 31, � At September 30, 2007 2007 Capital
Ratios Equity to total assets (%) 16.97 17.53 Outstanding shares
(#) 11,509,716 11,946,190 � Asset Quality Ratios: Non-performing
loans to total loans (%) 0.17 0.28 Non-performing assets to total
assets (%) 0.14 0.22 Net charge offs to average loans outstanding
(%) 0.00 0.00 Allowance for loan losses to non-performing loans (%)
347.98 205.56 Allowance for loan losses to total loans (%) 0.60
0.58 � For the three months ended December 31, 2007 2006 SELECTED
OPERATING DATA (in thousands): Total interest income $ 7,834 $
6,708 Total interest expense � 4,732 � � 3,538 � Net interest
income 3,102 3,170 Provision for loan losses � 139 � � 50 � Net
interest income after provision for loan losses 2,963 3,120
Noninterest income 395 287 Noninterest expense � 3,276 � � 2,890 �
Income before income taxes 82 517 Income tax provision � (11 ) �
188 � Net income $ 93 � $ 329 � � Performance Ratios: Return on
average assets 0.07 % 0.26 % Return on average equity 0.38 1.10 Net
interest rate spread 1.50 1.54 Net interest margin 2.31 2.59
Noninterest income to average total assets 0.28 0.22 Noninterest
expense to average total assets 2.30 2.26 Efficiency Ratio 93.68
83.60 � PER SHARE DATA: Earnings per share Basic 0.01 0.03 Diluted
0.01 0.03 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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