Net interest margin for 2012 was 3.61%, a decrease of 0.25% from the 3.86% for 2011. The margin decrease was mainly the result of a 0.41% lower yield from interest-earning assets partially offset by a 0.19% reduction in the rate paid for interest-bearing deposits.For the three months ended December 31, 2012, the Bank had a net loss of $1.0 million compared to a loss of $164,000 for the three months ended December 31, 2011. This increased net loss is predominantly the result of expenses and charges related to resolving problem loans resulting in an increase in the loan loss provision expense of $140,000 and an increase in the loss on the sale and write-down of other real estate owned of $506,000. Additionally, net interest income was $161,000 less when compared to the fourth quarter of 2011. There were no gains from the sale of securities in 2012 as compared to $263,000 of securities gains in the fourth quarter of 2011. Fee income decreased $14,000 in the fourth quarter of 2012 as compared to the fourth quarter of 2011. Non-interest expenses in the fourth quarter of 2012 decreased $215,000 as compared to the same period last year largely due to a fraud loss of $301,000 recognized in the fourth quarter of 2011. Miscellaneous expenses increased $76,000 while expenses for taxes decreased $57,000. Expenses related to ORE increased $99,000. Net interest margin for the fourth quarter of 2012 was 3.53%, a decrease of 0.31% from the 3.84% for the fourth quarter of 2011. The margin decrease was mainly the result of a 0.52% lower yield from interest-earning assets partially offset by a 0.27% reduction in the rate paid for interest-bearing deposits. Total assets at December 31, 2012 were $174.3 million, representing an increase of $1.4 million from December 31, 2011. The increase was due primarily to an increase in Fed funds sold and interest bearing cash deposits, which increased $3.8 million and investments which increased $8.5 million. Gross loans totaled $123.9 million at December 31, 2012, a decrease of $9.2 million from $133.1 million at December 31, 2011. The allowance for loan losses at December 31, 2012 was $1.5 million, an increase of $157,000 from $1.3 million at December 31, 2011. Other real estate owned at December 31, 2012 was $5.6 million, an increase of $1.1 million from $4.5 million at December 31, 2011 and other assets decreased $240,000.
Total deposits increased $4.2 million to $154.8 million at December 31, 2012 from $150.6 million at December 31, 2011. The increase was primarily due to a $1.8 million increase in non-interest bearing demand accounts and a $2.4 million increase in interest bearing accounts.The Bank continues to increase non-interest bearing deposit accounts. Total non-interest bearing deposit accounts at December 31, 2012 were $15.4 million as compared to $13.6 million at December 31, 2011. Non-interest bearing accounts were 10.0% of total deposits at December 31, 2012 as compared to 9.1% of total deposits at December 31, 2011. The growth in deposits was from the Bank’s local area market. The increase in interest-bearing deposit accounts of $2.4 million was due primarily to an increase in money market deposit accounts, which increased $10.5 million from $46.7 million at December 31, 2011 to $57.2 million at December 31, 2012. In addition, savings deposit accounts increased $831,000 from $12.5 million to $13.3 million at December 31, 2011 and 2012, respectively. Certificates of deposit, our highest cost deposits, decreased $8.9 million from $77.8 million to $68.8 million at December 31, 2011 and 2012, respectively. At December 31, 2012, our criticized/classified assets totaled $8.5 million, a $7.1 million decrease from $15.6 million at December 31, 2011 while other real estate owned increased $1.1 million from $4.5 million to $5.6 million at December 31, 2011 and 2012, respectively. Criticized/classified assets plus other real estate owned totaled $20.2 million at December 31, 2011 as compared to $14.2 million at December 31, 2012, a decrease of $6.0 million. “We have made considerable progress in addressing and resolving problem assets, which fortunately have been essentially stabilized since 2011,” said CEO Kevin Kutcher, adding, “The legal processes of our foreclosure efforts and the like has been excruciatingly slow in New Jersey. We are now seeing opportunities for justifiable collateral liquidations and property sales. At the same time we continue to advance another of our primary strategic objectives – growing core non-interest bearing business based checking accounts. This will pay significant dividends as the economy recovers and interest rates eventually rise.”
CFO Ben Watts added, “Our Board and management group continue to diligently address problem assets. Our goal is to remain well capitalized while resolving these remaining problem assets as rapidly as possible and, with other cost containment and revenue enhancements, to restore profitability for 2013. Our Board of Directors purchase of additional shares of newly issued common stock at year end 2012 greatly assists in this effort.”Set forth below is certain selected balance sheet and income statement data at and for the years ended December 31, 2012 and 2011.
|SELECTED BALANCE SHEET DATA|
|(Unaudited, in thousands)||December 31,||December 31,|
|Fed funds sold and interest bearing cash||$19,319||$15,551|
|Net loans receivable||122,508||131,861|
|SELECTED INCOME STATEMENT DATA|
|(Unaudited, in thousands except per share data)|
|Quarter ended||Quarter ended||YTD||YTD|
|December 31,||December 31,||December 31,||December 31,|
|Net interest income||$1,315||$1,476||$5,531||$5,920|
|Provision for loan losses||270||130||1,850||390|
|Loss on sale of ORE||685||178||1,528||180|
|Provision for income taxes||(24||)||33||2||35|
|Earnings per share:|
|Total risk based capital||10.03||%||11.10||%|
The Bank provides diversified financial products through three locations in Burlington County, New Jersey and one location in Camden County, New Jersey.The Bank may from time to time make written or oral “forward-looking statements”, including statements contained in this release. Such statements are not historical facts and include expressions about management's confidence and strategies and management's current views and expectations about new and existing programs and products, relationships, opportunities, taxation, technology and market conditions. Actual results may differ materially from such forward-looking statements, and no undue reliance should be placed on any forward-looking statement. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, unanticipated changes in the financial markets and the direction of interest rates; volatility in earnings due to certain financial assets and liabilities held at fair value; stronger competition from banks, other financial institutions and other companies; insufficient allowance for credit losses; a higher level of net loan charge-offs and delinquencies than anticipated; material adverse changes in the Bank’s operations or earnings; a decline in the economy in our primary market areas; changes in relationships with major customers; changes in effective income tax rates; higher or lower cash flow levels than anticipated; inability to hire or retain qualified employees; a decline in the levels of deposits or loss of alternate funding sources; a decrease in loan origination volume; changes in laws and regulations, including issues related to compliance with anti-money laundering and the bank secrecy act laws; adoption, interpretation and implementation of new or pre-existing accounting pronouncements; operational risks, including the risk of fraud by employees or outsiders; the inability to successfully implement new lines of business or new products and services .and other factors, many of which are beyond the Bank's control. The words “may”, “could”, “should”, “would”, “believe”, “anticipate”, “estimate”, “expect”, “intend”, “plan”, and similar expressions are intended to identify forward-looking statements. All such statements are made in good faith by the Bank pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The Bank does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Bank.