New Jersey Community Bank (OTCQB: NJCB) reported a net loss of $278 thousand, or ($0.15) per share for the three months ended June 30, 2017, compared with a net loss of $580 thousand, or ($0.30) per share for the same period in the prior year. For the first six months of 2017, the Bank reported net loss of $512 thousand, or ($0.27) per common share compared with a net loss of $863 thousand, or ($0.45) per common share for the same period in the prior year. The losses for the first six months and the second quarter 2017 improved when compared to the prior year largely due to a substantial decline in operating expenses.
The losses for the second quarter 2017 were further impacted in part due to increased cost of deposits as a result of increases in both average volume and interest rates when compared to the same period in the prior year. Total interest income for the quarter increased primarily as a result of an increase in average loans outstanding despite a decline in interest yield year over year. Net interest margin for the quarter decreased 39 basis points year over year primarily due to the reasons noted above.
Balance Sheet Summary
At June 30, 2017, total assets were $103.6 million, a decrease of $1.6 million from December 31, 2016 primarily as a result of a slight decrease in deposits. Total cash and cash equivalents decreased $3.1 million while due from banks-time deposits decreased $2.2 million. Loans totaled $80.5 million at June 30, 2017, an increase of $3.7 million from the year-end 2016. The growth in loans was funded utilizing the available liquidity in cash and cash equivalents.
Total deposits decreased $1.0 million compared to the levels at year end 2016. Non-interest bearing deposits decreased $687 thousand; Savings, NOW and money market accounts decreased $3.5 million; these were substantially offset by a $3.2 million increase in total time deposits. Time deposits increased as a result of deposit promotion on longer term time deposits.
Shareholders' equity totaled $9.6 million at June 30, 2017, decreasing primarily due to net losses reported during the first six months of 2017 when compared to year-end 2016. The Bank's capital ratios continue to remain strong, with a leverage ratio of 9.20%; common equity tier 1 risk based capital ratio of 11.62%; and a total risk based capital ratio of 12.87%. These ratios exceed those needed to be deemed a well-capitalized financial institution.
Results of Operations
For the quarter ended June 30, 2017, net interest income totaled $729 thousand, decreasing $23 thousand over the same period in the prior year. At June 30, 2017, the net interest margin was 2.95%, decreasing 39 basis points compared to the same period a year ago. The yield on average earning assets decreased 16 basis points to 3.86% while the cost of interest-bearing deposits increased 23 basis points to 1.06%, compared to the same period in the prior year, primarily due to competitive market conditions.
The Bank did not record any provision for loan losses during the second quarter 2017 and 2016. The allowance for loan losses at period-end was $1.5 million, or 1.87% of total loans. Management continue to monitor the asset quality and will take actions necessary to affect the provision for loan losses; however, the current level of the allowance for loan loss is considered to be more than adequate.
Non-interest income decreased $47 thousand to $69 thousand for the quarter ended June 30, 2017, compared with $116 thousand for the same quarter in the prior year. The majority of such decrease is directly related to the gain on sale of other real estate owned recorded in the prior year.
Non-interest expense totaled $1.1 million for the quarter ended June 30, 2017, decreasing $372 thousands from a year-ago quarter. Of the total decrease in non-interest expense, salaries and employee benefits decreased $67 thousand as a result of a reduction in head count while management is attempting to fill certain open positions. Occupancy and equipment expense declined $45 thousand as a direct result of the closure of one of the branch facilities. Professional and other fees decline $215 thousand while the FDIC insurance assessment declined $37 thousand as a result of lifting of the Consent Orders. The decline in professional and other fees was directly related to the Bank complying with certain regulatory orders during the same period in the prior year. All other components of total non-interest expenses showed moderate variances.
About the Bank
New Jersey Community Bank is a state-chartered commercial bank headquartered in Freehold, New Jersey. The Bank opened for business in July 2008 and operates two full-service banking offices in the central New Jersey counties of Monmouth. The Bank provides traditional commercial and retail banking services to small businesses and consumers. For additional information about New Jersey Community Bank, please visit www.njcbk.com