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 net income of $431,000 for the
quarter ended June 30, 2008. By comparison, net income for the
quarter ended June 30, 2007 was $150,000. Basic and diluted
earnings per share for the quarter ended June 30, 2008 were $0.04
and $0.04, respectively. By comparison, for the quarter ended June
30, 2007, basic and diluted earnings per share were $0.01 and
$0.01, respectively. The Company�s earnings for the nine months
ended June 30, 2008 were $512,000 in comparison to $628,000 for the
nine months ended June 30, 2007. Basic and diluted earnings per
share for the nine months ended June 30, 2008 were $0.05 and $0.05,
respectively. By comparison, for the nine months ended June 30,
2007, basic and diluted earnings per share were $0.05 and $0.05,
respectively. For the nine months ended June 30, 2008, loans
receivable, net increased $33.3 million or 7.6% to $471.2 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
$32.5 million. The increase in loans receivable, net also included
net increases in home equity loans and home equity lines of credit
totaling $1.8 million and net increases in consumer loans of
$247,000. Offsetting the growth in these categories was a $799,000
decrease in the balance of 1-4 family first mortgages and a net
increase to the allowance for loan losses totaling $397,000. For
that same period, the balance of the Company�s investment
securities increased by $27.2 million. This net growth in
securities was largely attributable to a wholesale growth
transaction in March 2008 through which the Company purchased
approximately $50.0 million of mortgage-related investment
securities funded by an equivalent amount of borrowings from the
FHLB and through reverse repurchase agreements. The net interest
income resulting from this transaction is intended to augment the
Company�s earnings as it continues to incur the near term costs
associated with executing its business plan. The growth in
securities associated with this transaction was partially offset by
the continued reinvestment of a significant portion of the funds
received from maturing debentures and other mortgage-related
security repayments into the loan portfolio. The Company�s balance
of cash and cash equivalents decreased by $4.8 million which also
provided a portion of the funding for the Company�s reported net
loan growth and continued share repurchases during the current nine
month period. The balance of deposits increased $22.2 million for
the nine months ended June 30, 2008. This net growth reflected
increases in certificates of deposit and noninterest bearing
checking accounts of $36.6 million and $64,000, respectively. This
growth was offset by reductions in interest bearing checking and
savings accounts of $13.7 million and $819,000, respectively. For
the same period, borrowings increased $44.0 million reflecting the
additions to FHLB advances and reverse repurchase agreements
associated with the $50.0 million wholesale growth transaction
noted above offset by the net repayment of $6.0 million of maturing
FHLB term advances. Additionally, the Company reported a net
increase of $10.5 million in treasury stock attributable primarily
to the Company�s share repurchase programs. For the nine months
ended June 30, 2008, the Company has repurchased a total of
1,002,070 shares at an average price of $10.44 per share. The
Company�s yield on earning assets decreased 26 basis points to
5.43% for the quarter ended June 30, 2008 from 5.69% for the
quarter ended June 30, 2007. This decrease reflected the impact of
overall reductions in market interest rates on the yields of
repricing assets which has more than offset the beneficial impact
on earning asset yields resulting from the Company�s growth in
higher yielding commercial loans. The decrease in the yield on
earning assets between the comparative quarters was outpaced by a
reduction in the Company�s interest costs for the same periods. The
Company�s cost of interest-bearing liabilities decreased 86 basis
points to 3.44% for the quarter ended June 30, 2008 from 4.30% for
the quarter ended June 30, 2007. This decrease in interest cost was
primarily attributable to two related factors. First, the Company
continued to reduce the interest rates paid on deposits generated
through the three full service branches opened during fiscal 2007
on which promotional interest rates had originally been paid.
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 59
basis points to 1.99% from 1.40% for those same comparative
periods. The factors noted in the quarterly discussion above have
also effected the Company�s comparative net interest spread for the
nine months ended June 30, 2008 and 2007. For these comparative
periods, the Company�s net interest spread widened 28 basis points
to 1.74% from 1.46%. The increase in net interest spread resulted
primarily from a 27 basis point decrease in the Company�s cost of
interest-bearing liabilities to 3.88% from 4.15% while the
Company�s yield on earnings assets increased by 2 basis points to
5.63% from 5.61%. The factors resulting in the widening of the
Company�s net interest spread also positively impacted the
Company�s net interest margin for both the three and nine month
periods ended June 30, 2008. However, the impact of the Company�s
share repurchase plans on net interest margin for each period
diminished the benefits of the widening net interest spread. For
the comparative three and nine month periods ended June 30, 2008
and 2007, the average balance of treasury stock increased $16.9
million and $19.1 million, respectively, reflecting the Company�s
share repurchase activity. The foregone interest income on the
earning assets used to fund those share repurchases significantly
impacted the Company�s net interest margin reported for the
comparative three and nine month periods. For the three months
ended June 30, 2008, the Company reported a 21 basis point increase
in net interest margin to 2.53% from 2.32% for the same period in
2007. By contrast, for the nine months ended June 30, 2008, the
Company reported a 3 basis point reduction in net interest margin
to 2.41% from 2.44% for the same period in 2007. The Company
reported an increase in net interest income of $649,000 or 21.2% to
$3.7 million for the quarter ended June 30, 2008 from $3.1 million
for the quarter ended June 30, 2007. This increase was partially
offset by a comparatively greater provision to the allowance for
loan losses. For those same comparative periods, the Company�s loan
loss provision increased $44,000 to $121,000 from $77,000. The
provision for loan losses for both comparative periods primarily
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. For the nine months ended June 30,
2008, the Company reported an increase in net interest income of
$731,000 or 7.9% to $10.0 million from $9.3 million for the nine
months ended June 30, 2007. This increase was partially offset by a
comparatively greater provision for loan losses. For those same
comparative periods, the Company�s loan loss provision increased
$111,000 to $431,000 from $320,000. The expense for the nine months
ended June 30, 2008 reflected a provision of $34,000 attributable
to one impaired construction loan, that portion of which was deemed
uncollectible by management during its asset quality review
conducted at March 31, 2008 and therefore charged off. The
remaining balance of the impaired loan at June 30, 2008, after the
charge off, was approximately $146,000. By contrast, the expense in
the earlier comparative period reflected a reversal of an $86,000
impairment reserve that was no longer required. Excluding these
adjustments, the provision for loan losses for both comparative
periods primarily 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. For the three
month period ended June 30, 2008, noninterest income increased
$73,000 to $481,000 from $408,000 for the quarter ended June 30,
2007. The growth in noninterest income was largely attributable to
increases in deposit service fees and charges. A portion of the
increase was attributable to deposit service fees and charges at
the Bank�s de novo branches opened during fiscal 2007. However, the
reported increase was also due to growth in deposit-related fees
and charges within the Bank�s other branches. Additionally, the
Company reported increases in income from the cash surrender value
of life insurance attributable to a combination of higher average
balances and improved yields on those assets. The Company also
reported an increase in other noninterest income attributable
primarily to growth in loan-related fees and charges including, but
not limited to, increases in prepayment penalties and late charges.
Offsetting a portion of these increases in noninterest income was
the absence of loan sale gains that had been reported during the
earlier comparative period when a portion of one-to four-family
loans originated were sold into the secondary market � a strategy
that was discontinued during fiscal 2008 in favor of adding all
loans originated to the Company�s portfolio. For the nine months
ended June 30, 2008, noninterest income increased $263,000 to $1.3
million from $1.1 million for the same period in 2007. The growth
in noninterest income for the comparative nine month periods was
largely attributable to the same factors as those impacting the
comparative three month periods discussed above. For the three
months ended June 30, 2008, noninterest expense increased $214,000
to $3.4 million from $3.2 million for the three months ended June
30, 2007. This growth in noninterest expense was primarily
attributable to increases in occupancy and equipment, data
processing, legal, professional and consulting and other
noninterest expenses. These increases in noninterest expense were
partially offset by reductions in salaries and employee benefits
and advertising expenses. The reported increase of $224,000 in
occupancy and equipment expense is attributable, in part, to the
costs of the two additional branches opened in the latter half of
fiscal 2007. However, the comparative increase also reflects the
ongoing operating costs associated with the Bank�s relocated
Bloomfield branch which opened in April, 2008. Additionally, the
increase includes the cost associated with outsourcing a
significant portion of the Company�s information technology
infrastructure support services that had been provided by in-house
resources during the earlier comparative period. The reported
increase of $16,000 in data processing charges was also largely
attributable to the associated costs of the two additional branches
opened in the latter half of fiscal 2007 including both core
processing and item processing expenses. The reported increase in
legal expense was primarily attributable to recently completed
revisions to benefit plan agreements as required by
newly-implemented Internal Revenue Service regulations while the
increase in professional and consulting expenses resulted from
additional costs associated with disaster recovery and physical
security planning and review services utilized during the more
recent comparative quarter. Finally, the growth in other
noninterest expense includes increases in FDIC insurance expense
resulting from both growth in the balance of FDIC-insured deposits
plus the expiration of FDIC insurance credits which had reduced the
Bank�s net cost of FDIC deposit insurance over several prior
quarters. Increases in noninterest expense also included increases
in corporate insurance and regulatory assessment expenses. The
reported net decrease in compensation expense reflects, in part,
the absence in the current period of the changes in director
retirement plan benefit accrual assumptions that had increased the
related expenses during the earlier comparative period. The
remaining portion of the decrease is largely attributable to
accrued compensation expense reductions based on current year bonus
projections. Notwithstanding these factors, other increases in
compensation expense attributable to the two additional branches
opened in the latter half of fiscal 2007 have been largely offset
by the Company�s other compensation expense control efforts which
have resulted in a nearly 10% reduction in the number of full time
equivalent employees during fiscal 2008. Similarly, the absence of
denovo branch grand opening costs resulted in the reduction in
advertising costs reported for the more recent comparative quarter.
For the nine months ended June 30, 2008, noninterest expense
increased $1.1 million to $10.3 million from $9.1 million for the
same period in 2007. The growth in noninterest expense for the
comparative nine month periods was generally attributable to the
same factors as those impacting the comparative three month periods
discussed above. Additionally, the reported increase in
compensation expense for the nine month period included a charge
resulting from the death of a director emeritus of the Company
during the second fiscal 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 that quarter. The following tables present selected
balance sheet data as of June 30, 2008 and September 30, 2007 and
selected operating data for the three months and nine months ended
June 30, 2008 and June 30, 2007. FINANCIAL HIGHLIGHTS (unaudited) �
� At June 30, � At September 30, 2008 2007 � Balance � % Total
Assets Balance � % Total Assets SELECTED FINANCIAL DATA(in
thousands): Assets Cash and cash equivalents $ 32,643 5.18 % $
37,421 6.52 % Securities available-for-sale 85,136 13.50 58,093
10.13 Securities held-to-maturity 6,856 1.09 6,730 1.17 Loans held
for sale - - 1,243 0.22 Loans receivable, net 471,220 74.70 437,883
76.32 Premises and equipment 12,038 1.91 10,856 1.89 Federal Home
Loan Bank stock 3,014 0.48 2,553 0.45 Cash surrender value of life
insurance 13,619 2.16 13,214 2.30 Accrued interest receivable 2,365
0.37 2,212 0.39 Other assets � 3,832 � 0.61 � � 3,533 � 0.61 �
Total assets $ 630,723 � 100.00 % $ 573,738 � 100.00 % Liabilities
and equity Deposits $ 450,760 71.47 % $ 428,600 74.70 % Advances
for taxes and insurance 2,925 0.46 2,702 0.47 Borrowings 81,564
12.93 37,612 6.56 Other liabilities 4,581 0.73 4,231 0.74 Equity �
90,893 � 14.41 � � 100,593 � 17.53 � Total liabilities and equity $
630,723 � 100.00 % $ 573,738 � 100.00 % � � Loan Data � Balance %
Total Loans � Balance % Total Loans 1-4 family mortgage loans $
262,648 55.74 % $ 263,448 60.16 % Home equity loans 14,446 3.07
14,625 3.34 Home equity lines of credit 21,795 4.63 19,829 4.53
Multifamily mortgage loans 33,326 7.07 30,552 6.98 Nonresidential
mortgage loans 85,520 18.15 68,431 15.63 Land and property
acquisition loans 5,241 1.11 3,340 0.76 Construction loans 41,849
8.88 32,542 7.43 Business loans 8,458 1.79 7,029 1.61 Consumer
loans 902 0.19 655 0.15 Allowance for loans losses � (2,965 ) (0.63
) � (2,568 ) (0.59 ) Loans receivable, net $ 471,220 � 100.00 % $
437,883 � 100.00 % � � Deposit Data � Balance % Total Deposits �
Balance % Total Deposits Noninterest-bearing deposits 30,558 6.78 %
30,494 7.11 % Interest-bearing checking 98,128 21.77 111,795 26.08
Savings 91,959 20.40 92,778 21.65 Certificates of deposit � 230,115
� 51.05 � � 193,533 � 45.16 � Deposits $ 450,760 � 100.00 % $
428,600 � 100.00 % FINANCIAL HIGHLIGHTS (continued) (unaudited) � �
At June 30, � At September 30, 2008 2007 Capital Ratios Equity to
total assets (%) 14.41 17.53 Outstanding shares (#) 10,948,286
11,946,190 Asset Quality Ratios: Non-performing loans to total
loans (%) 0.19 0.28 Non-performing assets to total assets (%) 0.14
0.22 Allowance for loan losses to non-performing loans (%) 332.16
205.56 Allowance for loan losses to total loans (%) 0.63 0.58 � For
thenine months endedJune 30, For thethree months endedJune 30, 2008
� 2007 2008 � 2007 SELECTED OPERATING DATA(in thousands): Total
interest income $ 23,387 $ 21,375 $ 7,963 $ 7,508 Total interest
expense � 13,366 � � 12,085 � � 4,250 � � 4,444 � Net interest
income 10,021 9,290 3,713 3,064 Provision for loan losses � 431 � �
320 � � 121 � � 77 � Net interest income after provision for loan
losses 9,590 8,970 3,592 2,987 Noninterest income 1,314 1,051 481
408 Noninterest expense � 10,263 � � 9,117 � � 3,420 � � 3,204 �
Income (loss) before income taxes 641 904 653 191 Provision
(benefit) for income taxes � 129 � � 276 � � 222 � � 41 � Net
income (loss) $ 512 � $ 628 � $ 431 � $ 150 � Performance Ratios:
Return on average assets 0.12 % 0.16 % 0.28 % 0.11 % Return on
average equity 0.72 0.75 1.89 0.56 Net interest rate spread 1.74
1.46 1.99 1.40 Net interest margin 2.41 2.44 2.53 2.32 Noninterest
income to average total assets 0.30 0.26 0.31 0.29 Noninterest
expense to average total assets 2.32 2.27 2.20 2.30 Efficiency
Ratio 90.55 88.16 81.52 92.29 PER SHARE DATA: Earnings per share
Basic 0.05 0.05 0.04 0.01 Diluted 0.05 0.05 0.04 0.01 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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