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 that it had net income of $1.2
million for the year ended September 30, 2008. By comparison, net
income for the year ended September 30, 2007 was $557,000. Basic
and diluted earnings per share for the year ended September 30,
2008 were $0.12 and $0.12, respectively. By comparison, for the
year ended September 30, 2007, basic and diluted earnings per share
were $0.05 and $0.05, respectively. For the three months ended
September 30, 2008, the Company reported net income of $716,000
compared to a net loss of $72,000 for the three months ended
September 30, 2007. Basic and diluted earnings per share for the
three months ended September 30, 2008 were $0.07 and $0.07,
respectively, compared to $(0.01) and $(0.01), respectively, for
the three months ended September 30, 2007. Additional information
concerning the Company�s comparative financial performance for the
three months ended September 30, 2008 and September 30, 2007 is
provided in the tabular presentation at the end of this document.
For the year ended September 30, 2008, loans receivable, net
increased $40.7 million or 9.3% to $478.6 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 $39.9
million. The increase in loans receivable, net also included an
increase in the balance of 1-4 family first mortgage loans of
$297,000, net increases in home equity loans and home equity lines
of credit totaling $486,000 and net increases in consumer loans of
$504,000. Offsetting the growth in these categories was a net
increase to the allowance for loan losses totaling $467,000. For
that same period, the balance of the Company�s investment
securities increased by $23.8 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 continues to augment the
Company�s earnings as it incurs 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 $17.0 million which also provided a
portion of the funding for the Company�s reported net loan growth
and continued share repurchases during fiscal 2008. The balance of
deposits increased $19.1 million for the year ended September 30,
2008. This net growth reflected increases in certificates of
deposit and noninterest bearing checking accounts of $62.3 million
and $953,000, respectively. This growth was offset by reductions in
interest bearing checking and savings accounts of $36.5 million and
$7.7 million, respectively. For the same period, borrowings
increased $37.9 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 $12.1 million of maturing FHLB term advances.
Additionally, the Company reported a net increase of $11.4 million
in treasury stock attributable primarily to the Company�s share
repurchase programs. For the year ended September 30, 2008, the
Company repurchased a total of 1,090,664 shares at an average price
of $10.43 per share. The Company�s yield on earning assets
decreased 5 basis points to 5.59% for the year ended September 30,
2008 from 5.64% for the year ended September 30, 2007. This
decrease reflected the impact of overall reductions in market
interest rates on the yields of repricing assets which 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
years was outpaced by a reduction in the Company�s interest costs
for those same periods. The Company�s cost of interest-bearing
liabilities decreased 48 basis points to 3.73% for the year ended
September 30, 2008 from 4.21% for the year ended September 30,
2007. This decrease in interest cost was primarily attributable to
two related factors. First, the Company reduced 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 43 basis points to 1.87% from 1.44% for
those same comparative periods. The factors resulting in the
widening of the Company�s net interest spread also positively
impacted the Company�s net interest margin for the year ended
September 30, 2008. However, the impact of the Company�s share
repurchase plans on net interest margin partially offset the
benefits of the widening net interest spread. For the comparative
years ended September 30, 2008 and 2007, the average balance of
treasury stock increased $17.8 million reflecting the Company�s
share repurchase activity. The foregone interest income on the
earning assets used to fund those share repurchases during fiscal
2008 significantly impacted the Company�s net interest margin
reported for that year. As a result of these offsetting factors,
the Company reported a $1.7 million increase in net interest income
to $14.0 million for fiscal 2008 from $12.3 million for fiscal 2007
reflecting an 11 basis point increase in net interest margin to
2.50% from 2.39% for those same comparative periods. The increase
in net interest income 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
$56,000 to $501,000 from $445,000. The expense for fiscal 2008
included 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 September 30, 2008, net of that earlier charge
off, was approximately $146,000. By contrast, the expense for
fiscal 2007 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 year ended September 30,
2008, noninterest income increased $369,000 to $1.8 million from
$1.4 million for fiscal 2007. The growth in noninterest income was
largely attributable to increases in deposit service fees and
charges which increased $233,000 in fiscal 2008 compared to fiscal
2007. A portion of that 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. The Company also reported an increase of $78,000 in
income from the cash surrender value of life insurance attributable
to a combination of higher average balances and improved yields on
those assets. Additionally, the Company reported an increase of
$85,000 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 a $34,000
reduction in loan sale gains during fiscal 2008 compared with
fiscal 2007. The reduction reflects the Company�s discontinuation
of selling a portion of one-to four-family loans originated into
the secondary market � as had been the Company�s strategy during
fiscal 2007 - in favor of adding all loans originated in fiscal
2008 to the portfolio. For the year ended September 30, 2008,
noninterest expense increased $998,000 to $13.5 million from $12.5
million for fiscal 2007. This growth in noninterest expense was
primarily attributable to comparative increases in salaries and
employee benefits of $206,000, increases in occupancy and equipment
expense of $791,000 and increases in data processing, legal and
other noninterest expenses totaling $34,000, $48,000 and $103,000,
respectively. These increases in noninterest expense were partially
offset by a $177,000 reduction in advertising and marketing
expenses. The reported increase in salaries and employee benefits
for fiscal 2008 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.
Other increases in compensation expense, including those
attributable to the three de novo branches opened during fiscal
2007, were more than offset by the Company�s compensation expense
control efforts which resulted in a nearly 10% reduction in the
number of full time equivalent employees during fiscal 2008. The
reported decrease in advertising and marketing expense during
fiscal 2008 was largely attributable to the absence of grand
opening expenses during fiscal 2008 associated with the three de
novo branches opened during fiscal 2007. The full year�s operating
costs of those branches contributed significantly to the reported
increase in occupancy and equipment and data processing expenses
for fiscal 2008. However, such increases also reflected the ongoing
operating costs associated with the Bank�s relocated Bloomfield
branch which opened in April, 2008. Additionally, the reported
increase in occupancy and equipment expense also reflected the
costs 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 in legal expense was
primarily attributable to revisions to benefit plan agreements as
required by newly-implemented Internal Revenue Service regulations
as well as other human resource-related legal expenses. Finally,
the reported increase in other noninterest expense resulted
primarily from increases in FDIC insurance expense. This increase
was attributable, in part, to overall growth in the balance of
FDIC-insured deposits. However, the increase also reflected the
expiration of FDIC insurance credits during fiscal 2008 which had
previously reduced the Bank�s net cost of FDIC deposit insurance
throughout fiscal 2007. The following tables present selected
balance sheet data as of September 30, 2008 and September 30, 2007
and selected operating data for fiscal year and three months ended
September 30, 2008 and September 30, 2007. FINANCIAL HIGHLIGHTS
(unaudited) � At September 30, � At September 30, 2008 2007 �
Balance � % Total Assets Balance � % Total Assets SELECTED
FINANCIAL DATA (in thousands): Assets Cash and cash equivalents $
20,375 3.28 % $ 37,421 6.52 % Securities available-for-sale 81,163
13.06 58,093 10.13 Securities held-to-maturity 7,509 1.21 6,730
1.17 Loans held for sale - - 1,243 0.22 Loans receivable, net
478,574 76.99 437,883 76.32 Premises and equipment 11,894 1.91
10,856 1.89 Federal Home Loan Bank stock 2,743 0.44 2,553 0.45 Cash
surrender value of life insurance 13,761 2.21 13,214 2.30 Accrued
interest receivable 2,391 0.38 2,212 0.39 Other assets � 3,223 �
0.52 � � 3,533 � 0.61 � Total assets $ 621,633 � 100.00 % $ 573,738
� 100.00 % Liabilities and equity Deposits $ 447,687 72.02 % $
428,600 74.70 % Advances for taxes and insurance 2,811 0.45 2,702
0.47 Borrowings 75,547 12.15 37,612 6.56 Other liabilities 4,740
0.77 4,231 0.74 Equity � 90,848 � 14.61 � � 100,593 � 17.53 � Total
liabilities and equity $ 621,633 � 100.00 % $ 573,738 � 100.00 % �
Loan Data Balance % Total Loans Balance % Total Loans 1-4 family
mortgage loans $ 263,744 55.11 % $ 263,448 60.16 % Home equity
loans 14,053 2.94 14,625 3.34 Home equity lines of credit 20,887
4.36 19,829 4.53 Multifamily mortgage loans 36,855 7.70 30,552 6.98
Nonresidential mortgage loans 90,644 18.94 68,431 15.63 Land and
property acquisition loans 6,665 1.39 3,340 0.76 Construction loans
40,051 8.37 32,542 7.43 Business loans 7,551 1.58 7,029 1.61
Consumer loans 1,159 0.24 655 0.15 Allowance for loans losses �
(3,035 ) (0.63 ) � (2,568 ) (0.59 ) Loans receivable, net $ 478,574
� 100.00 % $ 437,883 � 100.00 % � Deposit Data Balance % Total
Deposits Balance % Total Deposits Noninterest-bearing deposits
31,447 7.02 % 30,494 7.11 % Interest-bearing checking 75,307 16.82
111,795 26.08 Savings 85,092 19.01 92,778 21.65 Certificates of
deposit � 255,841 � 57.15 � � 193,533 � 45.16 � Deposits $ 447,687
� 100.00 % $ 428,600 � 100.00 % FINANCIAL HIGHLIGHTS (continued)
(unaudited) � At September 30, � At September 30, 2008 2007 Capital
Ratios Equity to total assets (%) 14.61 17.53 Outstanding shares
(#) 10,859,692 11,946,190 Asset Quality Ratios: Non-performing
loans to total loans (%) 0.24 0.28 Non-performing assets to total
assets (%) 0.18 0.22 Allowance for loan losses to non-performing
loans (%) 266.97 205.56 Allowance for loan losses to total loans
(%) 0.63 0.58 � For the year ended September 30, For the three
months ended September 30, 2008 � 2007 2008 � 2007 SELECTED
OPERATING DATA (in thousands): Total interest income $ 31,437 $
29,029 $ 8,050 $ 7,654 Total interest expense � 17,397 � � 16,731 �
� 4,030 � � 4,646 � Net interest income 14,040 12,298 4,020 3,008
Provision for loan losses � 501 � � 445 � � 71 � � 125 � Net
interest income after provision for loan losses 13,539 11,853 3,949
2,883 Noninterest income 1,791 1,422 477 371 Noninterest expense �
13,542 � � 12,544 � � 3,279 � � 3,427 � Income (loss) before income
taxes 1,788 731 1,147 (173 ) Provision (benefit) for income taxes �
560 � � 174 � � 431 � � (101 ) Net income (loss) $ 1,228 � $ 557 �
$ 716 � $ (72 ) Performance Ratios: Return on average assets 0.21 %
0.10 % 0.46 % (0.05 )% Return on average equity 1.31 0.51 3.19
(0.28 ) Net interest rate spread 1.87 1.44 2.21 1.39 Net interest
margin 2.50 2.39 2.75 2.26 Noninterest income to average total
assets 0.30 0.26 0.31 0.26 Noninterest expense to average total
assets 2.27 2.31 2.11 2.43 Efficiency Ratio 85.54 91.43 72.91
101.43 PER SHARE DATA: Earnings per share Basic 0.12 0.05 0.07
(0.01 ) Diluted 0.12 0.05 0.07 (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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