Central Jersey Bancorp Reports a Substantial Decrease in Solomon Dwek's Equity Holdings and a 10.7% Increase in 2nd Quarter 2006 Earnings.LONG BRANCH, N.J. -- (NASDAQ Capital Market Originally called the NASDAQ Small Cap Market, NASDAQ announced a name change to the NASDAQ Capital Market on September 27, 2005. [1] The NASDAQ Capital Market exists for securities of smaller, less-capitalized companies (small caps) that do not qualify for : CJBK): Substantial Decrease in Solomon Solomon, d. c.930 B.C., king of the ancient Hebrews (c.970–c.930 B.C.), son and successor of David. His mother was Bath-sheba. His accession has been dated to c.970 B.C. According to the Bible. Dwek's Equity Holdings An aggregate of 564,910 shares of Central Jersey Bancorp's common stock, representing approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 6.8% of the shares of Central Jersey Bancorp's common stock currently outstanding, were recently sold at prices ranging from $8.80 to $8.85 per share to two institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. for the benefit of another financial institution. These shares of Central Jersey Bancorp's common stock and other securities unrelated to Central Jersey Bancorp had been pledged pledge n. 1. A solemn binding promise to do, give, or refrain from doing something: signed a pledge never to reveal the secret; a pledge of money to a charity. 2. a. by Solomon Dwek as collateral collateral (kəlăt`ərəl), something of value given or pledged as security for payment of a loan. Collateral consists usually of financial instruments, such as stocks, bonds, and negotiable paper, rather than physical goods, although to secure a $10.0 million loan he had personally received from another financial institution. The entire collateral position was ordered sold by the Superior Court of New Jersey in connection with an action commenced by PNC PNC Purdue University North Central (Westville, Indiana) PnC Point 'n Click PNC Police National Computer PNC People's National Congress (Guyana) PNC People's National Congress Bank against Mr. Dwek. As of April 6, 2006, the record date for Central Jersey Bancorp's 2006 annual meeting of shareholders, Mr. Dwek held 779,730 shares of Central Jersey Bancorp's common stock (818,716 shares as adjusted for the 5% stock distribution paid on July July: see month. 1, 2006), which represented at such time 9.96% of the shares of Central Jersey Bancorp's common stock outstanding. As the result of the recent sale of shares of Central Jersey Bancorp's common stock held as collateral at another financial institution, coupled with other transfers and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. sales of Central Jersey Bancorp's common stock formerly held by Mr. Dwek, which have occurred in connection with the pending action against Mr. Dwek, the equity holdings of Mr. Dwek in Central Jersey Bancorp have been significantly reduced. 2nd Quarter 2006 Earnings Central Jersey Bancorp, the parent company of Central Jersey Bank, N.A., reported net income of $675,000 for the three months ended June June: see month. 30, 2006, as compared to net income of $610,000 for the same period in 2005, representing an increase of $65,000, or 10.7%. The reported net income for the second quarter was negatively impacted by a $103,000 loan loss provision related to $413,000 in unsecured loans Unsecured Loan A loan that is issued and supported only by the borrower's creditworthiness, rather than by some sort of collateral. Notes: Generally, a borrower must have a high credit rating to receive an unsecured loan. placed on non-accrual status as of June 30, 2006. Basic and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the three months ended June 30, 2006 were both $0.08 as compared to $0.08 and $0.07, respectively, for the same period in 2005. Per share earnings have been adjusted in all periods to reflect the two-for-one stock split paid on July 1, 2005 and the 5% stock dividend paid on July 1, 2006. For the six months ended June 30, 2006, Central Jersey Bancorp reported net income of $1.40 million, as compared to $1.22 million for the same period in 2005, representing an increase of 14.8%. Basic and diluted earnings per share were $0.17 and $0.16, respectively, for the six months ended June 30, 2006, as compared to $.15 and $.14, respectively, for the same prior year periods. George S George, river, c.345 mi (560 km) long, rising in a lake on the Quebec-Labrador boundary, E Canada. It flows N through Indian Lake (125 sq mi/324 sq km) to Ungava Bay (an arm of Hudson Strait). . Callas Cal·las , Maria Originally Maria Anna Sophia Cecilia Kalogeropoulos. 1923-1977. American soprano known for her technical capacity and dramatic intensity. Among her notable operatic roles was the title role in Bellini's Norma. , Chairman of the Board of Directors, and James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. S. Vaccaro, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , commented that, "In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite the fact that the second quarter operating results were impacted by the loan loss provision related to the previously-mentioned unsecured loans, Central Jersey Bancorp increased its net income by 10.7% over the same period in 2005. These unsecured loans are related to the pending actions against Solomon Dwek and, while these loans are presently current, we believe that, based upon their unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. status, the decision to record additional loan loss reserves was prudent and appropriate. Central Jersey Bancorp's only other exposure to Mr. Dwek and related entities is a $2.0 million commercial mortgage loan which is performing. We remain confident that the underlying fundamentals of our organization remain strong. Balance sheet stability and a continued focus on expense control have provided for positive core earnings growth. This performance is in spite of the difficult operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. and significant pressure on net interest margin being experienced throughout the banking industry as a result of the flat or inverted yield curve Inverted Yield Curve Usually a chart showing long-term debt instruments that have lower yields than short-term debt instruments. It is sometimes referred to as a negative yield curve. and heightened pricing competition for deposits." Results of Operations Net interest income was $4.3 million and $8.6 million, respectively, for the three and six months ended June 30, 2006, as compared to $4.4 million and $8.7 million, respectively, for the same prior year periods. Net interest income for the three and six months ended June 30, 2006 was comprised primarily of $5.9 million and $11.5 million, respectively, in interest and fees on loans, $1.4 million and $2.8 million, respectively, in interest on securities, and $64,000 and $112,000, respectively, in other interest income, less interest expense on deposits of $2.6 million and $4.7 million, respectively, interest expense on borrowed funds of $309,000 and $912,000, respectively, and interest expense on subordinated debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before of $106,000 and $205,000, respectively. Although net interest income for the three and six months ended June 30, 2006 and 2005 was consistent in both comparative periods, the cost of deposits and interest-bearing Adj. 1. interest-bearing - of financial obligations on which interest is paid liabilities increased to an average cost of 2.69% and 2.60%, respectively, for the three and six months ended June 30, 2006 from an average cost of 1.64% and 1.54%, respectively, for the same periods in 2005. For the three and six months ended June 30, 2006, the average yield on interest-earning assets was 6.39% and 6.31%, respectively, as compared to 5.65% and 5.62%, respectively, for the same periods in 2005. The average net interest margin for the three and six months ended June 30, 2006 was 3.76% and 3.74%, respectively, as compared to 4.04% and 4.09%, respectively, for the same periods in 2005. The margin compression compression, external stress applied to an object or substance, tending to cause a decrease in volume (see pressure). Gases can be compressed easily, solids and liquids to a very small degree if at all. experienced during the three and six months ended June 30, 2006 is reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of the increase in general interest rates and the competitive deposit pricing environment. For the three and six months ended June 30, 2006, the provision for loan losses was $97,000 and $148,000, respectively, as compared to $79,000 and $179,000, respectively, for the same prior year periods. The increase in the provision for loan losses for the three months ended June 30, 2006 was due primarily to additional loan loss provision related to the previously-mentioned unsecured loans. Non-interest income, which consists of service charges on deposit accounts, income from bank owned life insurance and fees from the gain on the sale of residential mortgages, was $423,000 and $904,000, respectively, for the three and six months ended June 30, 2006, as compared to $369,000 and $715,000, respectively, for the same prior year periods. The increase in both periods is due primarily to the gain on sale of residential mortgages which we began to offer in the latter part of 2005. Non-interest expense was $3.6 million and $7.1 million, respectively, for the three and six months ended June 30, 2006, as compared to $3.7 million and $7.3 million, respectively, for the same prior year periods. Non-interest expense generally includes costs associated with employee salaries and benefits, occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy expenses, data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a fees, professional fees, core deposit intangible amortization, and other operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. . Financial Condition Central Jersey Bancorp's assets, at June 30, 2006, totaled $510.7 million, a decrease of $3.9 million, or 0.8%, from the December December: see month. 31, 2005 total of $514.6 million. The total assets figure of $510.7 million at June 30, 2006, is inclusive of inclusive of prep. Taking into consideration or account; including. $27.0 million in goodwill and $2.8 million in core deposit intangible. Cash and cash equivalents were $23.0 million at June 30, 2006, an increase of approximately $1.8 million, or 8.4%, from the December 31, 2005 total of $21.2 million. The increase is due primarily to the timing of cash flows related to the bank's business activities. Investments totaled $124.2 million at June 30, 2006, a decrease of $9.5 million, or 7.1%, from the December 31, 2005 total of $133.7 million. This decrease was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to principal pay downs on mortgage-backed securities Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. totaling $3.7 million and matured investment securities totaling $4.2 million. The proceeds received by Central Jersey Bancorp from these transactions were used to fund loan growth that occurred during the period and pay-down Pay-down In a Treasury refunding, the amount by which the par value of the securities maturing exceeds that of those sold. In the context of general equities, paying a lower price in an accumulation of stock. Antithesis of pay-up. borrowings. Loans held for sale totaled $577,000 at June 30, 2006, as compared to $3.1 million at December 31, 2005. The decrease is due primarily to lower residential loan origination The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. volume. Loans, net of the allowance for loan losses, closed the six months ended June 30, 2006 at $314.2 million, an increase of $7.0 million, or 2.3%, over the $307.2 million balance at December 31, 2005. The increase is due primarily to the origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real of commercial real estate loans during the period. Deposits at June 30, 2006 totaled $414.2 million, an increase of $6.6 million, or 1.6%, over the December 31, 2005 total of $407.6 million. The slight increase in deposit balances is reflective of normal seasonal flows and the general funding and liquidity challenges prevalent prevalent widespread occurrence. throughout the banking industry. Other borrowings were $27.2 million at June 30, 2006, as compared to $38.2 million at December 31, 2005, a decrease of $11.0 million, or 28.9%. These borrowings, which are short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. in nature, were reduced during the period due to cash inflows resulting from deposit growth and the principal amortization and maturity of investment securities. At June 30, 2006, book value per share and tangible Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. book value per share were $7.60 and $3.99, respectively, as compared to $7.53 and $3.85, respectively, at December 31, 2005. Asset Quality The allowance for loan losses, which began the year at $3.17 million, or 1.02% of total loans, was $3.28 million at June 30, 2006, with the allowance for loan losses ratio at 1.03% of total loans. Non-performing loans A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms. totaled $505,000 at June 30, 2006, as compared to $79,000 at December 31, 2005. The significant increase in non-performing loans is due primarily to the previously-mentioned unsecured loans, totaling $413,000, which were placed on non-accrual status at June 30, 2006. Loan charge-offs during the three and six months ended June 30, 2006 totaled $46,000, as compared to $93,000 for the same prior year periods. About the Company Central Jersey Bancorp is the holding company and sole shareholder of Central Jersey Bank, N.A., the national banking entity resulting from the August 22, 2005 combination of Monmouth Monmouth, city, United States Monmouth, city (1990 pop. 9,489), seat of Warren co., W Ill.; inc. 1852. Located in a farm area, it is a trade center with a packing plant. Manufactures include pottery, farm tools, and feed. Monmouth College is in the city. Community Bank, N.A. and Allaire
See: Ticker symbol "CJBK." Central Jersey Bank, N.A. can be accessed through the internet at www.CJBNA.com. Forward Looking Statements Statements about the future expectations of Central Jersey Bancorp and its subsidiary, Central Jersey Bank, N.A., including future revenues and earnings, and all other statements in this press release other than historical facts are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. Since these statements involve risks and uncertainties and are subject to change at any time, the companies' actual results could differ materially from expected results. Among these risks, trends and uncertainties are the effect of governmental regulation on Central Jersey Bank, N.A., the availability of working capital, the cost of personnel, and the competitive market in which Central Jersey Bank, N.A. competes.
CONSOLIDATED BALANCE SHEETS
June 30, 2006 (UNAUDITED) AND DECEMBER 31, 2005
(dollars in thousands)
June 30, December
2006 31, 2005
--------------------
ASSETS (unaudited)
------
Cash and due from banks $23,001 $21,228
Investment securities available for sale, at
market value 102,550 111,175
Investment securities held to maturity (market
value of $20,694 (unaudited) and $22,058 at
June 30, 2006 and December 31, 2005,
respectively) 21,647 22,567
Loans held for sale 577 3,127
Loans, net 314,187 307,168
Premises and equipment 5,760 6,006
Bank owned life insurance 3,393 3,338
Accrued interest receivable 2,645 2,636
Goodwill 26,957 27,229
Core deposit intangible 2,788 3,097
Other assets 7,177 6,992
--------------------
Total assets $510,682 $514,563
====================
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Deposits:
Non-interest bearing $84,104 $91,297
Interest bearing 330,082 316,257
--------------------
414,186 407,554
Other borrowings 27,153 38,191
Subordinated debentures 5,155 5,155
Accrued expenses and other liabilities 1,491 1,885
--------------------
Total liabilities 447,985 452,785
--------------------
Shareholders' equity:
Common stock, par value $0.01 per share.
Authorized 100,000,000 shares and issued
and outstanding 8,255,012 and 8,169,844
shares at June 30, 2006 and December 31,
2005, respectively. 83 82
Additional paid-in capital 60,506 59,999
Accumulated other comprehensive loss, net of tax
benefit (3,142) (2,153)
Retained earnings 5,250 3,850
--------------------
Total shareholders' equity 62,697 61,778
--------------------
Total liabilities and shareholders'
equity $510,682 $514,563
====================
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(dollars in thousands, except per share amounts)
Three months ended Six months ended
June 30, June 30,
2006 2005 2006 2005
---------- ---------- ---------- ----------
(unaudited) (unaudited)
Interest and dividend
income:
Interest and fees on
loans $5,882 $4,478 $11,486 $8,644
Interest on securities
available for sale 1,124 1,267 2,280 2,599
Interest on securities
held to maturity 251 277 506 563
Interest on federal
funds sold and due
from banks 64 38 112 69
---------- ---------- ---------- ----------
Total interest
and dividend
income 7,321 6,060 14,384 11,875
Interest expense:
Interest expense on
deposits 2,564 1,495 4,661 2,764
Interest expense on
subordinated
debentures 106 82 205 156
Interest expense on
other borrowings 309 129 912 266
---------- ---------- ---------- ----------
Total interest
expense 2,979 1,706 5,778 3,186
---------- ---------- ---------- ----------
Net interest
income 4,342 4,354 8,606 8,689
---------- ---------- ---------- ----------
Provision for loan losses: 97 79 148 179
---------- ---------- ---------- ----------
Net interest
income after
provision for
loan losses 4,245 4,275 8,458 8,510
---------- ---------- ---------- ----------
Other income:
Service charges on
deposit accounts 343 344 682 659
Gain on sale of loans 51 -- 161 --
Income on bank owned
life insurance 25 25 55 56
Other service charges,
commissions and fees 4 -- 6 --
---------- ---------- ---------- ----------
Total other
income 423 369 904 715
---------- ---------- ---------- ----------
Operating expenses:
Salaries and employee
benefits 1,850 1,817 3,732 3,638
Net occupancy expenses 424 593 826 1,211
Data processing fees 195 261 398 526
Core deposit
intangible
amortization 155 172 309 344
Other operating
expenses 970 846 1,870 1,596
---------- ---------- ---------- ----------
Total other
expenses 3,594 3,689 7,135 7,315
---------- ---------- ---------- ----------
Income before provision for
income taxes 1,074 955 2,227 1,910
Income taxes 399 345 827 690
---------- ---------- ---------- ----------
Net income $675 $610 $1,400 $1,220
========== ========== ========== ==========
Basic earnings per share $.08 $.08 $.17 $.15
========== ========== ========== ==========
Diluted earnings per share $.08 $.07 $.16 $.14
========== ========== ========== ==========
Average basic shares
outstanding 8,262,545 8,132,394 8,231,423 8,123,592
========== ========== ========== ==========
Average diluted shares
outstanding 8,738,853 8,882,612 8,726,918 8,884,288
========== ========== ========== ==========
Performance Ratios (unaudited) Three Months Ended Six Months Ended
(dollars in thousands) June 30, June 30,
----------------------------------------------------------------------
Ratio 2006 2005 2006 2005
----------------------------------------------------------------------
Return on average assets 0.53% 0.51% 0.55% 0.51%
----------------------------------------------------------------------
Return on average tangible assets 0.56% 0.54% 0.59% 0.54%
----------------------------------------------------------------------
Return on average equity 4.30% 3.99% 4.49% 4.04%
----------------------------------------------------------------------
Return on average tangible equity 8.14% 7.88% 8.63% 8.07%
----------------------------------------------------------------------
Efficiency ratio 75.4% 78.1% 75.0% 77.8%
----------------------------------------------------------------------
Efficiency ratio (less core deposit
intangible amortization expense) 72.2% 74.5% 71.8% 74.1%
----------------------------------------------------------------------
Operating expense ratio 2.83% 3.06% 2.81% 3.04%
----------------------------------------------------------------------
Net interest margin 3.76% 4.04% 3.74% 4.09%
----------------------------------------------------------------------
----------------------------------------------------------------------
Ratio Calculations
----------------------------------------------------------------------
Efficiency ratio:
----------------------------------------------------------------------
Net interest income $4,342 $4,354 $8,606 $8,689
----------------------------------------------------------------------
Non-interest income 423 369 904 715
----------------------------------------------------------------------
Total revenue 4,765 4,723 9,510 9,404
----------------------------------------------------------------------
Non-interest expense $3,594 $3,689 $7,135 $7,315
----------------------------------------------------------------------
Ratio 75.4% 78.1% 75.0% 77.8%
----------------------------------------------------------------------
----------------------------------------------------------------------
Efficiency ratio (less core deposit
intangible amortization expense):
----------------------------------------------------------------------
Net interest income $4,342 $4,354 $8,606 $8,689
----------------------------------------------------------------------
Non-interest income 423 369 904 715
----------------------------------------------------------------------
Total revenue 4,765 4,723 9,510 9,404
----------------------------------------------------------------------
Non-interest expense 3,594 3,689 7,135 7,315
----------------------------------------------------------------------
Less: Core deposit
amortization
expense (155) (172) (309) (344)
----------------------------------------------------------------------
Non-interest expense (less core
deposit intangible
amortization expense) $3,439 $3,517 $6,826 $6,971
----------------------------------------------------------------------
Ratio 72.2% 74.5% 71.8% 74.1%
----------------------------------------------------------------------
----------------------------------------------------------------------
Operating expense ratio:
----------------------------------------------------------------------
Average assets $509,183 $483,528 $512,288 $481,593
----------------------------------------------------------------------
Non-interest expense $3,594 $3,689 $7,135 $7,315
----------------------------------------------------------------------
Ratio 2.83% 3.06% 2.81% 3.04%
----------------------------------------------------------------------
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